Court Opinion

ID: 6163525
Source: CourtListenerOpinion
Date Created: 2022-02-05 18:18:52.888966+00
Date Added: 2024-06-11T08:55:32.448596
License: Public Domain

McGown, J., (after stating the facts as above.)
The above actions are of the same nature as several others brought in this court for the purpose of determining the personal liability of a stockholder of the American Opera Company, under chapter 611 of the Laws of 1875. This action vras commenced on April 7, 1887, at which time no judgment had been obtained by the plain*125tiff against the American Opera Company; as the plaintiff did not recover his. judgment until the 16th day of May, 1887. The Southern Trust Company obtained a judgment on the 21st day of February, 1887, against the American Opera Company on a promissory note for $5,000, and an execution was issued thereon on the same day, and returned wholly unsatisfied, before the commencement of the action, by the Southern Trust Company, viz., on April 20, 1887, on which day an action was commenced by the Southern Trust Company against this defendant, as a stockholder, etc., to recover the amount of the said promissory note; and defendant, on May 6, 1887, paid to the Southern Trust Company the sum of $5,000 in full satisfaction of her liability on said note. Justice Rehrbas, in his opinion, holding that on April 7, 1887, when this action was commenced, plaintiff had no existing cause of action-against the defendant, inasmuch as the judgment recovered by the plaintiff against the American Opera Company, had not been recovered, or execution thereon returned unsatisfied, at the time of the commencement of this action, on April 7, 1887; said judgment not having been recovered until the 16th day of May, 1887; and that defendant’s liability did not become fixed until May 16, 1887, and that defendant had on May 6, 1887, discharged her liability as a stockholder by payment to the Southern Trust Company of the sum of $5,000, the amount claimed in the suit of the Southern Trust Company against her, commenced on April 20.1887. In deciding that plaintiff had no existing cause of action against the defendant for the reason that no judgment had been obtained and execution returned thereon unsatisfied in plaintiff’s action against the American Opera Company at the time of the commencement of this suit, Justice Rehrbas followed the ruling of this court on that question, which-ruling was affirmed by the general term of the court of common pleas, on an appeal in Richards v. Beach, 12 N. Y. St. Rep. 136, and many similar cases-decided in this court. The court of appeals, however, have in Walton v. Coe, 17 N. E. Rep. 676, overruled the decision of this court and of the court of common pleas made in the cases above referred to, and hold that under the act of 1875 it is not necessary first to obtain judgment against the corporation, and have execution thereon; and that the same is not made a condition under said act to the commencement of a suit by a creditor against a stockholder. In holding that defendant discharged her liability as a stockholder-by the payment by her to the trust company the amount of her liability, Justice Rehrbas’ decision is in full accord with, and sustained by, the decisions of the court of appeals in Garrison v. Howe, 17 N. Y. 458; Weeks v. Love, 50 N. Y. 572; Mathez v. Neidig, 72 N. Y. 100; Pfohl v. Simpson, 74 N. Y. 143. The payment made by defendant was clearly “under legal compulsion.” An action had been commenced against her for a cause of action, to which she had no legal or honest defense. She was not required to incur the expense of a defense, where none existed, nor to wait for the recovery of the judgment, against her, and thus subject herself to unnecessary costs. Justice Rehrbas, in his opinion, further says that “it is a rule of pleading that on a demurrer the court will consider the whole record, and give judgment for the party who, on the whole, appears to be entitled to it.” This ruling is sustained by the opinion of Chief Justice MoAdam in Richards v. Brice, at general term, filed February 10, 1888, IS R. Y. St. Rep. 728, which ruling was not overruled in Walton v. Coe, hereinbefore referred to. See, also, Richards v. Coe, 19 Abb. N. C. 79; Young v. Brice, N. Y. City Ct. Sp. Term, June, 1887. The demurrer of the plaintiff to the separate defense set up in defendant’s answer admits all such matters of fact as were therein sufficiently pleaded, thus admitting the payment by the defendant to the Southern Trust Company of the amount of her liability as a stockholder; and, as before stated, such payment, being admitted by the demurrer, was a good defense to this action, and" which could be set up on a new trial, and would be a good defense on such trial.° For the-reasons above stated the judgments appealed from must be affirmed, with costs,.
*126but with liberty to the plaintiff to withdraw his demurrer on payment within 10 days of $20 costs of the trial of an issue of law in one action, and the costs .of appeal in one action, to be taxed. If this condition is not complied with, .the affirmance will be absolute, with costs in each action.