Case ID: ad_75/html/0581-01.html
Source: Caselaw Access Project
Author: {"author": "Lattghlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Stephen J. Geoghegan and Others, Suing on Behalf of Themselves and of all Other Creditors of the Harlem Casino Company, Appellants, v. August Luchow, Respondent, Impleaded with Charles E. Runk and Others, Defendants.
    
      Motion to dismiss a complaint for laches in serving the defendants — an extension of the time to answer is not a bar thereto—fifty dolla/rs costs cannot be allowed.
    
    Where creditors of a corporation suing on behalf of themselves and all other creditors, bring an action against the directors of the corporation to enforce the liability imposed upon them by section 24 of the Stock Corporation Law and serve the summons upon only one of such directors, the fact that the time of such director to answer was extended from time to time by stipulation does not prevent him from making, before the expiration of the last extension of time, a motion to dismiss the complaint upon the ground that the plaintiffs had unreasonably neglected to make service of the summons upon the other defendants.
    An award, made upon the granting of the motion to dismiss the complaint, of fifty dollars costs to the moving defendant in addition to the costs of the motion, cannot be sustained where the only foundation laid for the imposition of such costs was that such defendant should be indemnified against the expense of having the records of the corporation examined in order to prepare his answer, as, if timely service had been made upon the other defendants, the moving defendant would still have been-obliged to serve his answer.
    Appeal by thé plaintiffs, Stephen J. Geoghegan and others, suing on behalf of themselves and of all other creditors of the Harlem Casino Company, 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 30th day of July, 1902, granting a motion made by the defendant Luchow for the dismissal of the complaint as to him, with ten dollars costs, unless the plaintiffs within thirty days should cause the summons and complaint to be served upon the other defendants, who resided in the State,, and also should pay to the defendant Luchow, or his attorney, the sum of fifty dollars costs.
    
      Henry Hoelljes, for the appellants.
    
      Henry Schmitt, for the respondent.
   Lattghlin, J.:

The plaintiffs are creditors of the Harlem Casino Company, and as such bring this action in behalf of themselves and all other creditors against the directors of the corporation to enforce the liability created by section 24 of the Stock Corporation Law (Laws of 1890, chap. 564, as amd. by Laws of 1892, chap. 688) prior to its repeal by chapter 354 of the Laws of 1901. The summons and complaint were served on the defendant Luchow on the 14th day of October, 1901. His time to answer was extended by stipulation from time to time until after the making of this motion.Hone of the other defendants have been served. The motion was made upon the ground that the plaintiffs had unreasonably neglected to serve the other defendants.

The motion was opposed by the plaintiffs upon three grounds: (1) That the defendant was not in a position to make the motion upon which the order was granted, he not having answered or demurred, but having obtained an extension of time which had not éxpired when the motion was made ; (2) that inasmuch as no notice of intention to hold them personally liable was served on the other directors upon whom service of the summons has not been made as required by subdivision 2 of section 34 of the Stock Corporation Law, added by chapter 354 of the Laws of 1899, such directors are not liable and service upon them will be of no avail; and (3) that due diligence has been used in endeavoring to make such service.

The plaintiffs have made the other directors defendants, and they have not used due diligence in serving the summons upon them. The acceptance of stipulations extending his time to answer did not bar the defendant from complaining of the plaintiffs’ gross laches in failing to bring in the other defendants. The appeal does not present the question as to whether the action can be maintained against the defendant Lucliow alone, or whether the defendants who have not been served would have a good defense.

The appellants also contend that the order requires them to serve all of the defendants, which is impossible on account of the non-residence of one of them. As we read the order, it only requires them to serve the resident defendants.

The award, however, of fifty dollars costs to the defendant Lucliow, in addition to the costs of the motion, cannot be sustained. The only foundation laid for the imposition of these costs was the claim that, as the action could not be successfully maintained, he should be indemnified against the expense of having the records of the corporation examined to prepare his answer. We fail to discover any logic in this claim. If the other parties had been served and notified timely, said defendant would have been obliged to prepare his answer, and then might have been held liable.

The order should, therefore, be modified, by striking out the requirement that the plaintiffs pay fifty dollars to the respondent, and as modified affirmed, without costs.

Van Beunt, P. J., O’Bbien and McLaughlin, JJ., concurred.

Order modified as directed in opinion, and as modified affirmed, without costs.