Court Opinion

ID: 7337151
Source: CourtListenerOpinion
Date Created: 2022-07-25 23:15:27.64903+00
Date Added: 2024-06-11T16:20:13.512079
License: Public Domain

McLAUGHUN, j.
I concur in the result reached by Mr. Justice INGRAHAM, but not upon all of the grounds assigned by him. The ■ case comes before us upon the judgment roll alone, and in disposing •of the question presented we are, of course, bound by the findings of :fact as made by the trial court. The trial court found as a fact that in the month of July, 1895, at a meeting duly called, at which all of the stockholders were present, a resolution was unanimously passed authorizing and directing the board of directors to change the principal business office of the corporation from Chichester, Ulster county, to the city and county of New York, and that, in pursuance of such vesolution, the board of directors, on the same day, at a meeting duly called, unanimously passed a resolution making the change; that from the month of July, 1895, to and including the month of January, 1896, the principal business office of the corporation was in fact located in the city and county of New York, and that within the time .provided by statute the defendants, as directors, made as of the 1st -day of January, 1896, the annual report required by statute, and filed •the same in the office of the clerk of the city and county of New York, and also in the office of the secretary of state. It is unnecessary for us to pass upon or determine how or in what way the principal business office could have been legally changed. All that we are called upon to decide in this case, and all that it is necessary to decide, is that, under the findings of fact as made by the trial court, the defendants were not liable. Under the findings the change is conclusive, and neither the manner of making it nor the legality of the procedure taken can be inquired into. Wallace & Sons v. Walsh, 125 N. Y. 26, 25 N. E. 1076. The directors are made liable for the debts of a corporation, not because they have contracted to pay them, or have agreed to assume the obligations of the corporation, but solely as a penalty for failure to comply with the provisions of the statute. The rule is well settled that the provisions of a penal statute will not be extended beyond the strict letter of it, neither to afford relief to one seeking to take advantage of its provisions, nor to bring a case within its meaning which is not clearly embraced both within the letter and spirit of it. Wallace & Sons v. Walsh, supra; Bonnell v. Griswold, 80 N. Y. 128. In Wallace & Sons v. Walsh, supra, the stockholders of a corporation voted to reduce the number of trustees from 12 to 9, but no certificate of that fact was filed as required by statute. After this attempted change, only 9 trustees were elected, and reports -of the corporation thereafter made were signed by less than a majority of 12. It was there claimed, for that reason, that a report had not been made as required by law, and that the trustees were liable •for the debts of the corporation. The plaintiff had a judgment, •which was reversed by the late general term, and what the court of *629appeals said in affirming the reversal is quite applicable to the question here presented. Euger, C. J., in delivering the opinion of the-court, said:
“It cannot, we think, be doubted but that the proceedings referred to, concurred in by every one having an interest in the corporation or its affairs,, effected a practical reduction of the number of its trustees, and constituted the • nine thereafter elected a de jure as well as a de facto board, entitled to act for the corporation in transacting its business until some party whose interests were affected should raise the question in a direct proceeding to question the exercise of such authority. People v. Railway Co., 84 N. Y. 566. Neither the company, nor its trustees, nor stockholders could have been heard to allege in. a collateral proceeding the invalidity of their action in reducing such board, or its want of authority to administer the general affairs of the corporation. Whatever might have been the effect upon the corporation of a direct proceeding by the attorney general, or otherwise, to test the legality of their action-in reducing such number, or by doing business with an insufficient or defective board, we think such action could not collaterally be assailed and tried in a. proceeding wherein the question was only incidentally involved.”
I am of the opinion that the conclusion reached by the trial court that the defendants were liable is not sustained by the findings of fact, and for that reason the judgment should be reversed, and a new trial ordered.