(SnrnpU ICaui ^rl^nnl ICihtatij Cornell University Library KFN5340.R78 A treatise on the law of corporations in ill 3 1924 022 797 264 The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924022797264 A TREATrSE ON THE LAW OF CORPORATIONS IN NEW YORK BASED ON THE REPORTED DECISIONS AND WRITTEN IN CONNECTION WITH THE STATUTES REGULATING CORPOSATIONS, AS AMENDED TO JANUARY 1, 1922, INCLUDING THE GENERAL CORPORATION LAW BUSINESS G0RP0RAJ:'I0NS LAW STOCK Got5>MI:^'^N LAW TRANSPORTATION COT\PORATIONS LAW CIVIL PRACTICE ACT RULES OF CIVIL PRACTICE BY ALDEN I. ROSBEOOK OF THE AISANY BAB WITH COMPLETE FORMS FOB THE ORGANIZATION, MANAGEMENT AND CONTROL OF CORPORA- TIONS AND PROCEDURAL FORMS ALBANY, N. Y. MATTHEW BENDER & COMPANY INCORPOKATBD 1922 COPTBIQHT, 1921 Bt MATTHEW BENPEB & COMPANY HsrOORPORATEB TO MY WIFE, ALICE MOIR ROSBROOK, This hook is affectionately dedicated PREFACE There are few, if any, subjects in the law that require and demand so much attention as that of corporations. In this day, especially in this state, when the greater bulk of busi- nesses carried on through the medium of corporations, every lawyer has before him, from time to time, questions of corpo- ration law, the correct solution of which may be of the greatest importance both to himself and to his client. It was the desire and the purpose of the author to write a treatise on the law of corporations that would materially aid in the solution of the difficult problems with which the bench and the bar are so fre- quently confronted. Whether that desire has been realized and that purpose accomplished the profession alone can determine. The subject is a difficult one. The difficulty of accurate state- ment of the law as it exists at any given time may be appre- ciated when one considers the ever changing statutory law, — changes that may or may not aflfect the force and applicability of prior decisions. Two plans of construction presented themselves to the author. The annotated statute method and the textbook method. The first is easy of execution but unsatisfactory in results. The other, more difficult of fulfillment, was chosen as the best means of making all the law, both case and statu- tory, readily available. The provisions of the statutes are quoted in their logical position in the text without regard to their particular position in the statutes. In the preparation of the text the author has endeavored to state the general rules and principles governing the point under discussion, to give the reasons therefor, and to set forth particular instances of their application that point out the way those rules and principles should be applied to new situations. In the drawing of papers and pleadings every lawyer depends to a great extent on prepared forms. It was the aim of the author to present to the profession a set of forms for the organization and management of corporations, and for the commencement and carrying on of actions and proceedings peculiar to corporations, that would meet all the requirements of the statutes, the decisions of the courts, and the rules of the [V] VI PREFACE. Secretary of State's office and the Attorney-Greneral's office. The hope is expressed that the profession will find them reliable in every way. Honorable Austin B. Griffin, prior to his appointment as Supreme Court Reporter had planned a book on New York corporations and had done a large amount of work towards bringing that plan to completion. After his appointment he found that it would not be possible for him to complete hip book and the author arranged with Mm to use the result of his labors in this treatise. The author here expresses his appreciation for the assistance that he has received from the result of Mr. Griffin's research and industry; ALDEN I. EOSBROOK. Albany, N. Y., December, 1921. TABLE OF CONTENTS. [References are to paragraphs.] Table of Cases Cited xU Table of Statutes oxxrvii CHAPTER 1. Par. Intkoductort. 1. Definition and nature of oorporation. 3. Corporation distinguished from joint stock company. 3. " Citizen " as including corporation. 4. " Person " as including corporation. 5. Conflicting corporate laws: Construction. 6. Power to create. 7. Corporation as distinct from its members. CHAPTER II. Classipication op Coeporations. 8. In general. 9. Statutory classification. 10. Particular corporations defined. CHAPTER ni. Incokpokation and Organization. in General. 11. Incorporation by act of legislature. 13. Number and qualification of incorporators. 13. Purposes of incorporation. 14. Organization of corporation to do work of learned professions prohibited. 15. Fraud in organization of corporation. 16. Full liability corporations. Certificate of Iiicorporation. 17. Nature and contents generally. 18. Requisites of certificate. 19. Provisions that may be put into certificate generally. 30. Particular proT^isions. 31. Provisions as to directors and duration of existence. 33. Corporation issuing stock without nominal or par value. 33. Execution of certificate. 34. Filing and recording. 35. Lost or destroyed certificate of incorporation. 36. Organization tax. 27. Filing, recording and other fees. De Facto Corporations. 28. In general. 39. Rights, duties and liabilities; [vii] VIU TABLE OF CONTEXTS. Par. ; Corporators, and Promoters. 30. In general. 31. Sale of property to corporation. 32. Promoter's contracts. 33. Liability for fraudulent representations. 34. Liability of corporation on contracts of promoters. CHAPTER rV. Corporate Existence and Franchise. Dwration of Existence. 35. In general. 36. Extension of corporate existence generally. 37. Extension where stock owned by another corporation. 38. Effect of extension. 39. Revival of corporate existence. 40. Approval of certificate of extension of existence. Evidence of Existence. 41. Proof of existence. 42. Estoppel to deny corporate existence. Amendment and Alteration of Certificate. 43. Amendment of certificate. 44. Amendment to alter and extend business. 45. Amendment to change to shares without nominal or par value. 46. Alteration and repeal of charter by legislature. CHAPTER V. Corporate Name and Seal. Name. 47. Similarity to names of existing corporations. 48. Construction and application of statute. 49. Use of words " University " or " College." 50. Name indicating connection with national guard or naval militia. 51. Unlawful use of certain titles in connection with corporate name. 52. Conflict between names of domestic and foreign corporations. 53. Remedy upon acceptance of improper name by secretary of state. 54. Injunctive relief against improper use of corporate namee. 55. Basis of equitable relief.* 56. Particular instances. 57. Penalty under civil rights law for unlawful use of name. 58. Duty to use corporate name. 59. Change of corporate name generally. 60. Petition to change name. 61. Procedure on presentation of petition: Reservation of proposed name by secretary of state. 62. Order authorizing Ohange: Review. 63. When change to take effect. 64. Substitution of new name in pending actions and proteedings. TABLE or CONTENTS. IS Par. Seal. 65. In general. 66. Effect of seal. : . . CHAPTER VI. Domicile and Place of Business. 67. Principal office and place of business. 158. Change of place of business. CHAPTER VII. By-Laws and Records. By-Laws. 69. Power to make by-laws: Validity: Publication. 70. CoMtruotib'n and effect of by-laws. 71. Power to alter, amend or repeal by-laws. Mamtenance of Books of Account emd Stoolc Booh. 72. In general. 73. Penalty for failure to keep books. 74. Stock book as evidence. 75. Minute books as evidence. 76. Account books as evidence. CHAPTER Vm. Mbrgee and Consolidation. Merger. 77. Distinction between merger and consolidation. 78. Manner of merging corporation. 79. Proof of merger. 80. Name of merged corporation, 81. Rights of creditors: Effect of merger. Consolidation. 8S. Manner of consolidating corporations. 83. Submission of consolidation agreement to stockholders: Filing agreement. 84. Effect of consolidation generally: Proof of consolidation. 85. Powers of consolidated corporations. 86. Transfer of property of old corporations to consolidated corporation. 87. Rights of stockholders not consenting to consolidation: Appraisal of stock. 88. Rights of creditors of old corporations. 89. Combinations effecting monopoly. CHAPTER IX. Kbincorporation and Reorganization of Existing Corporations. 90. In general. 91. Reorganization on sale of corporate property and franchises generally. 98. Contents of plan or agreement for reorganization. 93. Assent of municipality holding stock. X TABLE OF COiNTENTS. Par. 94. Construction and validity of agreement. 95. Effect of reorganization. 96. Sale of property on foreclosure: Liability of new corporation. CHAPTER X. Capital Stock. In General. 97. Distinction between capital stock and capital. 98. Nature of property in shares. 99. Unissued stock of corporation. 100. Creditors' rigilits: Trust fund doctrine. 101. Issuance of preferred and common stock: Exchange of preferred for coramoii. 102. Effect of Amendment of 1901. 103. Change in par value of shares. 104. Value of shares issued without nominal or par value: Sale of shares. 105. Amount of capital and of shares without nominal or par value. 10'6. Issuance of partly paid stock. 107. Issuance of stock to employees. 108. Lien of corporation on shares. 109. Assessment of fully paid shares. 110. Payment of capital stock. Increase and BeSiicOition of Capital Stoclc. 111. Right to increase or reduce: Liabilities of stockholders. 112. Principles governing reduction of capital stock. 113. Manner of increasing or reducing capital stock: Meeting of stockholders. 114. Conduct of stockholders' meeting: Certificate of increase or reduction. 115. Right of stockholder to avoid fraudulent increase. . . 116. Right of stockholder to proportionate shares of new stock.. , 117. Liability of original holdeirs where increased capital not paid in. 118. Increase or reduction of shares or capital of corporation issuing shares without nominal or par value. Stoolc Certificates. 119. In general. 130. Nature of stock certificates. 131. Negotiability of stock eertificates. laS, Certificate of . shares witnout nominal or par value. 123. Effect of alteration of stock certificate. 134. Proceedings to compel issuance of certificate. 135. Issuance of certificates in excess of number of shares authorized. 136. Lost or destroyed certificates of stock: Proceedings to compel issuance of new certificate. 127. Constitutionality and construction of statute. 138. Procedure on application for new certificate. 129. Consideration generally.' 130. Property as consideration. 131. Lawful purpose defined. TABLE OF CONTENTS. XI Par. 132. Labor and services as consideration. 133. Rights and liabilities arising out of issuance of stock without consjiieration. 134. Liability of corporation on forged or fraudulently issued certificate. 135. Rights of holder of spurious certificate. 136. Criminal liability of oflScers or agents for fraudulent issue of stocks oi bonds. Frcmdulent Practices in Sespect to Corporate Stocks and Bonds. 137. Investigaitioh by attorney general. 138. Action by attorney general. 139. Examination of witnesses and preliminary injunction. 140. Procedure on hearing. 141. Powers of referee. 142. Penalties. 143. Criminal prosecutions. 144. Immunity of witnesses. 145! Untrue and misleading advertisements. CHAPTER XI. Subscription to Stock. In General. 146. Subscription after incorporation. 147. Right to subscribe to new issue. 148. Subscription prior to organization. 149. Agreement iby corporation to take back stock or pay profits. 150. Recission of subscription induced by fraud. 151. Release of subscriber from subscription. Pai/ineHt. 152. Payment of ten per centum in cash. 153. Effect of failure to pay ten per centusa. 154. Time of payment of subscription to stock: Forfeiture for non-payment. 155. Assessments or calls generally. 156. Liability of transferee for calls. Enforcement of Liability. 157. In general. 158. Defenses. > CHAPTER XII. Transfer of Shares. In General. 159. Right of stockholder to sell or transfer stock. 160. Restrictions on transfer generally. 161. Transfer of stock prior to filing certificate. 1«2. Transfer of stock by stockholder indebted to corporation or in contempla tion of insolvency. 163. By-laws regulating transfer of stock; Xll TABLE OF CONTENTS. Par. ' 164. Agreements between stockholders regulating transfers. 165. Blank assignment and power of attorney. 166. Purchaser chargeable with constructive notice of contents of certificate: Lis Pendens. 167. What passes by transfer. 16S. Transfer on books of corporation generally. 169. Eflfeet of failure to have transfer made on books. 170. Remedy for refusal of corporation to make transfer on books. 171. Contract for sale of stock. 172. Specific performance of contract. Transfer as Affected by Personal Property Law. 173. How title to certificate and shares may be transferred: Definitions. 174. Powers of persons lacking full legal capacity and of fiduciaries. 175. Right of corporation to treat registered holders as owners. 176. Eifect of title derived from certificate on title derived from separate document. 177. Who may deliver certificate. 178. Effect of endorsement. 179. Recission of transfer. 180. Effect of delivery of unindorsed certificate. 181. Effect of ineffectual attempt to transfer. 182. Warranties on sale of certificate. 183. Attachment or levy on shares. 184. Creditors remedies to reach certificates. Pledge of Corporate Stock. 185. In general. 186. Sale or pledge by pledgee. 187. Attachment of pledgor's interest. 188. Right to dividends.' 189. Rights of pledgor. 190. Right of pledgee to maintain action. CHAPTER XIII. Dividends. 191. Power of directors to declare dividends. 198. Dividends to be declared^ from surplus profits. 193. Capital stock not to be impaired. 194. Guaranty of dividends. 195. Stock and scrip dividends. 196. Dividends on partly paid stock and on 'stock without nominal or par value. 197. Suit by stockholder to compel dedaratiioa of dividend. 198. When right or title to dividend accrues. ., 199. Right of preferred stockholders to flividends. . 300. Effect of transfer of stock on rights to - dividends. 201. Rights of life tenant and remainderman in dividends generally. 3'02. Rights of life tenant and remainderman in extraordinary dividends. 203. Action by stockholder to recover declared dividend. TABLW OF CONTENTS. XUI CHAPTER XIV. Stockholdees. Par. In General. 304. When relation of stockholder created. S05. Relation of common and preferred stockholders to each other and to cor- poration. Inspection of Boohs. 206. Right to inspection of stock book. 307. Purpose of inspection of stock book. 308. Right to inspection of general books. 209. Effect of statute on common law right to inspect general books. 310. When inspection of general books will be denied. 311. Who entitled to inspection generally. 313. Inspection by directors and oiBcera. , 213. Inspection of by-laws. 214. Mandamus to compel outgoing officers to deliver corporate books and papers. 215. Penalty for refusal to permit inspection. Bepresentative Actions. 216. In general. 317. Nature of action. 218. When action maintainable generally. 2il9. Particular instances. 230. Action by stockholder based on transactions consummated before he ac- quired stock. 221. Demand and refusal. 322. When demand unnecessary. 223. Estoppel of stockholder to bring action. 324. Essential allegations of complaint. 225.. Stateinent of cause of action. 236. Parlies; examination before^trial. 237. Limitation of actions; abatement; trial. 328. Relief that may be granted. 239. Appointment of receiver. CHAPTER XV. STOCKHOIiDEKS ' MiaiTINGS. In General. 230. Qualification of members as voters. 331. Validity of restrictions on voting powers. 333. Voting of stock by fiduciaries. 233. Waiver of notice of meeting. 234. Inspectors of election. 335. Cumulative voting. 336. Challenge to voters. 337. Criminal liability for misconduct at corporate election. XIV TABLE OF CONTENTS. Par. Proxies and Voting Trusts. 238. In general. 239. Who may act as proxy. 240. Execution, validity, duration and revocation of proxy. 241. Voting trust agreements. Powers of Supreme Court Bespecting Elections. 242. In general. . 343. Construction of statute. 244. Application of statute. 245. Proceedings to test validity of election. 246. Restraining interference with officer in possession. CHAPTER XVI. Stockholders ' Liability. 247. Stockholders awning majority or all of stock. 248. Contributions between stockholders. 249. Liability of stockholder of full liability corporations. 250. Liability wlhere stock not fully paid. 251. Nature of liability. 252. Stock issued for property or services. 253. Liability of stockholders to laborers, servants or employees. 254. Who are laborers, servants and employees. 355. Non-liability of persons holding stock as pledgor or representative. 356. Debts included. CHAPTER XVn. Enforcement of Stockholders' Liability. 257. Form of action. 258. Who may sue. 2159. Conditions precedent generally. 260. Judgment against corporation and return of execution unsatisfied. 261. When judgment against corporation and return of execution excused. 2612. Debts of corporation payable within two years. 263. Persons liable. . 264. Defenses: Set off. 265. Misnomer not available in action against stockholder. 266. Limitation of action against corporation and stockholder. 367. Parties. 268. Pleading: Service of suamons by publication. 369. Judgment against corporation as evidence. 270. Proof of being- stockholder. CHAPTER XVIII. Directors. 7k General. 271. Qualifications. 27i2. De facto directors. 2T3. Change in number of directors. 274. Filing transcript of proceedings. TABLE OF CONTENTS. XV Par. Election. 275. In general. 276. By-laws regulating elections. 277. Neglect of directors to adopt by-laws for election of directorB. 278. Notice of election. 279. Failure to elect directors on day designated. 280. Special meeting for election of directors. 381. Mode of conducting special meeting. 282. Qualification of voters and canvass of votes at special election. Suspension, Semoval and Besignation. 383. Suspension or removal generally. 384. Resignation of directors. 38'5. Vacancies. Powers. 286. In general. 287. Separate and individual authority of directors. 288. Powers of executive committee of board of directors. Procedure of Board. 389. In general. 290. Quorum of directors and power of majority. 291. Notice of meetings. CHAPTER XIX. Bights, Duties and Liabilities of Dikectoes and Ofpioers. In General. 89i3. Fiduciary relation of directors and oflBcers to corporation. 293. Validity of contracts between corporations Slaving common directors. 294. Financial statement to stockholder. 295. Motive of stockholder in demanding statement. 296. Demand for and sufficiency of statement. Compensation. 297. In general. r 298. Services outside regular duties. 299. Power of directors to fix salaries. 300. Recovery back of salaries illega;lly voted to officers and directors. 301. General employees and agents. ■Directors and Officers a^ Creditors. .S02. Loans and advances by directors to corporation. 303. Purchase and enforcement by directors of obligations of corporations. Corporate Management. 304. Duties and liabilities generally. 305. Nature and extent of liability. 306. Errors of judgment. XVI TABLE OF CONTENTS. Par. 307. Ultra vires acts. 308. Preaumption of knowledge of corporate conditions. 309. Directors as trustees in case of dissolution. Dealings with Corporation. 310. In general. ' 311. Validity of contracts openly made. 312. Acquiring corporate property. Misrepresentation of Financial Condition. 313. Liability for false statements inducing purchase of stock. 314. Essential elements of cause of action; measure of damages. Official Misconduct. 315. Enforcement of liability generally. 316. Who may bring action generally. 317. When attorney general must bring action. •318. Action by attorney general to remove trustees, directors or other officers. 319. Action by creditor against directors. 330. Action by director or officer against co-director or officer. 331. Liability of directors to account in equity for official misconduct generally. 332. Equity jurisdiction conferred by statute. 323. Effect of statute. 334. Joinder of causes of action: Receiver. .335. Bringing in creditors to prove claims. 326. Injunction staying action by creditors. 337. Injunction suspending business or restraining officers from acting. 328. Abatement of action. 329. Compelling officer and agents to testify. 330. Proof of misconduct. 331. Judgment. 332. Criminal liability for official rhisconduct. 333. Presumption of knowledge of corporate condition in criminal prosecution CHAPTER XX. Liability of Directoes and Officers fob Coriporate Act.s .^n'h 1)i-;hts. 334. Liability of directors vrh«re loans made to stockholders. 335. Wrongful distribution of assets. 336. Liability for participating in prohibited transfers by corporation. 337. Declaration of unauthorized dividends. 338. Unauthorized dividends on stock without nominal or par value. 339. Debts by corporation issuing stock without nominal or par value incui reii before capital paid in. 340. False certificates, reports or public notices. 341. Enforcement of liability generally. .342. Action to enforce liability for making false reports. 343. Evidence: Burden of Proof: Damages. 344. Criminal responsibility for corporate acts. TABLlil OF CONTENTS. ■ XVI 1 CHAPTEE XXI. Powers, Duties and Functions of Corporations. Par. In General. 345. General powers. 346. Construction of provisions of charter and statutes. 347. Unexpressed and incidental powers of corporations. 348. Power to enter into partnership. 349. Restrictions on commencement of business. 350. Eestrictions on commencement of business by corporation issuing stock without nominal or par value. 351. Control by courts of internal management of corporation. 352. Prohibition against exercise of banking powers. 353. Prohibition against practicing law. 354. Purpose and construction of statute. 355. Application of statute. 35€. Prohibition against practicing medicine or dentistry. Atmual Report to Secretary of State. 357. Duty to make report. 358. Construction of statute and i-eports thereunder. 359. Requisites of report. 360. When corporation relieved' from filing report. Bight to Acquvre and Hold Corporate Stock. 361. Purchase by corporation of its own stock. 362. Purchase of stock of other corporations generally.. 363. Application of statute. AcqimiUon and IHspo.^al of Property. 364. In general. 3'65. Acquisition of additional real property after conveyance. '366. Property rights extending beyond period of existence. 367. Acquisition of property without State. 368. Enlargement of limitations upon amount of property which non-stock corporations may hold. Power to Borrow Money and Mortgage Property. 309. In general. 