Court Opinion

ID: 5244733
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:55:52.795758+00
Date Added: 2024-06-11T08:27:51.111646
License: Public Domain

Scott, J. (dissenting):
I dissent for the reasons given by me for dissenting from the decision of this court in Niagara Woolen Company v. Pacific Bank (141 App. Div. 265, 271). and much more forcefully and elaborately stated by Mr. Justice Thomas in Town of Eastchester v. Mount Vernon Trust Co. (173 id. 482). If it be considered that plaintiff has, by its amended complaint, successfully stated a cause of action in conversion, then the defendant and E. Moch were joint tort feasors and I think a question was presented for the jury as to' whether or not the E. Moch Company had not compromised with 'and released E. Moch, and thereby released the defendant. The E. Moch Company was a small affair and originally E. Moch was the only stockholder; afterwards I. Salaman & Co. owned all the stock. No one except these two owned any of the stock, save two shares, issued to employees merely to qualify them to act as directors. If a tort was committed, E. Moch participated in it, and must be held to have authorized it. After the fraud had been discovered I. Salaman & Co. came to a settlement with E. *850Moch, by which they took everything he had, including his life insurance policies, refrained from prosecuting him, and kept him at the head of the business of E. Moch & Co. Although no formal release was executed, I think that a jury would have been justified in finding that the intent and purpose of this settlement was to release E. Moch from liability for his tort. There is 'ample authority for the proposition that the stockholders of a corporation, being the equitable owners of the corporation property, and knowing all the facts, may ratify an unauthorized act of an officer and release him from liability therefor. {Martin v. N. F. P. Mfg. Co., 122 1ST. Y. 165; Coss & Co. v. Goss, No. 8, 147 App. Div. 698.) It is to be noted that this is not a creditor’s action, or one for the benefit of creditors as such, but one in behalf of the corporation. If the corporation by the act of the holders of its entire capital stock has settled with one joint tort feasor and released him from liability on account of the tort, that release will inure to the benefit of his joint tort feasor.
In my opinion the judgment should be reversed and a new trial ordered.
Clarke, P. J., concurred.
Judgment affirmed, with costs.