Case Name: Alfred W. Young, Resp't, v. Parke Godwin, App'lt
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1892-06-27
Citations: 46 N.Y. St. Rep. 934
Docket Number: 
Parties: Alfred W. Young, Resp’t, v. Parke Godwin, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 46
Pages: 934–936

Head Matter:
Alfred W. Young, Resp’t, v. Parke Godwin, App’lt.
(New York Common Pleas, General Term,
Filed June 27, 1892.)
Business corporations—Liability of director for signing false report.
A director of a corporation organized under chap. 611, Laws 1876, who has signed a false report, is not liable under § 21 of that act for debts of the corporation contracted before such report was signed and filed.
(Torbett v. Godwin, 62 Hun, 407; 42 St. Rep., 323, followed.)
Appeal from the judgment of the general term of the city court, affirming a judgment of that court entered upon a verdict directed by the trial court.
Action to enforce defendant’s liability under § 21 of chap. 611, Laws of 1875, as a director of the American Opera Company, Limited, a corporation organized pursuant to that act, for the signing and filing of an alleged false report.
Wm. W. Badger, for resp’t; Nelson Smith, for app’lt.

Opinion:
Bischoff, J.
Plaintiff, an opera singer, on July 1, 1886, ena contract employment services as such, for the period of twenty-five weeks, commencing November 15, 1886, with the American Opera Company, Limited, a corporation organized under chap. 611 of the Laws of the state of New York of 1875. On December 11, 1886, the American Opera Company, Limited, wrongfully discharged plaintiff from such employment, and refused to perform the contract on its part, for which, in an action instituted for that purpose in the city court of New York, plaintiff on February 11, 1887, recovered a judgment for $663.24 damages. On. January 20, 1887, the directors of the American Opera Company, Limited, among others the defendant, signed and caused to be filed the annual report, required by § 18 of the act above referred to, in the office of the secretary of state. This report was incorrect in that it alleged certain persons to be stockholders who were not such in fact, and in that it stated the amount of capital stock actually paid in to be $148,600, when in truth it was but $140,000, and in other respects, all of which were held to be material misrepresentations within the meaning of § 21 of chap. 611, Laws of 1875, by the general term of this court in Brand v. Godwin, reported in 15 Daly, 456; 29 St. Rep., 143. Thereafter, plaintiff brought this action in the city court of New York to charge the defendant with the amount of the damages which had accrued to him from the company's breach of contract under said § 21, which provided that " if any certificate, or report made, or public notice given by the officers of any such corporation shall be false in any material representation, all the officers who shall have signed the same shall be jointly and severally liable for all the debts of the corporation contracted while they are officers thereof." On the trial of this action plaintiff established the contract of employment, its breach by the American Opera Company, Limited, the amount of damages sustained by him, the signing and filing of the annual report and its falsity in the particulars already mentioned by sufficient evidence, and then rested, and. thereupon defendant moved the dismissal of the complaint upon the ground that no cause of action against him had been shown. This motion was denied and a verdict directed for the plaintiff, from the judgment entered on which defendant appealed to the general term of the court below, where it was affirmed, and from the judgment of affirmance an appeal was taken to this court.
On the argument of the appeal it was, among other things, urged by the learned counsel for the appellant as ground for reversal, that the proper construction of | 21 of chapter 611 of the Laws of 1875 rendered it applicable only to debts contracted by the corporation subsequently to the signing and filing of the alleged false report, and that as it appeared upon the trial that the debt due the plaintiff was incurred before the report was signed and filed, the facts did not entitle plaintiff to recover, and, hence, that the complaint ought to have been dismissed. If the construction contended for is correct, no good can result from a discussion of the other questions raised on this appeal, since a reversal of the judgment will be imperative upon us.
The precise question was before the general term of the supreme court, in the first department, in Torbett v. Godwin, reported in 62 Hun, 407; 42 St. Rep., 323, since the trial of this action, and does not appear to have been heretofore presented. In the case cited, Mr. Justice Barrett, in a learned and elaborate opinion, concurred in by his associates, Justices Van Brunt and Daniels, reaches the conclusion that the highly penal character of the statute requires its operation to be confined within the strictest construction ; that its language is incapable of including by implication debts contracted before the alleged false report was signed and filed; that it was the intention of the legislature to visit upon the delinquent officers of a corporation for the making and filing of a report which contains material misrepresentations no greater penalty than such as is measured by the debts of the corporation thereafter contracted, and that creditors who were such before the filing of the report, and could not possibly have been induced to extend their credit in reliance upon its statements, cannot avail themselves of the liability imposed upon the officers because one or more of the material statements of the report are incorrect.
Counsel for respondent refers us to the opinion of the supreme court in Ferguson v. Gill, general term, first department, 46 St. Rep., 474, with the claim that the views expressed in Torbett v. Godwin are thereby modified, but the following language of Mr. Justice Van Brunt, concurred in by Justices O'Brien and Andrews, we must regard as an emphatic affirmation of the construction adopted by the former general term: "As long as the trustee knows the certificate to be false and the debt is thereafter contracted while he is an officer of the company, it comes within the provisions of the statute."
We concur in the conclusions of the supreme court in Torbeit v. Godwin, for the reasons stated in the opinion, and it follows that the judgment must be reversed.
Judgment of the general and trial terms of the city court re versed, and. new trial ordered, with costs to the appellant to abide the event.
Daly, Ch. J., and Pryor, J., concur.