370. Consent of stockholders as essentiial to validity of mortgage. 371. Requisites of consent: When consent not required. 372. Who may consent. 373. Filing consent. 374. Who may object to validity of mortgage. 375. Validity of corporate mortgage. 376. Mortgage covering after-acquired property. 377. Refunding mortgage. 378. Filing of mortgage covering real and personal property. XVlll TABLE OF CONTENTS, Judicial Proceedings to Sell, Mortgage, or Lease Heal Property. Par. 379. In general. 380. Petition. 381. Hearing on petition. iSZ. Order to sell, mortgage or lease. 383. Notice to creditors of insolvent corporation. 384. Service of notices. '385. Practice in cases not specially provided for. Transfers While Insolvent or in Contemplation of Insol'eency. 386. In general. 387. Construction and object of statute. 388. Assignment by officer or stockholder of claim against eorpdration. 389. Transfers in contemplation of insolvency. 390. Intent to create preference. 391. Knowledge by creditor of insolvency of corporation; collateral security. 39'2. Corporate mortgages executed in contemplation of insolvency. 393. Validity of judgments against insolvent corporation. 394. Effect of failure to defend valid claim. 395. Particular transactions not fraudulent or in violation of statute. 396. Assignment for benefit of creditors without preferences. 397. Transfers within four months of bankruptcy. 398. Actions based on illegal transfers. Volwntary Sale of Franchise and Property to Another Corporation. 399. In general. 400. Eights of non-consenting stockholders. 401. History and application of statute. 402. Loaning money or credit: Execution of accommodation paper. 403. Liability of corporation on debts and contracts of predecessor. 404. Power to guarantee bonds and other obligations of other corporations. Corporate Bonds. 405. In general. 406. Consideration for bonds. 407. Issue and sale of bonds. 408. Negotiability and enforcement of bonds. 409. Interest coupons. 410.. Trust mortgage to secure bonds. OHAPTBK XXII. Representation of Cokpoeation by its Officers and Agents. In General. 411. Appointment, resignation and removal of officers and agents. 412. Power and authority of officers and agents generally. 413. Principles of agency a-pplicable. 414. Acts within apparent authority of officer or agent. 415. Notice of authority of officers and agents. 416. Effect of by-laws. TABLE OF COKTENTS. XIX Par. Authority of Particular Officers. 417. President's authority generally. 418. Particular instances of president's authority. 419. Treasurer's authority. 430. Secretary's authority. 431. General manager's authority. Application of Bules. 423. Contracts of employment. 42i3. Authority to execute and transfer negotiable paper. 434. Execution of commercial paper in interest of officer. 435. Wrongful use of checks. 436. Liability of corporation for wrongful acts of officers and agents. 437. Repudiation of wrongful acts. 438. Knowledge of officer or agent as knowledge of corporation. 439. Admissions and declarations by members of corporation. 430. Katification of acts of officers and agents. 431. What amounts to ratification. 432. Proof of authority. 433. Execution of authority. CHAPTER yXTn Ultka Vires Contracts. 434. In general. 435. Effect of ultra vires contracts. 436. When plea of ultra vires will not prevail. 437. Ratification of ultra vires acts, 438. Pleading defense of ultra vires. 439. Political contributions prohibited. CHAPTER XXIV. Actions By, and Aqainst Corporations. 440. Allegation of corporate existence. 441. Mistakes in statement of corporate name: Substitution of new name io pending action. 443. Verification of pleadings. 443. Place of trial. 444. Service of process on corporation generally: Substituted service. 445. Service on particular officers: Service on resigned officers. 446. Service on managing agent. 447. Service of orders on corporation. 448. Examination of corporation before trial. 449. Affidavit and order. 450. Production of corporate books and records. 45il. When proof of corporate existence unnecessary. 4S3. Action against conponation upon note or contract for payment of money absolute: Extension of time to plead: Judgment. 453. Action to compel determination of claim to real property. XX TABLE or CONTENTS. Par. 454. Right to maintain action for libel. 455. Defenses of usury prohibited. 456. Effect of appointment of receiver. 457. Effect of dissolution on pending actions. 458. Substitution of receivers or directors on dissolution. 459. Stay of proceedings in actions eoUusively brought by directors against corporation. 460. Injunction suspending business of corporation and restraining officers from performance of duties. 46il. Officers and agents may be compelled to testify in certain actions. 453. Supplementary proceedings; Attachment. CHAPTER XXV. Sequestration ob Corporate Pkopbety. 463. In general. 464. Application to court. 465. Bringing in creditors to prove claims. 466. Pleadings. 467. Papers to be served on attorney general. 468. Temporary injunction against corporation and officers. 469. Injunction staying action by creditors in certain cases. 470. Requisite of injunction against corporation. 471. Collection of amount due on stock subscriptions. 472. Temporary receiver. 473. Additional powers and duties of temporary receiver. 474. Permanent receiver. 475. Additional duties and liabilities of permanent receiver. 476. Effect of judgment of sequestration and appointment of receiver. 477. Distribution of property by jiiflgment. CHAPTER XXVI. Voluntary Dissoldtiok. Without Judicial Proceedings. 478. Dissolution before beginning business. 479. Dissolution before expiration of time limit. 480. Meeting and consent of stockholders. 481. Effect of dissolution. 482. Effect on obligations of corporation. 483. Dissolution at termination of corporate existence. Through Judicial Proceedings. 484. In general. 485. Nature of proceeding. 486. Practical dissolution without judicial proceedings. 487. Necessity that dissolution be beneficia,l to interest of stockholders. 488. Effect of pending suits by stockholders or artion by attorney general. 489. Duty of directors to present petition. 490. Petition when directors do not agree. TABLE OF CONTENTS. XXI Par. 491. Contents of petition. 493. AflSdavit to be annexed to petition. 493. Amendment of schedules annexed to petition. 494. Where petition presented. 4(95. Order to show cause. 496. Publication of order to show cause. 497. Service, entering and filing order to show cause. 498. Notice to attorney general. 499. Reference, hearing and decision. 500. Motion for final order. 501. Granting final order. 502. Vacating final order: Costs: Appeal. 503. Effect of dissolution generally. 504. Effect on corporate obligations and liabilities. 505. Certain sales', transfers and judgments after filing petition void. 506. Directors as trustees on dissolution. 507. Appointment and powers of temporary receiver. 508. Application for appointment. 509. When receiver to be appointed: Vacating order. 510. Possession of property by receiver. 511. Injunction restraining creditor. 512. Powers, duties and liabilities of receiver. 513. Appointment and powers of permanent receiver. 514. Who may be appointed. 515. OmiBsiou, defect or default of receiver. CHAPTER XXVn. Action foe Dissolution. Corporations Generally. 516. Grounds for dissolution. 517. Who may maintain action. 518. When attorney general must bring action. 519. Application to court: Reference. 520. Venue in action by attorney general. 521. Pleading: Parties. 532. Officers and stockholders as parties to action: Separate a^"'iHo;is. 794. Incorporation. 795. Alteration or extension of route. 796. Powers. 797. Existing routes and extensions. 798. When stage-coach corporatiojis common carriers witliin Public Service Commission Lave. 799. When consent of local authorities recjiiired. TABLE. OP CONTENTS. Xxix Par- Telegraph and Telephone Corporations. 800. Incorporation. , , 901. Construction of lines. . : 802. Extension of lines. 803. Condemnation of property. 804. Right-s and remedies of abutting owners. 805. Construction of contracts for right of way. 806. Condition upon granting of telephone service. 807. Telephone rates; discrimination. 808. Transmission of dispatches. 809. Limiting liability. 8ilO. Consolidation of corporations. 811. Special policemen. Tramiuay Corporations. 812. Incorporation. 813. Powers. 814. Right to acquire land by condemnation. 815. Crossings. Tunrpike, Plank-Road and Bridge Corporations. 816. Incorporation. 817. Location of ofl&ce of corporation. 818. Proof of incorporation. 819. Extension of corporate existence. ,. : 820. Consolidation of corporations; sale of franchise. 8ai. Sale of rights, franchises and property to county. 822. When stockholders to be directors. 823. Acts of directors prohibited. 824. Restrictions on location of road. 825. Agreement for use of highway. 826. Application to board of supervisors. 827. Commissioners to lay out road. 828. Possession of and title to real estate. 829. Change of route; extensions and branches. 830. Use of turnpike road by plank road. 831. Width and construction of road. 832. Construction of bridges; obstruction of rafts prohibited. 833. Certificate of completion of road or bridge. 834. Gates, rates of toll, and exemptions. 835. Location of gates and change thereof. 836. Mile-stones, guide-posts and hoist-gates. 837. Toll-gatherers. 838. Penalty for running gate. ■839. Inspectors. 840. Highway labor upon line of plank road or turnpike. 841. Hauling logs and timber. 842. Encroachment of fences. 843. Penalty for fast driving over bridges. 844. Taxation and exettiption. 845. Actions for penalties. XXX TABLE OF CONTENTS. Par. 846. Suirender of road. 847. Dissdlution of corporation; road to be highway. 848. Town must pay for lands not originally highway. WaterworTcs. Corporations. 849. Incoi-poration. M.'jU. Municipal ordinances. 851. Duty to supply water generally; contracts wdth munioipalities. S52. Rates. 853. Powers. Sa4. Survey and map. 8i>5. Condemnation of real property. 856. RigHit to contract with other cities, villages and towns; amended certificate. CHAPTER XXXIV. DisTEK'T Steam Corporations. 857. In general. 858. Examination of meters. 859. Entry by agent to cut off steam. 860. Duties as to service and rates. CHAITER XXXV. Co-operative Corporations. 861. Definition. 863. Incorporation. 863. Corporate name. 864. Application of Corporate Law. 865. Directors: Officers. .566. Amendment of certificate. 867. Stock and stoekliolders. 868. Written \ote of absent stockholders. 869. Subscription of stock in other corporations. 870. Purchasing business of other corporations or persons. 871. Earnings; dividends. 87a. Dissolution. 873. Annual report. 874. Existing co-operative cornorations or associations. 875. Violation of statute; excessive dividends; criminal liability. CHAFTER XXXVI. Taxation. Corporation Tax. 876. Organization tax. 877. License tax on foreign corporations. 878. Franchise tax on corporations. - ■ 879. Corporations issuing stock without nominal or par value. 880. Certain corporations exempt from tax on capital stock. TABLE OF COBTTENTS. XXXi Par. 881. Additional franchise tax on transportation and transmission corporations and associations. 882. Franchise tax on elevated railroads or surface railroads not operated by steam. 883. Franchise tax on water-works companies, gas companies, electric or steaia heating, lighting and power companies. 884. Francfhise tax on insurance corporations. 885. Franchise tax on trust companies. 886. Taxation of investment companies. 887. Franchise tax on savings banks. 888. Purchase of state bonds; credit to be given. 889. Tax upon foreign bankers. 890. Reports of corporations. 89il. Value of stock to be appraised. 892. Further requirements as to reports of corporations. BO'S. Powers of tax commission to examine into affairs of corporations. 894. Notice of statement of tax; interest. 895. Payment of tax and penalty for failure to report or pay tax. 896. Revision and readjustment of accounts by tax commission. 897. Review of determination of tax commission by certiorari. 89-8. Regulations as to certiorari. 899. Warrant for collection of taxes. 900. Information of delinquents. 901. Action for recovery of taxes; forfeiture of charter of delinquent corporation. 903. Reports to be made by secretary of state. 903. Exemptions from otlier state taxation. 904. Application of taxes. 905. Limitation of time. Franchise Tax on Business Corporations. 906. Definitions. 907. Franchise tax on corporations baaed on net income. 908. Corporations exempt. 909. Reports of corporations to tax commission. 910. Reports by corporation on basis of fiscal year. 911. Verification and form of repprtsi. 912. Computation of tax. 913. Taxation of. corporations acquiring assets or franchises of other corporations. 914. Rate of tax. 915. Penalty for failure to report. 916. Powers of tax commission. 917. Revision and readjustment of accounts by tax commission. 91i8. Review of determination oi tax commission by certiorari. 919. Audit and statement of tax. 920. Notice of tax. 921. When tax payable. 922. Corrections and c]ta,nges. 9i23. Warrant for collection of ta^^es. 924. Action for recovery of taxes; forfeiture of Charter by delinquent corpora- tions. XXXll TABLE OF OONTKNTS. Par. 925. Deposit of revenues collected. 926. Disposition of revenues collected. 927. Secrecy required of officials; penalty. 928. Exemption from certain other taxation. 929. Limitation of time. 930. Personal property defined. Tax on Transfers of Stock. 931. Amount of tax. 932. Construction and application of statute. 933. Stock without nominal or par value. 934. Stamps generally. 935. Sale of stamps. 936. Penalty for failure to pay tax. 937. Canceling stamps; penalty for failure. 938. Contracts for dies. 939. Illegal use of stamps. 940. Registration. 941. Books and records to be kept. 942. Civil penalties; procedure. 943. Effect of failure to pay tax. 944. Application of taxes. 945. Refund of tax erroneously paid. FORMS [References are to pages.] CERTIFICATES UNDER BUSINESS CORPORATIONS LAW Page Certificate of incorporation of a company all of whose shares are to have a designated par value ...■.■..' 961 Certificate of reorganization. •'. . . . : -. . . i ; . . . . 962 Certificate of payment of one-half capital stock 963 Agreement for consolidation of the Vulcan Iron Works, Inc., and the American Foundry Co., forming the American Iron Corporation 964 • CERTIFICATES UNDER GENERAL CORPORATION LAW Certificate of amendment to correct informality and eliminate unauthorized matter ''.... .......' ... 972 Amended certificate to remedy defective acknowledgment. . . ; 972 Statement and designation under section 16 of the General' 'Corporation Law, by a foreign corporation 973 Verification of charter or certificate of incorporation of foreign corporation . 974 Revocation, by person designated, of consent to act as designee 975 Appointment of new designee by foreign corporation ; : ■ . 975 TABLE OF CONTENTS. XXXUl Page Certificate of surrender of authority to do business in New York by a foreign corporation i 975 Voting trust agreement 976 Proxy for stockholders' meeting 978 Consent of stockholders to extension of existence 978 Certificate of extension of existence by written consent of the stockholders, without a meeting 979 Certificate of extension of existence by vote 979 Notice of meeting of stockholders to extend corporate existence 980 Waiver of notice of meeting of stockholders 981 Certificate of change of name of the A. B. Company to X. Y. Corporation. . 981 Affidavit of publication of notice of stockholders' meeting to change name of A. B. Company to X. Y. Corporation. 983 Certificate of dissolution , 984 Dissolution by stockholders 984 Stockholders ' waiver of notice 986 CERTIFICATES UNDER STOCK CORPORATION LAW Consent of stockholders to mortgaging of property 988 Certificate of increase of capital stock by resolution of the board of directors. , .,.,....,.,...... 989 Certificate of reorganization .' 990 Stockholders' consent to change location of principal ofSce of the corpo- ration. . . .,...........: 991 Certificate of change of location of principal office of the corporation 992 Certificate of merger of the Union Steel Corporation by the Consolidated , Rolling Mills, Inc. . , ; v 993 Certificate of amendment of certificate of incorporation of the A. B. C. Company, Inc. .' 995 Copy of minutes of stockholders' meeting to amend certificate of incorpora- tion of the A. B. C. Company, Inc ; 996 Certificate of incorporation of a liusiness corporation authorized to issue ' , shares without designated par value and shares with par value and pre- . f erred as to principal 997 Clause for certificate of incorporation which provides for the issuance of . shares without nominal, or par value and shares with nominal or par value, preferred as to dividends,, but without preference as to principal. . ; 99P Certificate of amendment to. increase number of authorized shares and stated capital 999 Certificate of proceedings of stockholders ' meeting, „tp amend certificate of incorporation pifrsuant to' § 22, Stock Corporation Law, to increase the number of authorized shares and amount of stated capital. 1000 (jertificate as to debts and liabilities to be annexed to certificate of amend- ment red-ucing amount of stated capital 1002 Certificate of amendment pursuant to § 24 of the Stock Ccrporation Law of the A. B. Corporation. . . , .:..,. i .;.;.■■ - ^ •■ ■ • ■ If"" XXXIV TART.w OF CONTENTS. 1 Page, Affidavit of custodian of stock-boofc to be annexed to ' certificate of amend- ment when signed by all of the stockholders 1004 Affidavit of president (or a vice-president) and secretary (or treasurer) to" be annexed to certificate of amendment when signed by such officers 1004 Stockholders' consent to increase (Or reduce) nuniber of directors of the A. B. C. Gorporation... ....."....:... 1005 Transcript of minutes of stockholders' meeting of the X. Y. Z. Company, Erie., held for the purpose of increasing (or reducing) number of direc- tors ; : ; 1006 Annual report of domestic corporation 1007 . Annual report of foreign corpofatibii 1007 Subscription for partly paid shares , 1008 Certificate of classification of capital stock . 1008- Pref erence clause with sinking fund and redemption provisions , . 1011 Change of amount of authorized capital stock by a majority of the stock- holders at a meeting 1012 Change of amount of authorized capital stock by unanimous written con- sent of stockholders withouta meeting.. . . ..,.,.-... . . .v. 1013 Change of number and par value of shares of stock 1014 Bequest for statement 1016 CERTIFICATES UNDER TEAWSPORTATION CORPORATIONS LAW Certificate of incorporation of the Mohawk Ferry Corporation 1017 Affidavit of payment. of one-half capital stock of the Mohawk Ferry corpo- ration ....;.. ; 1017 Certificate of incorporation of the Sun Navigation Corporation 1018 Certificate of payment of one-half capital stock 1019 Certificate of incorporation of the Inter- Village Auto-Eus Lino, Inc 1019 Certificate of alteration (or extension) of route of the Inter- Village Auto- Bus Line, Inc.. 1020 Certificate of incorporation of Garnet Tramway Corporation 1021 Certificate of incorporation of Producers ' Pipe Line Corporation 1032 Certificate of incorporation of the Metropolitan Gas & Electric Corporation. 1023 Certificate of incorporation of the Bethlehem Water- Works Corporation .... 1024 Permit of village trustees 1026 Certificate of incorpora,tion of the Jamesville Telephone Lines, Inc 1026 Certificate of incorporation oD>Bed Creek Bridge Corporation 1027 Certificate of incorporation of Harbor Freight Terminal Company, Inc 1028 MISCELI-ANEOtlS CORPORATION FORMS Agreement to form corporation and take stock 1030 Minutes of meeting to form corporation. . '. 1031 "Proxy for first subscribers' meeting after filing of certificate of incorpora- tion- •••■• 1032 Assignment of subscription for stock [ 1032 TABLE OF COBTTBITTS. XXXV Waiver of notice of incorporator's meeting. _ 1033 Waiver of notice of first meeting of directors 1033 Letter offering to sell business to corporation 1033 Minutes of first meeting of subscribers to stock after filing of certificate of incorporation 1034 Adinutes of first meeting of directors 1035 Certified copy of resolution designating depositary. . ... .; 1037 Notice that partnership has been dissolved and succeeded by a corporation. . 1038 Treasurer's bond (individual sureties) 1038 ?y.laws 1039 SPECIFIC OBJECTS OF BUSINESS CORPORATIONS Accounting. 1043 Advertising. 1043 Agency, general 1043 Agency, insurance. 1044 Agency, mercantile. . . . 1044 Agency, forwarding. . 1044 Agency, real estate. . ''. 1044 Air eraft :'■'■ 1045 Ammunition .....'. 1045 Ajfparel •.'■.■ 1045 Arms : ....;..'..... 1046 Art Shop ; :.:;.:.;..•....... io46 Bakery ;;..:.:,;; io46 Brewing '■'■ 1046 Brick making 1047 Bridge building :: !..... . 1047 Brokerage 1047 Building : . . : ■ • 1047 Building materials .........' i .. 1^4'^ Butcher : . : : • ■ ■ ; ; ■ 1047 Canvas goods 104S Chemicals . ■ ■ • ■ ••••■• • ■ • 104S Concrete mixers '.'..'..'.'.'.' ••■■■■,■,■, 1048 Confectionery ..'..■.... ■ • • • 104S Contracting • 1040 Dairy : .•• ;.:..::.. .V:. lo4<. Dfetiartment store ■ -.r"^ ■ ■■■ •'. "f rtiKojj-;! '•- ' msn Dietective agency • ^"'^" _. ..„ ... 1050 Distillery - • • : •^; ; ; •; ; Dredging, wrecking and salvage ......:. ;:?'.'. 1050 Drug store ^"^'- XXXVl TABLE OF CONTENTS. Page Dyeing .......; ;; :■. . : . . . 1051 Electricians '.' . . . . . . 1051 JExpress and transfer , 1051 Farming , ;' 1053 Farming machinery ., 1052 Farm produce 1052 Fire extinguishing equipment. . . . ; . ; . . . ; 1052 Fireproofing 1053 Fishing 1053 Florist 1053 Fuel 1054 Furniture .... . .,, . .i. . . . 1054 Furs 1054 Garage 1054 Glass factory 1054 Gloves 1055 Jewelry 1055 Hotel ., 1055 House cleaning , 1055 Holding company 1056 Kjiitting mills 1056 Laundry 1056 Leather goods 1056 Lumber 1057 Lunch rooms 1057 Machine shop 1057 Meats 1057 Merchandising ; 1058 Metal furniture 1058 Millinery 1058 Milling. , 1058 Mining 1058 Motor vehicles 1059 Optician 1059 Paint manufacturing. . . . .» 1059 Painting and paperhanging 1060 Paper and pulp 1060 Photograph studio 1060 Plumbing io60 Plumbers' and Steam&tters' supplies 1061 Provisions loei Publishing and printing _ ^Qg-^ Seal estate improvement 1061 TABLE OF CONTEKTS. XXXVii Page Road construction lOgg Roofing and sheet metal IO63 Rubber goods 1063 Safes 1062 Securities brokerage 1063 Ship building ....,,.. 1063 Ship chandlery ; 1063 Shirt factory ; 1064 Soaps and cosmetics 1064 Sporting goods store 1064 Stationery 1064 Summer resort 1065 Steam boilers and fittings 1065 Structural steel ....'. 1065 Tannery ..:...'.. 1065 Taxi service , 1066 Tea, coffee and spices (premiums given with purchase) 1066 Textiles 1066 Theatrical . 