Court Opinion

ID: 3602221
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:48:23.817502+00
Date Added: 2024-06-11T12:13:59.280603
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 181 
This action is brought to recover from the defendant an indebtedness of the Ventilating Rubber Shoe Company to the plaintiff for money borrowed of him in September, 1869. The defendant is sought to be charged on the ground that he was, in the month of January, 1870, one of the trustees of the company, and that no report of the capital and indebtedness of the company was filed or published within twenty days after January 1, 1870, as required by the statute under which the company was organized.
The court directed a verdict for the plaintiff. Many exceptions were taken at the trial, but only two of them in our judgment require special notice. The first is to the refusal of the court to submit to the jury the question whether the defendant, Lefferts, was a trustee of the company after November 10, 1869, or acted as such after that date.
The company was organized under the general act for the incorporation of manufacturing companies, in November, 1868, the term of its corporate existence commencing November 10, 1868. Five trustees were appointed by the articles of incorporation to manage the concerns of the corporation for the first year. The defendant, Lefferts, was not one of these, but he testified at the trial that he became a trustee of the company about the 5th of April 1869. In what manner *Page 183 
does not appear. He also testified that he ceased to act as trustee in November, 1869, when his office terminated. But at the same time he testified, that after November, 1869, the affairs of the company were wound up by the sale of its property and the application of the proceeds so far as they would go to the payment of its debts; that the sale was effected in January, 1870; that the last meeting of the trustees was on the 28th of January, 1870, and they transacted business on that occasion; that he was present at that meeting; that there were no other trustees at that time than those who carried on the business in November, and the same persons were acting; that as late as March 1870, there was a small balance in his hands as treasurer of the company, which he told plaintiff that if the other trustees would consent he would pay him; that the other trustees to whom he referred were those who had been acting with him as trustees, from April, 1869, when he was appointed.
It is clear that the sale of the property in which the defendant admits that he co-operated, could only be made by the trustees in their official capacity; that those who were in office in November, 1869, were entitled to hold over until others were appointed, and that the defendant, Lefferts, although he might have exempted himself from liability by refusing to participate further in the management of the affairs of the company after the expiration of his term of office, did not do so, but continued to unite with his co-trustees in their endeavors to wind up the company. His bare statement, that he ceased to act as trustee after November, 1869, when his office terminated, taken in connection with the specific acts to which he testified, was not sufficient to raise a question of fact to be determined by the jury, but must rather be regarded as the legal conclusion of the witness that the expiration of his term of office terminated his character of trustee.
We, therefore, are of opinion that there was no substantial conflict of testimony, on the question whether the defendant *Page 184 
was trustee at the time when the report should have been made, and that the court properly refused to submit that question to the jury. The principal defence set up in the answer is, that the company had, prior to January, 1870, ceased to do business, and was then engaged only in winding up its affairs by the sale of its property and the payment or compromise of its debts, and that the plaintiff had full notice of this fact, he being a stockholder and participating in the proceedings. It is scarcely necessary to say that, in the absence of any legal dissolution of the company, these extra-judicial proceedings did not affect the statutory liabilities of the trustees to creditors, or that knowledge on the part of the creditors of the financial condition and embarrassment of the company, did not exempt the trustees from the statutory consequences of a failure to file and publish the prescribed report.
The other exception taken at the trial, and which has been strongly urged on this appeal, is to the refusal of the court to dismiss the complaint on the ground that the plaintiff was himself a stockholder of the company. It is argued that the liability of trustees of a manufacturing company under section 12 of the act, for a failure to file and publish a report, cannot be enforced by a creditor who is also a stockholder; that the object of the requirement is to protect outside creditors, who have no means of knowing the financial condition of the company, and cannot be enforced by stockholders, who are constituent parts of the company and have the means of informing themselves as to its affairs.
In the absence of any discrimination in the statute itself between stockholding and other creditors we do not see any ground upon which we can make this distinction. It is true the statute makes it the duty of the company to file and publish the statements, but this duty is to be performed by the trustees and president, and not by the stockholders. (Bolen v. Crosby,49 N Y, 183.) The stockholders are not subjected to any liability for its non-performance. There is no presumption that the plaintiff had in any other manner *Page 185 
become personally liable for the debts of the company, and no proof to that effect, and the reasons which induced the court inBaily v. Banker (3 Hill, 191, and subsequent cases, to hold that one stockholder cannot maintain a common-law action against another stockholder to recover a debt for which all the stockholders are liable, do not apply. A stockholder may be a creditor of the company of which he is a member, and may maintain an action at common law for the recovery of his claim (3 Hill, 389; 47 Penn. St., 49); and we see no ground upon which we should be justified in withholding from him any remedy against the trustees to which other creditors are entitled.
The objection to the jurisdiction of the City Court is not tenable. The defendant appeared and answered without taking any objection to the jurisdiction of the court, and raised no such point upon the trial. For aught that appears upon the record, the summons may have been served in the city of Brooklyn, and proof of that fact would have been an answer to the objection had it been taken.
We have carefully examined the elaborate points on the part of the appellant, but find in them no ground for reversing the judgment. It must be affirmed, with costs.
All concur.
Judgment affirmed.