Court Opinion

ID: 3581361
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:32:28.51528+00
Date Added: 2024-06-11T07:41:31.406850
License: Public Domain

This action was brought to recover from the original defendant, Frantz, on his subscription to the capital stock of "The Excelsior Hay Carrier Company, of Rochester, N.Y.," a manufacturing corporation, organized under the act of 1848. The defendant, after the organization of the company, subscribed for twenty shares of its stock, of the par value of $100 each, and no part of the subscription has been paid. On the 12th of February, 1874, Raymond and Huntington commenced an action against "The Excelsior Hay Carrier Company" upon a note purporting to be made by that company and the summons was served on the treasurer of "The Excelsior Hay Carrier Company of Rochester, N.Y.," and judgment was taken by default, and execution thereon was issued and returned unsatisfied. The execution followed the judgment and directed the collection thereof out of the property of "The Excelsior Hay Carrier Company." The plaintiffs in the judgment, after the return of the execution, presented a petition to the Supreme Court, under the thirty-sixth section of the article of the Revised Statutes, entitled "of proceedings against corporations in equity;" (2 R.S., *Page 460 
462), for the sequestration of the property and effects of "The Excelsior Hay Carrier Company of Rochester, N.Y.," and the appointment of a receiver. The petition alleged the recovery by Raymond  Huntington of a judgment against that corporation, (specifying the date and amount of the judgment) and the issuing and return of an execution thereon unsatisfied.
No reference was made in the petition to the variance between the name of the corporation, as specified in the pleadings, judgment and execution, and the name in the certificate of incorporation. The petition was duly served on the treasurer of the company. The company did not appear on the hearing of the petition, but made default, and an order was made sequestrating the property of the corporation and appointing the plaintiff receiver. The plaintiff thereupon brought this action and was nonsuited at the circuit. The facts in relation to the judgment and execution in the action of Raymond  Huntington were shown upon the trial, and one of the grounds of nonsuit was that the judgment, by reason of the mis-nomer of the corporation, was void and did not bind the company, and that the court had therefore no jurisdiction to appoint a receiver, under the thirty-sixth section of the statute. That section provides that "whenever a judgment at law, or a decree in equity, shall be obtained against any corporation, incorporated under the laws of this State, and an execution issued thereon shall have been returned unsatisfied in part or in the whole, upon the petition of the person obtaining such judgment or decree, or his representatives, the Court of Chancery may sequestrate the stock, property, things in action and effects of such corporation, and may appoint a receiver of the same." The Supreme Court has succeeded to the power possessed by the Court of Chancery under this section, and it was decided in Bangs, receiver, v. Duckinfield
(18 N.Y., 592), that in exercising the power thereby conferred it acts as a court of general jurisdiction.
The proceeding for the appointment of a receiver, under *Page 461 
this section, is a proceeding against the corporation, and if the appointment of a receiver under it is binding upon the corporation, no one else can question it. The petition alleged all the facts necessary to give the court jurisdiction. It alleged the recovery of a judgment against the corporation, and the return of an execution unsatisfied. The jurisdiction of the court to entertain the proceeding did not depend upon the truth of the facts alleged in the petition. The existence of a valid judgment against the corporation and the return of an execution unsatisfied was properly averred, and the court was called upon to decide whether the facts alleged were established, and whether it decided rightly or not was not a matter affecting its jurisdiction. The corporation could have come in and denied the facts stated in the petition, and have appealed from the order, and procured its reversal, but it could not assail it collaterally by showing that the facts stated in the petition were unproved on the hearing or even that they had no existence, and the corporation being concluded so long as the order stands unreversed, third persons are concluded also.
But there is another answer to the objection founded upon the misnomer in the suit brought against the company. The company, by not appearing and pleading the mis-nomer in abatement, waived any objection on that ground to the validity of the judgment. The statute provides, (2 R.S., 459, § 14) that "in suits or proceedings by or against any corporation a mistake in the naming of such corporation shall be pleaded in abatement; and if not so pleaded, shall be deemed to have been waived." The objection is waived unless pleaded, and this as well when the corporation suffers a default as when it appears and answers. It is unnecessary to consider whether the judgment would bind the corporation at common law and in the absence of a statutory provision. The judgment was therefore a valid judgment against the company, notwithstanding the misnomer, and if it had appeared upon the hearing of the petition, it could not have resisted the appointment of a receiver upon the objection now taken. *Page 462 
The motion for nonsuit was made on the additional ground that the defendant was discharged from his subscription by an alteration in the subscription-paper, made after he signed it.
The defendant's subscription was made after that of several other persons, and among others that of one Churchill, who had subscribed for fifty shares of the stock. On producing the subscription-paper on the trial, the name of Churchill was canceled by lines drawn through it, and opposite his name were the words "By agree't, Mar. 5, '73;" and the testimony tends to show that this date was subsequent to the time of the subscription by the defendant. There is no explanation of the cancellation, outside of the paper itself. The alteration did not, we think, per se discharge the defendant from his subscription. His contract with the company to take and pay for the shares was several. The consideration upon which he agreed to pay the amount subscribed was the interest he would thereby acquire in the property of the corporation and the profits of its business. Each subscription constituted a separate and independent contract between the subscriber and the company. In the absence of proof, there can be no presumption that the defendant was induced to make his subscription because Churchill had agreed to take an interest in the same enterprise, and the suggestion that the defendant may have been influenced by the prior subscriptions is mere speculation. It may very well be that a fraudulent release by the company of other subscribers would, as between the defendant and the corporation, have discharged the former from his obligation to take and pay for the stock. But this does not appear, and cannot be presumed.
The contract of the defendant was not in a legal sense altered or affected by the discharge of Churchill, and the mere proof of the cancellation of his subscription by agreement with the company, made, as we must presume, bona fide and for proper reasons, furnishes no ground of defense; and nothing further being shown, the plaintiff was not called *Page 463 
upon to explain or justify the action of the company, or to account for the cancellation.
These views lead to a reversal of the judgment. No questions other than those we have considered have been called to our attention.
The judgment should be reversed.
All concur, except MILLER and EARL, JJ., absent; CHURCH, C.J., concurring in result.
Judgment reversed.