Case ID: abbn-cas_31/html/0027-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Kellogg, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

KLUEG v. BOSCH.
    
      Supreme Court; Circuit, Kings County;
    
    
      June, 1893.
    I. Manufacturing companies; liability of stockholders.\ A stockholder of a company formed under the Manufacturing Act of 1848, who is a creditor of the company, cannot bring an action to recover his debt against another stockholder upon the latter’s liability for the debts of the company arising from a failure to file and record the required certificate as to the payment of he company’s capital.
    Following Bailey v. Bancker, 3 Hill, 188.'
    2. The same.] It seems that the only remedy of the creditor stockholder in such a case is an action against all the stockholders for contribution.
    Trial at circuit without a jury.
    Action by Jacob Klueg against John Bosch. The plaintiff, a creditor of the Brooklyn Publishing Company, sued the defendant, as a stockholder, to recover a debt •due him by the company, seeking to charge the defendant with the statutory liability of stockholders under § 10 of. chap. 40 of the Laws of 1848, which renders stockholders liable on their stock to all creditors of the company where the capital stock has not been fully paid, or a certificate ■of such payment duly filed. It was conceded that the plaintiff himself was a stockholder in the same company, ■and for this reason defendant moved to dismiss.
    
      Daniel Cameron (Charles Reinhart, Attorney), for plaintiff.
    
      Thomas E. Pearsall and Isaac M. Kapper, for defendant.
    I. The rule is well settled that a stockholder, who is also a creditor, cannot bring an action against his co-stockholder to enforce; the only remedy for such a ■creditor is in equity by a bill for contribution (Citing Bailey v. Bancker, 3 Hill, 188; Beers v. Waterbury, 8 Bosw. 396; Richardson v. Abendroth, 43 Barb. 162 ; Andrews v. Murray, 33 Id. 354; Deming v. Puleston, 33 Super. Ct. 235; Meisser v. Thompson, 9 Brad. (Ill.) 368; 108 Ill. 359; Thayer v. Union Tool Co., 70 Mass. 75; Dodge v. Havemeyer, 4 State Rep. 561; McDowall v. Sheehan, 129 N. Y. 200).
   Kellogg, J.

This action was tried by the court without a jury. It presents the single question as to whether a stockholder in an insolvent corporation may bring an action at law against another stockholder on a liability-created by failure to file a certificate and have the same recorded in the county clerk’s office showing the entire-capital stock to have been paid in as provided by the Laws of 1848. It seems to have been well settled in this State by decisions of the courts, which have been uniform so far as the same question has arisen, that no such action will lie. Convincing reasons why such an action will not lie were given in the case of Bailey v. Bancker (3 Hill, 188).

I think the plaintiff in this case must be relegated to his action in equity against all stockholders ; and that this, complaint should be dismissed with costs. 
      
      The decision in Bailey-y. Bancker, 3 Hill, 188, was placed upon the ground that the stockholders in such a case are to be regarded as partners, or, what is the same thing, as an unincorporated association, and that one partner cannot be allowed to sue another for a debt due from the whole firm.
      There is a distinction, however, between the liability of a stockholder in such a case, and the liability of a trustee for failing to file an annual report, see note to Chase v. Lord, 6 Abb. N. C. 258; and a creditor of the corporation, though a stockholder, may hold a trustee liable for failure to publish an annual report in absence of anything to show that as stockholder he became personally liable for the debts, Sanborn v. Lefferts, 16 Abb. Pr. N. S. 42; s. c., less fully, 58 N. Y., 179.