1067 Tires 1067 Tobacco 1067 Tool making 1067 Trucking 1068 Warehousing 1068 PROCEDURAL FORMS Complaint against directors for waste of corporate funds 1069 Complaint against directors for fraud and concealment 1072 Petition to set aside election of directors. 1073 Petition to change name 1077 Order changing name 1078 Petition for leave to sell real estate ..,;.,..... .1079 Resolution of board of trustees to sell real estate. . . ....;.!:;: 1080 Order authorizing sale of real estate 1081 Deed with recitals. : .' ..; 1081 Petition for leave to mortgage real estate 1082 Order granting leave to mortgage real estate '. 1084 Petition by non-consenting stockholder for aptpraisal of stock on sale of ' ■ property and franchise- of corporation 1085, Form of notice of objection to sale of property and franchises 1086 Order granting application and appointihg appraisers to appraise stock on sale of corporate property and franchises ..;..... ^ .,.....-..•. 1087 Complaint in action for sequestration..;:. : 1: . j ;;....'......;.... , . . 1088 XXXVlll TABLE OF CONTENTS. , , Page Judgment in action for sequestration ■ ■ ■ ■ ^^^'^ Complaint in action for dissolution. 1090, lOU;' Judgment la action for dissolution 1093 Complaint in action to annual corporation 1095 Petition and schedules in proceedings for voluntary dissolution 1096 Petition in proceedings for voluntary dissolution 1098 Order to show cause before referee with injunction in voluntary dissolution proceedings 1099 Order to show cause, appointing temporary receiver, etc., in voluntary disso- lution proceedings 1100 Kotice to attorney-general in voluntary dissolution proceedings llOl Bef eree 's report in voluntary dissolution proceedings 1101 Notice of filing referee's report in voluntary dissolution proceedings 1104 Notice of motion to confirm report of referee and for order of dissolution. . 1105 Order confirming referee's report, appointing receiver and for injunction in voluntary dissolution proceedings 1105 Order for dissolution and appointing permanent receivers in voluntary disso- lution proceedings .' 1106 Order appointing temporary receiver in sequestration 1108 Order appointing receiver with temporary injunction 1109 Order appointing temporary receiver 1111 Bond of temporary receiver 1111 Order extending powers of temporary receiver 1112 Petition for accounting by temporary receiver 1113 Order Discharging temporary receiver 1116 Order discharging temporary receiver and canceling bond 1117 Petition for instruction as to bringing suit 1117 Order permitting receiver to bring suit 1118 Petition for leave to continue business 1118 Order authorizing continuance of business 4 j . 1119 Order granting leave to receiver to issue certificates 1119 Notice of motion for order extending powers of temporary receiver and directing sale of property 1120 Petition for order extending powers of temporary receiver and directing sale of property. s , ,. . 1121 Order extending powers 01 temporary receiver and authorizing receiver to sell 1123 Petition for instructions as to sale of real estate , , 1124 Order authorizing receiver to sell property. , 1125 Agreement by receiver with counsel 1126 Order approving agreement by receiver with counsel 1127 Notice of motion for order to prove claims. , 1127 Petition for order requiring creditors to prove claims 1128 Order requiring creditors to prove claims 1129 XABLK OF CONTENTS. XXXIX Page Notice to creditors to prove claims 1130 Receiver's notice to pay debts and present claims 1130 Notice by receiver of meeting of creditors 1131 Report and account of receivers 1132 Order of reference as to interlocutory account 1133 Report of referee on interlocutory accounting 1134 Order confirming report of referee on interlocutory accounting 1137 Notice of motion on application for final settlement 1139 Account of receiver, including copy of notice to present claims and copy notice of presentation of account 1139 Order appointing referee to examine and report upon receiver's accounts. . . . 1142 Order settling receiver's accounts 1143 Receiver's final report 1144 Notice of accounting 1145 Notice of motion to discharge receiver 1146 Temporary injunction 1146 Index to Forms 1149 General Index 1163 TABLE OF CASES CITED. [jii] TABLE OF GASES CITED [References are to pages] A • Page Aaronson v. Mayer Brewing Co., 8.9 Misc. 289, 60 N. Y. Supp. 523 490 Abbot V. American Hard Rubber Co., 33 Barb. 578, 21 How. Pr. 193. . .326, 472 Abbott V. Harbeson Textile Co., 163 App. Div. 405, 147 N, Y, Supp. 1031. . 347 Abbott V. Le Prevost, 166 App. Biv. 40, 151 N. Y. Supp. 616. ........... 475 Abbott V. Petersbergh Granite Quarrying Co., 62 Hun 622, 17 N. Y. Supp. 440. . . . 119 Abrams v. Manbattan Consumers Brewing -Co., 142 App. Div. 39S, 136 N. Y. Supp. «44 455 Abyssinian Baptist Church, Matter of, 13 N. Y. Supp. 919, 37 St. Rep. 764 67 Acken v. Coughlin, 103 App. Div. 17 93 N. Y. Supp. 70O 739 Acker, Merrill & Condit v. Richards, 63 App. Div. '305, 71 N. Y. Supp. 92.9 44 Acorn Brass Mfg. Co. v. Ruteaberg, 147 App. Div. 533, 13a N, Y. ^Sijpp. 600 ..763, 769 Adams v. Empire Laundry Machinery Co., 4 N. Y. Supp. 738, S& St. Rep. 271 ......r...... '. : 37 Adams v. Lamson Store-Service 'Co., 59 Hun 127, 13 N. Y. Supp. 118..... 785 Adams v. New Jersey Steamboat 0°-, 151 N. Y. 163, 45 rN. E, 369 ,:. 844 Adams v. Slingerland, «7 . Apjp. , Div. 312, 84 N. Y. Supp. 32^ S8i2 Adams v. Wallace, SZ App. Div. 117, 81 N. Y. Supp. 848 .082, 283 Adriance v. Roome, 50 Barb. 399. , 490 Aetna Explosives Co., Inc., v. Bassick, 176 App. Div. 577, 163 iN. Y. Supp. 917 .. , 493, 498 Agate v. Sands, 73 N. Y. 630 ,.... ,'.'■ 3«3 Agnelli v. SJiatzin,. 68 Misc. 320, ^23 N. Y. Supp. 797 397 Aiken, Lambert & Co. v. Haskins, 27 Misc. I629, '59 N. Y. Supp. 486 773 Alexander v. Brown, 9 Hun 641 523 A,lexander v. Cauldwell, 83 N. Y. 480 491, 494 Alexander v. Donohue, 143 N. Y. 203, 38 N. E. 263. . ,,. 347 Alexander v. iSearcy, '81 Ga. 536 , , 242 Alexandria Bay S. B. Co. v. N. Y. O. So H. E. R. Co., 18 App. Div. 527, 45 N. Y. Supp. .1091 , : •:...■ ,... 9* Allen V. McCormiek, 110 Misc. S54, 180 N. Y. Supp. 116. . , 643 Alpha-.Pprtland iCement Co. v. Schrsutwieser, 315 Fed. 1:982 ; 287 Alpha-Portland Cpment Co. v. Sdiratwieser, 221 Fed. «5&. ....... 133, 135 Alpha-Portland C. Co. v. Sehratwieser F. C.Co., 146 App. Div. 571, 131 ; N. Y. Supp. 143 773 Abing Co. v. New England Quartz Co., 66 ,App. Diy. 473, 73 N. Y; Supp, , 347_ . . . .• ■.. ., 753, 7?S [xliiil Xliv TABLE OF CASES (JITED. Page Althause, People ex rel. v. Glroux Consolidated M. Co., lag App. Div. &17, 107 N. Y. Supp, 188 7a9 Althause v. Giroux, 56 Misc. 508, 107 N. Y. Supp. 191 221, 727 Althause v. Guaranty Trust Co., 78 Misc. 181, 137 N. Y. Supp. 945 7a6 American Baptist Home Mission Society v. Foots, 5a Hun 307, 5 N. Y. Supp. 336 ., , 538 American & British Mfg. Co. v. International P. Co., 173 App. Div. 319, 159 N. Y. Supp. 583 743 American Broom & Brush Co. v. Addickes, 19 Misc. 36, 42 N. Y. iSupp. 871 763 American Can Co. v. Grassi Contr. Co., 102 Misc. 330, 168 N. Y. Supp. 689 770 American Case & Register Co. v. Griawold, 143 App. Div. 807, 128 N. Y. Supp. 206 764 American Cigar Lighter Co., Matter of, 77 Misc. 643, 13i8 N. Y. Supp. 455 54 American Contractor Pub. Co. v. Bagge, 91 N. Y. Supp 73 763 American Dramatic Fund Assn.; Matter of, 3 N". Y. Supp. 793, 32 Abb. N. C. 231 584 American Fidelity Co. v. Leahy, 189 App. Div. 242, 178 N. Y. Supp. 511.. 748 American Ink Co. v. Riegel Sack Co., 79 Misc. 431, 140 N. Y. Supp. 107 . . 773 American Press. Assn. v. Brantingham, 75 App. Div. 435, 78 N. Y. Siipp. 305 . 125 American Eapid Tel. Co. v. Hess, 125 N. Y. 641, 27 N. E. 919 864 American Silk Works v. Solomon, 4 Hun 135,^ 6 T. & 0. 852 . 152 American Tartar Co. v. American Tartar Co., 57 App. Div. 411, 68 N. Y. Supp. 236. . . . . '. "..■'. 57 American Typefounders Go. v. Conner, 6 Misc. 391, 26 N. Y. Supp. 742 755 Anderton v. Aronson, 3 How. Pr. N. S. 216 ; ; 348 Anderton v. Wolf, 41 Hun 571, 4 St. Rep. 101 '.'. 3'45, 3!46 Andrews v. Delhi & Stamford Telephone Co., 36 Misc. 23, 72 N. Y. Supp.' 50 864 Andrews v. Murray, 9 Abb. Pr. 8 392 Andrews v. North River Elec, L. & Power Co., 34 Misc. 671, 53 N. Y. Supp. 810 : 831 Angel v. Silsbury, 19 How. Pr. 48 574 Angldile Computing Scale Cb. v. Gladstone, 164 App. Div. 370, 149 N. Y. Supp. 807 . . :t. . 7i60, 761, 763, 770 Anglo-American Provision Co. v. Davis Provision Co., 169 N. Y. 506, 62 N. E. 587.. . ;..'....... .1, 4,' 777, 779 Anonymous, 12 Modern S5& ; 715 Anthony v. American Glucose Co., 146 N. Y. 407, 41 N. E. 23. 102 Antipoller Mutual Aid Society. Maitter of, 100 Misc. 589, 166 N. Y. Supp. 386. . . .' 55 Appelbaum v. Star Fire Ins. Co., 115 App. Div. 117, 100 N. Y. Supp. 747; . 803 Appleton V. Am. Malting Co.; 65 N.' J. Eq. 375 343 Appleton V. Weldh, 20 TVtisc. 343, 45 N. Y. Supp. 751 .. ; 613, gSl Application of R. E. R. Co., Matter of, 123 N. Y. 351, 25 N. E'. 381 881 Archer v. Dunham, 89 Hun 387, 35 N, Y. Supp. 387 127 Archer v. Hesse; 164 App. Div. 493, 150 N. Y. Supp. 396. ...... .l.......... 754 Briggs V. Penniman, 8 Cow. 387, 18 Am. Dec. 454 648 Briggs V. Waldron, 83 N. Y. 582 286 Brightson v. Glaflin, 225 N. Y. 469, 122 N. E. 458 195 Brinkerhoff v. Bostwiek, 88 N. Y. 52: . . .. .f 357 Biinckerhoff v. Bostwiek, 99 N. Y. 185, 1 N. B. 663 645 Brisay v. Star Co., 13 Misc. 349, 35 Jf. Y. Supp. 99 5a8, 533 Brisbane v. Delaware, Xaekawanria & Western R. Co., 94 N. Y. 304. .=. . 19!) Brisbane v. Delaware, Laekawanna & Western R. Co., 25 Hun 438 ...... 311 Bristor v. Smith, 158 N. Y. 157, 53 N. E. 43 389, 390 Bristor v. KT'eitz; 2'3 Misc. 55, 49 N- Y. Supp. 404 ; ; 290 Britton, People ex rel. . y. .American. Press. Assn., 148 App. Div. 951, 133 N. Y. Supp. 316 ..-...::: ....::..: .-. . 233 Broadway Ins. Co., Matter of, 23 App. Div. 28i3, 48 N. Y. Supp. a99. .598, 607 Broadway & ^Seventh Ave. R. R. Co.- Matter of, 73 Hun 7, 25 N. Y. Supp. 1080. . ■ 553 Broadway Theatre Co. v. Dessau Co., 45 App. Div. 475, 61 N. Y. Supp. 335. 361 Brock V. Poor, 21'6 N. Y. 387, 111 N, B. 229 340, 353 Brock V. Poor, 167 App. Div. 708, 153 N. Y. Supp. 343. . . .'.' 354 Bronson,. Matter of, 177 App. Div. :374, 164 N. Y. Supp. 179. . 469, 875 .Bronx Gas & Electric Co. y. Public Service Com., 19.0 App. Div. 13, 180 N. Y. Supp. 38. . ; . .-. ...... ■. .'. . : ■ . ■ 835, 836 Brookf ord Mills v. Baldwin, 154 App. Div. 553, 139 N. Y. Supp. 195 764 Brooklyn City R. R. Co. v. Whalen, 111 Misc. 348; 181 N. Y. Supp. 308. . . . 858 Brooklyn El. B. Co., MaAter of, 135 N. Y. .434, i26 N.. E. 474. .. . .- 655 Brooklyn Heights R. Coi v. Brooklyn City R. Co., 151 App. Div, 465, 135 N. Y. Supp. 990 ..;,...: 521, 523 liv TABLE 01' CASES CITED. Page Brooklyn Heights R. <)o. v. aty of Brooklyn, 153 N. Y. 344, 46 N. E. &0I9. . 409 Brooklyn Heights Realty Co. v. Kurtz, 115 App.-Div. 74, 100 N. Y. Supp. 733. . 326 Brooklyn Steam Transit.Co. v. City of Brooklyn, 78 N. Y. 584 651, 652 Brooklyn Union Gas Co. v. City of New York, 115 App. Div. 69, 100 N. Y. Supp, 635. ... • ■ • • ■ 835 Brooklyn, W. & N. R. Co., In re, 73 N. Y. 345., .*, 651 Brookman v. Merchants' Savings Bank, 31 Misc. 191, 65 N-.Y. Supp. 54. . .736 Brown v. A. B. O. Fence Co., 53 Hun 151, 5 N. Y. Supp. 95 391 Brown V. Actors' Fund of America, 103 Misc. 578, 171 N. Y. Supp. 683 491 Brown v. Arbogast; & Bastian Co., 168 App. Div, 603, 147 N. Y. Suj>p. »96. 127 Brown v. Brittpn, 41 App. Div. 57, 58 N. Y. Supp. 353 , ........ 372 Brown v. Buffalo, N. Y. & Erie ».. Co., 37 Hun 342 345 Brown v. Uark, 81 Hun 367, 30 N. Y. Supp. 801.., , 424 Brown v. Mitchell-Lewis Motor Co., 174 App. Div. 420, 161 N- Y. Sapp.il62. 57,1 Brown v. Superno Co., Inc., 181 App. Div, 430, 168 N. Y. Supp. 918 127 Brown v. Utopia Land Co., 118 App. Div. 364, 103 Ni Y. Supp. 50. . . .851< 386 Brown Seed Co. v. Richardson, 53 Misc. 517, 103 N. Y. Supp. 343. 764 Browne, People ex rel. v. Kpenig, 133 App. Div. 756, 118 N. Y. Supp. 136 : 108, 330, 264 Browning, King & Co., People ex rel. v. Stover, 145 App. Div. 259, 1,30 N. Y. Supp. 92........... ;...., 748 Bruff V. Mali, 36 N. Y. 200, 34 How. Pr. 338 , 138 Bruen v. Whitman Co., 100 App. Div. 248, 94 N. Y. Supp. 304 547 Brun V. Northwestern Realty Co., 53 Misc. 538, 102 N. Y. Supp. 473 545 Buchanan v. Prospect Park Hotel Co., 14 Misc. 435, 35 N. Y. Supp. 713 544 Buckley v. Harrison, 10 Misc. 683, 31 N. Y. Supp. 999 ; . . .1618, 743 Buckley v. Stansfield, 155 App. Div. 735, 140 N. Y. Supp. 953 380, 3«1 Budd V. Munroe, 18 Hun 316 . . ; ..... . 180 Buell V. Baltimore &-0. S. W. R. Co., 39 App. Div. 336, S7 N. Y. SUpp. 111. 793 Buffalo & Allegany R; R. Co. v. Cary, 36 N. Y. 7^. . ; 31, 16fi Buffalo; City of, v. Buffalo Gas Co., 81 App. Div., 505, 80 N. Y. Supp. 1093. 841 Buffalo Electro-Plating Co. vj Day, 151 App. Div. 237, 135 N. Y. Supp; 1054 .....1..... ...;...' ....318, 505 Buffalo German Ins. Co. v. Third National Bank, 162 N. Y. 163, 56 N. E. '521. : ; . . ; ;.;..;; 173 Buffalo lee Co., Matter of, 37 Ap>p. Div. 144, 55 N. Y. Supp. 783 638 Buffalo & Jamestown R. Co^ v. Clark, 82 Hun 359 14,9 Buffalo & Jamestown B. Co. v. Gifford, 87 N. T. 294 , , 148, 149 Buffalo Loan Co. v. Medina Gas Co., 13 App. Div. 199, 4'3 N. Y. Supp. 781. 512 Buffalo & New York City E. Co. v. Dudley, 14 N. Y. 336 . . ; 150 Buffalo, New York & Erie R. Co., Matter of, 37 N. Y. Supp. 1048, 74 St. Reps 345 aei, i,-ifi- Buffalo Loan, T. & S. D. Co. v. Medina Gas Co., 163 N. Y. 67, 56 N. E. 505 .,....,.:. :• ...380, 481, 483, 489 Buffalo Loan Co. v. Medina Gas Co., IS App. Div. 199, 48 N. Y. Supp: 781. 489 Buker v. Leighton Lea Assn., «3 App. Div. 507, 71 N. Yi Supp. 610 154 Buker V. Steele^ 43 N. Y. Supp. 346 • . .■ • 232 Bulkley v. Wihitcomb, 131 N. Y. 107, 24 N. B. 13 303 TABLE OF OASES CITED. Iv Page BuloTO, V. Bamett, Inc., 114 Misc. 94, 186 N. Y. Supp. 90 , 451 Bump V. New York, N. H. & H. E. Ck)., 38 App. Div. 60, 55 N. Y. Supp. 96S. 775 Bunke v. New York Telephone . Co., 110 App, IJiy. 241, 97 N. Y. Supp. 66. 863 Burden v. Burden, 159 N. Y. 287, 54 N. E. 17 33, 75, 205, 337, 338 •: , 429, 431, 535 Burden v. Burden, S App, Div. 160, 40 N. Y. Supp. 499 170, 533 Burgoyne v. Eastern & W. Ky. Co., 13 N. Y. Sojp^- 537 .741 Burke v. Cialveston, Houston & Henderson U. Co., 173 App. Div. 221, 159 N. Y. Supp. 379 760 Burke v. Lincoln-Valentine Co., 28 Misc. 202, 58 N. Y, Supp. 1077 475 Burlingame v. Aetna Ins. Co., 36 App. Div. 358, 55 N. Y. Supp. 287 491 Bumes v. Newcojnb, 89 N. Y. 108 , 637 Burr V. Wilcox, 23 N. Y. 551 aS5, 309 Burrall v. Bushwlck K. Co., 75 N. Y. all , . 105 Burrow v. Marceau, 132 App. Div. 797, 117 N. Y. Supp. 537. . . 85 Burrows v. Interborough Metropolitan Co., 156 Fed. 389 95, 427, 428 Burrows v. Smith, 10 N. Y. 550, , 19 Burrows Co. y. Caplin, 127 App. Div. 3L7, 111 N. Y. Supp. 498 763 Bush V. Gilmore, 45 App. Div. 89, 61 N. Y. Supp. 682 527 Bussman v. Western Transit Co., 9 Misc. 410, 39 N. Y. Supp. 1066 844 Butler V. Frontier, Telephone Co., 186 N. Y. 486, 79 N. E., 716 867 Butler V. Standard Milk Flour Co., 146 App. Div. 735, 131 N. Y. Supp. 451. 782 Butler V. Wright, 186 N. Y, 259, 78 N. E. 1002,. . . , 126 Butler. V. Wright, 103 App. Div. 46:3, 93 N. Y. Supp. 113 188 Butts V. Wood, 37 N. Y. 317. ..... ,, . . 348 Butts V. Wood, 38 Barb. 181 ^ . ,,, 350, 357 Bystrom v. Villard, 175 App. Div. 433, 163 N. Y.^ Supp. 100 371, 373 Caesar v. Bernard, 156 App. Div. 724, 141 N Y. Supp. 659.. 397, 398, 449, . 450 Caldwell v. Mutual Reserve Fund Life Assn., 53 App. Div. 245, 65 N. Y. Supp. 826 .!.;;....<..;..) 326 Calkins v. Atkinson, 3 Lsi,ns. 13.,. ....... : , 69ti Oallanan, People ex rel. v. Keeseville, etc. , E. Co., 106 App. Div, 349, 94 , N. Y. Supp .555.., ,.. , 221, 324 Camacho v. Hamilton Bank Note & Engraving Co., 2 App. Div. 3169, 37 N. Y. Supp. 725 .... ,. '604, 505 Cameron v. Seaman, 69 N. Y. S^Q - 316 Campbell v. American Zylpnite Co., 132 N. Y. 455, 35 N, E. ,853.- 110, 184 jGanandaigua Academy v. McKeehine, 19 Hun 6i3 538 Canadian Agency v. Assets Eealization Co., 165 App. Div. 96, 150 N. Y. . Supp. 758. . . ..„ *..; .rv 154 Canandarqua Academy v. McKechnie, 90 ,N. ,Y. 61'8 70 Cajiandarqua Academy v. McKechnie, 19 Hun 62 69, • 70 Oanavello v. Michael & Co., 31 Misc. 170,(65 N. Y. Supp. 967 553 Candee: v. Cunneen, 92 App. Div. 71, 86 N. Y. Supp. 723. 641 Card V. Gr(?esbick,r 204 N. Y. 301, 97 N.. E. 7;28 .389,. 297 Card V. Mopre, 68 App. Div. 337, ,74 iN. Y., Supp. 18 ;. 30 Ivi TABLE OF CASES CITED. Oardozo v. Brooklyn Trust Co, 36 Am. B. R. 351, S38 Fed. 333.. .455, 456, 464 Carhart v. Auburn Gas Light Co., 33 Barb. 313 83.6 Carl V. Meyer, 51 App. Div. 5, 64 N. Y. Supp. 1077 675 Carlaftes v. Goldmeyer Co., 73 Misc. 75, 139 N. Y. Supp. 39-6 473 Carnaghan v. Exporters' & Producers' Oil Co., .57 Hun 588, 11 N. Y. Supp. 173. 544 Carney v. New York Life Ins. Co., 163 N. Y. 453, 57 N. E. 78 508 Carpenter v. New York & New Haven R. R. Co., 5 Abb. Pr. ,377 301 Carr v. Kimball, 153 App. Div. 835, 139 N. Y. Supp. 253 849, 350, 336 Carr v. Nat. Bank & Loan Co., 167 N. Y. 375, 60 N. E. 649 371 Carr v. Eischer, 119 N. Y. 117, 33 N. E. 396 390 Carrier Engineering Corp. v. International Mfg. Co., 104 Misc. 191, 171 N. Y. Supp. 641 753 Carroll v. Silver Creek Natural Oas & Improvement Co., 153 App. Div. 630, 139 N. Y. Supp. 161.. 833 Carthage, Village of, v. Central New York Tel. Co., 185 N. Y. 448, 78 N. E. 165. . . . . 864 Ca;rvalho v. Brooklyn & J. B. Turnpike Co., 56 App. Div. 533, 67 N. Y. Supp. 539 879, 884 Carvel Court Realty Co., Inc. v. Jonas, 19i5 App. Div. 663 541 Cary v. Schoharie Valley Machine Co., 3 Hun 110, 4 T. & C. 395 586 Casco Nat. Bank v. Clark, 189 N. Y. 307, 34 N. E. 908 537 Cass V. Realty Securities Co., 148 App. Div. 96, 183 N. Y. Supp. 1074 35« 388, 478 Cassagne v. Marvin, 143 N. Y. 393, 38 N. E. 385 ; 173 Cassidy's, Ltd. v. Rowan, 99 Misc. 374, 163 N. Y. Supp. 1079. 760 Castle v. Bell Telephone Co., 49 App. Div. 437, 68 N.' Y. Supp. 483 864 Castle Bradi Co., In re, 145 Fed. 334 435 Castner v. Duryea, 16 App. Div. 349, 44 N. Y. Supp. 708 306 Cataract Power & Conduit Co. v. -City of Buffato, 131 App. Div. 485, 115 N. Y. Supp. 1045 ; 833 Cate V. Fisk, 175 App. Div. 385, 161 N. Y. Supp. 441 541 Cavinato v. Piccirilli, 184 App. Div. 640, 173 N. Y. Supp. 431 . . . . : 49.6 Cawthra v. Stewart, 59 Misc. 38, 109 N. Y. Supp. 770. . 154 Cayadlitta P.R. Co., People ex rel. v. Cummings, 166 N. Y. 110, 69 N. E. 708. 891 Cayuga Lake R. Co. v. Kyle, 64 N. Y. 185. 1^3 Cayuga' Power Corporation, Matter of (opinion of Public Service Comm., 3d Dist., 1917), 13 State Dept. Rep. 383 .' 816 Cayuga Power 'Corporation, People ex rel.- v. Public Service Commission, 336 ■ N. Y. 537, 134 N. E. 105 / 49 Cecil, Matter of, 36 How. Pr. 477 .1 • . 373 Center v. Hoosiek River Pulp Co., 43 Misc. 347, 88 N. Y. Supp. 548 S54 Central New York Tel. & TeK Co. v. Averill; 139 App. Div. 758, 114 N. Y. Supp. 99 ..-.;... 868 Central Park F. Ins. Co. v. Oallaghan, 41 Barb. 448 ; 39 Central Trust Co. v. New York City & N. R. Co., 110 N. Y. 350, 18 N. E. 90. 699 Central Trust Co. v. Pittsburgh S. & N. R. Co., 233 N. Y. 347, 119 N. B. 665. 681 Chamberlain v. Rochester S. P. V. Co., 7 Hun 557. 535, 607 884 TABl.E OF CASES CITED. Ivll Page Cliambers v. Lancaster, 1«0 N. Y. 34.2, 54 N. E. 707 493 Chambers v. Sterling Automobile Mfg. Co., Inc., 163 N. Y. Supp. 574, 197 St. Rep. 574 330, 533 Chandler v. Erie Transfer Co., 13 N. Y. Supp. 573 539 Chandler v. Hoag, 3 Hun 613 334 Chapman v. Chumar, 54 Hun 636, 7 N. Y. 'Supp. 230 291 Chapman v. Lynch, 156 N. Y. 551, 51 N. E. 275 414 Chard v. Ryan-Parker Constr. Co., 183 App. Div. 455, 169 N. Y. Supp. 62i3. . 496 Charleston Illuminating Co. v. Knickeribocker Trust Co., 138 App. Div. 107, 132 N. Y. Supp. 994 445 Chartered Bank of India v. North RJVer Ins. Co., 136 App. Div. 646, 131 N. Y. Supp. 399 547, 548 Ohase v. Lord, 77 N. Y. 1 33, 287, 389 Chase v. Vanderbilt, 62 N. Y. 307 ... ; 93 Chase National Bank v. Faurot, 149 N. Y. 533, 44 N. E. 164 - 70 Chasmar & Co., Matter of, 22 Misc. 680, 50 N. Y. Supp. 1065 678 Chauneey, Matter of, 191 App. Div. 359, ISl N. Y. Supp. 653 .'. .571, 684 Cheever v. Pittsburgh E. Co., 150 N. Y. 59, 44 N. E. 701 513 Chemical National Bank v. Colwell, 132 N. Y. 350, 30 N. E. 644 182, 311 Cheiiaiigo County Mutual Ins. Co., Matter of, 19 Wend. 6i3i5 367, 268, 276 Cheney v. Scharmann, 145 App. Div. 456, 12a N. Y. Supp. 993 290 Chester County Guarantee Trust & Safe Deposit Co. v. Securities Co., 165 App. Div. 329, 150 N. Y. Supp. lOlO: 479 Ohevra Bnai Israel v. Chevra Bikur Cholim, 34 Misc. 189, 53 N. Y. Supp. 712. 86 Chicago, City of, v. Cameron, 32 111. App. 91 242 Chicagd Crayon Co. v. Slattery, 68 Misc. 148, 133 N. Y. Supp. 987 770, 773 Chicago Great Western R. Co. v. State of New York, 197 App. Div. 743 947 Childs V. Harris Mfg. Co., 104 N. Y. 477, 11 N. E. 50 797 Childs V. White, 158 App. Div. 1, 142 N. Y. Supp. 732. 357 Christensen v. Colby, 43 Hun 362 302 ChriBtensen v. Eno, 106 N. Y. 97, 12 N. E. 648 105, 138, 165, 735 Christensen v. Quintard, 55 Hun ©08, 8 N. Y. Supp. 400 165 Christian Jensen Co., Matter of, 128 N. Y. '550, 28 N. E. 665 596 Christian Union v. Yount, 101 U. S. 3'52 720 Christie v. Bowne, 83 Hun 107, 31 N. Y. Supp. 390 114 Churchill v. St. George Development Co., 174 App. Div. 1, 160 N. Y. Supp. 357 .'. . 372, 875 Cianeimino v. Man, 1 Misc. 131, 30 N. Y. Supp. 7013. 277 Citizens' Bank of Buffalo v. Weinberg, 36 Misc. 518, 57 N. Y. Supp; 495.. 397 300, 305, 306 Citizens' Water Works Cq., Matter of, 33 App. Div. 54, 53 N. Y. Stipp. 473. 901 Citizens' Water Works Co. v. Parry, 59 Hun 303, 13 N. Y. Supp. 490 901 City Bank of Columbus v. Bruce & Fox, 17 N. Y. 507 116. 426 City of Brooklyn, Matter of, 143 ^N. Y. 596, 38 N. E. 983 SO 7 City of Buffalo V. Buffalo Gas 'Co., SI App. Div. 505, 80 N. Y. Supp. 1093. S41 City of Chicag-6 v. Cameron,' 3i2 HI. App. 91 342 City of .Jamestown v. Home Telephone Co., 135 App. Div. 1, 109 N. Y. ' Supp. 297 ■ 863 Iviii TABLE OP CASES CITED. Page City of Mount Vernon v. New York Interuiiban Water Co., 115 App. Div. 658, 101 N. Y. Supp. 233 , ,- 898 City of New York v. Bronx Gas & Electric Co., 113 Misc. 166, 184 N. Y. Supp. 658 ■ .: ■ 830 City of New York v. Eppinger & Bussell Co., ITO App. Div. 747, 156 N. Y. Supp. '663 , 4''"^ City of New York v. Fifth Ave. Coach Co., 95 Misc. 366, 158 N. Y. Supp. 740 -^ SS''' City of New York v. Hudson & Manhattan R. R. Co., 188 App. Div. 294, 177 N. Y. Supp. 4 ••■■•■• *° City of New York v. Jamaica Water Supply Co., 181 App. Div. 49, 167 N. Y. Supp. 763 896 City of New York, Matter of, 144 App. Div. 107, 138 N. Y. Supp. 999. , . . . 415 aty of New York v. New York Edison Co., 196 App. Div. 644, 188 N. Y, Supp. 363 837 City of New York v. New York Mutual Gas Light Co., 307 N. Y. 647, 100 N. E. 427 , 818 City of New York v. New York & South Brooklyn Ferry & S. T. Co., 331 N. Y, 18, 131 N. E. 554. . . . ; ; 581 City of New York v. New York & South Brooklyn Ferry & S. T. Co., 104 Misc. 438, 173 N. Y. Supp. 495 583' City of New York v. Union R. Co.; 31 Misc. 451, 64 N. Y. Supp. 483 540 City of New York v. Woodhaven Gas Light Co., ISl App. Div. 188, 168 N. Y. Supp. 439 , 834 City of Oswego v. Peoples Gas & Electric Co., 116 Misc. 354 837 City of Rochester v. Bell Telephone Co., 53 App. Div. 6, 64 N. Y. Supp. 804. So.'