Case Name: CUNNINGHAM v. GLAUBER et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-06-11
Citations: 117 N.Y.S. 866
Docket Number: 
Parties: CUNNINGHAM v. GLAUBER et al.
Judges: 
Reporter: West's New York Supplement
Volume: 117
Pages: 866–871

Head Matter:
CUNNINGHAM v. GLAUBER et al.
(Supreme Court, Appellate Division, First Department.
June 11, 1909.)
Corporations (§ 349 )—Actions Against after Dissolution—Necessity of Suing Corporation for Tort.
Under section 57 of the stock corporation law (Laws 1892, p¡ 1824, c. 688), as added by Laws 1896, p. 1007, c. 932, § 1, amended by Laws 1900, р. 1621, c. 760, § 1, providing that all corporations shall continue in existence to pay existing debts and be sued to enforce the same, an actiofor a tort committed by a corporation during its lifetime should, in any event, be prosecuted against the corporation after dissolution, and an action therefor does not lie against its directors as trustees of its creditors under section 30 of the general corporation law (Laws 1890, p. 1060, с. 563, § 30, as amended by Laws 1892, p. 1811, c. 678).
[Ed. Note.—For other cases, see Corporations, Cent. Dig. § 1459; Dec. Dig. § 349. ]
Patterson, P. J., and Clarke, J., dissenting.
Appeal from Special Term, New York County.
Action by Michael C. Cunningham against Samuel S. Glauber and others, as trustees of the creditors of the Sam S. Glauber Company. From a judgment.(61 Mise. Rep. 443, 115 N. Y. Supp. 259) sustaining a demurrer to and dismissing the complaint, plaintiff appeals.
Affirmed.
Argued before PATTERSON, P. J., and INGRAHAM, LAUGHLIN, CLARKE, and SCOTT, JJ.
I. N. Jacobson, for appellant.
Milton M. Goldsmith, for respondents.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
SCOTT, J.
The plaintiff appeals from a final judgment sustaining a demurrer to the complaint. The complaint alleges: That the plaintiff was run over and injured by a truck belonging to the Sam S. Glauber Company; that the accident occurred by reason of the negligence of said company or its servants; that subsequently said corporation was dissolved under the provisions of section 51 of the stock corporation law (Laws 1892, p. 1839, c. 688); that the defendants were the directors of said corporation at its dissolution, and thereupon and thereafter became possessed of the property and assets of the corporation as trustees. Here, then, we have the case of a tort being committed against the plaintiff during the lifetime of the corporation, and an action therefor commenced after its dissolution; and the sole question involved is whether such an action should be brought against the corporation or against its former directors as trustees.
Section 30 of the general corporation law, being section 30 of chapter 563, p. 1060, of the Laws of 1890, as amended by chapter 687, p. 1811, of the Laws of 1892, provided that:
"Upon the dissolution of any corporation, its directors shall be the trustees of its creditors and shall have full power to settle its affairs, collect and pay outstanding debts. Such trustees shall have authority to sue for and recover the debts and property of the corporation and shall jointly and severally be personally liable to its creditors, stockholders or members, to the extent of the property and effects that shall come into their hands."
That such a cause of action as is set forth in the complaint survives the dissolution of the corporation was settled in Marstallar v. Mills, 143 N. Y. 398, 38 N. E. 370, decided in 1894 under the business corporation law (chapter 691, p. 2042, Laws 1892). It was assumed in that case that such an action would lie against the trustees, if it would lie at all; and in fact, at that time, such an action, if brought at all, could only be brought against the trustees, for there was no provision of law whereby the corporation was continued for the purpose of suing and being sued. Section 57 of the stock corporation law has now made such provision, for it is therein enacted that, in case of the dissolution of a corporation, "said corporation shall nevertheless continue in existence for the purpose of paying any existing debts and may sue and be sued for the purpose of enforcing such debts and obligations." Chapter 932, p. 1007, Laws 1896, amended by chapter 760, p. 1621, Laws 1900.
The general scheme of collecting debts from dissolved corporations seems to be clearly outlined by the above quotations from the statute. Upon the dissolution of a corporation, the directors become trustees for the benefit of all who may be entitled to share in its assets and, to this end, are entitled to take possession of the assets and distribute them pro rata among its creditors, or as the law may create priorities' if any. They are accountable, however, only for what they receive! Any admitted and uncontested debt of the corporation it is their duty to pay, so far as the assets will permit. In the case of contested claims against the corporation which can be established and liquidated only by a judgment, the action should be prosecuted against the corporation, which is expressly continued in existence for that purpose. Whether or not the trustees could properly be joined as defendants in such an action in order to conclude them as to the existence of the debt and its amount, it is not now necessary to determine; but we think it is clear that the action should in any event be against the corporation, and that an action does not lie against the trustees alone.
The case of General Railway Signal Co. v. Cade, 122 App. Div. 106, 106 N. Y. Supp. 729, holds nothing to the contrary to this view. That action was brought under a statute of the state of New Jersey quite similar to. our own. Its purpose was to compel the trustees of a dissolved corporation to execute assignments of certain patent rights in specific and full performance of a contract already partly executed between plaintiff and the dissolved corporation. The court held that, while the action might properly have been brought against the dissolved corporation, yet it would also lie against the trustees, who were- expressly authorized by statute to settle the affairs of the corporation and sell and convey its property; but the court was careful to- point out that the contract sought to be enforced was not one to pay money, but to transfer and convey specific property, and it is apparent from a reading of the case that there was no question of the obligation on the part -of the corporation to make the transfer. We are.therefore of the opinion that the case was properly disposed pf below and that the judgment must be affirmed, with costs.
INGRAHAM and LAUGHLIN, JJ., concur.