Court Opinion

ID: 5191877
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:37:24.266382+00
Date Added: 2024-06-11T08:23:17.539174
License: Public Domain

Ingraham, J.:
At the close of the testimony counsel for the plaintiffs asked, the court to direct a verdict for the plaintiffs. This motion was denied upon the ground that there was a question of fact as to whether the judgment which the plaintiffs had obtained against the Metropolitan Messenger Company had been paid. The court submitted that question to the jury, saying: “ If the note was actually paid, and the parties have such interest as to distort and have distorted the transaction, then you will find a verdict for the defendant. If, on. the other hand, the note has never been paid, if it was an obligation of the corporation and one' which this defendant is liable for, being money used in the business in the corporation and this note became a debt of the corporation, then you will find a verdict for the plaintiff for $540.” The jury found a verdict for the defendant. Thereafter the plaintiffs made a motion for a new trial on the ground that the verdict was contrary to the evidence, which was denied, and the plaintiffs appeal from the order denying the motion. The first •question presented is whether there was evidence to sustain the verdict.
The action was brought by the plaintiffs as judgment creditors of "the Metropolitan Messenger Company, a corporation organized under the laws of this State, to enforce the obligation imposed upon the stockholders of the corporation by section 54 of the Stock Corporation Law (Laws of 1892, chap. 688). That section provides : “The *257stockholders of every stock corporation shall, jointly and severally, be personally liable to its creditors to an amount equal to the amount of the stock held by them, respectively, for every debt of the corporation until the whole amount of its capital stock issued and outstanding at the time such debt was incurred shall have been fully paid.” It appeared and was not disputed that in April, 1898, the company issued to the defendant thirty shares of its capital stock of the par value of $3,000, for which the defendant paid $1,500, and, subsequently, in May, 1898, issued other certificates of stock, aggregating thirty shares, at the par value of $3,000, for which the defendant paid $1,700. It also appeared that the president of the corporation borrowed $500 from the plaintiffs, for which the corporation issued to the plaintiffs its promissory note dated August 12, 1898; that plaintiffs’ check for that amount was received by the president of the corporation, was delivered to its treasurer, was indorsed and passed to the credit of the company in the bank account of the company in the Produce Exchange Trust Company. It also appeared that at the time of the making of the loan to the corporation the plaintiffs received from Klock, the president of the corporation, twenty-five shares of the stock of the Pennsylvania Railroad Company as security for that loan; that that stock was the individual property of Klock, he having deposited it with the plaintiffs to secure the repayment of the loan made to the corporation; that subsequently and while the plaintiffs held Klock’s stock as security for this loan to the corporation, they commenced an action against the corporation to recover the amount of this loan and obtained a judgment against it for $540.48, upon which execution was issued and returned unsatisfied. On November 2, 1889, after the plaintiffs had obtained judgment against the corporation, Klock directed the plaintiffs to sell the Pennsylvania railroad stock which he had deposited with them as collateral security for the loan, which stock was sold and the proceeds turned over to Klock, whereupon Klock deposited with the 'plaintiffs the sum of $540.48 and took from them a receipt by which, after reciting the entry of this judgment, they agreed to accept the money so deposited with them by Klock as security for the payment of said judgment, and to take proceedings to recover from the company or any stockholder thereof the *258amount of their .judgment, and that any sum collected was to ..be: paid-over to Klock upon demand, less the expense incurred in- the-, collection thereof.
■ - It was this transaction which the court submitted to the jury, for them to determine whether or not it was a payment of the demand ¡ of these plaintiffs against-the corporation. We.think that the find-, ing that this operated as a payment to the plaintiffs of their demand 1 against the corporation was not only not sustained by the evidence, but that there-was no evidence of such a payment which justified' the court in submitting the question to the jury. There is.not the. slightest évidence that the corporation ever paid this judgment or any. part thereof. The plaintiffs called Klock as a witness, and he testified without contradiction that the stock' deposited with the. plaintiffs to secure the loan made to the company was his individual property, in which the company had no interest. The proceeds of.. that, stock .when sold belonged to Klock and not to the company,, and considering that the plaintiffs held a portion of the proceeds of that stock as security for their judgment against the. company, that, was not a payment of the judgment, so as to discharge the company’s liability therefor. Whether Klock was believed or not, there, was absolutely no evidence to sustain -a finding that the company-had paid the judgment or discharged its obligation to the plaintiffs.. We think, therefore, that the finding was entirely without support from the evidence. .
