Case Name: The State Bank of Rock Valley, Resp't, v. Wallace C Andrews, App'lt
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1893-02-06
Citations: 51 N.Y. St. Rep. 123
Docket Number: 
Parties: The State Bank of Rock Valley, Resp’t, v. Wallace C Andrews, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 51
Pages: 123–124

Head Matter:
The State Bank of Rock Valley, Resp’t, v. Wallace C Andrews, App’lt.
(New York Common Pleas, General Term,
Filed February 6, 1893.)
1. Corporations — Liability op directors for debt op company.
Where the charter of a corporation provides that “ every director shall he personally liable for debts incurred by the corporation during his administration to an amount not exceeding” a certain sum, an action may be maintained by a single creditor against a single director to recover his debt.
3. Same.
In such a case it is not necessary to allege or prove the recovery of a judgment against the corporation, as the director is liable as an original debtor.
Appeal from a judgment of the general term of the city court of New York, affirming a judgment for plaintiff entered upon the decision of a demurrer to the complaint.
Action by a creditor of the American Loan & Trust Company to recover the amount of his demand of the defendant, a director, under a provision of the charter of the company that “ every director shall be personally liable for debts incurred by the corporation during his administration to an amount not exceeding five thousand dollars.”
Marshall P. Stafford, for resp’t; James W. Hawes, for app’lt.
Affirming 44 St. Rep., 788.

Opinion:
Bischoff, J.
The complaint alleges that plaintiff is a corporation created under the laws of the state of Iowa, and that the American Loan & Trust Company was chartered by the legislature of the state of New York; that the latter corporation is indebted to the former for money deposited, which it failed to repay after due demand, in the sum $1,478.13 ; that the American Loan & Trust Company has suspended business and been placed in the hands of a receiver for liquidation and dissolution; that its charter, among other things, provided that " every director shall be personally liable for all debts incurred by the corporation during his administration to an amount not exceeding five thousand dollars; " and that defendant continued to be a director when the corporation's indebtedness to plaintiff was incurred.
To this defendant demurred, alleging as grounds thereof, that the court below was without jurisdiction of the subject matter of the action, that there was a defect of parties plaintiff and defendant, and that the facts were insufficient to constitute a cause of action. Plaintiff had judgment on the demurrer, which was sustained at general term in the court below. The Bank of Poughkeepsie v. Ibbotson, 24 Wend., 473, is to the effect that an action ;at law to recover the amount of his demand may be maintained by a single creditor against a single stockholder to enforce the latter's liability under a statute which provides that for all debts due and owing by the corporation at the time of its dissolution the persons composing it shall be individually responsible to the extent of their respective shares of stock, and is, therefore, decisive of the questions presented on this appeal concerning the jurisdiction of the court below and the nonjoinder of parties plaintiff and defendant.
The liability imposed upon defendant by the charter of the American Loan & Trust Company is in all respects similar to that, enforced in The Bank of Poughkeepsie v. Ibbotson, and there is an obvious distinction between that case and the class of cases relied on by the appellant, Hornor v. Henning, 93 U. S., 228, and Anderson v. Speers, 21 Hun, 568. In the last mentioned cases the liability of the stockholder or officer of a corporation for its debts-extended only to the excess of liabilities over and above the assets, the amount of which was ascertainable only by means of a discovery and an accounting, remedies which are peculiar to courts-of equity.
The allegations of the complaint are claimed to be defective fertile purposes of a cause of action because of the omission to recite that judgment was recovered against the American Loan &. Trust Company for its indebtedness to plaintiff, and the issue of execution thereunder, but counsel for appellant does not refer us-to any need for these recitals. Nor do the cases cited by him to-sustain this ground of demurrer, Stephens v. Fox, 83 N. Y., 313; Allen v. Clark, 108 id., 269; 13 St. Rep., 609, so hold.
The decision in both cases was not that the recovery of judgment against the corporation for the amount of its indebtedness is essential to the maintenance of an action to enforce the stockholder's or officer's statutory obligation, but that such a judgment is admissible in evidence and constitutes prima facie evidence of the indebtedness. If defendant's liability, as in Hornor v. Henning and Anderson v. Speers, supra, extended only to the excess of the corporation's liabilities over and above its assets, it might be construed as a security only for the payment of debts,, and the need for the recovery of judgment and execution thereunder, wholly or partly unsatisfied, be existent to prove the corporation's default. As it is the defendant is liable as an original debtor. Wolverton v. Taylor, 28 Am. & Eng. Corporation Cases,, 647.
The judgment appealed from should be affirmed, with costs.
Bookstaver and Pryor, JJ., concur.