Case Name: Saverio Agnelli, Respondent, v. Abraham Shatzin, Appellant
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1910-07
Citations: 68 Misc. 329
Docket Number: 
Parties: Saverio Agnelli, Respondent, v. Abraham Shatzin, Appellant.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 68
Pages: 329–331

Head Matter:
Saverio Agnelli, Respondent, v. Abraham Shatzin, Appellant.
(Supreme Court, Appellate Term,
July, 1910.)
Corporations — Insolvency and receivers — In general — Prohibition of preferences to officers and stockholders — Actions — Facts constituting a cause of action.
A complaint, in an action by one claiming to be a creditor of a corporation against the president of the corporation, alleging transfers by the corporation to the defendant in violation of the provisions of section 66 of the Stock Corporation Law, but which does not allege any loss to have been sustained by the plaintiff by reason of the violation of the statute, fails to state facts sufficient to constitute a cause of action.
Appeal by the defendant from an interlocutory judgment of the Municipal Court of the city of New York, second district, borough of the Bronx, overruling a demurrer to the complaint.
Simon H. Glass, for appellant.
Thomas H. Ray, for respondent.

Opinion:
Lehman, J.
The plaintiff alleges in his complaint that he is the assignee of a judgment rendered against the corporation of A. Shatzkin & Sons, Inc., on November 8, 1909, for the sum of $261.36; that the defendant was, on and after the 5th day of May, 1909, " the president and director of said corporation " and after the said fifth day of May the sole owner of its capital stock; that on the 5th day of May, 1909, the defendant caused to be transferred from the corporation to himself a plot of land which the said corporation had by contract agreed to sell to the plaintiff's assignor; that in the month of August, 1909, the defendant transferred a second piece of real estate, signing the deed as president of the corporation; that both these transfers were made in violation of section 66, article 4, chapter 59, of the Consolidated Laws, and that said acts " were committed while the corporation was insolvent for the purpose of and did actually defraud" the plaintiff's assignor and plaintiff as one of the creditors of the said corporation. The defendant has demurred to this complaint and the demurrer has been overruled.
The respondent claims that this complaint sets forth a cause of action under section 66 of the Stock Corporation Law, which prohibits transfers to officers or stockholders of a corporation under certain circumstances and provides that: " Every director or officer of a corporation who shall violate or be concerned in violating any provisions of this section, shall be personally liable to the creditors and stockholders of the corporation of which he shall be director or an officer to the full extent of any loss they may respectively sustain by such violation." The statute does not make the director liable for any claims which the creditors may have against the corporation, but only for any loss Avhich the creditors may sustain by reason of the violation of the statute. The loss to the creditors is the basis of the action. The amount of the loss of -any creditor is the difference between the amount which he would have received from the corporation if its property had not been diverted and the amount which he can obtain from the corporation after this diversion. The plaintiff, to sustain a cause of -action under this statute, should allege in the complaint and prove at the trial facts that will enable the court to determine this loss. The complaint in this action fails to set forth such facts, and the demurrer should be sustained.
The judgment should be reversed and the demurrer sustained, with costs to appellant, with leave to the plaintiff to amend his complaint within ten days, upon payment of costs in the court below and upon -appeal.
Seabury and Page, JJ., concur.
Judgment reversed and demurrer sustained, with costs to appellant, with leave to plaintiff to amend complaint within ten days upon payment of costs.