! City of Rochester v. Rochester & Lake Ontario Water Co., 189' N. Y. 333, 83 N. E. 154 . . ; 900 City of Utiea v. TJtica Telephone Co., 24 App. Div. ,=>61, 48 N. Y. Supp, 916. . 863 City Trust Co. v. Wilson Mfg. Co., lSA App. Div. 371. 68 N. Y. Supp. 10a4.76'. Canadian Car & Foundry Co., Ltd., 320 N. Y. 270, 115 N. E. 711 ' 793 Dollar Co. v. Canadian Car & Foundry Co., Ltd., 100 Miac. 564, 166 N. Y. Supp. 34 see Donaldson v. Brooklyn Heights R. Co., 119 App. Div. 513, 104 N. Y. Supp. 178 » 546 Donahue v. Keystone Gas Co., 181 N. Y. 313, 73 N. E. 1108 826 Donnelly v. Pancoast, 15 App. Div. 333, 44 N. Y. Supp. 104 312 Donohue v. City Water Power Co., 159 App. Div. 776, 144 N. Y. Supp. 923. 797 Donovan v. Powers Film Products, Inc., Ill Misc. 276, 181 N. Y. Supp. 157 120, 148, 157, 158 Doolittle V. Kevka College, 129 App. Div. 829, 114 N. Y. Supp. 662 522 Dorris v. French, 4 Hun 292, 6 T. & Co. 581 33, 166, 1«8 Dorris v. Sweeney, 60 N. Y. 463. 156 Doty V. Mich. Cent. R. Co., 8 Abb. Pr. 437 799 Doubleday, Page & Co. v. Shumaker, 60 Misc. 237, 113 N. Y. Supp. 83 533 Dougherty v. King, 41 App. Div. 1, 58 N. Y. Supp. 67 557, 558 Douglass V. Ireland, 73 N. Y. 100 288 Douglass V. Merchants' Ins. Co., 118 N. Y. 484, 23 N. E. 806 504 Douglass V. Phenix Ins. Co., 138 N. Y. 309, 33 N. E. 938 71, -541 Dow V. Iowa Central R. Co., 144 N. Y. 426, 39 N. E. 398 161 Downey v. Finucane, 205 N. Y. 351, 98 N. B. 391 36, 37 Downey v. Finucane, 146 App. Div. 209, 130 N. Y. Supp. 988 36 Doyle v. Kimball, 33 Misc. 431, 52 N. Y. Supp. 195 293, 308 Doyle, People ex rel. v. Benevolent Society, 3 Hun 361 75 Dr. David Kennedy Corp. v. Kennedy, 165 N. Y. 353, 59 N. E. 133 59 Drake v. New York Suburban Water Co., 36 App. Div. 499, 50 N. Y. Supp. 836 ,88, 135, 247 Drew V. Longweli, 81 Hun 144, 30 N. Y. Supp. 733 591, 614 Dreyfus & Co. v. Seale & Co., 37 App. Div. 351, 55 N. Y. Supp. 1111 741 Dreyfus & Co. v. Seale & Co., 18 Misc. 551, 41 N. Y. Supp. 875 741 Driscoll V. West Bradley & C. M. Co., 59 N. Y. 96 173 Drosnea, Matter of, 187 App. Div. 425, 175 N. Y. Supp. 628 471, 473, 535 Drucklieb v. Harris, 309 N. Y. 311, 102 N. E. 599 77, ise Dmcklieb v. Harris, 84 Misc. 291, 147 N. Y. Supp. 898 369 Dubarton Flax Spinning Co. v. Greenwich & Johnsonville Ey. Co., 87 App. Div. 21, 83 N. Y. Supp. 1054 758 Dubois, Ex parte, 15 How.#Pr. 7, 6 Abb. Pr. 386 585 593 Ducat v. Chicago, 10 WftU. (U. S.) 410 ' 745 Duche V. Buffalo Grape Sugar Co., 63 How. Pr. 516 543 Dudensing v. Jones, 27 Misc. 69, 58 N. Y. Supp. 178 453 Dudley v. Armenia Ins. Co., 115 App. Div. 380, 100 N. Y. Supp. 818. .235, 351 Dudley v. Gould, 6 Hun 97 ' ^^^ Duesenberry v. Sagamore Development Co., 164 App. Div. 573 150 N Y S"PP-?29 '. ,'...' 149 Duitz V. Kings County Lighting Co., 115 Misc. 14, 188 N. Y. Supp. 67. . . . 839 Duke V. Mount Morris Construction Co., 127 App. Div 39 m N Y Supn ''' • '■■'..: 554 TABLE OF CASES CITED. IxV Page Duubarton Flax Spinning Co. v. Green-wich & J. Ry. Co., 87 App. Div. 21, 83 N. Y. Supp. 1054 TSS Duncan v. Treadwell Co., 8Z Hun 376, 31 N. Y. Supp. 340 258 Duncomb v. New York, H. & N. R. Co., 84 N. Y. 190 364, 366 Duncomb v. New York, H. & N. R. Co., 88 N. Y. 1 499 Dunlop V. Paterson Fire Ins. Co., 12 Hun 627 685 Dunn V. Commercial Bank of Buffalo, 11 Barb. 580 177 Dupignac v. Bernstrom, 76 App. Div. 105, 78 N. Y. Supp. 705 199 Dupignac v. Bernstrom, 37 Misc. 677, 76 N. Y. Supp. 381 509, 521 Durant Land Imp. Co. v. Thomson-Houston Elec. Co., 2 Misc. 18'2, 21 N. Y. Supp. 7«4 489 Durbrow v. Swedish Iron & Steel Corp., 95 Misc. 160, 158 N. Y. Supp. 701 . . 475 Duryea. v. Zimmerman, 121 App. Div. 560, 106 N. Y. Supp. 237 37 Dusenberry v. Sagamore Development Co., 164 App. Div. 573, 150 N. Y. Supp. 229 122, 318, 330, 497 Dutcher \ . Importers & Traders' Nat. Bank, 59 N. Y. 5 453 Dutchess & Columbia R. Co. v. Mabbett, 58 N. Y. 397 150 Dutilh-Smith Co., People ex rel. v. Miller, 90 App. Div. 545, 85 N. Y. Supp. 849 757, 765 Dyer v. Drueker, 108 App. Div. 239, 95 N. Y. Supp. 749 306 Dyer v. Drueker, 104 N. Y. Supp. . 166 293 Dyer v. Power, 14 N. Y. Supp. 873, 39 St. Rep. 136 674 Dykman v. Keeney, 154 N. Y. 483, 48 N. E. 894 387 Dykman v. Keeney, 16 App. Div. 131, 45 N. Y. Supp. 137 399 E Eagle Iron Works, Matter of, 8 Paige 385 615 Eagle Mfg. Co. v. Arkell & Douglas, 197 App. Div. 788 763 Eagle Sayings & Loan Co. v. Samuels, -43 App. Div. 386, 60 N. Y. Supp. 91. 45 Eagle Steam Laundry, In re, 23 Am. B. R. 859, 176 Fed. 740 438 East Canada Creek Electric Light & Power Co., Matter of, 49 Misc. 565, 99 N. Y. Supp. 109 820 East Coast Coal Co. v. HqlUns, 183 App. Div. 67, 170 N. Y, Supp. 576 770 East Coast Oil Co. v. Toltec Mexican Oil Co., 183 App. Div. 7fi, 170 N. Y. Supp. 582. . . . 779 East Lake Lumber Co. v. Van Gorder,. 105 Misc. 704, 174 N. Y. Supp. 38 . . 132 East New York & Jamaica R. Co. v. Elmore, 5 Hun 214 369 East New York & Jamaica R. Co. v. Lighthall, 5 Abb. Pr., N. S. 45-8, 36 How. Pr. 481 497 East River Bank v. Rogers, 7 Bosw. 493 552 East River Electric Light Co. v. Clark, 18 N. Y. Supp. 463, 45 St. Rep. 63'5. 552 Easterly v. Barber, 65 N. Y. 252 316 Eastern Plank Road Co. v. Vaughan, 14 N. Y. 546 877 Eastern Products Corporation v. Tennessee C. & I. R. Co., 102 Misc. 557, 170 N. Y. Supp. 100 796 Eastham v. New York Teleph. Co., 86 App. Div. 562, 83 N. Y. Supp. 1019 . . 540 Easton National Bank v. Buffalo Chemical Works, 48 Hun 557, 1 N. Y. Supp, 350. . 565 Ixvi TABLE OF CASES CITED. Page Baton V. Aspinwall, 3 Abl). Pr. 417, 13 How. Pr. 184 303 Eaton v. Aspinwall, 19 N. Y. 119 ^^^ Echman v. Lindbeek, 178 App. Div. 720, 165 N. Y. Supp. 145 ^55 Eclipse Silk Mfg. Co. v. Hiller, 145 App. Div. 558, 139 N. Y. Supp. 879..755, 771 Economic P. & C. Co, v. City of Buffalo, 19'5 N. Y. 386, 88 N. E. 389 8 Edison Electric Light Co. v. New Haven Electric Co., 35' Fed. 333 88 Edison Electric Light Co. v. United States Electric Lighting Co., 53 Fed. 300 ^* Edison Electric Light Co. v. Westinghouse, 34 Fed. 332 94 Edison G. E. Co., People ex rel. v. Barker, 141 N. Y. 351, 36 N. E. 196... 300 Edison L. & P. Co., People ex rel. v. Kelsey, 101 App. Div. 305, 91 N. Y. Supp. 709. ^''S Educational Films Corporation v. Lincoln & Parker Co., Inc., 193 App. Div. 631, 183 N. Y. Supp. 113 5id Eels V. A. T. & T. Co., 143 N. Y. 133, 38 N. E. 303 867 Bhret, Matter of, 70 Misc. 576, 137 N. Y. Supp. 934 ^ 594 Ehret v. Ringler Co., 144 App. Div. 480, 139 N. Y. Supp. 551 313, 667 Bhret v. Ringler & Co., 70 Misc. 637, 139 N. Y. Supp. 546 667 Ehricii V. Grant, 111 App. Div. 196, 97 N. Y. Supp. 600 188 Eicliberg v. Wiokham, 31 N. Y. Supp. 647 615 Eickemeyer Field Co., People ex rel. v. Rice, 138 N. Y. 614, 33 N. B. 1083. 910 Eiekemeyer-Field Co., People ex rel. v. Rice, 66 Hun 130, 31 N. Y. Supp. 48. 916 Einstein v. Rochester Gas & Elec. Co., 146 K Y. 46, 40 N. E. 631 11-5 Eisenhofer \. New Yorker Zeitung Pub. Co., 91 App. Div. 94, 86 N. Y. Supp. 438 544 Electric Fire Proofing Co. v. Smith, 113 App. Div. 615, 99 N. Y. Supp. 37. . 133 Electric Power Co. v. Mayor, 36 App. Div. 383, 65 N. Y. Supp. 460 818 Electric I'ower Co. v. Metropolitan Telephone & Telegraph Co., 75 Hun 68, 37 N. Y. Supp. 9S 863 Elger v. Boyle, 69 Misc. 373, 126 N. Y. Supp. 946 264 EUas, Matter of, 17 Misc. 718, 40 N. Y. Supp. 910 311 Elliot-Fisher Co., People ex rel. v. Sohmer, 148 App. Div. 514, 132 N. Y. Supp. 789 757 Ellsworth V. St. Louis, A. & T. H. R. Co., 98 N. Y. 553 483, 722 Elmer v. Title Guarantee & Trust Co., 156 N. Y. 10, 50 N. E. 420 418 Elyea v. Lehigh Salt Mining Co., 169 N. Y. 39, 61 N. E. 993 '. . 197 Emerson > . Auburn ,& O^L. R. Co., 13 Hun 150 545 Emery v. DePeyster, 77 App. Div. 75, 78 N. Y. Supp. 1056 30 Emery v. New York, L. E. & W. R. Co., 9 Misc. 310, 30 N. Y. Supp. 306. .'237, 481 Emmerich Co. v. Sloane, 108 App. Div. 330, 95 N. Y. Supp. 1139. .754, 758, 770 Emmerich Co. v. Sloane, 46 Misc. 513, 9'5 N. Y. Supp. 39 755 Emmet v. Northern Bank of N. Y., 173 App. Div. 840, 160 N. Y. Supp. 183. 513 Empire State Supreme Lodge, Matter of, 118 App. Div. 616, 103 N. Y. Supp. 1334 275, 321, 328 Empire State Supreme Lodge, Matter of, 53 Misc. 344, 103 N. Y. Supp. *®5 ■ a73, 318 Fjinis V. Federal Brewing Co., 138 App. Div. 691, 108 N. Y. Supp. 330 470 TABLE OF CASES CITED. Ixvii Page Equitable Life Assurance Society v. Union Pacific E. Co., ai2 N. Y. 360, 106 N. B. 93 20S Equitable Life Assurance Society v. Union Pacific R. Co., 163 App. Div. 81, 147 N. Y. Supp. 383 2ly Equity Gas Light Co., Matter of, 10 N. Y. Supp. 801, 83 St. Rep. 1138 658 Ericsson v. Brown, 38 Barb. 390 290 Erie Beach Amusements, Ltd. v. Spirella Co., Inc., 105 Misc. 170, 173 N. Y. Supp. 636 746, 747 Erie & Jersey R. Co. v. Brown, 57 Misc. 164, 107 N. Y. Supp. 9«i3 551 Erie R. Co., People ex rel. v. Bd. of B. E. Commissioners, 105 App. Div. 273, 93 N. Y. Supp. 584 25 Ernst V. Gary Safe Co., 113 Misc. 620, 185 N. Y. Supp. 166.. 491, 493, 495,. 497 Ernst V. Elmira Municipal Imp. Co., 34 Misc. 583, 54 N. Y. Supp. 116. .110, 73 1 Ernst V. Rutherford & B. S. Gas Co., 38 App. Div. 388, 56 N. Y. Supp. 403 436, 738, 77.-> Ernst V. Terminal Clearing House Assn., 86 Misc. 295, 149 N. Y. Supp. 181. 414 Ersfeld v. Exner, 128 App. Div. 135, 113 N. Y. Supp. 561 137 .Ervin v. Oregon Railway & Nav. Co., 38 Hun 369 776, 777 Ervin v. Oregon Railway & Nav. Co., 35 Hun 544 171, 242 Esmond v. Bullard, 16 Hun 65 30R Eustace v. New York Building Loan Banking Co., 98 App. Div. 97, 90 N. Y. Supp. 784 ; . .635, 643 Evans v. Keystone Gas Co., 148 N. Y. 113, 43 N. E. 513 836 Everson v. Eddy, 59 Hun 6.20, 12 N. Y. Supp. 87i3 440, 457 Excelsior Grain Binder Co. v. Stayner, 35 Hun 91, 61 How. Pr. 456.. 157, 158 Excelsior Petroleum Co. v. Lacey, 63 N. Y. 433 399 Exempt Firemen's Benev. Fund, Trustees of, v. Roome, 93 N. Y. 313 S F Fabre v. O'Donohue, 185 App. Div. 779, 173 N. Y. Supp. 473 489 Factors Fire Ins. Co. v. Whilden, 92 Misc. 558, 156 N. Y. Supp. 362 770 Fairchild, People ex rel. v. Preston, 140 N. Y. 549, 35 N. E. 979 30 Fairclough v. Southern Pacific Co., 171 App. Div. 496, 157 N. Y. Supp. 862. 780 Fallon V. W. S. Directory Co., »6 App. Div. 39, 83 N. Y. Supp. 359 666 Faltiska v. N. Y., L. E. & W. R. Co., 13 Misc. 478, 33 N. Y. Supp. 679 . . 545 Farmer v. Farmer & Son Type Founding Co., 83 App. Div. 218, 83 N. Y. Supp. 338 378 Farmer v. Na/tional Life Assn., 67 Hun 119, 31 N. Y. Supp. 1056 803 Farmer v. National Life Assn., 28 Abb. N. C. 421 • 803 Farmer & Son Co. v. Humboldt Pub. Co., 37 Misc. 314, 57 N. Y. Supp. S31. 474 Farmers' Loan & Trust Co. v. Aberle, 19 App. Div. 79, 46 N. Y. Supp. 10. . 76 Farmers' Loan & Trust Co. v. Bankers & Mer. Tel. Co., 148 N. Y. 315, 43 N. E. 707 483, 636 Farmers' Loan & Trust Co. v. Bankers & Mer. Tel. Co., 83 Hun 560, 31 N. Y. Supp. 1096 700 Farmers' Loan & Trust Co. v. Clowes and Wife, 3 N. Y. 470 473 Farmers' Loan & Trust Co. v. Curtis, 7 N. Y. 466 431 Ixviii TABLE Oi" OASES CITED, Page Farmers' Loan & Trust Co. v. Equity Gas Light Co., 84 Hun 373, 32 N. Y. Supp. 385 *^* Farmers' Loan & Trust Co. v. Hoffman House, 1 Misc. 358, 27 N. Y. Supp. 634 ^^"' Farmers' Loan & Trust Co. v. Housatonic R. Co., 153 N. Y. 351, 46 N. B. 504. 350 Farmers' Loan & Trust Co, v. New York & N. E. Co., 150 N. Y. 410, 44 N. E. 1043 429 Farmers' Loan & Trust Co. v. New York & N. E. Co., 78 Hun 213, 28 N. Y. Supp. 933 413 Farmers' & Mechanics' Bank v. Empire Stone Dressing Co., 10 Abb. Pr. 47,-18 Super. (5 Bosw.) 275 ^ 509 J'armers' & Merchants' Nat. Bank of Buffalo v. Rogers, 1 N. Y. Supp. 757, 15 Civ. Pr. 350 539 Farmers' Nat. Bank v. Underwood, 6 App. Div. 373, 39 N. Y. Supp. 596 546 Farnsworth v. Bovo Oil & Gas Co., 316 N. Y. 40, 109 N. E. 860 816, 821 Farnsworth v. Wood, 91 N. Y. 308 287, 393, 689 Farnum v. Harrison, 167 App. Div. 704, 153 N. Y. Supp. 835 291 • Farnum v. Harrison, 83 Misc. 424, 145 N. Y. Supp. 36 291 Farrow v. Holland Trust Co., 74 Hun 585, 36 N. Y. Supp. 503 376 Fay V. Coughlin-Sanf ord S. Co., 47 Misc. 687, 94 N. Y. Supp. 638 725, 727 Federman v. Standard Churn Mfg. Co., 138 App. Div. 493, 113 N. Y. Supp. S34 571' Fenkart v Bodenmann, 64 Misc. 140, 118 N. Y. Supp. 1 777 Fenlon v. Dempsey, 50 Hun 131, 2 N. Y. Supp. 763 77 Fenn v. Ostrander, Inc., 133 App. Div. 311, 116 N. Y. Supp. 1083 258 Fennessy v. Ross, 5 App. Div. 342, 39 N. Y. Supp. 323 344 Fennessy v. Ross. 90 Hun 298, 35 N. Y. Supp. 868 370 Ferguson v. Ann Arbor E. Co., 17 App. Div. 336, 45 N. Y. Supp. 173 101 Ferguson v. Gill, 64 Hun 384, 19 N. Y. Supp. 149 403 Ferguson v. Gill, 74 Hun 566, 36 N. Y. Supp. 596 404 Ferguson, People ex rel. v. Eeardon, 197 N. Y. 336, 90 N. E. 829 954 Fernschild v. Yuengling Brewing Co., 154 N. Y. 667, 49 N. E. 151 101 Fernschild v. Yuengling Brewing Co., 15 App. Div. 29, 44 N. Y. Supp. 106. . 108 Fifer v. Prudential Ins. Co., 5 App. Div. 633, 38 N. Y. Supp. 1143 803 Fifth Ave. Bank v. F. S. S. & Q. S. F. R. Co., 137 N. Y. 331, 33 N. E. 378 • 140, 141 Fifth Ave. Coach Co. v. City of New York, 194 N. Y. 19, 86 N. E. 834 857 Fifth Ave. Coach Co. v. City of New York, 58 Misc. 401, 111 N. Y. Supp. 759 539 Fifth Nat. Bank v. Navassa Phosphat Co., 119 N. Y. 356, 3 N. E. 737 . . 499 Fifty-third Nat. Bank of Cincinnati v. Hudson Refrigerator Co., 153 N. Y. Supp. 168 553 Filon v. Miller Brewing Co., 60 Hun 582, 15 N. Y. Supp. 57 337 Finch School v. Finch, 144 App. Div. 697, 139 N. Y. Supp 1 71 Finck V. Canadaway Fertilizer Co., 153 App. Div. 391, 136 N. Y. Supp. 914 . 519 Firestone Tire & Rubber Co. v. Agnew, 194 N. Y. 165, S6 N. E. 1116 297, 298 First Nat. Bank v. Com. Travelers' Home Assn., 108 App. Div. 78, 95 N. Y. Supp. 454 328, 499, 521 TABLE OF CASES CITED. Ixix Page First Nat. Bank v. Cornell, 8 App. Div. 427, 40 N. Y. Supp. 850 133 First Nat. Bank v. Council Bluffs W. W. Co., 56 Hun 412, 9 N. Y. Supp. 859 . 510 First Nat., Bank v. General Construction Co., 180 App. Div. 743, 168 N. Y. Supp. 305 798 First Nat. Bank v. Slattery, 4 App. Div. 421, 338 N. Y. Supp. 859 552 First National Bank of Brooklyn, Matter of, 28 Misc. 662, 59 N. Y. Supp. 1042 229 First National Bank of North Hempton v. Doying, 13 Daly 509, 11 Civ. Proc. 61 539 First National Bank of Waterloo v. Bacon, 113 App. Div. 612, 98 N. Y. Supp.- 717 193 First Nat. Bank of Waterloo v. Exchange Nat. Bank of Seneca Falls, 226 N. Y. 633, 123 N. E. 368 195 First National Bank of Waverly v. Winters, 225 N. Y. 47, 121 N. E. 459 . . 556 Fisher v. Mechanics & Metals Nat. Bank, 89 Misc. 587, 153 N. Y. Supp. 786 . 194 Pister V. LaEue, 15 Barb. 323 522 Fitchett V. Murphy, 46 App. Div. 181, 61 N. Y. Supp. 182 347, 351 Fitchett V. Murphy, 26 Misc. 544, 56 N. Y. Supp. 322 347 Fitts V. Andrews, 192 App. Div. 160, 182 N. Y. Supp. 464 906, 907 Fitzgerald v. Atlanta Home Ins. Co., 61 App. Div. 350, 70 N. Y. Supp. 552 . 446 Flaherty v. Murray, 60 App. Div. 92, 69 N. Y. Supp. 675 37 Flash V. Conn, 109 XT. S. 371 286 Flatbush Gas Co., People ex rel. v. Coler, 190 N. Y. 268, 83 N. E. 18 818 Flaum v. Kaiser Bros. Co., 66 Misc. 586, 122 N. Y. Supp. 100 221, 395 Fleitman v. United Gas Imp. Co., 174 App. Div. 781, -161 N. Y. Supp. 650. . 249 Floersheimer, People ex rel. v. Purdy, 221 N. Y. 481, 116 N. E. 390 420 Flour City National Jank v. Shire, 88 App. Div. 401, 84 N. Y. Supp. 810.288, 309 Flower v. State of New York, 143 App. Div. 871, 128 N. Y. Supp. 208 957 Floyd, People ex rel. v. Conklin, 5 Hun 452 412 Flynu V. Brooklyn City E. Co., 158 N. Y. 493, 53 N. E. 520. . . .234, 235, 239, 243 250, 253, 412, 520 Flynn v. Hudson E. E. Co., 6 How. Pr. 308 545 Flyun V. Union Surety & Guaranty Co., 170 N. Y. 145, 63 N. E. 61 803 Flynn v. White, 122 App. Div. 780, 107 N. Y. Supp. 860 766 Pontana v. Post Printing & Pub. Co., 87 App. Div. 233, 84 N. Y. Supp. 308 797, 799 Ford V. Binghamton Hydraulic Power Co., 54 Hun 451, 7 N. Y. Supp. 714. . 554 Ford V. Chase, 118 App. Div. 605, 103 N. Y. Supp. 30 292, 300, 301, 305, 307 Forker v. Brown, 10 Misc. 161, 30 N. Y. Supp. 827 364, 613 Forrester v. B. & M., etc. Co., 21 Mont. 544 842 Fort Edward, Town of, v. Hudson Valley Ey. Co., 127 App. Div. 438, 111 N. Y. Supp. 753 562 Fortescue v. Kings County Lighting Co., 128 App. Div. 826, 112 N. Y. Supp. 1010 842 Fox V. Arctic Placer Mining & Milling Co., 229 N, Y. 124, 128 N. E. 154. . 343 348 Fox V. Arctic Placer Mining & Milling Co., 185 App. Ddv. 761, 173 N. Y. Supp. 708 343 Fox V. Erie Preserving Co., 93 N. Y. 54. .' 539 IXX TABLE or CASES CITED. Page Fox V. Rural Home Co., 90 Hun .365, 35 N. Y. Supp. 896 473 Frankel v. Dover Mfg. Co., 104 N. Y. Supp. 459 799 Fraser v. Granite State Provident Assn., 8 Misc. 7, 28 N. Y. Supp. 65 53« Fredonia, Village of, v. Fredonia Natural Gas Light Co., 84 Misc. 150, 145 N. Y. Supp. 820 620, 822 Freeman v. Panama E. Co., 7 Hun 122 .' 13 Freeport, VUlage of, v. Nassau & Suffolk Lighting Co., Ill Misc. 671, 181 N. Y. Supp. 830 824, 839 French v. Andrews, 145 N. Y. 40 N. E. 214 461 French v. Dauchy, 134 N. Y. 543, 31 N. E. 1041 706 French, Matter of, 181 App. Div. 719, 168 N. Y. Supp. 988 602, 611 French v. McMillan, 43 Hun 188, 4 St. Rep. 357 341 French Mfg. Co., Matter of, 12 Hun 488 610 Freschen v. Western Union Telegraph Co., 115 Misc. 289, 189 N. Y. iSupp. 649 873, 874 Fresno Home Packing Co. v. Turle & Skidmore, 60 Misc. 79, 111 N. Y. Supp. 839 763 Frick Co. v. Pultz, 162 App. Div. 209, 147 N. Y. Supp. 732 .770, 771 Friedenberg v. Lee Construction Co., 27 Misc. 651, 58 N. Y. Supp. 391 545 Friedman, Matter of, 177 App. Div. 755, 164 N. Y. Supp. 892 40, 583 Frothingham v. Broadway & Seventh Ave. R. Co., 9 Civ. Pro. Rep. 304 242 Fuller V. O'Connor, 61 Misc. 279, 113 N. Y. Supp. 684 730 Fuller V. Rowe, 57 N. Y. 23 32 Fuller & Co. v. Sehrenk, 68 App. Div. 222, 68 N. Y. Supp. 781 773 Furber v. National Metal Co., 118 App. Div. 263, 103 N. Y. Supp. 490 194 G G. V. B. Mining Co. v. First National Bank of Hailey, 95 Fed. 231 69 436, 438, 499 Gaffney v. People's Trust Co. of Binghamton, 191 App. Div. 697, 182 N. Y. Supp. 451 955 Gaitley v. Albany Foundry Co., 157 App. Div. 10, 141 N. Y. Supp. 676 512 Galdieri & Co., Inc. v. Arthur Waist Co., 98 Misc. 612, 163 N. Y. Supp. 154. 522 552 Gale v. Troy & Boston R. Co., 51 Hun 470, 4 N. Y. Supp. 295 93 Galster v. Syracuse Savings Bank, 29 Hun 594 705 Gamble v. Queens County Water Co., 123 N. Y. 91, 25 N. E. 201 236 • 237, 261, 413, 479, 520 Gardiner v. Bronx National Bank, 158 App. Div. 288, 142 N. Y. Supp. 713. . 328 Gardner, Matter of, 86 Hun 30, 33 N. Y. Supp. 326 561 Garrett Co. v. Appleton, 101 App. Div. 507, 92 N. Y. Supp. 136 154 Garrison v. Howe, 17 N. Y. 458 302 Gaul v. Kiel & Arthe Co., 199 N. Y. 472, 92 N. E. 1069 343, 345, 350 363, 753 Gause v. Boldt, 49 Misc. 340, 99 N. Y. Supp. 442 0, 296 Gause v. Commonwealth Trust Co., 196 N. Y. 134, 89 N. E. 476 7o, 409 410, 531 Gause v. Commonwealth Trust Co., 124 App. Div. 438. 108 N. Y. Supp. 1080. 328 496, 523 TABLE OF CASES CIXBD. ixxi Page Gay V. Hudson River Electric Power Co., 190 Fed. 773 70, 458, 478 Geery v. New York & L. S. C. Co., 12 Abb. Pr. 268 294 General Baking Co. v. Daniell, 181 App. Div. 501, 170 N. Y. Supp. 365. .71, 72 General Electric Co. v. Wightman, 3 App. Div. 118, 39 N. Y. Supp. 420. .148, 151 General Rubber Co. v. Benedict, 215 N. Y. 18, 109 N. E. 96 357 General Rubber Co. v. Benedict, 164 App. Div. 332, 149 N Y. Supp. 880 388 Genesee Valley & W. R. Co. v. Retsof Min. Co., 15 Misc. 187, 36 N. Y. Supp. 896 326, 337 Geneva Basket Co., Matter of, 71 Misc. 156, 127 N. Y. Supp. 943 597 Geneva Mineral Springs Co. v. Coursey, 45 App. Div. 268, 61 N. Y. Supp. 98 649 Geneva Mineral Springs Co. v. Steele, 111 App. Div. 706, 97 N. Y. Supp. 996 123 Geneva-Seneca Electric Co. v. Eeonomio Power & Construction Co., 136 App. Div. 219, 120 N. Y. Supp. 926 823 Georgeson v. CaflFrey, 71 Hun 472, 24 N. Y. Supp. 971 45 Gerard v. Empire Square Realty Co., 195 App. Div. 244, 187 N. Y. Supp. 306. 327 328, 507 German-American Button Co. v. Heymsfold, Inc., 170 App. Div. 416, 156 N. Y. Supp. 223 54, 59, 60 German-American Coffee Co. v. Diehl, 216 N. Y. 57, 109 N. E. 875 734 German- American Coffee Co. v. Diehl, 86 Mise. 547, 149 K Y. Supp. 413.. 386 German-Am. Ins. Co. of N. Y. v. Standard Gas Light Co. of N. Y., 67 App. Div. 539, 73 N. Y. Supp. 973 825 Germicide Co., Matter of, 65 Hun 606, 20 N. Y. Supp. 495 272 Getty V. Devlin, 54 N". Y. 403 35 Getty V. Devlin, 70 N. Y. 504 35 Ghee v. Northern Union Gas Co., 158 N. Y. 510, 53 N. E. 692 821 Gibbs V. Long Island Bank, 83 Hun 92, 31 N. Y. Supp. 406 179 Giebler Mfg. Co. v. Kranenberg, 102 App. Div. 471, 92 N. Y. Supp. 843 523 Gies Lithographing Co., Matter of, 7 App. Div. 550, 40 N. Y. Supp. 146 609 Gifford V. Glen Telephone Co., 54 Misc. 46S, 106 N. Y. Supp. 53, 871 Gilbert v. Ackerman, 159 N. Y. 118, 53 N. E. 753 645 Gilbert v. Finch, 173 N. Y. 455, 66 N. E. 133 385 Gilbert v. Manchester Iron Mfg. Co., 11 Wend. 627 180 Gildersleeve v. Lester, 68 Hun 532, 22 N. Y. Supp. 1026 370, 381, 666 Gildersleeve v. Lester, 68 Hun 535, 22 N. Y. Supp. 1028 39) Gill V. Bell's Knitting Mills, 128 App. Div. 691, 113 N. Y. Supp 90. ...... 462 Gill V. New York Cab Co., 48 Hun 524, 1 N. Y. Supp. 202 346 Gilleran v. Springfield, L. I. Cemetery Society, 161 App. Div. 597, 146 N. Y. Supp. 828 234 Gillig v. Treadwell Co., 151 N. Y. 552, 45 N. E. 1035 700 Gillin Printing Co. v. Traphagen, 36 Mise. 774, 74 N. Y. Supp. 900 637 Ginsberg v. Automobile Coaching Co., 151 App. Div. 627, 136 N. Y. Supp. 354 398, 466 Giveen v. Gans, 91 App. Div. 37, 86 N. Y. Supp. 430 347 Glenn v. Garth, 133 N. Y. 18, 30 N. B. 649.' 164 Glen Salt Co., Matter of, 17 App. Div. 234, 45 N. Y. Supp. 568. . . .263, 271, 276 Glens Falls Paper Co. v. White, 18 Hun 214 423 Glines v. Binghamton Trust Co., 68 Hun 511, 22 N. Y. Supp. 1023 614 Globe Mutual Benefit Aasn., Matter of, 63 Hun 263, 17 N. Y. Supp. 862. .14, 312 Ixxii TABLE 03? CASES CITED. Globe Woolen Co. v. Utiea Gas & Electric Co., 224 N. Y. 483, 121 N. E. 378. 338 Globe Woolen Co. v. Utica, Gas & Elec. Co., 151 App. Div. 184, 136 N. Y. Supp. 24. . 519 Gluck V. Bedford Cleaning & Dyeing Co., Inc., 195 App. Div. 493, 186 N. Y. Supp. 823 ; 497 Glynn v. Conklin, 127 App. Div. 473, 111 N. Y. Supp. Ill 944 Glynn v. Hyde-Murphy Co., 113 Mise. 329, 184 N. Y. Supp. 462 798 Godfrey t. Medical Society, 177 App. Day. 684, 104 N. Y. Supp. 846 16, 421 Godley v. Crandall & Godley Co., 212 N. Y. 121, 105 N. E. 818 215, 346 350, 520, 521 Godley v. Crandall & Godley Co., 153 App. Div. 697, 139 N. Y. Supp. 236. . .218 235, 238, 256 Godley v. Godley & Crandall Co., 181 App. Div. 75, 168 N. Y. Supp. 251 ... . 243 244, 359 Goff, People ex rel. v. Kirk, 65 Mise. 657, 122 N". Y. Supp. 604 530, 90O Gold V. Clyne, 134 N". Y. 262, 31 N. E. 980 635 Goldieri & Co., Inc. v. Arthur Waist Co., 98 Misc. 612, 163 N. Y. Supp. 154. 38 Goldmark v. Magnolia Metal Co., 28 App. Div. 264, 51 N. Y. Supp. 68 475 Goldmark v. Magnolia Metal Co., 44 App. Div. 35, 60 N. Y. Supp. 425 476 Goldshear v. Barron, 42 Misc. 198, 85 N. Y. Sujpp. 