Case Name: The United States Glass Co., Plaintiff, v. Alexander Levett et al., Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1898-08
Citations: 24 Misc. 429
Docket Number: 
Parties: The United States Glass Co., Plaintiff, v. Alexander Levett et al., Defendants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 24
Pages: 429–431

Head Matter:
The United States Glass Co., Plaintiff, v. Alexander Levett et al., Defendants.
(Supreme Court, New York Special Term,
August, 1898.)
Stock corporations — Liability of stockholder — Temporary injunction against the corporation does not excuse a failure to allege the return of an execution unsatisfied — A final order of dissolution cannot be alleged by a supplemental complaint in aid of the original complaint.
It is a condition precedent to the maintenance of an action against stockholders of a stock corporation, whose stock has not been fully paid in," that an execution against the corporation should have been returned unsatisfied, and an omission of the complaint to allege this fact is not excused by an allegation that, by the connivance of the stockholders, a preliminary restraining order, appointing a receiver, has been granted in proceedings taken for the voluntary dissolution of the corporation. The plaintiff will not be permitted to allege by a supplemental complaint that, since the commencement of the action, a final order dissolving the corporation has been granted, as such an allegation sets up a new and different cause of action, which cannot be allowed to aid the defective complaint.
Motion for leave to serve supplemental complaint.
Albert K. Newman, for motion.
Blumenstiel & Hirsch, opposed.

Opinion:
Daly, J.
The action is brought under the Stock Corporation Law (Laws- of 1892, chap. 688) to enforce the liability of stock-, holders for a debt- of the corporation, The Levett-Hilton Company, on the ground that the stock of the company had not been fully paid in. § 54. By the same act it is provided that such' an action shall not be brought until judgment therefor has been recovered against the. corporation and an execution thereon has been returned unsatisfied; -the amount due on such execution to be the amount recoverable, With costs, against the stockholders. § 55, No such judgment had been recovered by this plaintiff when this action was brought, but the complaint alleges, ás an excuse for not complying with the statute, that a proceeding for the voluntary dissolution of the Corporation had been commenced by a majority of its directors, with the connivance and procurement of the defendants, that an order had been made therein appointing a receiver of the corporation, which Was insolvent) and enjoining and restraining all persons, and especially creditors, from bringing any suit against said corporation. Since the commencement of this action a final, order of dissolution has been entered in that proceeding and the plaintiff asks leave to file a -supplemental com--plaint setting up that fact. The defendants oppose the applica-* t'ion on the ground that the original complaint fails to set forth a cause of action and that the-fact'to be alleged in the supplemental, complaint is a new and different cause of action. The objection seems to be well taken. In United Glass Co. v. Vary, 152 N. Y. 121, it was expressly held that obtaining judgment against the company and the return of execution thereon unsatisfied is a condition precedent to the maintenance of añ action to enforce the liability of a stockholder; that failure to proceed to judgment and execution cannot be excused unless performance of the condition is impossible, which is. not the case where a preliminary order of rthe court restraining creditors from bringing suits has been made in a suit by a stockholder against the corporation to obtain a receiver, if the creditor has made no effort to obtain a modification of such order, in order to permit him to obtain judgment and issue execution. In that case, the court says that the decisions have dispensed with the condition precedent (1) where the corporation has been dissolved by judicial decree, (2) where by final judgment in an action for sequestration a perpetual" injunction has been issued restraining suits by creditors, and (3) where by statute such suits are prohibited; and that the courts should not extend the exception unless possibly in a new case clearly within the principle of the decisions already made. It does not appear that the plaintiff, has shown such a new case. He distinguishes the preliminary injunction set out in his complaint from that described in the case cited, because the former was obtained in a proceeding for voluntary dissolution procured to be brought by the stockholders he is pursuing, while in the latter case it was obtained in a suit , by a creditor against the corporation for a receiver, which suit was of doubtful right. But the principle upon which the decision of the Court of Appeals is based has no reference-to- the form of action in which the injunction order issues, but to the quality of the order itself, that is to say, whether it is preliminary or final; for in the latter case it is an absolute bar to actions by creditors against the corporation, and renders the condition precedent of judgment and execution against the company impossible of performance, while in the former case the court can and always does modify its preliminary injunction so as to permit creditors to proceed as required by the statute. In this case the plaintiff shows nothing by which it can be inferred that he could not have obtained such modification, and so he falls directly within the rule of the authority cited.- He relies upon the language of the Appellate Division in Hirshfeld v. Bopp, 27 App. Div. 180, but in that case the action was brought after the final dissolution of the corporation, and not, as here, before dissolution. The fact proposed to be set up in the supplemental complaint, namely, final dissolution of the corporation Would justify a new action, but cannot help the pending one brought before such dissolution. All' of plaintiff's argument upon this motion is in support of a right of recovery upon the cause of action set out in his original complaint,. and the supplemental complaint- is wholly unnecessary in aid of such cause of action, if any exists.
Motion denied, with $10 costs.