Case Name: CASTNER et al. v. DURYEA
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1897-04-09
Citations: 44 N.Y.S. 708
Docket Number: 
Parties: CASTNER et al. v. DURYEA.
Judges: 
Reporter: West's New York Supplement
Volume: 44
Pages: 708–710

Head Matter:
CASTNER et al. v. DURYEA.
(Supreme Court, Appellate Division, First Department.
April 9, 1897.)
•Corporations—Stockholders—Actions against.
The provision of Laws 1848, c. 40, §. 24, that no action shall be brought against a stockholder for debts of the corporation unless commenced within two years from the time he ceased to be a stockholder, is a time limitation, and therefore the complaint need not allege that defendant was a .stockholder within such time.
Appeal from trial term, Few York county.
Action by Samuel W. Castner and Henry B. Curran against John "Duryea to charge defendant, as a stockholder of the Consumers’ -Coal Company, with the statutory liability for a debt of said com pany. The complaint was dismissed, as not alleging facts sufficient to constitute a cause of action, and plaintiffs appeal. Reversed.
Argued before VAN BRUNT, P. J., and WILLIAMS, PATTERSON, INGRAHAM, and PARKER, JJ.
I. D. Warren, for appellants.
R. L. Maynard, for respondent.

Opinion:
WILLIAMS, J.
The decision as made was evidently based upon the decision of the general term in this department in Herbert v. Duryea, 87 Hun, 288, 33 N. Y. Supp. 1031. The principle held in that case was, however, subsequently overruled by the court of' appeals in Rowell v. Janvrin, 151 N. Y. 60, 45 N. E. 398; and this decision cannot therefore be upheld upon the ground assigned by the learned trial court. The respondent now contends that the decision should be upheld, and the judgment affirmed, upon another ground; and this raises the only question which calls for consideration by this court.
It is said the complaint was defective, in failing to allege that the defendant continued to be the owner and holder of the stock until within two years prior to the commencement of the action. The complaint alleged that the debt was contracted in June, 1889, and was payable within one year, and that the defendant was, at the time the debt was contracted, owner of stock of the company; that an action was commenced to recover the debt against the corporation November 8, 1889, and judgment therein was recovered December 6, 1889; and that execution was issued upon such judgment, and returned wholly unsatisfied. This action was begun January 12. 1892.
It was provided by section 10, c. 40, Laws 1848, that:
"All the stockholders of every company incorporated under this act shall be-severally individually liable to the creditors of the company, in which they are-stockholders, to an amount equal to the amount of stock held by them respectively, for all debts and contracts made by such company until the whole-amount of capital stock fixed and limited by such company shall'have been-paid in, and a certificate thereof shall have been made and recorded as prescribed in the following section," etc.
And it was further provided by section 24 of the same act, among; other things:
"And no suit shall be brought against any stockholder who shall cease to be a-stockholder in any such company, for any debt so contracted, unless the same shall be commenced within two years from the time he shall have ceased to be a stockholder in such company," etc.
It was alleged that the defendant was a stockholder in June,. 1889, and this suit was not begun until January, 1892; so that the-defendant may have ceased to be such stockholder more than two years before the commencement of the suit. And, if he had, this-action could not be maintained against him. It did not appear from the allegations in the complaint whether the defendant had so-ceased to be a stockholder or not. The question is whether the • complaint should have contained an allegation upon this subject, or whether it was a matter of defense, which defendant must set up- in his answer. The question was not involved in the case of Herbert v. Duryea, above, and was not determined by the court of appeals in rowell v. Janvrin, above. Whatever other answers there may be to the defendant's contention upon this question growing out of the general reasoning of the court of appeals in the case above referred to, we think it is a sufficient answer to say that the provision above quoted from section 24 of the act of 1848 was, in effect, a time limitation of the creditors' right to bring and maintain the action under section 10 of the act above quoted, and, in analogy to the rule applicable to the Code, time limitation of actions was a matter of defense, which would be waived if not pleaded by answer. It' was not necessary that the plaintiff should allege in his complaint the facts showing that such time limitation did not operate to defeat Ms right of action. The language used in the act of 1848 is substantially the same in form as the language used in the Code: "Ho action shall be brought unless the same shall be commenced [within a certain time]." We do not see why the same rule of pleading should not apply as is applicable to the statute of limitations under the Code. Section 24 did not exclude any class of persons from the effect of section 10, but merely provided the action could not be maintained unless brought within a certain time. It will hardly do to say that allegations of this nature must be regarded as necessary, because it has been usual to insert them in other cases. Unnecessary allegations have been frequently inserted in pleadings, notably so the allegations as to nonpayment'of indebtedness; and yet payment is ordinarily a defense, and must be pleaded in an answer in order to give the defendant the benefit thereof, and the right to prove the same to defeat the plaintiff's right of action.
We think the complaint contained sufficient allegations to constitute a cause of action, and that the decision was erroneous; and the judgment entered thereon should be reversed, and a new trial ordered, with costs of appeal to appellants to abide event. All concur.