395 367 Goldsmith v. Swift, 25 Hun 201 207, 214 Goldsmith v. Wells Co., 86 Hun 489, 33 N. Y. Supp. 727 551 Goldstein v. Godfrey Co., 70 Misc. 235, 120 N. Y. Supp. 622 503 Goodrich v. Sanderson, 35 App. Div. 546, 55 N. Y. Supp. 881 677 Gordon v. Evening Post Pub. Co., 66 N. Y. Supp. 828 560 Gordon v. Southgate Building Co., 109 App. Div. 838, 96 N. Y. Supp. 717. . 461 Gorton Steamer Co. v. Spoiiord, 5 Civ. Pro. 116 538 Goss V. Goas, 147 App. Div. 698 132 N. Y. Supp. 76 7 Goss V. Warp Triating-In Machine Co., 133 App. Div. 122, 117 N. Y. Supp. 228. . . , 662, 666 Goss & Co. V. Goss, 147 App. Div. 698, 132 N. Y. Supp. 76 364, 368 Gould V. Edison Electric Illuminating Co., 29 Misc. 241, 60, N. Y. Supp. 559 834 Gould, People ex rel. v. Mutual Union Tel. Co., 2 Civ. Pro. Kep. 295 675 Gould V. Texas & Pae. R. Co., 176 App. Div. 818, 163 N. Y. Supp. 479. . . 11, 542 Gould V. Town of Oneonta, 71 N. Y. 293 '. 166 Graeber v. Ehrgott, 182 App. Div. 377, 109 TST. Y. Supp. 32 296, 305, 307 Grafton v. Union Ferry Co., 13 N. Y. Supp. 878, 40 St. Rep. 137. .558, 559, 660 Graham v. aiaipman, UN.* Supp. 318, 33 St. Rep. 349 679 Grand Central Bank. Matter of, 27 Misc. 116, 57 N. Y. Supp. 418 573 Grandison v. National Bank of Rochester, 34 Am. B. E. 497, 220 Fed. 981 456, 464 Grandison v. Robertson, 34 Am. B. R. 609, 220 Fed. 985 453, 455, 463, 464 Grant v. Cananea Con. Copper Co., 189 N. Y. 241, 82 N. E. 191 . . ' 792 Grant v. Oobre Grande Copper Co., 193 N. Y. 806, 86 N. E. 34 476 Grant v. Greene Consolidated Copper Co., 169 App. Div. 206, 154 N. Y. Supp. 596. 238, 780 Grant v. Treadwell Co., 1 App. Div. 367, 37 N. Y. Supp. 392 500 Grant v. Treadwell Co., 82 Hun 591, 31 N. Y. Supp. 70S 510 TABLE OF CASES CITED. Ixxiii Page Gray v. Fuller, 17 App. Div. 29, 44 N. Y. Supp. 883 240 Gray v. New York & Virginia Steamship Co., 3 Hun 383 253 Gray v. New York State Telephone Co., 92 App. Div. 89, 86 N. Y. Supp. 771 . 866 Greason v. Goodewillie-Wyman Co., 38 Hun 138 625 626 Great Northern Moulding Co. v. Bonewur, 128 App. Div. 831, 113 N. Y. Supp. 60 772 Great Northern Trading Co., Matter of, 168 App. Div. 536, 153 N. Y. Supp. 213 gg9 Great Western Turnpike Co. v. Shafer, 57 App. Div. 331, 68 N. Y. Supp. 5 886, 887 Greeves v. Gouge, 69 N. Y. 154 240 Greaves v. Gouge, 52 How. Pr. 58 : 253 Green v. Compton, 41 Mise. 21, 83 N. Y. Supp. 588 382 Green v. Seymour, 3 Sandf . Ch. 285 532 Green Island Water Supply Co. v. Trojan Laundry Co., 126 App. Div. 584, 110 N. Y. Supp. 508 899 Greene v. Shain, 22 Misc. 720, 49 N. Y. Supp. 1061 726 Greenpoint Sugar Co. v. Kings Co. Mfg. Co., 7 Hun 44 437, 440 Greenpoint Sugar Co. v. Whitin, 69 N. Y. 328 437, 438 Grieber v. Ehrgott, 182 App. Div. 377, 169 N. Y. Supp. 32 293 Grier v. Hazard H. & Co., 13 N. Y. Supp. 583, 38 St. Rep. 462 38 Griffith V. Green, 13 N. Y. Supp. 470, 37 St. Rep. 705 304 Groh's Sons v. Groh, 80 App. Div. 85, 80 N. Y. Supp. 438 199, 330 Groton Bridge & Mfg. Co. v. American Bridge Co., 151 Fed. 871 774 Guarantee Trust Co. v. Philadelphia R. & N. E. R. Co., 31 App. Div. 511, 52 N. Y. Supp. 116 677 Guaranty Trust Co. v. Edison United Phonograph Co., 128 App. Div. 591, 112 N. Y. Supp. 929 680 Gundlin v. Hamburg- Am. Packet Co., 8 Misc. 291, 28 N. Y. Supp. 572 787 Gunst V. Goldstein, 30 Misc. 44, 61 N. Y. Supp. 707 233 Gunst, People ex rel., v. Goldstein, 37 App. Div. 550, 56 N. Y. Supp. 306. . . 231 Gunther v. Mayer, 67 Hun 116, 22 N. Y. Supp. 50 = 457 Gumey v. Atlan. & G. W. R. Co., 58 N. Y. 358 290 Gursky v. Blair, 218 N. Y. 41, 112 N. E. 431 797 Gursky v. Blair, 164 App. Div. 612, 150 N. Y. Supp. 422 790 Gutmann Silks Corp. v. Reilly, 189 App. Div. 258, 178 N. Y. Supp. 457 508 H H. & G. M. Co. V. H. & W. M. Co., 127 N. Y. 252 427 Haas V. Universal Phonograph & Record Co., 75 Misc. 119, 132 N. Y. Supp. 767 347 Haberman v. James, 5 App. Div. 412, 39 N. Y. Supp. 313 40 Habennan, People ex rel. v. James, 5 App. Div. 412, 39 N. Y. Supp. 313 6 42, 102 Hackett v. Northern Pacific R. Co., 36 Misc. 583, 73 N. Y. Supp. 1087 110 Hackley v. Draper, 60 N. Y. 88 687 Hackley v. Draper, 2 Hun 523, 4 T. & C. 614 673 Haddam Granite Co., Inc. . . Brooklyn Heights R. Co., 131 App. Div. 685 116 N. Y. Supp. 96 : 762 Ixxiv TABLE OF CASES CITED. Page Hafner & Scheen Furniture a>. v. Grumme, 10 Civ. Proo. 176 539 Hagmayer v. Alten, 36 Misc. 59, 72 N. Y. Supp. 623 64T Haines v. Kinderhook & H. R. Oo., 33 App. Div. 154, 53 N. Y. Supp. 368 102 Hakehiloth, Matter of, 18 Misc. 717, 42 N. Y. Supp. 895 21 Hale V. Mason, 160 N. Y. 561, 55 N. E. 202 384 Hale V. Mason, 86 Hun 499, 33 N. Y. Supp. 789 674 Hall TT, City of Syracuse, 71 Hun 465, 24 N. Y. Supp. 959 319, 326 Hall V. Herter Bros., 83 Hun 19, 31 N. Y. Supp. 692 38, 329, 475 HaU V. Herter Bros., 90 Hun 280, 35 N. Y. Supp. 769 330, 492 Hall V. Holland House Co , 12 Misc! 55, 33 N. Y. Supp. 50 740 Hall V. Lay, 27 Misc. 602, 59 N. Y. Supp. 638 123 Hall V. Ochs, 34 App. Div. 103, 54 N. Y. Supp. 4 498, 526 Hallenborg v. Greene, 66 App. Div. 590, 73 N. Y. Supp. 403 781 Hallett V. Metropolitan Messenger Co., 69 App. Div. 258, 74 N. Y. Supp. , 639 266, 292, 624 Hallett V. Metropolitan Messenger Co., 35 Misc. 659, 72 N. Y. Supp. 370 290 Halpin v. Mutual Brewing Co., 20 App. Div. 583, 47 N. Y. Supp. 412 325 356, 382 Halpin v. Mutual Brewing Co., 91 Hun 220, 36 N. Y. Supp. 151 377 Halsey v. Jewett Dramatic Co., 190 N. Y. 231, 83 N. E. 25 774 Halsted, Matter of, 42 App. Div. 101, 58 N. Y. Supp. 898 724 Halsted v. Postal Telegraph Cable Co., 193 N. Y. 293, 85 N. E. 1078 873, 874 Hamershlag v. Duryea, 58 App. Div. 288, 68 N. Y. Supp. 1061 79 Hamilton v. Gibson, 145 App. Div. 825, 130 N". Y. Supp. 684 382 Hamilton Park Co., Matter of, 1 App. Div. 375, 37 N. Y. Supp. 310 611 Hamilton Trust Co. v. Clemes, 163 N. Y. 423, 57 N. E. 614 18, 311, 438 Hamilton Trust Cto. v. Clemes, 17 App. Div. 152, 45 N. Y. Supp. 141 312 439, 441, 485 Hammond, In re, 139 Fed. 89S 320 Hammond v. National Life Assn., 58 App. Div. 453, 69 N. Y. Supp. 585 .... 742 783 Hammond v. National Life Assn., 31 Misc. 182, 65 N. Y. Supp. 407 ... 743 Hanchy v. Draper,' 89 N. Y. 334 297 Hancock, Town of, v. First Nat. Bank, 93 N. Y. 82 548 Hanle v. Consumers' Park Brewing Co., 150 App. Div. 582, 135 N. Y. Supp. 900 476 Hanna v. Lyon, 179 N. Y. 107, 71 N. E. 778 251 Hannahs v. Hammond Typewriter Co., 158 App. Div. 620, 143 N. Y. Supp. 939 '.....: 177 Hannon v. Siegel-Cooper Co., 167 N. Y. 244, 60 N. E. 597 421, 714 Hanover Bank v. Aiherican Dock & Trust Co., 148 N. Y. 612, 613, 43 N. E. 72 362 Hansen v. American Security &, Trust lOo., 159 App. Div. 801, 144 N. Y. Supp. 839 797 Hapgoods v. Luseh, 123 App. Div. 23, 107 N. Y. Supp. 331 157 Harby Steamship Co., Inc. v. Staten Island Shipbuilding Co., 189 App. Div. 769, 178 N. Y. Supp. 818 ' 543 Hardman v. Sage, 124 N. Y. 25, 20 N. E. 354 114^ 304 Hardt v. Levy, 20 App. Div. 400, 46 N. Y. Supp. 815 ' 706 Hargraves Mills v. Harden, 25 Misc. 665, 56 N. Y. Supj). 937 745 Harmon v. Vanderbilt Hotel Co., 79 Hun 393, 29 N. Y. Supp. 783 53ft TABLE OF CASES CITED. IxXV Page Harmony Fire & Marine Ins. Co., Matter of, 45 N. Y. 310 628 Harms (3o. v. Michel Brewing Co., 228 N. Y. 263, 126 N. E. 705 477, 498 Harms Oo. v. Michel Brewing Co., 176 App. Div. 235, 162 N. Y. Supp. 1071 ! 478 Harpending v. Munson, 91 N. Y. 650 355 Harriman National Bank v. Palmer, 93 Misc. 431, 158 N. Y. Supp. Ill 159 Harris v. Wells, 57 Misc. 172, 108 N. Y. Supp. 1078 164 Harrison v. Eepetti, 160 N. Y. Supp. 1018, 194 St. Rep. 1018 492 Harrison v. Eepetti, 177 App. Div. 480, 164 N. Y. Supp. 257 220 Hart V. Adams Cylinder & Webb Press, 69 App. Div. 578, 75 N. Y. Supp. 110. 75 Hartt V. Harvey, 13 Abb. Pr. 332, 21 How. Pr. 382 323 Hart V. Ogdensburg & L. C. E. Co., 89 Hun 316, 35 N. Y. Supp. 566. .338, 412, 413 Hart V. Sickles, 45 Misc. 174, 91 N. Y. Supp. 897 282 Hart V. Washburn, 62 Hun 543, 16 N. Y. Supp. 923 390 Hartley v. Pioneer Iron Works, 181 N. Y. 73, 73 N. E. 576 106, 211 Harvard Co. v. Wicht, 99 App. Div. 507, 91 N. Y. Supp. 48 762, 763 Harvard College, President & Fellows of, v. Kempner, 131 App. Div. 848, 116 N. Y. Supp. 437 * 753 Hassam Paving Co., Matter of, 152 App. Div. 610, 137 N. Y. Supp. 453. .. . 311 Hastings V. Brooklyn L. Ins. Co., 138 N. Y. 473, 34 N. E. 289 503 Hastings v. Drew, 76 N. Y. 9 398, 467 Hastings v. International Paper 'Co., 187 App. Div. 404, 175 N. Y. Supp. 815 198 209 Hastings, Matter of, 128 App. Div. 516, 112 N. Y. Supp. 800 228 Hastings, Matter of, 56 Misc. 45, 106 N. Y. Supp. 938 228 Hastings, Matter of, 120 App. Div. 756, 105 N. Y. Supp. 884 228 Hastings v. Tousey, 121 App. Div. 815, 106 N. Y. Supp. 639 259 Hatch V. Attrill, 1 St. Eep. 497 402 Hatch, People ex rel. v. Lake Shore & M. S. E. Co., 11 Hun 1 222 Hathaway v. American Mining Stock Exchange, 31 Hun 575 543 Hatton V. Cook, 166 App. Div. 257, 151 N. Y. Supp. 577 373 Haule V. Consumer's Park Brewing Co., 150 App. Div. 582, 135 N. Y. Supp. 900 132 Havana Electric R. Co. v. Central Trust Co., 122 App. Div. 829, 107 N. Y. Supp. 680 445 Hawes v. Oakland, 104 U. S. 450 242 Hay V. Brookfield, 160 App. Div. 277, 145 N. Y. Supp. 543 255 Hayes v. Cohoes Gas Light Co., 183 App. Div. 182, 170 N. Y. Supp. 312. .. . 824 Hayt, Matter of, 39 Misc. 356, 79 N. Y. Supp. 845 129 Hazard v. Wight, 201 N. Y. 399, 94 N. E. 855 396 Hazzard v. Philips, 173 App. Div. 425, 159 N. Y. Supp. 264 215 Heam v. Western Union Tel. Co., 36 Misc. 557, 73 N. Y. Supp. 1077 873 Hearst, People ex rel. v. Eamapo Water. Co., 51, App. Div. 145, 64 N. Y. Supp. 532. .'.... • 620, 650, 658 Heath v Bannore, 50 N. Y. 302 40, 362, 635, 880, 892 Hebbelthwaite v. Flint, 185 App. Div. 249, 173 N. Y. Supp. 81 196 Heola Coilsolidated Gold Min. Co. v. O'Neill, 65 Hun 619, 19 N. Y. Supp. 592. 37 Hefifron Co., In re, 216 Fed. 642 ^ 430, 723 Hegewisoh v. Silver, 140 N. Y. 414, 35 N. E. 658. . . . : 557, 665 Heig V. Caspary, 191 App. Div. 560, 181 N. Y. Supp. 633 515 Ixxvi TABLE OF CASES OITED. Page Hein v. Standard Die & Tool Works, Inc., 113 Misc. 137, 184 N. Y. Supp. 78. 554 Heller v. Pope, 183 App. Div. 864, 171 N. Y. Supp 619 171 Hellman v. Forty-Seeond St., etc. R. Oo., 74 Hun 529, 26 N. Y. Supp. 553. . 138 Hempstead, Village of, v. Ball Electric Co., 9 App. Div. 48, 41 N. Y. Supp. 124 * 821 Hemsley & Co., Ltd. v. Duncan Co., Inc., 98 Misc. 338, 164 N. Y. Supp. 282 376, 395 Hennessy v. Muhleman, 40 App. Div. 175, 58 N. Y. Supp. 854 360 Henry v. Ba,bcoek & Wilcox Co., 196 N. Y. 302, 89 N. E. 942 221, 341, 727 Hepner v. Maybury, 23 Misc. 262, 51 N. Y. Supp. 170 38 Hepworth v. Union Ferry Co., 62 Hun 257, 16 N. Y. Supp. 692. . . .558, 559, 582 Herbert v. Duryea, 34 App. Div. 478, 54 N. Y. Supp. 311 137, 284 Herbert v. Montana Diamond Co., 81 App. Div. 212, 80 N. Y. Supp. 717 785 Herman v. Brooklyn Savings Bank, 196 Aipp. Div. 269, 187 N. Y. Supp. 738. 14 Herries v. Piatt, 21 Hun 132 289 Herries v. Wesley, 13 Hun 492 79, 219, 309 Herring v. New York, L. E. S. W. R. Co., 105 N. Y. 340, 12 N. E. 763 617 629, 647, 676, 686 Herrman v. Tapley Co., 64 Misc. 466, 118 N. Y. Supp. 80;^ 548, 549 Hess V. Sloane, 66 App. Div. 522, 7'3 Supp. 313 503, 535 Hessey v. Queens Borough Gas & Electric iCo., 47 Misc. 375, 93 N. Y. Supp. 1114 842 Hetzel V. Tannehill Silver M. Co!,. 4 Abb. N. C. 40 543, 635 Hexter v. Day-Elder Mol^ors Corporations, 192 App. Div. 394, 182 N. Y. Supp. 717 798 Hey V. Dolphin, 92 Hun 230, 36 N. Y. Supp. 627 175, 271, 272 Hibernia National Bank v. Laeombe, 84 N. Y. 367 779 Hibernia National Bank v. Laeombe, 21 Hun 166 797 Hiokok V. Cowperthwait, 210 N. Y. 137, 103 N. E. 1111 193 Higgins V. Applebaum, 18S App. Div. 527, 170 N. Y. Supp. 228 382 Higgins v. Applebaum, 186 App, Div. 682, 174 N. Y. Supp. 807 35, 378 Higgins v. Higgins Soap Co., 144 N. Y. 462, 39 N. E. 490 58, 61 Higgins V. Hocking Valley R. Co., 188 App. Div. 684, 177 N. Y. Supp. 444. 478 532, 533 Higgins V. Tefft, 4 App. Div. 62, 38 N. Y. Supp. 716 386 Higgins V. Worthington, 90 Hun 436, 35 N. Y. Supp. 815 632, 684 Higgins Co. v. Higgins So«p Cb., 144 N. Y. 462, 39 N. E. 490 7 Hill V. Knickerbocker Electric L. & P. Co., 63 Hun 632, 18 N. Y. Supp. 813. . 733 Hill V. Newichawanick Co., 8 Hun 459 195 Hill V. Newichawanick Co., 48 How. Pr. 427 212 Hill V. Spencer, 61 N. Y. 274 29ft Hill V. Troegerlith Tile Co., 168 App. Div. 639, 154 N. Y. Supp. 525. . . . . . 507 Hiller v. Burlington & M. R. R. Co., 70 N. Y. 223 789, 797 Hilton v. Ernst; 38 App. Div. 94, 57 N. Y. Supp. 908 ' 454 Hinck'ey v. Sehwarzschild & 8. Co., 107 App. Div. 470, 95 N. Y. Supp. 357, 110 Hinckley v. Sehwarzschild & S. Co., 45 Misc. 176, 91 N. Y. Supp. 893 110 Hinds V. Fishkill & Matteawan Gas Co., 96 App. Div. 14, 88 N, Y. ^upp. 954 469 519 TABLE OF CASES CITED. Ixxvii Page Hinds, Noble & Eldredgo, Matter of; 172 App. Div, 140, 158 N". Y. Supp. 249 67, 412 Hirsoh v. Jones, 115 App. Div, 156, 100 N. Y. Suipp. 687 257, 348 Hirseh v. Twelfth Ward Bank, 66 Misc. 290, 122 K. Y. Supp. 1076 435 Hirshfeld v. Bopp, 145 N. Y. 84, 39 N. E. 817 294, 296, 299 Hirshfeld v. Bopp, 5 App. Div. 202, 39 N. Y. Supp. 24 294 Hirshfeld v. Ealischer, 81 Hun 606, 30 N. Y. Supp. 1027 673 Hirshfeld v. Kursheedt, 81 Hun 555, 30 N. Y. Supp. 1023 296 Hiscoek v. Lacy, 9 Misc. 678, 30 N. Y. Supp. 860 205 Hitchcock, Matter of, 149 App. Div. 824, 134 N. Y. Supp. 174 225 Hitchcock, Matter of, 157 App. Div. 328, 142 N. Y. Supp. 247. . .' 223, 225 Hitchcock Mfg. Co., Matter of, 1 App. Div. 164, 37 N. Y. Supp. 834 594 608, 610 Hitohings v. St. Louis Co., 68 Hun 33, 22 N. Y. Supp. 719 513, 514 Hoag V. Edwards, 69 Misc. 237, 124 N. Y. Supp. 1035 46, 412, 581, 587 Hoag V. Lamont, 60 N. Y. 98 69 Hoagland v. Bell, 36 Barb. 57 219, 309 Hoagland, Robinson Co., Matter of, 36 Misc. 28, 72 N. Y. Supp. 435 566 573. 084 Hobbs V. National Bank of Commerce, 101 Fed. 75 10 Hoboken Beef Co. v. Hand, 104 App. Div. 390, 93 N. Y. Supp. 834 423 Hoch v. Brooklyn Borough Gas Co., 117 App. Div. 882, 103 N. Y. Supp, 370 s:!l Hoevel Sandblast Machine Co. v. Hoevel, 167 App. Div. 548. 153 X. \. Supp. 35 755, 774 Hoffman v. Van Nostrand, 42 Barb. 174, 28 How. Pr. 115 363 Holbrook v. New Jersey Zinc Co., 57 N. Y. 616 123, 124, 180, 186 Hollaman v. El. Arco Mines Co., 137 App. Div. 862, 122 N. Y. Supp, 852, . 727 Holland Trust Co. v. Consolidated Gas & Electric Co., 85 Hun 454, 32 N. Y. Supp. 830 634, 667 Holland Trust Oo. v. Thomison-Houston Electric Co., 170 N. Y. 68, 62 N. E. 1090 484 Holland Trust Oo. v. Thomson-Houston Electric Co., 9 App. Div. 473, 41 N. Y. Supp. 457 484 Hollander v. Westchester Lighting Co., 79 Misc. 646, 140 N. Y. Supp . 544 .. , 833 Hollingshead v. Woodward, 107 N. Y. 96, 13 N. E. 62] 304 HoUister v. De Forest Wireless Tel. Co., 47 Misc. 674, 94 N. Y. Supp. 504. . ,730 Hollwedel Co. v. Auerbach & Co., 67 Misc. 148 38 Holm V. Lipeius Brewing Co., 21 App. Div. 204, 47 N. Y. Supp. 518 530 Holmes v. Oamp, 219 N. Y. 359, 114 N. E. 841 105, 106 Holmes v. Camp, 176 App. Div. 771, 162 N. Y. Supp. 1014. 249 Holmes v. Camp, 180 App. Div. 409, 167 N. Y. Supp. 840 230. 238 Holmes v. Camp, 186 App. Div, 675, 175 N. Y. Supp. 349 236, 256, 257 Holmes v. Crane, 191 App. Div. 820, 182 N. Y. Supp. 270 359, 361 Holmes v. McDowell, 15 Hun 585 675 Holmes v. Saint .Joseph Lead Co. No. 1, 108 App, Div. 685, 154 N. Y. Supp. 517. . . . . . .' • . • • 357 Holmes v. Saint Joseph Lead Co. No. 2, 168 App. Div. 688, 154 N. Y. Supp. 513 359 Holmes v. Saint Joseph Lead Co., 84 Misc. 278, 147 N. Y. Supp. 104, .201, 412 IxXViii TABLE OF CASES CITED. Page Holmes v. Willard, 125 N. Y. 75, 25 N. E. 1083 -361, 475 Holmes, Booth & Haydens v. Willard, 53 Hun 629, 5 N. Y. Supp. 610 530 Holmes Electric Protective Co. v. Williams, 228 N. Y. 407, 127 N. E. 315 . . 865 Home Bank v. Brewster & Co., 15 App. IHv. 338, 44 N. Y. Supp. 54 466 Home Bank v. Brewster & Co., 17 Misc. 442, 41 N. Y. Supp. 203 463 Home Book Co., Matter of, 60 Misc. 560, 112 N. Y. Supp. 1012 615 Home Fire Ins. Co. v. Barber, 67 Neb. 644 242 Home Provident Safety Fund Assn., Matter of, 129 N. Y. 288, 29 N. E. 323. . 686 Hooke V. Financier Co., 99 App. Div. 186, 90 N. Y. Supp. 1012 506 Hooker v. Eagle Bank of Eocbester, 30 N. Y. 83, 86 Am. Dee. 351 506 Hope Mutual Life Ins. Co. v. Perkins, 38 N. Y. 404 529 Hopper V. Sage, 112 N. Y. 530, 20 N. E. 350 211 Horn Silver Mining Co. v. New York, 143 U. S. 305 734, 745 Horner & Co. v. Lawrence, 86 Misc. 95, 149 N. Y. Supp. 82 579 Horowitz V. Broads Mfg. Co., 54 Misc. 569, 104 N. Y. Supp. 988 37 Horroeks Desk Co. v. Fangel, 71 App. Div. 313, 75 N. Y. Supp. 967 424 Horst V. Yuengling Brewing Co., 1 App. Div. 629, 37 N, Y. Supp. 3 547 Horton v. McNally Co., 155 App. Div. 322, 140 N. Y. Supp. 357 741 Horton Ice Cream Co. v. Merritt, 63 Hun 628, 17 N. Y. Supp. 718 498 Hovey v. De Long Hook & Eye Co., 211 N. Y. 420, 105 N. E. 667 727, 746 Hovey v. De Long Hook & Eye Co., 147 App. Div. 881, 133 N. Y. Supp. 25. 725 Hovey v. Eiswald, 139 App. Div. 433, 124 N. Y. Supp. 130 726, 728 Howard v. Prudential Ins. Co., 1 App. Div. 135, 37 N. Y. Supp. 832 803 Howard Aid Society, Matter of, 160 N. Y, Supp. 789 55 Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489 736 Howarth v. Angle, 39 App. Div. 151, 57 N. Y. Supp. 187 690 Howden & Co. of America, Inc. v. American Condenser & Engineering Corp., 194 App. Div. 164 752, 753, 758 Howe v. New York, New Haven & Hartford H. Co., 142 App. Div. 451, 126 N. Y. Supp. 1090 775 Howell V. Chicago & N. W. R. Co., 51 Barb. 378 203 Howell V. German Theatre, 64 Misc. 110, 117 N. Y. Supp. 1124 668, 692 Howell, People ex rel. v. Jessup, 160 N. Y. 249, 54 N. E. 682 884 Howes V. Gas Consumers' Beneat Co., 12 N. Y. Supp. 924, 36 St. Rep. 48. . 184 Howes Co. V. Howes Grain Cleaner Co., 24 Misc. 83, 52 N. Y. Supp. 468. . . 61 Howland v. Metropolitan Bank, 228 Fed. 542 106, 455 Hoyle V. Plattsburgh & Montreal B. Co., 54 N. Y. 314, 13 Am. Rep. 595 370 Hoyt V. Quicksilver Mining Co., 17 Hun 169 Ill Hoyt V. Thompson, 5 N. Y. 120 327^ 496, 743 Hoyt V. Thompson's Executor, 19 N. Y. 207 329, 332, 521 Hoyt, etc. v. Great American Ins. Co., 115 Misc. 1, 188 N. Y. Supp. 257. . . 120 Huib Publishing Co. v. Richardson, 13 N. Y. Supp. 665 35 Hubbard v. Syenite-Trap Rock Co., 178 App. Div. 531, 165 N. Y. Supp. 486 501, 509, 510, 524 Hubbell V. Meigs, 50 N. Y. 480 7g Hubbell V. Syracuse Iron Works, 42 Hun 182, 4 St. Rep. 690 678 Hubbell & CUiTan v. Dana, 9 How. Pr. 424 '. gyg Huber Co. v. Warren, 29 Misc. 588, 61 N. Y. Supp .247 768 Hudson & Manhattan R. Co. v. State of New York, 227 N. Y. 233, 125 N. E. 202 : 947 TABLE OF CASES CITED, Ixxix Page Hudson River Telephone Co. v. Watervliet Turnpike & Ry. Co., 135 N. Y. 393, 32 N. E. 148 534 Hudson River & W. C. M. R. Co. v. Hanfield, 36 App. Div. 605, 55 N. Y. iSupp. 877 ' 135, 497 Hudson Trust Co. v. American Linseed Co., 190 App. Div. 289, 180 K. Y. Supp. 17 123, 125, 177, 178, 184, 518 Hudson Valley R. Co. v. O'Connor, 95 App. Div. 6, 83 N. Y. Supp. 742. . . 483 Hughes V. Vermont Copper Mining Co., 72 N. Y. 207 216 Hubm V. Richmond Light & R. R. Co. (opinion of Public Service Comm., 1st Dist., 1917), 13 State Dept. Rep. 168 834 Hulbert Bros. & Co., Matter of, 100 N. Y. 9, 54 N. E. 57.1 600, 6Q2 Hulbert Bros. & Co., Matter of, 38 App. Div. 323, 57 N. Y. Supp. 38 733 Hun V. Cary, 82 N. Y. 65 357 Hungarin General Credit Bank v. Titus, 175 App. Div. 507, 161 N. Y. Supp. 1078 768 Hunter v. Mutual Resen-e Life Ins. Co., 184 N. Y. 136, 76 N. E. 1072 803 Hunter v. Mutual Reserve Life Ins. Co, 192 N. Y. 85, 84 N. E. 576 804 Hunter v. Mutual Reserve Life Ins. Co., 118 App. Div. 94, 103 N. Y. Supp. 70 803 Hunter, People ex rel. v. National Park Bank, 122 App. Div. 635, 107 N. Y. Supp. 369 .-. • ■ 223 Hunting v. Blun, 69 Hun 562, 23 N. Y. Supp. 965 299, 300 Huntington v. Attrill, 146 U. S. 657 403 Huntington v. Attrill, 118 N. Y. 365, 23 N. E.'544 361, 404 Huntington v. Attrill, 42 Hun 459, 4 St. Rep. 869 ; 402 Huntington v. Sheehan, 206 N. Y. 486, 100 N. E. 41 765 Hurd V. New York & C. Steam Laundry Co., 167 N. Y. 89, 60 N E. 327.106, 108 Hutchinson v. Curtiss, 45 Misc. 484, 92 N. Y. Supp. 70. 200, 400, 735 Hutchinson v. Stadler, 85 App. Div. 424, 88 N. Y. Supp. 509 733, 735 Hutchinson v. Young, 80 App. Div.. 246, 80 N. Y. Supp. 359 403 Hutchinson v. Young, 93 App. Div. 407, 87 N. Y. Supp. 678 403 Hutson V. Morrisania Steamboat Co., 12 Abb. N. C. 378, 64 How. Pr. 268. 554 Hyatt V. Allen, 56 N. Y. 553, 15 Am. Rep. 449 Hyde v. Equitable Life Assurance Society, 61 Misc. 518, 116 N. Y. Supp. 219. 435 Hyde v. Lynde, 4 N. Y. 387 S'S Hyde Park Terrace Co. v. Jackson Bros. Realty Co., 161 App. Div. 146 N. Y. Supp. 1037 Hygeia Water lee Co. v. New York Hygeia Ice Co., 140 N. Y. 94, 35 N. E 417 Hyman v. New York Urban Real Estate Co., 79 Misc. 439, 140 N. Y, Supp. 138 Hynes v. McDermott, 14 Daly 104, 3 St. Rep. 582 207 35 78 33 60, 61 392 I Ichelson v. Schlein & Sons, Inc., 103 Misc. 673, 171 N. Y. Supp. 2 524 Importers & Grocers' Exchange, Matter of, 132 N. Y. 212, 30 N. E. 401. . 585 588, 589 Independent T. Y. M. B. Assn. v. Somaeh, 52 Misc. 538, 102 N. Y. Supp. 495 523 India Rubber Co. v. Katz, 65 App. Div. 349, 72 N. Y. Supp. 658 783 IXXX TABLE OF GASES CITED. Page Industrial & General Trust v. Tod, 170 N. Y. 333, 63 N. E. 385 101 Industrial & General Trust v. Tod, 180 N. Y. 315, 73 N. E. 7 101 Inglehart v. Thousand Island Hotel Co., 33 Hun 377 356 Ingraham v. National Salt Co., 72 App. Div. 582, 76 N. Y. Supp. 1016 170 Innovation Trunk Co. v. Piatt, 56 Misc. 645, 107 N. Y. -SuRp. 816 500 Insurance Press v. Montauk Wire Co., 103 App. Div. 473, 93 N. Y. Supp. 134 366 Interborough-Metropolitan Co., Matter of, 135 App. Div. 804, 110 N. Y. Supp. 186 95 International Life Assur. Co. v. Sweetland, 14 Abb. Pr. 240 769 International Society v. Dennis, 70 App. Div. 327, 78 N. Y. Supp. 497. .. . 771 International Text-Book Co. v. Connelly, 67 Misc. 49, 124 N. Y. Supp. 603 773, 773 International Text-Book Co. v. Tone, 220 N. Y. 313, 115 N. E. 914 746, 747 Iowa Securities Corporation v. Kidgewood National Bank, 106 Misc. 335, 175 N. Y. Supp. 776 191 Ireland v. Oswego, etc.. Plank Koad Co., 13 N. Y. 526 880 Irish V. Citizens Trust Co. of Utica, 21 Am. B. R. 39, 163 Fed. 880 456 Irish Paper Corp. v. White, 91 Misc. 261, 154 N. Y. Supp. 778 285, 302 Irlbacker v. Roth, 35 App. Div. 290, 49 N. Y. Supp. 538 152 Iroquois Natural Gas Co., People ex rel. v. Public Service Comm., 194 App. Div. 578, 186 N. Y. Supp. 177 838 Irvine v. New York Edison Co., 207 N. Y. 425, 101 N. E. 358 85 Irvine v. New York Edison Co., 143 App. Div. 344, 138 N. Y. Supp. 397 . . 84, 91 Irving V. Neal, 209 Fed. 471 430 Irving National Bank v. Corbett, 10 Abb. N. C. 85 539 Isaacs, People ex rel. v. Moran, 206 N. Y. 670, 99 N. E. 1115 949 Isham V. Buckingham, 49 N. Y. 216 133 Israel, People ex rel. v. Tibbets, 4 Cow. 358 264 Ithaca Gas-Light Co. v. Treman, 30 Hun 313 385 Ives V. Met. Life Ins. Co., 78 Hun 32, 38 N. Y. Supp. 1030 .'. 545 Ives V. Smith. 3 N. Y. Supp. 645, 19 St. Rep. 556 781 J Jackson v. Campbell, 5 Wend. 572 502 Jackson v. Leggett, 7 Wend. 377 44 Jackson v. N. Y. C. R. Co., 2 T. & C. 653 346 Jackson v. Schuylkill Silk Mills, 92 Misc. 442, 156 N. Y. Supp. 319. ..... 