Citations
- 7 A.D. 366
Full opinion text
Hardin, P. J.:
In Seymour v. Sturgess (26 N. Y. 141) Allen, J., in speaking of the liability of a stockholder upon an original subscription or as transferee of stock, said, viz.: “ Without a promise, proved in one way' or the other, a party cannot be charged in assumpsit. If the circumstances negative all presumption of a promise, there is no rule of law applicable to any class of cases which compels courts to disregard the circumstances and adjudge a promise to have been made against the evidence. In the class of cases referred to (actions upon unpaid subscriptions for stock and against assignees of stock not fully paid for) courts have had respect to the terms of the contract and certificate and the circumstances of the case, leaving it for other tribunals, in applying the same principles, to observe and give effect to different • circumstances as they may arise, and declare what, in each case, is the contract or agreement of the parties. The Company was here incorporated, not to accomplish a great public object, but for the immediate profit and advantage of its projectors, and to enable them to dispose of their land and mines, and with a view to a development of their resources by those who should associate together in the corporation.” In that case no formal subscription was made for the stock. None is found in the appeal book before us. In the course of the opinion in that case it is further said: “But if there be no such agreement, the sole remedy for the corporation is by the sale of the shares of the delinquent members; ” citing numerous cases. And the learned judge further added : “ There was no express contract by the defendant Sturgess, or by any one to whose rights and liabilities he has succeeded, to take and pay for the: stock; and no implied contract or promise is made out by the evidence. On the contrary, every circumstance shows that no such promise was made, or intended to be made, or understood to have been made; and it follows that there is no personal liability which can be enforced by the corporation, or in behalf of. and for the benefit of a creditor of the corporation.”
That case was referred Jo with approval in Wintringham v. Rosenthal (25 Hun, 580) in which case it appeared that Brown had subscribed for 500 shares of the capital stock of a bank and transferred 50 shares of them to the defendant, and in an action brought by the receiver of the bank to recover the unpaid calls upon, the stock, it was held that the defendant was not liable for the same. And near the close of the opinion in that case Barnard, P. J.,.said: “ It is only where there is an express agreement to pay that an action will he by the corporation; c but if there be no such agrees ment the sole remedy for the corporation is by the sale of the shares of the delinquent members.’ ”
In Billings v. Robinson (94 N. Y. 415), near the close of the; opinion, Finch, J., said: “ It was said in Seymour v. Sturgess (26 N. Y. 141) that in actions upon unpaid subscriptions for stock, and against assignees of stock not fully paid for, courts have had respect' to the terms of the contract and certificate, and the circumstances, of the case.”
In The Fifth Avenue Bank v. F. S. S. & G. S. F. R. R. Co. (137 N. Y. 231) a secretary and treasurer of a company forged certain certificates and caused the same to be issued against the corpora*tion in which he was acting with apparent authority, and innocent parties relied upon the representations made by him and the instruments issued, and the corporation of which he was an officer was. held to he liable. That case is commented upon extensively by VAN Brunt, P. J., in Mutual Life Ins. Co. v. Forty-second Street & G. St. F. R. R. Co. (74 Hun, 505; S. C., 26 N. Y. Supp. 547).
To support the defense interposed by the defendant he was sworn, as a witness, and he was interrogated as to what Reynolds said at-the time he, the defendant, purchased the stock of him, and after the referee had excluded the conversation held with Reynolds, in which the defendant claimed that he had representedthat the stock was fully paid up, he testified that, before purchasing the stock he had a talk with the directors or managers of the company about the stock. He says: “ I had a talk at that time before I purchased the-stock of Mr. Reynolds; I talked with Mr. Aris and with Mr. Ranger at the company’s office.” When asked for what purpose, an objection was interposed by the plaintiff, on the ground that it was incompetent, and the objection was sustained and an exception was taken. Thereupon the further question was propounded to the witness :