Court Opinion

ID: 3615140
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:58:30.020894+00
Date Added: 2024-06-11T09:14:41.020195
License: Public Domain

The duty imposed upon manufacturing corporations by the twelfth section of the act of 1848 (Chap. 40), to make a report, is a corporate duty, to be discharged by making a report signed by the president and a majority of the trustees. The duty is not cast upon the trustees, either as such, or in their individual capacity. The section makes it the duty of the company to make the report, and provides for the manner of performing it. The act, as amended in 1860, provides that such corporations shall have not less than three nor more than thirteen trustees. It is evident therefore that a report made by a corporation organized since the act of 1860, having the full number of trustees thereby authorized, if signed by seven trustees, is, in that respect a valid report. So also of a corporation *Page 376 
previously organized which under the authority of the act of 1860 has increased its number of trustees to thirteen. The original act required that there should be not less than three, nor more than nine trustees. (§ 3.) A corporation previously organized, which has not availed itself of the act of 1860, if there were nine trustees, could make a report signed by five trustees. It does not appear whether the Ætna Iron Works was organized before or after 1860, or of what number the trustees consist. The ninth defense alleges that the defendants, comprising four persons, failed to file a report in 1873, and in each year thereafter, including 1876, and that more than three years had elapsed prior to the commencement of the action, after the penalty for not filing the report, if any, had been incurred. This defense was demurred to on the ground that it was insufficient in law. The complaint counts upon a failure of the Ætna Iron Works Company to file a report in 1877. The ninth defense was intended doubtless to set up the statute of limitations. But it neither alleges that the four defendants were trustees at the time of the alleged defaults, nor that there was any default by the company in performing the corporate duty of making a report. If it could be held that it is impliedly averred that the defendants were trustees prior to 1873 (Marie v. Garrison, 83 N.Y. 14), the other objection taken cannot in this way be obviated. The allegation that the defendants failed to make or file a report in 1873, and the following years prior to 1877, may be true, and yet the corporate duty of making a report may have been performed by a report made and signed by a majority of the trustees; since if there were nine or more trustees, a report signed by the trustees other than the defendants, would have been a compliance with the statute. There being no averment as to the number of trustees, it cannot be assumed that the defendants comprised a majority of the board. We think, therefore, the demurrer to the ninth defense was well taken.
The fifth defense does not allege that the title of the plaintiffs to the bonds, as assignees of Birdsall Cornell, one of the trustees, accrued subsequent to the default alleged, or that the assignment was not absolute. It is not necessary, therefore, to consider *Page 377 
whether if the bonds were assigned as collateral security only, a default of the company to make a report occurring subsequently to the assignment, would be available to the assignee. It cannot however be doubted, that when a debt against a corporation, owned by a trustee, is assigned by him absolutely for value, the assignee, on a default by the company subsequently occurring to make a report, may proceed under the twelfth section although the assignor continued to be a trustee up to the time of the default. The fifth defense was defective irrespective of any other question for the omission to aver that this default occurred prior to the accruing of the plaintiffs' title. It results, therefore that the judgment overruling the demurrer should be reversed, and judgment entered for the plaintiffs, with liberty to the defendants to answer within twenty days on payment of costs.
All concur.
Judgment accordingly.