793 Jackson Marine Ins. Co., Matter of, 4 Sandf. Ch. 559 647 Jacobs V. Blair, 157 App. Div. 601, 143 N. Y. Supp. 897 800 Jacobs V. Mexican Sugar Refining Co., 112 App. Div. 655, 98 N. Y. Supp 541. 547 Jacobs V. Mexican Sugar Refining Co., 11,3 App. Div. 657, 98 N. Y. Supp. 5*2 548, 549 Jacobs V. Mexican Sugar Refining Co., 104 App. Div. 342, 93 N. Y. Supp. '''^^- ■'■ • V 775, 776 .Jacobs y. Monaton Realty Investment Corporation, 312 N, Y. 48, 105 N E 968 ...' '...' 410 Jacobs V. Monaton Realty Investing Corp., 160 App. Div. 449 145 TSf Y Supp- 611 ' ■ ggg TABLE OF CASES CITED. IxXxi Page Jacobson v. Brooklyn Lumber Co., 184 N. Y. 152, 76 N. E. 1075.. 245, 364, 365 Jaeoibus v. American Mineral Water M. Co., 38 Misc. 371, 77 N. Y. Supp. 898 237 Jacobus V. Jamestown Mantel Co., 211 N. Y. 154, 105 N. E. 210 474 Jagger Iron Co. v. Walker, 76 N. Y. 521 304 Jamaica Consumers Ice Co., Matter of, 190i App. Div. 739, 180 N. Y. Supp. 384 269 Jamaica Gas Light Co. v. Nixon, 110 Misc. 494, 181 N. Y. Supp. 630 838 Jamaica Water Supply Co., People ex rel. v. State Bd. of Tax Comrs., 128 App. Div. 13, 112 N. Y. Supp. 392 200 Jaimes v. James Cement Co., 8 St. Rep. 490 673 James v. Woodruff, 2 Den. 574 635 Jameson v. Hartford Fire Ins. Co., 14 App. Div. 380, 44 N. Y. Supp. 15. . . 587 Jamestown, City of, v. Home Telephone Co., 125 App. Div. 1, 109 N. Y. Supp. 297 862 Janes v. Fitehburg R. Co., 50 Hun 310, 3 N. Y. Supp. 165 93 Janeway v. Burn, 91 App. Div. 165, 8« N. Y. Supp. 628 581 Jansen Co., Matter of, 128 X. Y. 550, 28 N. E. 665 609 Jarvis v. Manhattan Beach Co., 148 N. Y. 652, 43 N. E. 68 125, 138, 139 Jarvis v. Manhattan Beach Co., 75 Hun 100, 26 N. Y. Supp. 1061 140 JasBOy Co., In re, 178 Fed. 515 295 Jefferson Casket Co., In re (D. C, N. Y.), 182 Fed. 689 499 Jefferson County Nat. Bank v. Townley, 159 N. Y. 490, 54 N. E. 74 452 Jeffry v. Selwyn, 220 N. Y. 77, 115 N. E. 275 148, 157, 158, 162 Jeffry v. Selwyn, 173 App. Div. 217, 159 N. Y. Supp. 430 158 Jemison v. Citizens' Savings Bank, 122 N. Y. 135, 25 N. E. 264 1. 408 528, 529 Jemison v. Citizens' Savings Bank, 44 Hun 412 408 Jenkins v. John Good Cordage & Machine Co., 56 App. Div. 573, 68 N. Y. Supp. 239 485 Jensen Co., Matter of, 128 N. Y. 550, 28 N. E. 665 595, 596, 610 Jepson V. Postal Teleg. Co., 20 N. Y. Supp. 300 545 Jermain v. Lake Shore & M. S. R. Co., 91 N. Y. 483 211 Jermyn v. Searing, 225 N. Y. 5,25, 122 N, E. 706. 149 Jewett V. Swan, 19 Wkly. Dig. 144 , 598 Johnson v. Adams Tobacco Co., 14 Hun 89 787 Johnson v. New York Breweries Co., 178 Fed. 513 '. 774 Johnson v. Kayner, 25 App. Div. 598, 49 N. Y. Supp. 959 610, 615 Johnson v. Underhlll, 52 N. Y. 203 182, 183 Johnson v. Victoria Chief Copper Mining & S. Co., 150 App. Div. 653, 135 N. Y. Supp. 107O 739, 778 Johnson v. Victoria Chief Copper Mining & S. Co., 65 Misc. 332, 119 N. Y. Supp. 639 777 Johnson, People ex rel. v. New York Produce Exchange, 149 N. Y. 401, 44 N. E. 84 ■ 413 Johnston v. Mutual Reserve Life Ins. Co., 43 Misc. 251, 87 N. Y. Supp. 438. 790 Jones V. Blun, 145 N. Y. 333, 39 N. E. 954 450, 458, 572, 675 Jones >'. Bun- Brothers, 142 App. Div. 640, 127 N. Y. Supp. 478 778, 786 Ixxxii TABLE OF CASES CITED. Page Jones V. Keeler, 40 Misc. 321, 81 N. Y. Supp. 648 763 Jones V. Mail & Express Publishing Co., 80 Hun 368, 30 N. Y. Supp. 335. 114 Jones, Matter of, 172 N. Y. 575, 65 N. E. 570 134 Jones T. Nassau Suburban Home Co., 53 Misc. 63, 103 N. Y. Supp. 1089. . 362 Jones V. Rochester Gas & Electric Co., 168 N. Y. 65, 60 N. p. 1044.. 832, 833 Jones V. Rochester Gas & Electric Co., 7 App. Div. 465, 39 N. Y. Supp. 1105 833 Jones V. Rochester Gas & Electric Co., 7 App. Div. 474, 39 N. Y. Supp. 1110. . . . . * 832 Oones V. Standard Plunger Elevator Co., 167 App. Div. 178, 153 N. Y. Supp. 910 742 Jones V. Terre Haute & Richmond R. Co., 57 N. Y. 196 199 Jones V. Wells Fargo Express Co., 83 Misc. 508, 145 N. Y. Supp. 601 ... . 753 Jones Co., Matter of, 67 Hun 360, 32 N. Y. Supp. 318 319, 321, 590 Joseph V. Raff, 82 App. Div. 47, 81 N. Y. Supp. 546 363, 426 Josephy v. Kansas City, etc. R. Co., 180 App. Div. 133, 167 N. Y. Supp. 273 80O Jourdan v. Long Island R. Co., 115 N. Y. 380, 23 N. E. 153 70, 498 Journal Publishing Club, Matter of, 30 Misc. 336, 68 N. Y. Supp. 465 279 Judge, People ex rel. v. Public Service Comm., 193 App. Div. 837, 183 N. Y. Supp. 283 838 Just V. Idaho, etc. Co., 103 Pac. 381 242 K Kain v. Larkin, 4 App. Div. 209, 38 N. Y. Supp. 546 , 398 Kansas City Smelting & Refining Co., Matter of, 13 App. Div. 50, 43 N. Y. Supp. 51 86, 97 Karnes v. Rochester & Genesee Valley R. Co., 4 Abb. Pr., N. S., 107 198 Karosas v. Susquehanna Coal Co., 172 App. Div. 873, 158 N. Y. Supp. 1021. 797 Karsch v. Pettier & Stymns Mfg. Co., 83 App. Div. 230, 81 N. Y. Supp. 782. 503, 536 Kassel v. Empire Tinware Co., 178 App. Div. 176, 164 N. Y. Supp. 1033 205 200 Katz V. H. & H. Mfg. Co., 109 App. Div. 49, 95 N. Y. Supp. 663 75, 315 Kaulbach v. Knickerbocker Trust Co., 139 App. Div. 566, 124 N. Y. Supp. 286 538 Kavanaugh v. Commonwealthtf'rust Co., 181 N. Y. 131, 73 N. E. 563. .335, 351 Kavanaugh v. Commonwealth Trust Co., 103 App. Div. 95, 92 N. Y. Supp. 543 244 Kavanaugh v. Commonwealth Trust Co., 45 Misc. 295, 92 N. Y. Supp. 233 344, 350 Kavanaugh v. Kavanaugh Knitting Co., 236 N. Y. 185, 133 N. E. 148 588 Keane Aeroplanes, Inc., Matter of, 194 App. Div. 873, 185 N. Y. Supp. 163. 48 Keans v. New York & College Point Ferry Co., 17 Misc. 373, 40 N. Y. Supp. 366 ; 347 Keating v. American Brewing Co., 63 App. Div. 501, 71 N. Y. Supp. 95. . 530, 535 Keeler v. Seaman, 47 Misc. 393, 95 N. Y. Supp. 920 201 Keene, People ex rel. v. Supervisors, 151 N. Y. 190, 45 N. E. 453 893 TABLE OF OASES CITED. IxXXUi Keeseville, A. C. & L. C. E. Co., People ex rel. v. Powers, 145 App. Div. 693, 130 N. Y. Supp. 539 831 Keller, Matter of, 116 App. Div. 58, 101 N. Y. Supp. 133 323 Kellner v. Shelley, 178 App. Div. 657, 165 N. Y. Supp. 833 738 Kellogg T. Mately Supply Co., 168 App. Div. 671, 154 N. Y. Supp. 359 548 Kelly V. Forty-Seeond St. R. Co., 37 App. Diy. 500, 55 N. Y. Supp. 1096. 483 Kelly V. Mariposa Land & Mining Co., 4 Hun 633 431 Kelly V. Woman Pub. Co., 4 N. Y. Supp. 99, 15 Civ. Pro. Rep. 259 540 Kelly Asphalt Block Co. v. Brooklyn Alcatraz Asphalt Co., 190 App. Div. 750, 180 N. Y. Supp. 805 357 Kelsey, Matter of, 186 App. Div. 95, 173 N. Y. Supp. 860 417, 430 Kelsey v. Pfaudler Process Fermentation Co., 41 Hun 30, 3 St. Rep. 167. 232 Kelsey v. Pfaudler Process Fermentation Co., 45 Hun 10, 19 Abb. N. C. 427 618 Kelsey v. Pfaudler Process Fermentation Co., 51 Hun 636, 3 N. Y. Supp. 723 233 Kelsey v. Sargent, 40 Hun 150 245, 347 Kemp v. Able Realty Maintenance Co., 174 App. Div. 243, 160 N. Y. Supp. 243 466 Kennedy, Matter of, 75 App. Div. 188, 77 N. Y. Supp. 714 327 Kennedy v. Thompson, 97 App. Div. 296, 89 N. Y. Supp. 963 188 Kent V. Quicksilver Mining Co., 78 N. Y. 159 76, 108, 535 Keogh, Inc., Matter of, 192 App. Div. 634, 183 N. Y. Supp. 408 263, 373 Kern Horse Remedy Co., Inc. v. Seiner, 173 App. Div. 153, 158 N. Y. Supp. 192 73 Kevand v. New York Telephone Co., 159 App. Div. 638, 145 N. Y. Supp. 414. 870 Kharas v. Collier, Inc., 171 App. Div. 388, 157 N". Y. Supp. 410 714 Kieley v. Barron & Cooke H. & P. Co., 87 App. Div. 317, 84 N. Y. Supp. 306. 571 Kiendi v. Cochrane, 153 App. Div. 802, 138 N. Y. Supp. -630 465 Kiley v. Western Union Telegraph Co., 109 N. Y. 231, 16 N. E. 75 873 Kimball v. Ives, 30 Hun 568 385 Kincaid v. Dwinelle, 59 N. Y. 548 300, 308, 585 King V. Barnes, 109 N. Y. 267 34 King V. Union Iron Co. of Buffalo, 11 N. Y. Supp. 603, 33 St. Rep. 545.. 459 Kingman v. Rome, W. & 0. R. Co., 30 Hun 73 171 Kings County Lighting Co. v. Lewis, 110 Misc. 204, 180 N. Y. Supp. 570.. 835 Kings, Queens & Suffolk E. Co., Matter of, 6 App. Div. 341, 39 N. Y. Supp. 1004. 30 Kingsley v. First Nat. Bank of Bath, 31 Hun 339 459 Kinman v. Forty-Seeond St., etc. R. Co., 140 N. Y. 183, 35 N. E. 498. . . . 139 Kinnan v. Sullivan County Club, 26 App. Div. 213, 50 N. Y. Supp. 95. .174, 264 Kinney v. Reid Ice Cream Co., 57 App. Div. 206, 68 N. Y. Supp. 325 758 Kinsman v. Fisk, 83 Hun 494, 31 N. Y, Supp. 1045 354 Klein v. East River Electric Light Co., 182 N. Y. 37, 74 N. E. 495 484 Klein v. East River Electric Light Co., 33 Misc. 596, 67 N. Y. Supp. 923.. 536 Klein V. East River Electric Light Co., 37 Misc. 490, 75 N. Y. Supp. 1000. 92 Klein Bros. & Co. v. German Union Fire Ins. Co., 66 Misc. 638, 133 N. Y. Supp. 1082 ^°^ Ixxxiv TABLE OF CASES CITED. Page Kline v. Imperial Coal & Coke Co., 66 Misc. 616, 133 N. Y. Supp. 311. . . 779 Kline Bros. & Co. v. German Union Fire Ins. Co., 147 App. Div. 790, 133 N. Y. Supp. 181 760, 761 Klingenschmidt v. Martocci, 108 Misc. 636, 178 N. Y. Supp. 673 339, 341 Klueg V. Bosch, 38 N. Y. Supp. 159, 81 Abb. N. C. 37 385 Knapp V. Harkness, 60 N. Y. 613 ■ 556 Knickerbocker v. Conger, 110 App. Div. 135, 97 N. Y. Supp! 137 93 Knickerbocker v. Groton Bridge & Mfg. Co., Ill App. Div. 145, 97 N. Y. Supp. 595 579, 633, 633 Knickerbocker Investment Co. v. Voorhees, 100 App. Div. 414, 91 N. Y. Supp. 816 , 373 Knickerbocker Press, People ex rel. v. Barker, 87 Hun 341, 34 N. Y. Supp. 369 71 Knickerbocker Trust Co. v. Hard, 67 App. Div. 463, 73 N. Y. Supp. 979.157, 159 Knickerbocker Trust Co. v. Iselin, 185 N. Y. 54, 77 N. E. 877 295 Knickerbocker Trust Co. v. Iselin, 53 Misc. 80, 103 N. Y. Supp. 1108 735 Knickerbocker Trust Co. v. Tarrytown W. P. & M. R. Co., 133 App. Div. 385, 117 N. Y. Supp. 871 585, 597, 607, 625 Knight V. Lang, 3 Abb. Pr. 337, 4 E. D. Smith 381 503, 535 Knouer v. Globe, etc. Ins. Co., 14 J. & S. 370 556, 557 Kochler & Co. v. Eeinheimer, 36 App. Div. 1, 49 N. Y. Supp. 755 : 530 Koechl V. Leibinger & Oehm Brewing Co., 34 Misc. 398, 53 N. Y. Supp. 983. 468 Kohlmetz v. Calkins, 16 App. Div. 518, 44 N. Y. Supp. 1031 219, 690 Kolb V. Mortimer, 135 App. Div. 543, 130 N. Y. Supp. 543 249 Komow V. Simplex Cloth Cutting Machine Co., Inc., 109 Misc. 358, 179 N. Y. Supp. 683 330 Komow V. Simplex Cloth Cutting Machine Co., Inc., 109 Misc. 358, 179 N. Y. Supp{ 683 r Kortright v. Buffalo Commercial Bank, 30 Wend. 91 177, 185 Kossel V. Empire Tinware Co., 178 App. Div. 176, 164 N. Y. Supp. 1033. 336 Koster v. Pain, 41 App. Div. 443, 58 N. Y. Supp. 865 186 Kountze v. Flannagan, 64 Hun 635, 19 N. Y. Supp. 33 317 Kowalchek v. Buck Bun Coal Co., 173 App. Div. 653, 160 N. Y. Supp. 98 . . 779 797, 798 Kraft V. Griffon Co., 83 App. Div. 39, 81 N. Y. Supp. 438 783 Krahowski v. White Sulphur Springs, 174 App. Div. 440, 161 N. Y. Supp. 193 792 Kram v. Jewish World Pub. Co., 176 App. Div. 840, 163 N. Y. Supp. 361. 549 Kramer v. Buffalo Union Furnace Co., 133 App. Div. 415, 116 N. Y. Supp. 1101 ■ 545 Krauser v. Euckel, 17 Hun 463 ggg ggo Kreitner v. Burgweger, 174 App. Div. 48, 160 N. Y. Supp. 356 336, 346 350, 365 Krohowski v. White Sulphur Springs, Inc., 174 App. Div. 440, 161 N. Y. ■Supp. 193 .^53 Knowles v. Duffy, 40 Hun 485, 3 St. Rep. 135 I34 Knowlton v. Congress & Empire Spring Co., 57 N. Y. 518 366 Knox V. Eden Musee Americain Co., 148 N. Y. 441, 43 N. E. 988 74 135 139, 140, 177, 17!) TABLE OF CASES CITED. IxXXV L Page Ladenburg v. Commercial Bank, 87 Hun 269, 33 N. Y. Supp. 821 . . 776, 778, 784 Lafflin v. Traveller's Ins. Co., 121 N. Y. 713, 24 N. E. 934 803 Lake Ontario Shore E. Co. v. Curtiss, 80 N. Y. 319 151 Lake Shore National Bank v. Butler Colliery Co., 51 Hun 63, 3 N. Y. Supp. 771 513 Lake Superior Iron Co. v. Drexel, 90 N. Y. 87 288 Lambert v. Elmendorf, 124 App. Div. 758, 109 N. Y. Supp. 574 154, 371 Lamkin t. Palmer, 24 App. Div. 255, 48 N. Y. Supp. 427. 430 Lamming v. Galusha, 81 Hun 247, 30 N. Y. Supp. 767 30, 31, 32 Lamphere v. Lang, 213 N. Y. 585, 108 N. B. 82 165 Lamphere v. Lang, 157 App. Div. 306, 141 N. Y. Supp. 967 137 Lampson, Matter of, 33 App. Div. 49, 53 N. Y. Supp. 581 9 Lamson Consol. Store Service Co. v. Conyngham, 11 Misc. 428, 32 N. Y. Supp. 129 552 Lancaster v. Amsterdam Imp. Co., 140 N. Y. 576, 35 N. E. 964 722, 723 Lancaster v. Knight, 74 App. Div. 255, 77 N. Y. Supp. 488 283 Landes v. Hart, 131 App. Div. 6, 115 N. Y. Supp. 337 -. 326 Lane v. Barnard, 185 App. Div. 754, 173 N. Y. Supp. 714 176, 186 Lane v. Wheelwright, 69 Hun 180, 23 N. Y. Supp. 576 733 Lang V. Lutz, 180 N. Y. 254, 73 N. B. 24 283, 305, 306 Lang V. Lutz, 83 App. Div. 534, 82 N. Y. Supp. 319 293, 294 Langie v. Hebing, 160 N. Y. Supp. 621, 194 St. Rep. 621 .-. 532 Lannen v. Albany Gas Light Co., 44 N. Y. 459 825 Larsen & Son, Inc. v. Newmark & Davis, Inc., 182 App. Div. 724, 170 N. Y. Supp. 268 449, 450 Lathrop v. Kneeland, 46 Barb. 432 127 Lathrop, Shea & Henwood Co. v. Byrne, 115 App. Div. 846, 100 N. Y. Supp. 1041 400 Lathrop, Shea & Henwood Co. v. Interior Const. & Imp. Co., 150 Fed. 666. 796 Latimer v. Herzog Teleseme Co., 75 App. Div. 522, 78 N. Y. Supp. 314. .225, 229 Latiner v. Wonderland Amusement Co., 161 App. Div. 554, 146 N. Y. Supp. 779 507 Lawrence v. Fox, 20 N. Y. 268 164 Lawrence v. Weber, 65 Misc. 603, 120 N. Y. Supp. 289 245, 413 Lawshe v. Royal Baking Powder Co., 54 Misc. 220, 104 N. Y. Supp. 361. . . 229 Lawyer v. Rosebrook, 48 Hun 453, 1 N. Y. Supp. 594 308 Lawyers' Ad. Co. v. C. R. L. & R. Co., 187 N. Y. 395, 80 N. B. 799. . . .270, 331 LeBlanc, In re, 75 N. Y. 598 217 LeBlanc, Matter of, 14 Hun 8 316 LeRoy v. Globe Ins. Co., 2 Bdw, Ch. 657 217 Leach, People ex rel. v. Central Fish Co., 117 App. Div. 77, 101 N. Y. Supp. 1108 230 Leary v. Albany Brewing Co., 77 App. Div. 6. 79 N. Y. Supp. 130 505 Leask, Matter of, 159 App. Div. 102, 143 N. Y. Supp. 865 214 L«derwerke v. Capitelli, 92 Misc. 260. 155 N. Y. Supp. 651 759 Lee V. Pittsburgh Coal & Mining Co., 56 How. Pr. 373. 522 Leffert v. Jackman, 227 N. Y. 310, 125 N. E. 446 436, 438, 440 Lefl V. Nachod, 64 Misc. 497, 119 N. Y. Supp. 470 320 IxXXVi TABLE OF CASES CITED. Page Legal Aid Soc. v. Co-op. Legal Aid Soc, 41 Misc. 137, 83 N, Y. Supp. 936. . 61 Leggett V. Bank of Sing Sing, 34 N. Y. 383 ... , : 173 Legraad v. Manhattan Mercantile Assn., 80 N. Y. 638 ■■■■ 409 Lehigh Coal & Navigation Co. v. Central E. Co., 43 Hun 546, 7 St. Rep. 270. 666 Lehmaier, People ex rel. v. Interurban Ey. Co., 177 N. Y. 396, 69 N. E. 596. 648 Lehman-Charley v. Bartlett, 135 App. Div. 674, 130 N. Y. "Supp. 501 518 Lehman, People ex rel. v. Consolidated Fire Alarm Co., 143 App. Div. 753, 137 N. Y. Supp. 348 337 Lehman, People ex rel. v. Consolidated Fire Alarm Co., 145 App. Div. 437, 127 N. Y. Supp. 348 334 Leighton v. Leighton Lea Assn., 146 App. Div. 355, 130 N. Y. Supp. 935. 283 Leighton v. Leighton Lea Assn., 63 Misc. 73, 114 N. Y. Supp. 918 10, 301 Leinkauf v. Lombard, 137 N. Y. 417, 33 N. E. 472. 532 Leitch V. Wells, 48 N. Y. 585 180 Lenox Corporation, Matter of, 57 App. Div. 515, 68 N. Y. Supp. 103 585 594, 608, 609 Leonard v. Faber, 53 App. Div. 495, 65 N. Y. Supp. 391 79, 80 Leslie v. Lorillard et al., 110 N. Y. 519, 18 N. E. 363 . . 95, 360, 530, 528, 532 Leslie v. Lorillard, 31 Hun 305, 18 Wk. Dig. 288 349 Leslie v. Lorillard, 40 Hun 393 539 Levin v. Mayer, 86 Misc. 116, 149 N. Y. Supp. 113 333, 586 Leviue v. Brooklyn Union Gas Co., 146 App. Div. 464, 131 N. Y. Supp. 355. 832 Levey v. New York Central R. Co., 4 Misc. 415, 34 N. Y. Supp. 134 .' 74 Lewis V. Harlem Dental Co., 189 App. Div. 359, 178 N. Y. Supp. 533...! 422 Lewis V. Matthews, 161 App. Div. 107, 146 N. Y. Supp. 434 312, 314 317, 343, 349 Lewis V. Woodbury Dental Parlors Co., 106 Misc. 78, 175 N. Y. Supp. 269 422, 656 Lewis & Fowler Mfg. Co., Matter of, 89 Hun 208, 34 N. Y. Supp. 983 684 Lewis Publishing Co. v. Lenz, 86 App. Div. 451, 83 N. Y. Supp. 841 754 Lewis Publishing Co. v. Palmer, 84 N. Y. Supp. 141 754 Lewisohn Bros. v. Anaconda Copper Min. Co., 36 Misc. 613, 56 N. Y. Supp. 807 '. 732 Life & Fire Ins. Co. v. Mechanics Fire Ins. Co., 7 Wend. 31 496 Lighthall Mfg. Co., Matter of, 47 Hun 2.58, 13 St. Rep. 381 267, 271 Lilienthal v. Betz, 185 N. Y. 153, 77 N. E. 1003 ;',79 Lilienthal v. Betz, 61 App. Div. 601, 70 N. Y. Supp. 920 433 Lilienthal v. Betz, 108 Apjf Div. 332, 95 N. Y. Supp. 849 380 Lilienthal v. Yuengling, 33 Misc. 619, 68 N. Y. Supp. 897 433 Linderman v. Hastings Card &, Paper Co., 38 App. Div. 488, 56 N. Y. Supp. 456 463 Linkauf v. Caiman, 110 N. Y. 50, 17 N. B. 389 69 Little V. Garabrant, 90 Hun 404, 35 N. Y. Supp. 689 535 Little, Matter of, 47 App. Div. 33, 63 N. Y. Supp. 27 683, 707 Loaners' Bank v. Jacoby, 10 Hun 143 45 Lockport Canning Co. v. Pnsater, 79 Misc. 293, 139 N.' Y. Supp. 640 61 Loekport Gas & Electric Co., Matter of (Opinion of Public Service Comm., 2d Dist, 1917), 13 State Dept. Rep. 252 83 TABLE OF CASES CITED. IxXXvii Page Lofk-wood V. United States Steel Corp., 153 App. Div. 655, 138 N. Y. Siipp. 725 185 Lodi Chemical Co. v. National Lead Co., 41 App. Div. 535, 58 N. Y. Supp. n? 46r Lodi Chemical Co. v. Pleasants Co., 25 Misc. 97, 54 N. Y. Supp. fi68 459 Loeb V. Star & Herald Co., Inc., 187 App. Div. 175, 175 N. Y. Supp. 413.798, SOO Loewenstein v. Diamond Soda Water Mfg. Co., 94 App. Div. 383, 88 N. Y. Supp- 313 24S, 383 Logan T. I'idelity-Phenix Fire Ins. Co., 161 App. Div. 404, 146 N. Y. Supp. 678 70, 361, 497 Logan T. Fidelity-Phenix Fire Ins. Co., 187 App. Div. 153, 175 N. Y. Supp. 505 534 Logan V. McCall Pub. Co., 140 N. Y. 447, 35 N. E. 655 741 Logan V. New York Sugar Ref. Co., 176 App. Div. 660, 163 N. Y. Supp. 314 305 London Realty Co. v. Coleman Stable Co., 140 App. Div. 495, 135 N. Y. Supp. 410 440 Long Acre Electric Light & Power Co., Matter of, 188 N. Y. 371, 80 N. E. 1101 819 Long Beach, Village of, v. Long Beach Power Co., 104 Misc. 337, 171 N. Y. Supp. 824 824 Long Island Ferry Co. v. Terbell, 48 N. Y. 487 344 Long Island L. & T. Co. v. Long Island City & Newton R. Co., 85 App. Div. 36, 82 N. Y. Supp. 644 484 Long Island R. Co., Matter of, 19 Wend. 37, 33 Am. Dec. 439..160, 261, 274, 319 Long Island R. Co. v. Jones, 151 App. Div. 407, 135 N. Y. Supp. 594 551 Lopez V. Campbell, 163 N. Y. 340, 57 N. E. 501 456, 459, 460 Lord V. Equitable Life Assurance Society, 194 N. Y. 213, 87 N. E. 443. .40, 110 Lord V. Equitable Life Assurance Society, 47 Misc. 187, 94 N. Y. Supp. 65. 408 Lord V. Equitable Life Assuianee Society, 57 Mise. 417, 108 N. Y. Supp. 67 271 Lord V. United States Transportation Co., 143 App. Div. 437, 128 N. Y. Supp. 451 504 Lord V. Yonkers Fuel Gas Co., 99 N. Y. 547, 3 N. E. 909 436 Lord V. Yonkers Fuel Gas Co., 101 N. Y. 614, 3 N. E. 902 436 Lorge, People ex rel. v. Consolidated Nat. Bank, 105 App. Div. 409, 94 N. Y. Supp. 173 11, 221, 222, 239 Lorillard v. Clyde, 86 N. Y. 384 34, 35, 538 Loughlin v. Wocker, 152 App. Div. 466, 137 N. Y. Supp. 257 378 Louisville, C. & C. R. Co. v. Letson, 2 How. (U. S.) 497 407 Lovett V. Steam Saw Mill Assn., 6 Paige 54 70 Lowry v. Farmers' Loan & Trust Co., 172 N. Y. 137, 64 N. E. 796 203 Lowry v. Farmers' Loan & Trust Co., 56 App. Div. 408, 67 N. Y. Supp. 759. 214 Lowry v. Inman, 46 N. Y. 119 283, 73.-; Lozier v. Saratoga Gas, B. L. & P. Co., 59 App. Div. 390, 69 N. Y. Supp. 247 78, 233 Lozier Motor Co. v. Ball, 53 Misc. 375, 104 N. Y. Supp. 771 371 Ludington v. Thompson, 153 N. Y. 499, 47 N. B. 903 670, 693 IxXXviii TABLE OF CASES CITED. Page Ludwig, People ex rel. v. Ludwig & Co., 136 App. Div. 696, 111 N. Y. Supp. 94 224 Luitwieler v. Luitwieler Pumping Engine Co., 190 App. Div. 80, 179 N. Y. Supp. 463 ^^^' 956 Lukach v. Blair, 108 Misc. 30, 178 N. Y. Supp. 8 - 339 Lukens Iron & Steel Co. v. Payne, 13 App. Div. 11, 43 N. Y. Supp. 376 771 Lummis v. Crosby, 176 App. Div. 315, 163 N. Y. Supp. 444 ' *65 Lyceum v. Ellis, 8 N. Y. Supp. 867, 30 St. Rep. 342 439 Lyell Ave. Lumber Co. v. Lighthouse, 137 App. Div. 433, 131 N. Y. Supp. 803 303, 309 Lyman v. State Bank of Randolph, 81 App. Div. 367, 80 N. Y. Supp. 901 135. 173 Lynett v. Sea Beach R. Co., 178 App. Div. 113, 164 N. Y. Supp. 1039 551 Lyon V. James, 97 App. Div. 385, 90 N. Y. Supp. 38 374 Lyon V. West Side Transfer Co., 132 App. Div. 777, 117 N. Y. Supp. 648. 481 M MacArdell v. Olcott, 189 N. Y. 368, 83 N. E. 161 101 MacDonnell v. Buflfalo Loan, Trust & Safe Deposit Co., 193 N. Y. 93, 85 N. E. 801 443 MacGenness v. Amalgamated Copper Co., 45 Misc. 106, 91 N. Y. Supp. 591. 777 MacLean v. Mott Iron Works (Nos. 2, 4, 6, 9), 193 App. Div. 698, 184 N. Y. Supp. 333 353 MacMahon v. Stephney Spare Wheel Agency, 140 App. Div. 554, 125 N. Y. Supp. 833 590 MacNabb v. Porter Air-Lighter Co., 44 App. Div. 102, 60 N. Y. Supp. 694 569, 783 MacQuoid v. Queens Estates, 143 App. Div. 134, 137 N. Y. Supp. 867. .479, 556 MacVeach v. Continental Trust Co., 10 Misc. 600, 32 N. Y. Supp. 198 181 Maas V. Cunard Steamship Co., 19 Misc. 100, 43 N. Y. Supp. 319 775 Mabon v. Miller, 81 App. Div. 10, 80 N. Y. Supp. 979 336, 387 Mabon v. Ongley Electric Co., 156 N. Y. 196 743 Mabon v. Ongley Electric Co., No. 2, 24 App. Div. 50, 48 N. Y. Supp. 973. 787 Mack V. Latta, 178 N. Y. 535, 71 N. E. 97 155 Mackey, People ex rel. v. Am. Union L. Ins. Co., 31 Misc. 617, 64 N. Y. Supp. 916 227 Macy V. Ladd, 337 N. Y. 6*), 135 N. E. 839 213 Magee v. Geneseo Academy, 1 N. Y. Supp. 709, 17 St. Rep. 231 585 Magnolia Metal Co. v. Savannah Supply Co., 157 N. Y. Supp. 355, 191 St. Rep. 355 793 Mahaney v. Walsh, 16 App. Div. 601, 44 N. Y. Supp. 969 170, 183 Mahar v. Harrington Park Villa Sites, 304 N. Y. 331, 97 N. E. 587 753. Mahar v. Harrington Park Villa Sites, 146 App. Div. 756, 131 N. Y. Supp. 514. 761, 762 Maine Products Co. v. Alexander, 115 App. Div. 113, 100 N. Y. Supp. 711 155, 362 Malsch V. City of New York, 137 App. Div. 424, 111 N. Y. Supp. 645 543 Major V. American Malt & Grain Co., 110 Misc. 132, 181 N. Y. Supp. 153. , 587 TABLE OF CASES CITED. Ixxxix Page Maleom Brewing Co., Matter of, 78 App. Div. 592. 79 N. Y. Supp. 1057.. 585 600, 61 S Male V. Atchison, Topeka & Santa Fe Ry. Co., 330 N. Y. 158, 129 N. E. 458. 10,S Malerba v. Friars Minor, Order of St. Francis, 180 App. Div. 441, 167 N. Y. Supp. 1000 492 Mallory v. Austin, 7 Barb. 626 886 Mallory v. Saratoga Lake Bridge Co., 53 Misc. 446, 104 N. Y. Supp. 1035. 886 Manhattan Co. v. Kaldenberg, 165 N. Y. 1, 58 N. E. 790 489 Manhattan Life Ins. Co. v. Forty-Seeoiid St. & Grand St. Ferry B. Co., 139 N. Y. 146, 34 N. E. 776 502 Manhattan Life Ins. Co. v. Forty-Second St. & Grand St. Ferry E. Co., 64 Hun 635, 19 N. Y. Supp. 90 50(1 Manice, People ex rel. v. Powell, 201 N. Y. 194, 94 N. E. 634 323, 333 336, 380 Mann v. Currie, 2 Barb. 294 160, 163, 68ii Mann v. Pentz, 2 Sandf. Ch. 257 56.'i Mann v. Pentz, 3 N. Y. 419 574 Manne v, Siegel-Cooper Co., 30 Misc. 592, 46 N. Y. Supp. 353 522 Manoea Temple Assn., Matter of, 128 App. Div. 796, 113 N. Y. Supp. 172. . 314 590, 608 Manson v. Curtis, 223 N. Y. 313, 119 N. E. 559 361, 270, 272, 317, 326 335, 336, 856 Manufacturers' Commercial Co. v. Blitz, 131 App. Div. 17, 115 N. Y. Supp. 402 769, 770, 772, 773 Marbury v. Stone, 17 App. Div. 352, 45 N. Y. Supp. 184 364 ' Marine Bank of Buffalo v. Butler Colliery Co., 52 Hun 612, 5 N. Y. Supp. 291 r 500 Marine & Fire Ins. Bank of Georgia v. Jauncey, 1 Barb. 486 767 Market & Fulton National Bank v. Jones, 7 Misc. 307, 27 N. Y. Supp. 677. . . . _ 436, 441 Maroney v. Cole, 52 Misc. 451, 103 N. Y. Supp, 560 502 Marshall v. Baltimore & O. R. Co., 16 How. (U. S.) 314 4 Marshall v. Industrial Federation of America, 84 N. Y. Supp. 866 . . 