Case ID: misc_9/html/0372-01.html
Source: Caselaw Access Project
Author: {"author": "McAdam, L", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William G. McCrea, Plaintiff, v. Arthur G. Bedell, Defendant.
    (New York Superior Court—General Term,
    July, 1894.)
    A demand by a stockholder for a statement of the affairs of the corporation is sufficient, although it does not call for a sworn statement. The failure to require a sworn statement is, at most, a waiver by the stockholder of the verification which he is authorized to demand.
    An action against the treasurer of a corporation to recover the penalty for failure to furnish a statement of the affairs of the corporation was-brought under section 52 of chapter 564, Laws of 1890, and alleged a failure to furnish such statement within twenty days after demand. At the time of the default said act had been superseded by chapter 688, Laws of 1892, which allowed the treasurer thirty days to comply with such a demand. Objection on this ground was made at the trial, but no' motion to amend was made. SsM, that no recovery could be had under the complaint and that it was properly dismissed.
    Motion by defendant for judgment on dismissal of complaint where the exceptions were ordered to be heard in the first instance at General Term.
    
      W. L. McCorkle, for defendant and motion.
    
      Thos. J. Rush, for plaintiff, opposed.
   McAdam, L

The plaintiff, as owner of more than five per cent of the capital stock of the North Side Publishing Company, a corporation organized under the laws of the state of New York, sued the defendant, as treasurer of said corporation, to recover $450 as penalties for failing to furnish the plaintiff with a statement of the affairs of the corporation, agreeably to the statute, after demand made therefor. The plaintiff declared upon section 52 of chapter 564 of the Laws of 1890, which requires the treasurer of such a corporation to furnish the statement within “ twenty ” days after service of the written demand. The purpose of the provision requiring a detailed 'account of the assets and liabilities of the company is to enable the stockholder to appreciate the value of the shares of the stock held by him from the financial standing of the company. French v. McMillan, 43 Hun, 188.

The action was commenced July 30, 1892, and at that time section 52 of chapter 564 of the Laws of 1890 had been superseded by a new act which went into effect May 18,1892. See Laws 1892, chap. 688, § 52. The default sued for occurred in June, 1892, after the new act had become operative. The complaint alleges that, although more than “ twenty ” days had elapsed since the service of the demand, the defendant failed to comply therewith “ and with the statute aforesaid,” i. e., the act of 1890 before referred to. Section 52 of the new act is a substantial re-enactment of the same section of the former statute, except that it allows the treasurer “ thirty ” instead of “ twenty ” days within which to comply with the requirements of the demand.

At the trial the defendant, among other objections to the complaint, insisted that it was defective in .not requiring a “ sworn ” statement, as provided by the act; and, also, that the complaint did not allege a failure to comply with the demand within “thirty” days, according to the act of 1892, supra.

We hold that the demand was sufficient, as the failure to require a “sworn” statement (which was intended for the security of the stockholder demanding it) was, at most, a waiver on the part of the plaintiff of «the verification he was authorized to demand.

The real difficulty seems to be that the plaintiff founded his action on a statutory enactment which at the time of suit brought had no legal force or vitality. The action is highly penal, and is without any authority other than that furnished by the act of 1892, the existence of which must have been unknown to the plaintiff, or he would not have based his right of recovery upon the act of 1890, which had ceased to exist prior to the bringing of his suit. The plaintiff treated the act of 1890 as a private statute, and under section 630 of the Code designated it “ by its. chapter and year of passage.” To recover under another statute passed two years subsequently, and known by another chapter, would be a fatal variance between the allegation and the proof. This must be so, because the statute is the sole authority for the action.

The objection may be technical; but it was pointed out in time to enable the plaintiff to move to amend, which might have been permitted on terms which could not have misled the defendant to his prejudice. Besides, the action, being penal in its character, is controlled by a stricter rule than that applied in ordinary actions. See Whitney v. Cammann, 137 N. Y. 344.

Mo,motion to amend appears to have been made, and the court below, as it lawfully might, applied the strict rule of interpretation to the plaintiff’s pleading. Mo error was committed in so doing.

For these reasons the exceptions must be overruled and the defendant’s motion for judgment on the dismissal granted, with costs.

Freedman, J., concurs.

Exceptions overruled and motion for judgment on dismissal granted, with costs.