Hutchinson v. Young (93 A.D. 407, 1904)

Jenks, J.:

The action is to recover damages resulting from the purchase of stock in a corporation upon the faith of a false report made and issued by the defendant, its treasurer. The plaintiff pleads a cause of action under section 31 of the Stock Corporation Law, and a cause of action upon substantially the same facts, making the same allegations, supplemented ■ by further allegations of misrepresentation, and alleging the scienter of the defendant. The defendant demurs that there is a misjoinder of a cause of action for a penalty under the said section with one for injury to personal property sounding in tort.

On a former appeal by the plaintiff from an order changing venue, we thought it pertinent to consider the question whether this cause of action based upon said section 31 was penal, and we decided that it'was not. (Hutchinson v. Young, 80 App, Div. 246.) It is not necessary to restate the grounds for our judgment. The defendant admits that the second cause of action is for an injury to personal property within subdivision 6 of section 484 of the Code of Civil Procedure, but he contends that the first cause of action falls either within subdivision 1 of that section, as foundéd upon a contract implied by law or a quasi contract, or Within subdivision 8 of the same section, as a claim against a trustee.' I cannot accede to either proposition. The action conferred by the statute of 1892 (supra) in its present form is analogous to the common-law action for deceit or fraud, but. in furtherance of such remedy in that it does not require proof ’ of scienter. This is the view taken by the court in Parsons v. Johnson (28 App. Div. 1), Where Ward, J., says: “ The action upon this statute is one in tort partaking largely of the character of an action for damages for fraudulent representations knowingly made upon the sale of property.” The cause of action does not fall within éubdivi’sion 8 of section 484 of the Code of Civil Procedure for the reason that the defendant was not the trustee of the plaintiff when he made the false report which is the basis of the complaint on that cause of action. Of course, the cause of action