329, 347 Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419 735 Marshall v. Sherman, 84 Hun 186, 33 N. Y. Supp. 193 287 Marshall v. Wendell, 45 App. Div. 120, 61 N. Y. Supp. 13 627 Marstaller v. Mills, 143 N. Y. 398, 38 N. E. 370 363, 560, 582, 604, 636 Mart, Matter of, 22 Abb. N. C. 227, 5 N. Y. Supp. 83 585 Martin, Matter of, 62 Hun 557, 17 N. Y. Supp. 133 338, 333 Martin v. Niagara Falls P. Mfg. Co., 132 N. Y. 165, 25 N. E. 303. .474, 490, 520 Martin v. Remington-Martin Co., 95 App. Div. 18, 88 N. Y. Supp. 673 37 52, 130 Martin Cantinc Co. v. Warshauer, 7 Misc. 413, 38 N. Y. Supp. 139 552 Martine v. International Life Ins. Society, 53 N. Y. 339 749 Martyne v. American Union Fire Ins. Co., 216 N. Y. 183, 110 N. E. 503..721, 784 Martyne v. American Union Fire Ins. Co., 16g App. Div. 380, 153 N. Y. Supp. 433 ': 696 XC TABLE OF CASES CITED. Page Mason v. Henry, 152 N .Y. 529, 46 N. E. 837 387, 692 Mason v. Henry, 83 Hun 546, 31 N. Y. Supp. 1068 256, 388 Mason v. New York Silk Mfg. Co., 27 Hun 307 637 Mason V. Standard Distilling & Distributing Co., 85 App. Div. 520, 83 N. Y. Supp. 343 >iS02, 203, 533, 536 Mason v. Willers, 7 Hun 23 37 Mason & Hanger Co. v. Sharon, 31 Fed. 861 7'50 Masonic Hall, Trustees of, v. Fontana, 99 Misc. 497, 164 N. Y. Supp. 370. . 397 398, 450 Material Men's Mercantile Assn., Ltd. v. Material Men's Credit Agency, Inc., 191 App. Div. 73, 180 N. Y. Supp. 801 6B Material Men's Mercantile Assn. v. New York Material Men's Mercantile Assn., 169 App. Div. 843, 155 N. Y. Supp. 706 58 Mather v. Eureka Mower Co., 118 N. Y. 629, 23 N. E. 993 343 Mather v. Eureka Mower Co., 44 Hun 333, 7 St. Eep. 593 346 Mathews v. Hardt, 79 App. Div. 570, 80 N. Y. Supp. 463 496 Mathez v. Neidig, 72 N. Y. 100 284, 285, 303 Matthews v. Associated Press, 136 N. Y. 333, 32 N. E. 981 74, 75 Mawhinney v. Bliss, 117 App. Div. 255, 102 N. Y. Supp. 279 101 Mayer v. Metropolitan Traction Co., Ifi5 App. Div. 497, 150 N. Y. Supp. 1026 97 Mayor v. Manhattan R. Co., 143 N. Y. 1, 37 N. B. 494 410 Mayor v. Starin, 56 N. Y. Super, a. 153 562 MoCabe Hanger Mfg. Co. v. Chelsea Exchange Bank, 183 App. Div. 441, 170 N. Y. Supp. 759 , ._. 515 McCaddon v. Central Trust Co., 182 App. Div. 846, 170 N. Y. Supp. 110.. 481 MeCallum v. Purssell Mfg. Co., 1 N. Y. Supp. 428 37 . McClelland v. Norfolk Southern R. Co., 110 N. Y. 469, 18 N. E. 237 . . 482, 48:; McClure v. Central Trust Co., 165 N. Y. 108, 58 N. E. 777 3(i McClure v. Law, 161 N. Y. 78, 55 N. E. 388 384 McClure v. Supreme Lodge, 41 App. Div. 131, 59 N. Y. Supp. 704 794 McClure v. Trask, 161 N. Y. 82, 55 N. E. 407 385 MeComb v. Barcelona Apartment Assn., 56 Hun 644, 10 N. Y. Supp. 546 . . 439 MeComb V. Kellogg, 1 N. Y. Supp. 206, 16 St. Eep. 16 390 McConville, People ex rel. v. Hills, 1 Lans. 202 313 McCoy V. Gas Engine & Power Co., 135 App. Div. 771, 119 N. Y. Supp. 864 t 343, 246 McCoy V. Mutual Reserve Life Ins. Co., 84 App. Div. 315, 83 N. Y. Supp. 638 547 McCraith v. Nat. Mohawk Valley Bank, 104 N. Y. 414, 10 N. E. 863 491 McCrea v. Bedell, 9 Misc. 373, 29 N. Y. Supp. 705 343 MeCrea v. MoClenahan, 131 App. Div. 247, 115 N. Y. Supp. 720 500 McCrea v. Robertson, 192 N. Y. 150, 84 N. B. 960 355 MoCulloch V. Maryland, 4 Wheat. (U. S.) 316 6 McCulloch V. Norwood, 58 N. Y. 563 558, 559^ 635 McCulloh V. Paillard Non.-Mag. Watch Co., 14 N. Y. Supp. 491, 30 Civ. Proc. Rep. 386 797 McDermott v. Board of Police, etc., 5 Abb. Pr. 422, 25 Barb. 635 76 TABLE OF CASES CITED. XCl Page McDermott v. Harrison, 56 Hun 640, 2 N. Y. Supp. 184 154 McDowall V. Sheehan, 129 N. Y. 300, 39 N. E. 399 395, 311 McDowell V. Starobin Electrical Supply Co., Inc., 104 Misc. 596, 172 N. Y. Supp. 331 755, 759, 7©i McDuflSe V. Financier Co., 135 App. Div. 307, 119 N. Y. Supp. 949 498 McElwain Co. v. Primavera, 180 App. Div. 288, 167 N. Y. Supp. 815 84 McElwee Mfg. Co. v. Trowbridge, 68 Hun 28, 23 N. Y. Supp. 674 550, 552 McEIwee, People ex rel. v. Produce Ex. T. Co., 53 App. Div. 93, 65 N. Y. Supp. 936 324, 337 McGarry v. People, 45 N. Y. 153 716 McGill V. Commercial Credit Co., 343 Fed. 637 450, 453, 455 McGill Co. V. Underwood, 161 App. Div. 30, 146 N. Y. Supp. 363 425 McGovern v. Bulman-Warren Paint Co., 55 N.. Y. Supp. 767 554 McGratty y. Kranz Mfg. Co., Inc., 183 App. Div. 307, 170 N. Y. Supp. 568. 102 McHarg v. Commonwealtb Finance Corporation, 195 App. Div. 863. 741 McHenry v. Jewett, 36 Hun 453 361 Mellrath v. Waterbury & Sons Co., 193 App. Div. 491, 184 N. Y. Supp. 886. 32 ; Mclnnes, People ex rel. v. Columbia Bag Co., 103 App. Div. 308, 92 N. Y. Supp. 1084 230 McKee v. Metropolitan Life Ins. Co., 35 Hun 583 553 McLanaban v. Mott, 73 Hun 131, 35 N. Y. Supp. 893 11 McLaugblin, People ex rel. v. Police Commissioners, 174 N. Y. 450, 67 N. E. 78 323 McLean v. Eastman, 31 Hun 312 107 McLeary v. Erie Tel. & T. Co., 38 Misc. 3, 76 N. Y. Supp. 713 337 McLoughlin, Matter of, 176 App. Div. 653, 163 N. Y. Supp. 547 593 McLoutb V. Hunt, 154 N. Y. 179, 48 N. E. 548 314 McMahon v. Macy, 51 N. Y. 155 308 McMahon v. Stepney Spare Wbeel Agency, 140 App. Div. 554, 135 N. Y. Supp. 833 171 McManuB v. Durant, 168 App. Div. 643, 154 N. Y. Supp. 580 337 McMaster v. Davidson, 39 Hun 543 .; ; . 392 McNab. V. McNab & Harlin Mfg. Co., 63 Hun 18, 16 N. Y. Supp. 448.-305, 348 McNabb v. Porter Air-Lighter Co., 44 App. Div. 103, 60 N. Y. Supp. 694 . . 607 McNamara v. Keene, 49 Misc. 452, 98 N. Y. Supp. 860 748 McNeil V. Tentb National Bank, 46 N. Y. 335, 7 Am. Rep. 341 135, 177, 178 McNulty V. Brooklyn Heights R. Co., 31 Misc. 674, 66 N. Y. Supp. 57 648 McQueen v. New, 45 App. Div. 579, 6 N. Y. Supp. 464 467 McQueen v. New, 87 Hu» 306, 33 N. Y. Supp. 803 452 McVity V. Albro Co., 90 App. Div. 109, 86 N. Y. Supp. 144 .303, 533 Jfeade v. Southern Tier Masonic Relief Assn., 119 App. Div. 761, 104 N. Y. Supp. 533 548, 549 Meagrue, Matter of, 224 N. Y. 284, 130 N. E. 651 214 Mechanics Banking Assn. v. New York & S. White Lead Co., 35 N. Y. 505. 474 Meisel & Co. v. National Jewelers Board of Trade, 90 Misc. 19, 153 N. Y. Supp. 913 *30 Meisle v. New York Central & Hudson River R. Co., 319 N. Y. 317, 114 N. E. 347 810 XCll TABLE OF CASES CITED. I Page Mellroth v. Waterbury & Sons Co., 193 App. Div. 491, 184 N. Y. Supp. 886. 337 Memphis & C. R. Co. v. Alabama, 107 U. S. 581. 4 Meueely v. Meneely, 62 N. Y. 427, 20 Am. E. 489 69 Mercantile Trust Co. v. Kings Co. El. R. Co., 40 App. Div. 141, 57 N. Y. Supp. 892 630 Mercantile Trust Co., Matter of, 210 N. Y. 83, 103 N. E. 884 193 Merchants Exchange National Bank v. Commercial Warehouse Co., 49 N. Y. 635 556 Meredith v. Art Metal Constr. Co., 97 Misc. 69, 161 N. Y. Supp. 1 349 Merrick v. Van Santvoord, 34 N. Y. 208 720, 721, 735 Merrill v. Consumers' Coal Co., 114 N. Y. 216, 21 N. E. 155 506 Merrill v. United Box Board & Paper Co., 143 App. Div. 833, 138 N. Y. Supp. 959 365 Merrill v. Wakefield Rattan Co.,1 App. Div. 118, 37 IST. Y. Supp. 64 489 Merritt Burial & Cremation Co. v. Stephen Merritt Co., 155 App. Div. 565, 140 N. Y. Supp. 895 61 Merz v. Interior Conduit & Insulation Co., 87 Hun 430, 34 N. Y. Supp. 215 304, 479 Merz v. Interior Conduit & Insulation Co., 30 Misc. 378, 46 N. Y. Supp. 243 116, 479 Mesinger v. Mesinger Bicycle Saddle Co., 44 App. Div. 36, 60 N. Y. Supp. 431 38, 353 Methodist Episcopal Church v. Tryon, 1 Denio 451 551 Methodist Episcopal Union Church v. Pickett, 19 N. Y. 482 30, 32 Mcton & Sons v, Isham Wagon Co., 4 N. Y. Supp. 315, 15 Civ. Proc. Rep. 259 540 Metropolitan Dairy Co., Matter of, 35 Am. B. R. 466, 334 Fed. 444 457 Metropolitan Elev. R. Co. v. Kneeland, 120 N. Y. 134, 24 N. E. 381 513 Metropolitan Life Ins. Co. v. Sanborn, 34 Misc. 531, 69 N. Y. Supp. 1009. 630 Metropolitan Opera Co. v. Hammerstein, 163 App. Div. 691, 147 N. Y. Supp. 533 530 Metropolitan St. R. Co., People ex rel. v. Tax Comrs., 174 N. Y. 417, 67 N. E, 69 40 Metropolitan Tel. & Tel. Co. v. Met. Tel. & Tel. Co., 156 App. Div. 577, 141 N. Y. Supp. 598 59 Metropolitan Trust Co. v. Long Acre El. L. & P. Co., 184 App. Div. 156, 171 N. Y. Supp. 557 ;... 486 Metzger v. Knox, 77 Misc. 371, 136 N. Y. Supp. 681 259, 343 Meyer v. Blair, 109 N. Y. 600, 17 N. E. 228 152 Meyer v. Consolidated Ice Co., 132 App. Div. 365, 116 N. Y. Supp. 906 788 Meyer v. Lexow, 1 App. Div. 116, 37 N. Y. Supp. 67 613, 630 Meyer v. Page, 112 App. Div. 625, 98 N. Y. Supp. 739 375 Meyers v. Scott, 2 N. Y. Supp. 753, 20 St. Rep. 35 245 Meyers v. Spangenberg & McLean Co., 65 Misc, 475, 130 N. Y. Supp. 174. 770 Meyers v. Western Union Telegraph Co., 82 Misc. 266, 143 N. Y. Supp. 574 870 Michael v. Cayey-Cayuas Tobacco Co., 190 App. Div. 618, 180 N. Y. Supp. 532 , 3i(j TABLE OF CASES CITED. Xciii Page Michel V. Betz, 108 App. Div. 341, 95 N. Y. Supp. 844 355, 335 Mickles v. Eochester City Bank, 11 Paige 118 431 655 Middleton v. Wooster, 184 App. Div. 165, 171 N. Y. Supp. 593 165 Milbank v. DeEiesthal, 82 Hun 537, 31 N. Y. Supp. 523 451, 460, 461, 510 Milbank v. Welch, 74 Hun 497, 26 N. Y. Supp. 705 455 Miles, People ex rel. v. Mont. & Boston C. Co., 40 Misc. 282, 81 N. Y. Supp. 974 726, 730 Miller v. Barlow, 78 App. Div. 331, 79 N. Y. Supp. 964 382 Miller v. Car Trust Investment Co., 130 App. Div. 442, 105 N. Y. Supp. 5. 153 Miller v. Crown Perfumery Co., 125 App. Div. 881, 110 N. Y. Supp. 806. 349 Miller v. Crown Perfumery Co., 57 Misc. 383, 109 N. Y. Supp. 760 347, 369 Miller v. Dodge, 28 Misc. 640, 59 N. Y. Supp. 1070 98 Mil'.er v. Jahn Co., Inc., 104 Misc. 370, 172 N. Y. Supp. 219 546, 549 Miller v. Jones, 67 Hun 281, 22 N. Y. Supp. 86 793 Miller v. Miller Knitting Co., 23 Misc. 404, 52 N. Y. Supp. 184 457 Miller v. Quincy, 179 N. Y. 294, 73 N. E. 116 377, 775 Miller v. Reynolds, 92 Hun 400, 36 N. Y. Supp. 660 511 Miller v. University Magazine Co., 10 Misc. 311, 30 N. Y. Supp. 969 134 Miller, People ex rel. v. Cummings, 73 N. Y. 433 317 Milliken v. Frisbie, Coon & Co., 175 App. Div. 580, 162 N. Y. Supp. 561. 517 Milliken v. Frisbie, Coon & Co., 89 Misc. 579; 153 N. Y. Supp. 751 361 Milliken v. MeGarah, 159 App. Div. 735, 144 N. Y. Supp. 964 195 Mills V. Friedman, 111 Misc. 253, 181 N. Y. Supp. 285.. 148, 157, 158, 162, 219 Mills V. McNariiee, 194 App. Div. 932, 184 N. Y. Supp. 613 157 Mills V. Starin, 119 App. Div. 536, 104 N. Y. Supp. 230 769 Mills V. Stewart, 41 N. Y. 384 160 Mils V. United States Printing Co., 99 App. Div. 605, 91 N. Y. Supp. 185. 338 Mills Water-Works Co., People ex rel. v. Forrest, 97 N. Y. 97 894 Millspaugh v. Cassedy, 191 App. Div. 321, 181 N. Y. Supp. 276. .17, 47, 264, 365 Miner v. Edison Elec. Illuminating Co., 22 Misc. 543, 50 N. Y. Supp. 218. 495 Miner v. New York Central & H. R. R. Co., 123 N. Y. 242, 25 N. E. 339. 88 Miner v. New York Central & H. E. R. Co., 46 Hun 612, 13 St. Rep. 15 . . 432 Minor v. Crosby, 76 App. Div. 561, 78 N. Y. Supp. 594 80 Minor v. Happersett, 21 Wall. (U. S.) 162 4 Mitchell V. Banco de Londres y Mexico, 192 App. Div. 720, 183 N. Y. Supp. 446 741 Mitchell V. Boyer, 160 App. Div. 565, 145 N. Y. Supp. 715 179 Mitchell V. Forest City Printing Co., 187 App. Div. 743, 176 N. Y. Supp. 157 532 Mitchell V. Forest City Printing Co., 107 Misc. 709, 176 N.. Y, Supp. 157. 313 317, 325, 346-348 Mitchell, Matter of, 114 Misc. 370, 186 N. Y. Supp. 666 176 Mitchell V. Northern Security Oil &, Transp. Co., 44 Misc. 514, 90 N. Y. Supp. 60 , 739 Mitchell V. Vermont Copper Mining Co., 67 N. Y. 280 160 Moch Co. V. Security Bank of New York, 166 App. Div. 121, 151 N. Y. Supp. 756 514 XCIV TABLE OF CASES CITED. Page Model Building & Loan Aasn. v. Patterson, 13 Misc. 400, 34 N. Y. Supp. 341 3T9 Moe V. McNally Co., 138 App. Div. 480, 133 N. Y. Supp. 71 664, 70r Mohawk & Hudson R. Co., Matter of, 19 Wend. 135 367, 368, 37« Moir V. Provident Savings Life Assurance Soc, 137 App. Div. 591, 113 N, Y. Supp. 57 r 375 Momand v. Landers, 174 App. Div. 337, 160 N. Y. Supp. 1053 377 Monda v. Wells Fargo Express Co., 30 Misc. 685, 46 N. Y. Supp. 683 777 Monroe Dairy Assn. v. Webb, 40 App. Div. 49, 57 N. Y. Supp. 573 75 Montague v. Hotel Gotham Co., 208 N. Y. 443, 103 N. E. 513 454 Montague v. Hotel Gotham Co., 149 App. Div. 687, 133 N. Y. Supp. 954 . . 454 Monterey, etc. Plank Road Co. v. Chamberlain, 33 N. Y. 659 888 Montgomery v. Brush Electric 111. Co., 48 App. Div. 13, 63 N. Y. Supp. 606. 385 Montgomery Light & Power Co. v. Lahey, 131 Ala. 131 242 Monticello & Fallsburgh T. R. Co. v. Leroy, 73 App. Div. 241, 76 N. Y. Supp. 315 886 Monticello Tel. Co., People ex rel. v. Ti-ustees of Monticello, 35 Misc. 675, 72 N. Y. Supp. 350 864 Moore v. Champlain Electric Co., 88 App. Div. 389, 85 N. Y. Supp. 37.. 830, 832 Moore v. Institute of Educational Travel, 89 Misc. 369, 151 N. Y. Supp. 939 78, 332 Moore v. Monell Co., 27 Misc. 235, 58 N. Y. Supp. 430 535 Moore v. Monumental Mut. Life Ins. Co., 77 App. Div. 309, 78 N. Y. Supp. 1009 799 Moore v. Silver Valley Co., 104 N. C. 534 342 Moran v. Long Island City, 101 N. Y. 439, 5 N. E. 80 554 Moran v. Lydecker, 27 Hun 583, 11 Abb. N. C. 298 562, 647 Moran v. Vreeland, 81 Misc. 664, 143 N. Y. Supp. 532 235, 343, 3&fi Morgan v. Bon Bon Co., 223 N. Y. 23, 118 K E. 305 38, 136 Morgan v. Bon Bon Co., 165 App. Div. 89, 150 N. Y. Supp. 668 136 Morgan v. Skiddy, 63 n! Y. 319 372, 374 Morison v. American Telephone & Telegraph Co., 115 App. Div. 744, 101 N. Y. Supp. 140. 867 Morison v. American Telephone & Telegraph Co., 126 App. Div. 575, 110 N. Y. Supp. 801 868 Morrell v. Brooklyn Borough Gas Co., 231 N. Y. 398, 133 N. B. 129. .835, 836 Morrill v. Segar Mfg. Co., 32 Hun 543 495, 502 Morris v. Wiener Co., 65 SiSsc. 18, 119 N. Y. Supp. 163 473, 533 Morrison v. Baltimore & Ohio R. Co., 177 App. Div. 613, 164 N. Y. Supp. 258 780 Morrison v. Griffin Corners Water Co., 190 App. Div. 45, 179 N. Y. Supp. 333 220 Morrison v. Menhaden Co., 37 Hun 532 (525 Morton v. Metropolitan Life Ins. Co., 34 Hun 366 523 Moses V. Soule, 63 Misc. 303, 118 N. Y. Supp. 410 I7.5, 426 Hosier Safe Co. v. Guardian Trust Co., 308 N. Y. 524, 101 N. E. 786 296 Moss V. Averell, 10 N. Y. 449 . : '.-430, 431, 511, 533 Moss V. Manhattan Co., 48 App. Div. 561, 63 N. Y. Supp. 936 123 TABLE OF CASES CITED. XCV Page Moss V. Oakley, 2 Hill 265 i.v-. , 530 Motor Boat Pub. Co. v. Motor Boating Co., 57 Misc. 108, 107 N. Y. Supp. 468. 733 Mott V. Edwards, 98 App. Div. 511, 90 N. Y. Supp. 303 453 Mount Vernon, City of, v. New York Interurban Water Co., 115 App. Div. 658, 101 N. Y. Supp. 232. . 898 Muck V. Hitchcock, 312 N. Y. 283, 106 N. E. 75 72a Muehlfeld, Matter of, 16 App. Div. 401, 45 N. Y. Supp. 16 605 Muehlfeld & Haynes Piano Co., Matter of, 12 App. Div. 492, 42 N. Y. Supp. 802. . . . 605, 609, 685 Mulheran v. Gebhardt, 93 App. Div. 98, 86 N. Y. Supp.-flJ L '23i Muller V. Dows, 94 U. S. 444 i Mumford v. American Life Ins. & Trust Co., 4 N. Y. 463 407 Munger Vehicle Tire Co. v. Rubber Goods Mfg. Co., 39 Misc. 817, 81 N. Y. Supp. 302 , . . 777 Municipal Gas Co. of Albany v. Public Service Comm., a25 N. Y. 89, 121 N. E. 772 835, 837, 838 Municipal Gas Co., People ex rel. v. Public Service Comm., 324 N. Y. 156,^ 120 N. E. 132 . 835 Municipal Gas Co., People ex rel. v. Rice, 138 N. Y. 151, 33 N. E. 846. .49, 87, 816 Municipal Mortgage Co. v. Four Hundred Sixty -one Eighth Ave. Co., Inc., 195 App. Div. 370 ; 545 Munson v. Genesee Iron & Brass Works, 37 App. Div. 203, 56 N. Y. Supp. 139 451, 458 Munson v. Magee, 161 N. Y. 182, 55 N. E. 916 364, 365 Munson v. Magee, 32 App. Div. 333, 47 N. Y. Supp. 943 98 Munson v. Syracuse G. & C. E. Co., 103 N. Y. 58, 8 N. E. 355 33, 34, 37-39 364, 366, 370 Munzinger v. United Press, 53 App. Div. 338, 65 N. Y. Supp. 194 451, 463 Murphy Varnish Co. v. Connell, 10 Mise. 553, 33 N. Y. Supp. 492 763 Murray v. American Gas. Ins. Co., 88 App. Div. 324, 85 N. Y. Supp. 449.. 545 Murray v. Cantor, 18 Misc. 389, 41 N. Y. Supp. 652 630 Murray v. Smith, 224 N. Y. 40, 130 N. E. 60 395 Murray v. Smith, 166 App. Biv. 538, 153 N. Y. Supp. 103 347, 256, 336 347,. 473 Murray v. Vanderbilt, 39 Barb. 140 741, 790 Murray Hill Bank, Matter of, 153 N. Y. 199, 47 N. E. 398 590, 619 Murray Hill Bank, Matter of, 9 App. Div. 546, 41 N. Y. Supp. 914. ... 594 Murray Hill Bank, Matter of, 14 App. Div. 318, 43 N. Y. Supp. 836. . ..590,- 613 Murrin v. Archbald Consolidated Coal Co., 196 App. Div. 107, 187 N. Y. Supp. 606 ....: 193, 470, 472 Mutual Bank v. Burrell, 39 Misc. 333, 60 N. Y. Supp. 533 557 Mutual Benefit Life Ins. Co. v. Davis, 13 N. Y. 569 766 Mutual Brewing Co. v. New York & C. P; F. Co., 16 App. Div 149, 45 N. Y. Supp. 101 : 631 Mutual Life Ins. Co. v. Forty-second St., etc., R. Gov, 74 Hun 505, 26 N. y. Supp. §45'.. ...■ 141 irutual Life Ins. Co. v. Gillette, 119 App. Div. 430, 104 N". Y. Supp. 683. . 386 XCVl TABLE Oe CASES CITED. Pago Mutual Life Ins. Co. v. Yates Co. Nat. Bank, 35 App. Div. 318, 54 N. Y. Supp. 743 ^'' Mutual Reserve Assn. v. Phelps, 190 U. S. 147 795 Myers v. Bell Telephone Co. of Buffalo, 83 App. Div. ft33, 82 N. Y. Supp. 83 867 Myers v. Maehado, 6 Abb. Pr. 198, 14 How. Pr. 149 767 Myers v. Myers, 18 Misc. 663, 43 N. Y. Supp. 737... v 612 Myers v. Sturgis, 123 App. Div. 470, 108 N. Y. Supp. 528.... 116, 155, 161 165, 689 N Nash V. Hall, 11 Misc. 468, 32 N. Y. Supp. 701 738 Nash V. Hall Signal Co., 90 Hun 354, 35 N. Y. Supp. 940 245, 359 Nason Mfg. Co. v. Garden, 52 App. Div. 363, 65 N. Y. Supp. 147 613 National Bank v. Dillingham, 147 N. Y. 603, 42 N. E. 338 297 National Bank v. Graham, 100 U. S. 699 716 National Bank v. Navassa Phosphate Co., 56 Hun 136, 8 N. Y. Supp. 929. 513 National Bank of Falrhaven v. Phoenix Warehousing Co., 6 Hun 71.... 45 National Bank of Newport v. Snyder Mfg. Co., 107 App. Div. 95, 94 N. Y. Supp. 982 524 National Bank of Newport v. Snyder Mfg. Co., 117 App. Div. 370, 102 N. Y. Supp. 478 473 National Broadway Bank v. Wessell Metal Co., 59 Hun 470, 13 N. Y. Supp. 744 : 453, 565 National Enameling & Stamping Co. v. Kaplan, 53 App. Div. 96, 65 N. Y. Supp. 732 527 National Furniture Co. v. Spiegelman & Co., Inc., 116 Misc. 53, 189 N. Y. Supp. 449 800 National Gramophone Corp., Matter of, 87 App. Div. 76, 83 N. Y. Supp. 1087 683 National Knitting Co. v. Bronner, 30 Misc. 125, 45 N. Y. Supp. 714 . . 762, 763 National Park Bank v. German American, etc., Co., 116 N. Y. 281, 22 N. E. 567 i 473 National Safe Deposit S. & T. Co. v. Hibbs, 229 U. S. 391, 57 L. ed. 1241 . . 125 National Spraker Bank v. Treadwell Co.. 80 Hun 363, 30 N. Y. Supp. 77 510 National Steamship Co. v. Tugman, 106 U. S. 118 4 National Temperance Society & Publication House v. Anderson, 2 N. Y. Supp. 49, 17 St. Eep. 389 539 National Tube Works Co* v. Gilflllan, 124 N. Y. 302, 36 N. E. 538 288, 308 Nathan v. Whitehill, 67 Hun 398, 22 N. Y. Supp. 63 .' 364 Nauss v. Nauss Bros., 195 App. Div. 318, 187 N. Y. Supp. 158.. 198, 205, 207 Nealis v. American Tube & Iron Co., 150 N. Y. 42, 44 N. E. 944 571 Nealis v. American Tube & Iron Co., 76 Hun 320, 27 N. Y. Supp. 733.. 618 626, 631, 675, 688, 693 Nelligan v. Campbell, 30 N. Y. Supp. 334, 47 St. Eep. 576 493 NelHs Co. v. Nellis, 63 Hun 63, 16 N. Y. Supp. 545 395 Nelson v. Luling, 62 N. Y. 645 m Nesmith & Constantine Co., People ex rel. v. Miller, 105 App. Div. 326 94 N. Y. Supp. 193 , ' 757 TABLE OF CASES CITED. XCVll Page New Britain National Bank v. aeveland Co., 91 Hun 447, 36 N. Y. 6upp. 387 247,436,441, 457 New Haven Clock Co. v. Hubbard, 16 N. Y. Supp. 135, 40 St. Rep. 654. .. . 769 New Paltz & Wallkill Val. R. Co., Matter of, 27 Misc. 451, 59 N. Y. Supp. 247 New Rochelle Water Co., Matter of, 46 Hun 525, 12 St. Rep. 646 901 New Thought Church v. Chapin, 159 App. Div. 723, 144 N. Y. Supp. 1026. . 62 New Union Telephone Co. v. Marsh, 96 App. Div. 122, 89 N. Y. Supp. 79. 863 New York Architectural Terra-Cotta Co. v. Williams, 102 App. Biv. 1, 92 N.Y. Supp. 808 756,761,762, 771 New York Assets Realization Co. v. Pforzheimer, 158 App. Div. 700, 143 N. Y. Supp. .897 l^^ New York Automobile Co. v. Franklin, 49 Misc. 8, 97 N. Y. Supp. 781.. 364 New York Breweries Co. v. Johnson, 171 Fed. 582 New York Car Oil Co. v. Richmond, 10 Abb. Pr. 185, 19 How. Pr. 505. . 45 New York Central K Co. %. Middleport Gas & Electric Light Co., 193 App. Div. 273, 184 N. Y. Supp. 221 •'■ '• ". 827 New York, City of v. Bronx <}as & Electric Co., 113 Misc. 16_^_ jg^ n. y. Supp. 658 •. 836 New York, City of v. Jamaica Water Supply Co., 181 App. Div. 49, 167 N. Y. Supp. 763. 896 New York, City of v. New York Edison Co., 196 App. Div. 644, 188 N. Y. Supp. 262 v...." 837 New York, City of v. New York & South Brooklyn Ferry & S. T. Co., 231 N. Y. 18, 131 N. E. 554 : 581 New York, City of v. New York & South Brooklyn Ferry & S. T. Co., 104 Misc. 438, 172 N. Y. Supp. 495 582 New York, Oity of, r. Woodhaven «as Light Co.. 181 App. Div. 188, 168 N. Y. Supp. 429 824 New York Edison Co., People ex rel. v. Public Service Qomm., 191 App. Div. 237, 181 N. Y. Surpp. 259 828 New York Electric Lines Co., Matter of v. Empire City Subway Co., 201 N. Y. 321, 94 N. E. 1056. . 822 New York Electrical Workers' Union v. SuUivan, 122 App. Div. 764, 107 N. Y. Supp. 886 319, 331 New York Elevated R. Co., Matter of, 70 N. Y.' 327 655 New York Fruit Market & Western Union Telegraph Co., 190 App. Div. 60, 179 N. y. Supp. 483 , , i..873, 874 New York Independent Telephone Co., Matter of, 133 App. Div. 635, 118 • N. Y. Supp. 290 .. 863 New York, L. & W. E. Co., Matter of, 99 N. Y. 12, 1 N. B. 27 •. . . . .45, 551 New York, L. & W. E. Co., Matter of, 25 Hun 556 47 New York, Lackawanna ife, Western E. Co , Matter of, 33 Hun 148 540 New York, L. & W. R. Co., Matter of, 35 Hun 220 24 New York Life Ins. Co. v. Universal Life Ins. Co., 88 N. Y. 424 533 New York Life Ins. & Trust Co. v. Beehe, 7 N. Y. 364 414 Nenv York & Long Island Bridge Co. v. Smith, 148 N. Y. 540, 42 N. E. .1088. 651 New York & New Haven R. Co, v. Schuyler, 17. N. Y. 592, 7 Abb. Pr. 41 141 New York & New Haven R. Co. v. Schuyler, 34 N. Y. 30 177, 183, 714 XeVUl TABLK OF CASES CITED. Page N. Y. & New Jersey Globe Gas Light, Co. y. Met. Investmeoit ft)., 10 App. Div. 342, 41 N. Y. Supp. 797. . ' • ^^^ New York & Northern R. R. Co. v. Central Union Telegraph Co., 21 Hun 261. .......; ;..;,.., • • • •• ■ §63 New York & Oswego M. R. Co. v. Van Horn, 57 N. Y. 473 . . 157, 15» New York Oxygen Co., In re, 33 N. Y. Supp. 726 560 New York, P. & B. R. Co. v. Dixon, 114 N. Y. 80, 21 N. E. 110 491 New York Phonograph Co., People ex rel. v. Rice, 57 Hun 486, 11 N: Y. Supp. 249. . • 916 New York &- Queens Elec. L. & P. Co. v. Long Island Machine & Marine Uonstr. Co., 123 App. Div. 552, 108 N. Y. Supp. 176 834 New York & Richmond Gas Co., People ex rel. v. Cromwell, 89 App. Div. 291, 85 N. Y. Supp. 878 • ■•• ■• • 821 New York Security & Trust i C v. Saratoga G. & El. L Co., 159 N. Y. 137, 53 N. E. 758 : • •' • 443 New York Security & Trust Oo. v. Saratoga Gas & Electric Light Co., 88 Hun 569, 34 N. Y. Supip. 