■ The defendant also claims that at the time this action was commenced there was no statute in force under which he was liable to-a creditor of the corporation. It did not appear when the Metropolitan Messenger Company was incorporated or under what act,, the allegations of the complaint being that it is a corporation, organized and existing under: the laws of the State of New York,; and was engaged in business in the county of New York from about-October 6, 18.96, to December 12, 1898. It seems that on the 17th day of March, 1897,' the capital stock of the company was increased, from $10,000 to $60,000 (Hallett v. Metropolitan Messenger Co.,. 69 App. Div. 258); that such increase consisted of 500 shares of the par value of $100 each; that of that 500 shares there were: transferred to the defendant 60 shares of .the par value of $6,000,. for which the defendant paid to the company the sum of $3;200, *259leaving unpaid therefor the sum of $2,800. Of this 30 shares were transferred and delivered to the defendant on the 2d day of April, 1898, for which he paid $1,500, and 30 shares were delivered to the defendant on Hay 19, 1898, for which he paid $1,700.-The indebtedness to the plaintiffs was incurred on August 12, 1898, and the judgment against the corporation upon that indebtedness was entered on April 3, 1899. At the time this corporation commenced to do business, and during the period that this indebtedness was incurred and this stock issued, section 54 of the Stock Corporation Law (Laws of 1892, chap. 688) was in force. That section provides: “ The stockholders of every stock corporation shall jointly and severally be personally liable to its creditors to an amount equal to the amount of the stock held by them respectively for every debt of the corporation until the whole amount of its capital stock issued and outstanding at the time such debt was incurred shall have been fully paid.” There would seem to be no doubt but that under this statute the defendant would be liable to the plaintiffs for the full amount of the judgment against the corporation. In 1901 this section of the Stock Corporation Law was amended by chapter 354 of the laws of that year. As amended this section reads as follows : “ Every holder of capital stock not fully paid, in any stock corporation, shall be personally liable to its creditors to an amount equal to the amount unpaid on the stock held by him for debts of the corporation contracted while such stock was held by him. As to existing corporations the liability imposed by this section shall be in lieu of the liability imposed upon stockholders of any existing corporation under any general or special law, * * * on account of any indebtedness hereafter contracted or any stock hereafter issued.” By section 5 of this act it is provided: “ This act shall take effect immediately, but shall not affect any action or proceeding pending in any court at the time it takes effect or any right of any creditor of any corporation or of any stockholder against any director under existing law, providing action thereon be commenced within six months after this act takes effect, except as in this act otherwise provided.” The act took effect on April 16, 1901, and this action was commenced on the 13th day of September, 1901, within six months from the time the amendment of 1901 took effect.
*260The defendant being liable to, the plaintiffs at the time this indebtedness, was incurred, under the provision of section 54 of the Stock Corporation Law, to which attention has been called, the question is whether this amendment of the section repealed the law which imposed such liability, so that such liability terminated upon the passage of the act of 1901. Now, so far as the liability of this defendant to the plaintiffs is concerned, the defendant was liable, either under the section in force at the time the indebtedness was contracted or under the one in force after the amendment when the action was commenced. The act of 1901 restricted the liability of a stockholder as it existed under the provision of section 54. In one case the stockholder was liable to an amount equal to the amount of stock held by him for every debt of the corporation until the whole amount of its capital stock issued and outstanding at the time such debt was incurred should have been fully paid. Under the section as amended, the defendant, as a holder of capital stock not fully paid, was personally liable to the plaintiffs to án amount equal to the amount unpaid on the stock held by him. So, under both provisions of law the defendant would be liable, and. under the provision of section 5 of the act of 1901 the intention was clearly expressed that the amendment should not affect the right of any creditor of a corporation.
The defendant claims that this provision only applied to the action of a creditor against a director under the existing law, but it would seem as though it was the intention of the Legislature to protect all the rights of the creditors of a corporation and the rights of a stockholder against- a director. Section 31 of the Statutory Construction. Law (Laws of 1892, chap. 677) provides that the repeal of a law .“shall not affect or impair any act done or right accruing, accrued or acquired, or liability, penalty, forfeiture or punishment incurred prior to the time such repeal takes effect, but the same may be asserted, enforced, prosecuted or inflicted as fully and to the same extent as if such repeal had not been effected ; ” and assuming that the effect of the amendment by the act of 1901 would be to repeal section 54 of the Stock Corporation Law, under this provision of the Statutory Construction Law, the repeal of the section would not affect the right of a creditor to enforce the obligation of stockholders which existed at the time the amendment took effect.
*261We think, therefore, that the defendant was liable to the plaintiffs for the amount of the judgment against the corporation, and that the verdict of the jury that the debt had been paid was clearly against the weight of evidence.
It follows that the judgment and order appealed from should be reversed and. a new trial ordered, with costs to the appellant to abide the event.
Van Brunt, P. J., Patterson, Hatch and Laughlin, JJ., concurred.
Judgment and order reversed, new trial ordered, costs to appellant to abide event.