Court Opinion

ID: 6127121
Source: CourtListenerOpinion
Date Created: 2022-02-04 20:36:47.740858+00
Date Added: 2024-06-11T08:38:28.414953
License: Public Domain

Daniels, J.:
This action itself was prosecuted by the plaintiff, as a trustee of the New York Silk Manufacturing Company, and its object was to protect the rights and promote the property interests of the corporation. It was no part of its scope or purpose, as that was *309described in the complaint, to obtain a settlement of the affairs of the corporation and terminate its existence as such. It did not, therefore, include the right of creditors to enforce the payment of their debts against the stockholders of the corporation, because of their failure to pay up the whole amount of the capital stock of the company, or to proceed against the trustees after a failure on their part to make and publish the annual report of the affairs of the corporation, as that duty has been enjoined upon them by the statute. These were rights given to the creditors themselves as such of the corporation. (2 R. S. [6th ed.], 50,4, § 38; 506, § 47.)
That such was the intention of the statute is further manifested by section 59, rendering the liability of the stockholders dependent upon the fact that a suit shall be first brought for the collection of the debt against the company within one year after it shall become due, and-that an execution shall be returned unsatisfied upon the judgment recovered in the action. (Id., 508.) And from the manner in which these rights have been created a receiver of the property and effects of the corporation can have no authority either to assert or enforce them. They are on the contrary, by express language, secured to the creditors, who alone can enforce them by appropriate legal proceedings taken for that purpose. Neither the case of Story v. Furman (25 N. Y., 214), nor that of Calkins v. Atkinson (2 Lans., 12), depended upon or involved the construction of these statutory provisions; and because of that circumstance they are not authority in the present controversy. As the case is now presented it was the right of the creditor alone to proceed under these statutory provisions; and by taking such proceedings the receiver appointed in the action to take charge of the property and assets of the corporation would in no manner be disturbed in the exercise of his functions or the enforcement of his authority. For by issuing an execution upon a judgment recovered against the corporation after his appointment no part of its property could be seized or appropriated to the payment of the debt. The execution would have no other significance in the case than that of enabling the creditor to comply with what the statute has required to be done before he can proceed against the stockholders themselves and enforce their individual liability.
By the order which was made, the creditors of the corporation *310were restrained from bringing any action of the nature of that provided for in their behalf by this statute. To that extent it was not within the scope of the action itself, neither was it authorized by any fact or circumstance in the case'. The creditors might well be restrained from appropriating, by legal proceedings, the property and effects of the corporation placed in the hands of the receiver. But no legal authority can be found for preventing them from collecting their debts from the stockholders and trustees of the corporation personally, if they can be shown to have become liable for such payment under these provisions of the act authorizing the creation of manufacturing corporations. So far as the order restrains the creditors from enforcing these particular rights, it should be vacated. The order from which the appeal has been taken should therefore be reversed with ten dollars costs, and also disbursements, and an order entered to the effect already indicated.
Davis, P. J., and Brady, J., concurred.
Order reversed, with ten dollars costs and disbursements..