#### Henry Doyle, as Administrator, Etc., Plaintiff, *v.*Willard R. Kimball, Defendant.

(Supreme Court, Onondaga Special Term,

April, 1898.)

1. Order to examine defendant to frame compaint — When refused.

An order, requiring a defendant to submit to an examination so that the plaintiff may frame his complaint, should not be allowed to stand where the moving affidavit, is, without explanation, made by the attorney instead of by the plaintiff himself, where the order requires the defendant to produce books which are not shown to be in his possession nor under his control and where the plaintiff does not show that he has a cause of action.

*2.*Creditor’s action under Stock Corporation -Law, § ;54, against a stockholder for an improper issue of stock — Proof that the issue was outstanding when the liability was incurred.

As, under section 54 of the Stock" Corporation Law (Laws of .1.892, chap. 688), a stockholder of a stock corporation is liable for a debt only “ until the whole amount of its capital stock issued and outstanding at the time such debt was incurred shall have been fully paid,” the plaintiff must show, in an action predicated upon an alleged improper issue of stock to the defendant and others, that the ¡issue was outstanding when the plaintiff’s claim was incurred, whether such date is to |be regarded (as the time when the alleged negligent act was committed, or as the time when the claim was put in judgment against the corporation by the creditor.

8. Same — Semble, that a stockholder is liable for. ¡contract debts of the corporation but not for its negligent acts.

*Semble,*that sections 54 and 55 of the Stock Corporation" Law do not permit the creditor to hold a stockholder for a corporate liability *432which sounds in tort and that the statute applies only to (ordinary debts, voluntarily contracted by the corporation and becoming due at some given .time.

. Motioit to set aside an order heretofore granted, requiring said defendant to submit to examination before trial, and also upon said examination to produce certain books of the Syracuse Street Bail-road Company.

Charles E. Spencer, for motion.

Thomas Hogan, opposed.

Hiscock, J.

The object of the examination under said order was as claimed to secure information to enable plaintiff to frame his complaint. The nature of the action as outlined by the affidavit upon which the order was granted is to hold defendant liable as a stockholder in the Syracuse Street Bailroad Company, under sections 54 and 55, Stock Corporation Law, for a claim against said company. Said claim is now represented by a judgment recovered against said company upon which an execution has been issued and returned unsatisfied, and although it' does not appear by the affidavit it was agreed upon the argument that said claim was for dam ages resulting from the negligence of the railroad company. The specific ground of the alleged liability of defendant is that while he was an officer and stockholder of said company a large amount of stock was issued by it to him and other persons which was not paid for either in cash or property. .

There are several reasons why the order in question, should be set aside.

. 1. It requires the defendant to produce a large number of books .which do not appear to be in his possession or under his control.

*2.*The best authority is that the affidavit upon which the order was granted should have been made by the plaintiff rather than the attorney, as was done, in the absence of some sufficient explanation. This rule is not entirely technical, that where one party is seeking the preliminary examination of another upon the- ground that certain information is necessary to and not possessed by him that he should guarantee such necessity by his own affidavit. It might very often happen that the attorney could perfectly well make the required affidavit when the party could not. Simmons v. Hazard, 58 Hun, 119.

*4333. It is well settled that to secure a preliminary examination such as is here sought, it must be apparent irom the papers upon which the order is founded that the plaintiff has a cause of action against the defendant.

Tinder section 54, a stockholder is only liable for a debt until the amount of the capital stock of the corporation *issued and outstanding at the time such 1debt loas incurred,*shall have been fully paid. There is nothing to show that the issue of stock complained of by plaintiff and upon which he seeks to predicate the liability of defendant was outstanding at the time plaintiff’s claim was incurred, whether such date is to be regarded as the time when the negligent act was committed or as the time when the claim was put in judgment. So far as appears this issue of stock may not have taken place until after both events. There is absolutely nothing to show when it occurred. This fact and element, therefore, essential to plaintiff’s recovery does not appear to exist.

In addition to the foregoing grounds and independent of the alleged general insufficiency of the affidavit, a grave question exists whether plaintiff can hold defendant liable upon a claim against the corporation, in which he was a stockholder, for negligence. There is no lack of authorities both in the courts of this1 state and elsewhere, holdingthat a trustee would not be personally liableunder the provisions of the statutes for failure to file an annual report, upon such a liability. It is urged, however, that'such provisions of the statutes making a trustee personally liable upon a failure to file a report are penal and strictly to be construed and that in this respect they are different from the provisions making a stockholder personally hable where stock has been issued and not paid in; that these latter provisions should be construed more liberally in favor of the creditor. There is some force in this argument, but of course the liability of the stockholder is dependent upon the statute, and the question is whether the reasonable construction of the. language used permits a conclusion such as is urged by plaintiff. • The language of section 54 is: “ The stockholders of every stock corporation shall * * * be personally hable to its creditors,” etc. The term " creditor ” is broad enough to amply sustain the claim made. Further on, its meaning is somewhat narrowed by the use of the words “ at the time said debt was incurred,” and under section 55, relating to the same subject, we find the language: *“*Ho"stockholder shall be personally hable for any debt of the corporation not payable within two years from the time it was contracted, nor unless an *434action for its collection shall be brought * * * within two years: after the debt becomes due.” The natural import of all of this language taken together would seem to he that the claims contemplated were ordinary debts voluntarily contracted by the corporation and becoming due at some given time, rather than an involuntary obligation imposed upon .the corporation by some negligent or tortious, act.

This construction is sustained in the case bf an attempt to' make a stockholder personally liable for a negligent act of the corporation under a former statute of which the wording is substantially similar upon the point in question to the one now in force. Heacock v. Sherman, 14 Wend. 59.

This case thus far has not been overruled and the same rulé maintained by it is laid down by various text writers. Cook on Stockholders (3d ed.), § 217.

The order is vacated, with $10 costs.