890 .' • - 445 New York State Loan & Trust Co. v. Helmer, 77 N. Y. 64 : 414 New York Steam Co., People ex rel. v. Straus, 186 App. Div. 787, 174 N. Y. Supp. 868 907 New York Telephone Co. v. Dittman, 96 Misc. 60, 169 N. Y. Supp .625 864 New York Telephone Co. v. Siegel-Cooper Co., 202 N. Y. 502, 96 N. E. 109. . 870 New York Water Co. v. Crow, 110 App. Div, 3?, 96 N. Y. Supp. 899 444 Ne(W York& Westchester Town Site Co., Matter of, 145 App. Div. 623, 130 N. Y. Supp. 414.... 79, 161, 277, 503 New York & Western Union Telegraph Oo. v. Jewett, 116 N. Y. 166, 21 N. E. 1036 '. 701 Neweomib, Matter of, 18 N. Y. Supp. 10, 42 St. Rep. 442 261, 273 Niagara & Erie Power Co. v. Public Service Commission, 171 App. Div. 361, 156 N. Y. Supp. 879 821 Niagara Gorge K. R. Co. v. Gaiser, 109 Misc. 38, 178 N. Y. Supp. 156 860 Nickerson v. Canton Marble Co., 35 App. Div. Ill, 54 N. Y. Supp. 705 551 552 NichoU, People ex rel. v. N. Y. Infant Asylum, 122 N. Y. 190, 25 N. E. 241. 317 Nichols v. New York & Pennsylvania Tel. & Tel. Co., 126 Api>. Div. 184, 110 N. Y. Supp.' 325 868 Nicoll v. Clark, 13 Misc. 128, 34 N. Y. Supp, 159. . 45 Niooll V. New York & Erie R. Co., 12 N. Y. 121 , 482 Niles V. New York Central^ H. E. R. Co., 176 N. Y. 119, 68 N. E. 142. .235, 240 Niles V. New York Central & H. E. R. Co., 69 App. Div. 144, 74 N. Y. Supp. 617 245 Niles V. Yoakum, 179 App. Div. 75, 166 N. Y. Supp. 94 372 Nitting v. Kings County Elevated R. Co.,. 91 Hun 251, 36 N. Y. Supp. 142. . . 506 Nobis V. Nobis, 193 App. Div. 218, 183 N. Y. Supp. 726 ; 257 Noble V. Eldredge, 175 App. Div. 803, 162 N. Y. Supp. 503 249 Noble V. Euler, 20 App. Div. 548, 47 N. Y. Supp. 302 324 Noll V. Archer-Pancoast Co., 60 App. T)iv. 414, 69 N. Y. Supp. 1007. . .492, 494 Noa-Electric Fibre Mfg. Co. v. Ppa,hody, 21 App. Div. 247, 47 N. Y. Supp. 677. :■■_■_ 152, 156 Norfolk & Wratein K. R, Co. v. Pennsylvania, 136 U. S. 114 74s TABLE OF CASES CITED. XCIX Page Norman v. Federal, Min. & S. Co., 180 App. Dlv. 325, 107 N. Y. Supp. 794. 243 246, 247 Norman v. Loomis-Manning Filter Co., 123 App. Div. 739, 108 N. Y. Supp. 261 509 North Hempstead, Town of v. Public Service Corporation, 231 N. Y. 447, 132 N. E. 144 82.^ North Hempstead, Town of v. Public Service Corp. of Long Island, 193 App. Div. 224, 183 N. Y. Supp. 788 839 North Shore Electric Light & Power Co. v. Port Jefferson Electric Light Co., 151 App. Div. 63, 135 N. Y. Supp. 824 820 North Shore Staten Island Ferry Co., Matter of, 73 Barb. 556 266 Northern Adirondack Power Co., Matter of, 11 St. Dept. Rep. 416 652 Northern Dispensary, Matter of, 26 Misc. 147, 56 N. Y. Supp. 784 275 Northern R. R. Co. v. Miller, 10 Barb. 260 164 Northern Westchester Lighting Co. v. Village of Ossining, 154 App. Div. 789, 139 N. Y. Supp. 373 sio Norton v. Genesee Nat. Sav. Assn., 57 App. Div. 520, 68 N. Y. Supp. 32. . 505 Norwood, Matter of, 32 Hun 196 558, 55>l Novelty Mfg. Co. v. ConneU, 88 Hun 254, 34 N. Y. Supp. 717. . . . . .424, 755, 762 Novelty Tufting Machine Co. v. Hutkoff, 56 Misc. 522, 107 N. Y. Supp. 88. . 763 Nowaek v. Metropolitan St. R. Co., 166 N. Y. 433, 60 N. E. 32 517 Noye Mfg. Co. v. Raymond, 8 Misc. 353, 28 N. Y. 6up 68 Misc. 331, 123 N. Y. Supp. 980 175 Pierson, Matter -of, 44 App. Div . 215, 60 N. Y. Supp .671 228 ex TABLE OF CASES CITED. Page Pierson v. Morgan, 4 N. Y. Supp. 898, 17 Civ. Proc. 124 389 Pietraroia v. New Jersey & Hudaon River R. & Ferry Co., 197 N. Y. 434, 91 N. E. 120 ■ • • ■ ■ • • 776 Pileher v. Brayton, 17 Hun 429 • • • • 289 Pioneer Paper Co., Matter of, 36 How. Pr. 102 273 Pioneer Paper Co., Matter of, 36 How. Pr. 105 v. 276 Pioneer Paper Co., Matter of, 36 How. Pr. 102, 104, 111 ■ 278 Pittsburg Carbon Co. v. McMillan, 119 N. Y. 46, 23 N. B. 530 670 Pittsburg Plate Glass Co. v. Ravitch, 58 Misc. 191, 108 N. Y. Supp. 1103.. 770 Pittsburg Reduction Co. v. De Leon, 29 Mise. 180, 60 N. Y. Supp. 262 424 Pittsfield National Bank v. Bayne, 140 N. Y. 321, 35 N. E. 630 709 Piza V. Butler, 90 Hun 254, 35 N. Y. Supp. 721 666 Planten v. National Nassau Bank, 174 App . Div. 254, 160 N. Y. Supp. 297 . . 236 243, 241, 580 Piatt V. Ashman, 32 Hun 230 557, 559 Piatt V. New York i& Sea Beach R. Co., 9 App. Div. 87, 41 N. Y. Supp. 42. 444 446 Playa De Ore Mining Co. v. Gage, 60 App. Div. 1, 69 N. Y. Supp. 702'. ..... 170 Plimpton V. Bigelow, 93 N. Y. 592 124 Pocantico Water Works Co. v. Bird, 130 N. Y. 249, 29 N. E. 246. 901 Poeantico Water Works Co. v. Low, 20 Misc. 484, 46 N. Y. Supp. 633 135 Poland V. United Traction Co., 88 App. Div. 281, 85 N. Y. Supp. 7 72, 542 Poleti, People ex rel. v. Poleti, COda & Rebecehi, Inc., 193 App'. Div. 738, 184 N. Y. Supp. 368. 230 Polhemus v. Fitchburg R. Co., 50 Hun 397, 3 N. Y. Supp. 327 93 Polhemus v. Polhemus, 114 App. Div. 781, 100 N. Y. Supp. 263 245, 257 Polley V. Lehigh Valley R. Co., 138 App. Div. 636, 122 N. Y. Supp. 708. .72, 542 PoUitz V. Consolidated Gas Co., 118 App. Div. 92, 102 N. Y. Supp. 1017 840 Pollitz V. Gould, 202 N. Y. 11, 94 N. E. 1088 ; . 180, 242 Pollitz V. Wabash R. Co., 207 N. Y. 113, 100 N. E. 721 . . . 520 . Pollitz V. Wabash R. Co., 142 App. Div. 755, 127 N. Y. Supp. 782 253 Pollitz V. Wabash R. Co.,' 150 App. Div, 709, 135 N. Y. Supp. 785 521 Pollock V. National Bank, 7 N. Y. 274, 57 Am. Dec. 520 179 Pomeroy v. Hocking Valley Ry. Co., 218 N. Y. 530, 113 N. E. 504 802 Pond V. Hudson River R. Co., 17 How. Pr. 643 541 Pond V. New Rochelle Water Co., 183 N. Y. 330, 76 N. E. 211 898 Pondir v. New York, L. E. & W. R. Co., 72 Hun 384, 25 N. Y. Supp. 560. . . 245 Popper V. Supreme Council, 61 App. Div. 405, 70 N. Y. Supp. 637. . . .665, 741 Pope V. Terre Haute Car & Ifefg. Co., 87 N. Y. 137 543, 789, 797 Porter v. Eraser, 6 Misc. 553, 27 N. Y. Supp. 517 606 Porter V. Sewell Oar Heating Co., 7 N. Y. Supp. 166, 17 Civ. Pro. Rep. 386, 23 Abb. N. 0. 233 799 Portland Co. v. Hall & Grant Construction Co., 121 App. Div. 779, 108 N. Y. Supp. 649 748, 760, 771, 773 Portland 0>. v. Hall & Grant Construction Co., 123 App. Div. 495, 108 N. Y. Supp. 821 770 771 Post & Davis Co., In re, 219 Fed. 171 .' 437 Post Publishing Co. v. Bennett, 164 App. Div. 633, 149 N. Y. Supp. 867. . . 552 Postal Telegraph Oo. v. Robertson, 36 Misc. 785, 74 N. Y. Supp. 876 . ..;.... 873 Postal Telegraph-Cable Co. v. Associated Prees, 228 N. Y. 370, 127 N. E. 250. 869 TABLE OF OASES CITED. CXI Page Pottash V. Cleveland-Akron Bag Co., 197 App. Div. 7ft3 801 Potter V. New York Infant Asylum, 44 Hun 367, 8 St. Rep. 837 506 Powell V. Conover, 75 Hun 11, 26 N. Y. Supp. 1028 80, 362 Powell V. Murray, 3 App . Div. 273, 38 N. Y. Supp. 233 134 Powers V. Knapp, 71 Hun 371, 25 N. Y. Supp. 19 219 Powers V. Knapp, 85 Hun 38, 32 N. Y. Supp. 622 288 Powers V. Schlicht Heat & Power Co., 23 App. Div. 380, 48 N. Y. Supp. 237 406 507 Powers V. State Line Telephone Co., 116 App. Div. 737, 102 N. Y. Supp. 34. 866 Powers V. Universal Film Mfg. Co., 162 App. Div. 806, 148 N. Y. Supp. 114. 126 185 Pratt v. Short, 79 N. Y. 437 414 Pray v. Todd, 71 App. Div. 391, 75 N. Y. Supp. 947 339 Prentiss v. Greene, 193 App. Div. 672, 184 N. Y, Supp. 558 '. . . 783 President & Fellows of Harvard College v. Kempner, 131 App. Div. 848, 116 N. Y. Supp. 437 , 753 Press Pub. Co. v. Star Co., 33 App. Div. 242, 53 N. Y. Supp. 371 547 Preston v. Loughran, 58 Hun 210. 12 N. Y. Supp. 313 354 Preston v. Eeinhart, 109 App. Div. 781, 96 N. Y. Supp. 851 10 Prince v. Schlesinger, 116 App. Div. 500, 101 N. Y. Supp. 1031 640, 696 Prindle v. Washington Life Ins. Co., 73 Hun 448, 26 N. Y. Supp. 474. .352, 353 Pringle v. Woolworth, 90 N. Y. 502 408 Proetor v. Sidney Sash, Blind & Furniture Co., 8 App. Div. 42, 40 N. Y. Supp. 454 565, 567 Progressive Power Co. v. Wrought Iron Bridge Co., 14 Misc. 23, 35 N. Y. Supp. 130 777 Progressive Wall Paper Corp., In re, 224 Fed. 143 480 Progressive Wall Paper Corp., In re, 229 Fed. 489 480 Progressive Wall Paper Corp., In re, 230 Fed. 171 437 Prouty V. Lake Shore & M. S. K. Co., 52 N. Y. 363. 92 Prouty V. Michigan S. & N. Indiana R. Co., 1 Hun 655, 4 T. & C. 230 202 Providence Bank v. Billings, 4 Pet. (U. S.) 514. 2 Prayn v. McCreary, 105 App. Div. 302, 93 N. Y. Supp. 995 673 Pruyne v. Adams Furniture & Mfg. Co., 92 Hun 214, 36 N. Y. Supp. 361. .. . 527 Public Service Commission v. Booth, 170 App. Div. 590, 156 N. Y. Supp. 140. 859 Public Service Commission v. Brooklyn Borough Gas Co., 189 App. Div. 62, 178 N. Y. Supp. 93. 839 Public Service Commission v. Fox, 96 Misc. 283, 160 N. Y. Supp. 59 860 Public Service Commission v. Hurtgan, 91 Misc. 432, 154 N. Y. Supp. 897. . . 858 860 Public Service Commission v. Iroquois Natural Gas Co., 184 App. Div. 285, 171 N. Y. Supp. 379 839 Public Service Commission v. Iroquois Natural Gas Co., 189 App. Div. 545, 179 N. Y. Supp. 230 ■ 830 Public Service Commission v. Iroquois Natural Gas Co., 108 Misc. 696, 178 N. Y. Supp. 24 • 829 Public Service Commission v. Mount Vernon Taxieab Co., 101 Misc. 497, 168 N. Y. Supp. 83 8^° CXll TABLE OF CASES CITED. Page Public Sei-vice Commission v. Northern Union Gas Co., 168 App. Div. 731, 154 N. Y. Supp. 649 828 Public Service Commission v. Pavilion Nat. Gas Co., 195 App. Div. 534, 187 N. Y. Supp. 363 837, 839 • Public Service Commission v. Eogers Co., 184 App. Div. 705, 172 N. Y. Supp. 498 ! 816, 820 Public Service Commission, Matter of, v. Kings County Lighting Co., 105 Misc. 665, 173 N. Y. Supp. 789 840 Publicker Commercial Alcohol Co. v. Roberts, 114 Misc. 551, 187 N. Y. Supp. 178 746 Puriek v. Port Jefferson Electric Light Co., 186 App. Div. 214, 174 N. Y. Supp. 285 567 Putzel, People ex rel. v. Simonson, 61 Hun 338, 16 N. Y. Supp. 118 274 Pyro-Gravure Co. V. Staber, 30 Misc. 658, 64 N. Y. Supp. 520 787 Pyrolusite Manangese Co., Matter of, 29 Hun 429 592, 595, 599 Q Quaekenboss v. Globe & E. P. Ins. Co., 177 N. Y. 71, 69 N. E. 223 70 Quard v. Katkowsky, 183 App. Div. 428, 170 N. Y. Supp. 812 281 Quee Drug Co. v. Plant, 55 App. Div. 87, 67 N. Y. Supp. 10 497 Queen v. Benesch, 191 App. Div. 83, 180 N. Y. Supp. 856 35 Queens County Water Co., People ex rel. v. Travis, 171 Apjj. Div. 521, 157 N. Y. Supp. 943 199 Quicksilver Mining Co., Matter of, 184 App. Div. 637, 172 N. Y. Supp. 410. . 610 Quicksilver Mining Co., Matter of, 186 App. Div. 347, 174 N. Y. Supp. 338. . 598 Quinn v. Eoyal Ins. Co., 81 Hun 207, 30 N. Y. Supp. 714 803 R Race V. Union Ferry Co., 138 N. Y. 644, 34 N. E. 280 810 Eadam Microbe Killer Co., Matter of, 110 App. Div. 329, 97 N. Y. Supp. 76 • 485 Rafferty v. Buffalo City Gas Co., 37 App. Div. 618, 56 N. Y. Supp. 288. .135, 428 Rafferty v. Donnelly, 197 Pa. St. 423 , 242 Railway Age & Northwestern Railroader v. Pryibil, 18 Misc. 561, 42 N. Y. Supp. 697 547 Railway Equipment Co. v. Lincoln Nat. Bank, 82 Hun 8, 31 N. Y. Supp. 44 • 494, 495, 510 Raleigh, Matter of, 75 Misc. 55, 134 N. Y. Supp. 684 955 Ramsey v. Erie E. Co., 7 Abb. Pr., N. S. 156 323 Ramsey v. Gould, 57 Barb. 398, 39 How. Pr. 62 I7I 242 Randall, Matter of, 90 App. Div. 192, 85 N. Y. Supp. 1089 80 Eankin v. S. W. B. & I. Co., 12 N. Mex. 54 242 Rapid Transit Ferry Co., Matter of, 15 App. Div. 530, 44 N. Y. Supp. 539 318, 332 Eappleye, Matter of, 43 App. Div. 84, 59 N. Y. Supp. 838 729 Rateau Sales Co., Matter of, 201 N. Y. 420,. 94 N. E. 869 sgg 539 Rath V. Ohio German Fire Ins. Co., 132 App. Div. 692, 117 N. Y. Supp 3^2 790, 800 TABLE OF OASES CITED. Cxiii Page Eathbone v. Ayer, 84 App. Div. 186, 82 N. Y. Supp. 235 165, 295 Rathbim v. Northern Central Ey. Co., 50 N. Y. 656 785 Eathbun v. Snow, 123 N. Y. 343, 25 N. E. 379 76, 491, 496, 504 Raub V. Gerken, 127 App. Div. 43, 111 N. Y. Supp. 319 75, 77 Raymond v. Security Trust & L. Ins. Co., 44 Misc. 31, 89 N. Y. Supp. 753. 573 Recess Exporting & Importing Corporation, People ex rel. v. Hugo, 191 App. Div. 628, 182 N. Y. Supp. 9 21, 24 Recknagel v. Empire Self-Lighting Oil Lamp Co., 24 Misc. 193, 52 N. Y. Supp. 635 727 Reddington v. Mariposa L. & M. Co., 19 Hun 405 798 Redmond v. Hoge, 3 Hun 171, 5 T. & G. 386 740 Reed v. Bank of Newburgh, 6 Paige 337 272 Reed v. Keese, 60 N. Y. 616 321 Reed v. New York & Richmond Gas Co., 93 App. Div. 453, 87 N. Y. Supp. 810 842 Reformed Protestant Dutch Church v. Brown, 17 How. Pr. 287, 29 Barb. 335 152 Regener v. Phillips, 26 Misc. 311, 56 N. Y. Supp. 174. .. 573 Reichmann v. Manhattan Co., 26 Hun 433 546 Reilly v. Freeman, 84 App. Div. 433, 82 N. Y. Supp. 939 187 Reiser v. Edison Electric Illuminating Co., 76 Misc. 563, 137 N. Y. Supp. 145 831, 832 Reiss V. American Spirits Mfg. Co., 30 Misc. 234, 62 N. Y. Supp. 145 238 Reiss V. Levy, 175. App. Div. 938, 161 N. Y. Supp. 1048 318 Remington Paper Co. v. London Assurance Corp., 13 App. Div. 218, 43 N. Y. Supp., 431 502 Remington & Sherman Co. v. Niagara County Nat. Bank, 54 App. Div. 358, 66 N. Y. Supp. 560 769 Remington & Son Pulp & Paper Co. v. Caswell, 126 App. Div. 142, 110 N. Y. Supp. 556 531, 532 Reno V. Bull, 326 N. Y.. 546, 124 N. E. 144 373, 374 Reno Oil Co. v. Culv;er, 60 App. Div. 129, 69 N. Y. Supp. 969 123, 139 Rensens v. Manufacturing & Selling Co., 99 App. Div. 314, 90 N. Y. Supp. 1010 741 Reporters' Assn. v. Sun Printing & Publishing Assn., 186 N. Y. 437, 79 N. E. 710...... 555 Republican Art Printery, Inc. v. David, 173 App. Div. 736, 159 N. Y. Supp. 1010 • 333, 494 Revere Rubber Co. v. Genesee Blue Stone Co., 20 App. Div. 166, 40 N. Y. Supp. 989 • 542 Reynolds v. Bank of Mt. Vernon, 6 App. Div. 63, 39 N. Y. Supp. 633. .172, 198 Rice V. Rockefeller, 134 N. Y, 174, 31 N. E. 907 170 Rich V. Sargent Granite Co., 30 N. Y. Supp. 139, 61 St. Rep. 853 571 Richards v. Citizens' Water Supply Co. of Newtown, 140 App. Div. 206, 125 N. Y. Supp. 116 • 899 Richards v. Hartsborne, 110 App. Div. 650, 97 N. Y. Supp. 754 722 Richards v. Kinsley, 14 Daly 334, 12 St. Rep. 125 302 Richards v. Robin, 175 App. Div. 296, 162 N. Y. Supp. 12 181 CXIV TABLE OF CASES OITBD. PagL- Richards v. Schwab, 101 Misc. 128, 167 N. Y. Supp. 535. ' 29() Richards v. Wiener Co., 207 N. Y. 59 153 Richards v. Wiener Co., 145 App. Div. 353, 129 N. Y. Supp. 951 392 Richardson v. Abenroth, 43 Barb. 162. 281 Richardson v. Western Home Ins. Co., 8 N. Y. Supp. 873, 29 St. Rep. 820. . 804 Richardson & Boynton Co. v. Richardson & Morgan Co., 55 Hun 606, 8 N. Y. Supp. 53 61 Richardson Press t. Vandergrift, 165 App. Div. 180, 150 N. Y. Supp. 238 498, 536 Riehman v. Consolidated Gas Co., 114 App. Div. 316, lOO N. Y. Supp. 81 . . 843 Richmond v. Richmond, 133 App. Div. 117, 108 N. Y. Supp. 398 215 Richmond Cedar Works v. Buckner, 181 Fed. 434 774 Richmond, People ex rel. v. Pacific Mail Steamship Co., 50 Barb. 380, 34 How. Pr. 193 77, 223 Richmond Co. Society P. C. C. v. City of New York, 73 App. Div. 607, 77 N. Y. Supp. 41 536 Rickert v. White, 54 Misc. 114, 105 N. Y. Supp. 653 370 Rider Life Raft Co. v. Roach, 97 N. Y. 378 531, 533 Ridgway v. Symona, 4 App. Div. 98, 38 N. Y. Supp. 895 461 Riggs V. Commercial Mutual Ing. Co., 125 N. Y. 7, 25 N. E. 1058 431 Biker v. Leo, 133 N. Y. 519, 30 N. E. 598 409 Riley v. Metropolitan St. Ry. Co., 36 Misc. 789, 74 N. Y. Supp. 873 551 Riley v. Western Union Telegraph Co., 8 Misc. 217, 28 N. Y. Supp. 381.. 873 Ring V. Long Island Real Estate Exchange & Investment Co., 93 App. Div. 442, 87 N. Y. Supp. 683 ., 502 Ringler & Co., Matter of, 204 N. Y. 30, 97 N. E. 593 361, 274, 311 Ripin V. United States Woven Label Co., 805 N. Y. 442, 98 N. E. 855. . .22, 315 Risley v. Phenix Bank, 83 N. Y. 318 5 Ripin V. United States Woven Label Co., 205 N. Y. 443, 98 K E. 855 22 Ritzwoller v. Lurie, 225 N. Y. 464, 132 N. E. 634 154 Ritzwoller v. Lurie, 176 App. Div. 100, 162 N. Y. Supp. 475 154 Riverhead, Q. & S. R. Co., Matter of, 36 App. Div. 514, 55 N. Y. Supp. 938 47 Riverside & D. B. Cotton Mills v. Memfee, 237 U. S. 189, 59 L. ed. 910. . 792 Rives V. Bartlett, 156 App. Div. 552, 141 N. Y. Supp. 561 36, 374 Robert Dollar Co. v. Canadian Car Co., Ltd., 220 N. Y. 270, 115 N. E. 711 792, 793 Roberts v. Pioneer Iron Works, 135 App. Div. 207, 109 N. Y. Supp. 330 . . 538 Rolberts v. Roberts-Wicks Co., 184 N. Y. 257, 77 N. E. 13 210, 220 Robertson v. De Brulatour, 188 N. Y. 301, 80 N. E. 938 21o| 213 Robertson v. Rockland Light & Power Co., 187 App. Div. 730, 176 N. Y. Supp. 281 826 Robeson v. Central R. Co., 76 Hun 444, 28 N. Y. Supp. 104 786 Robinson v. Gilroy, 10 Misc. 205, 30 N. Y. Supp. 411 809 Robinson v. Jewitt, 14 St. Rep. 323 , 344 Robinson v. Mutual Reserve Life Ins. Co., 163 Fed. 794 . .. 566, 619 Robinson v. National Bank of New Berne, 95 N. Y. 637. igg Robinson v. New York & Staten Island Electric Co., 99 App. Div. 509, 91 N. Y. Supp. 153 .....; 701 TABLE OP CASES CITED, CXV Page Robinson v. New York, Weatehester & Boston R. Co., 123 App. Div. 339, 108 N. Y. Supp. 91 237 Robinson v. Oceanic Steam Nav. Co., 112 N. Y. 315, 19 N. E. 625 777 Rochester & Charlotte Turnpike Road Co. v. Joel, 41 App. Div. 43, 58 N. Y. Supp. 346 . , ., , , 886 Rochester & Charlotte Turnpike Road Co. v. Paviour, 164 N. Y. 281, 58 N. E. 114 515 Rochester, City of, v. Bell Telephone Co., 52 App. Div. 6, 64 N. Y. Supp. 804. . . . 863 Rochester, City of, v. Rochester & Lake Ontario Water Co., 189 N. Y. 333, 82 N. E. 154 900 Rochester Distilling Co. v. Rasey, 143 N. Y. 570, 37 N. E. 632 443 Rochester District Telephone Co., Matter of, 40 Hun 173. 363 Rochester Dry Goods Co. v. Fahy, 111 App. Div. 748, 97 F. Y. Supp. 1013. 181 Rochester Electric R. Co., Matter of, 123 N. Y.' 351, 25 N. B. 381. 881 Rochester, Hornell & L. R. Co. v. N. Y., L. E. & W. R. Co., 48 Hun 190, 15 St. Rep. 686 545 Rochester & K. P. Land Co. v. Raymond, 158 N. Y. 576, 53 K. E. 507. .170, 174 Rochester & K. F. Land Co. v. Raymond, 4 App. Div. 600, 39 N. Y. Supp. 145 163, 164 Rochester & K. F. Land Co. v. Roe, 7 App. Div. 366, 40 N. Y. Supp. 73 164 Rochester &, Lake Ontario Water Co. v. City of Rochester, 176 N. Y. 36, 68 N. E. 117 894 Rochester Savings Bank v. Averell, 96 N. Y. 467 437, 440 Rochester Telephone Co. v. Ross, 195 N. Y. 429, 88 N. E. 793 869 Rochester Telephone Co. v. Ross, 135 App. Div. 76, 109 N. Y. Supp. 381... 864 Rochester Trust & Safe Deposit Co. v. Oneonta Co., 133 App. Div. 193, 107 N. Y. Supp. 337 €30 Rock Island Butter Co. v. Freeman, 83 Misc. 7, 144 N. Y. Supp. 317 454 Rockefeller v. Lamora, 96 App. Div. 91, 89 N. Y. Supp. 1 496 Rockey River Development Co. v. German American Brewing Co., 193 App. Div." 197, 184 N. Y. Supp. 155 516, 519 Rockland & H. Town F. Ins. Co. v. Bussey, 48 App. Div. 359, 63 N. Y. Supp. 86 33 Rockwell V. Knights Templara & Masonic Mutual Aid Assn., 134 App. Div. 736, 119 N. Y. Supp. 515 76 Rocky Mountain National Bank v. Bliss, 89 N. Y. 338 397 Rodbourn v. Utica, Ithaca & Erie R. Co., 38 Hun 369 565, 574 Hodgers v. Adriatic Fire Ins. Co., 148 N. Y. 34, 43 N. E. 515 603, 733 Roebling's Sons Co. v. Federal, Storage B. C. Co., 185 App. Div. 430, 173 N. Y. Supp. 397 • ■ -297, 399, 305, 307 Rogers, Matter of, 32 App. Div. 438, 48 N. Y. Supp. 175 304 Rogers v. New York & Tex. Land Co., 134 N. Y. 197, 32 N. E. ,27. 37 Rogers v. Pell, 154 N. Y. 518, 49 N. E. 75 734 Rogers Construction Co., Matter of, 79 App. Div. 419, 79 N. Y. Supp. 444. . 463 Rollins V. Co-Operative Building Bank, 98 App. Div. 606, 90 N. Y. Supp. 631. •••■•■• 353 CXVl TABLE OF CASES CITED. Page Rolston V. Central Park, North & East River R. Co., 21 Misc. 439, 47 N. Y. Supp. 650 129. 18* Romecke, Inc. v,-Romecke & Co., Inc., 179 App. Div. 712, 167 N. Y. Supp. 235 • • 60 Root V. Great Western R. Co., 1 T. & C. 10, 65 Barb. 619 769 Root V. Olcott, 42 Hun 536 .'■; 505 Rorke v. Thomas, 56 N. Y. 559 800 Rose V. New York Telephone Co., 167 App. Div. 691, 152 N. Y. Supp. 827. S72 Rosenblatt v. Bridgeport Metal Goods Mfg. Co., 105 Misc. 92, 173 N. Y. Supp. 331 793, 802 Rosenblatt v. Jersey Novelty Co., 45 Misc. 59, 90 N. Y. Supp. 816 779 Rosenkranz v. Eagle Savings & Loan Co., 180 App. Div. 388, 167 N. Y. Supp. 781 494 Rosenthal v. Light, 185 App. Div. 702, 173 N. Y. Supp. 743 33 Rosenheimer v. Standard Gas Light Co., 36 App. Div. 1, 55 N. Y. Supp. 192 818 Rosevelt v. Brown, 11 N. Y. 148 261 Rossie Iron Works v. Westbrook, 59 Hun 345, 13 N. Y. Supp. 141 . . 71, 541, 543 Rossman v. Seaver, 41 App. Div. 603, 58 N. Y. Supp. 677 459 Rossman v. Seaver, 23 Misc. 661, 51 N. Y. Supp. 91 459 Roth V. Robertson, 64 Misc. 343, 118 N. Y. Supp. 351 245, 348 Rothbart v. Star Wet Wash Laundry, Inc., 185 App. Div. 807, 174 N. Y. Supp. 76 249, 378 Rothchild v. Grand Trunk Ry. Co., 10 N. Y. Supp. 36 539 Rothmiller v. Stern, 143 N. Y. 581, 38 N. E. 718 186 Rottenberg v. Englander, 185 App. Div. 1, 172 N. Y. Supp. 641 465 Rottenberg, People ex rel. v. Utah Gold & Copper M. Co., 135 App. Div. 418, 119 N. Y. Supp. 852 185, 222 Rowe, Matter of, 107 Misc. 549, 176 N. Y. Supp. 753 470 Rowe V. White, 112 App. Div. 688, 98 N. Y. Supp. 729 310 Rowell V. Janvrin, 151 N. Y. 60, 45 N. E. 398 385 Rowell V. Lambert, 66 Hun 4, 20 N. Y. Supp. 822 114, 288 Royal Watch Case Co. v. Camm-Roy Watch Case Co., 28 Misc. 45, 58 N. Y. Supp. 979 61 Royal Trust Co. v. Harding, 155 App. Div. 104, 140 N. Y. Supp. 9 743 Rubel V. Central R. R. Co. of N. J., 171 App. Div. 456, 156 N. Y. Supp. 1094 786 Rudd V. McClean Arms & Orffinance Co., 54 Misc. 49, 105 N. Y. Supp. 387. 799 Rudd V. Robinson, 126 N. Y. 113, 26 N. E. 1046 80, 362 Ruggles V. Brock, 6 Hun 164 167 ggo Rump V. Van Rensselaer Realty Co., 138 App. Div. 289, 122 N. Y. Supp. 913 464, 573 Eunyan v. Lessee of Coster, 14 Pet. (TJ. S.) 122 720 Rusling V. Union Pipe & Construction Co., 5 App. Div. 448, 39 N. Y. Supp, 216 69 Russell v. American Gas & Electric Co., 152 App. Divi 136, 136 N. Y. Supp. 602 110, 121, 209 Russell V. Washington Life Ins. Co., 62 Misc. 403, 115 N. Y. Supp. 950. 544, 798 TABLE OE CASES CITED, CXvii Page Rutgers Female College v. Tallman, a Misc. 561, 34 N. Y. Supp. 771 358 Eyckman v. Parkins, 5 Paige 543 632 Ryder v. Buahwick R. Co., 134 N. Y. 83, 31 N. E. 351 338 s Sadler v. Boston & Bolivia Rubber Co., 140 App. Div. 367, 135 N. Y. Supp. 405 793 V. Culver, 147 N. Y. 341, 41 N. E. 513 245, 365 V. Culver, 71 Hun 42, 34 N. Y. Supp. 514 853 V. Lake Shore & M. S. R. Co., 70 N. Y. 330 11 , Matter of, 70 N. Y. 320 725 Sager Mfg. Co. v. Smith, 45 App. Div. 358, 60 N. Y. Supp. 849 679 Salt V. Ensign, 79 Hun 107, 39 N. Y. Supp. 659 453 Saltzburg v. Utica Home Telephone Co., 159 App. Div. 51, 144 N. Y. Supp. 309 ■ 871 Salvation Army v. American Salvation Army, 135 App. Div. 368, 120 N. Y. Supp 471 58, 61 Salvator Brewing Co., In re, 183 Fed. 910 464 Salvin v. Myles Realty Co., 327 N. Y. 51, 124 N. E. 94 556 Samuel, Inc. v. Hams, 187 App. Div. 783, 176 N. Y. Supp. 378 431 San Remo Copper Mining Co. v. Moneuse, 149 App. Div. 26, 133 N. Y. Supp. 509 488 Santa Eulalia Silver Mining Co., Matter of, 2 N. Y. Supp. 331 601 Santa Eulalia Silver Mining Co., Matter of, 4 N. Y. Supp. 174, 31 St. Rep. 89 593 Sanders v. Barnaby, 166 App. Div. 274, 151 N. Y. Supp. 580 150 Sanders v. Barnaby, 173 App. Div. 244, 159 N. Y. Supp. 579 449 Sanders v. Proctor, 173 App. Div. 713 164 Sanford v. Rhoads, 113 App. Div. 782, 99 N. Y. Supp. 407 382, 304 Sanford Tool Co. v. Howe, Brown & Co., 157 U. S. 312 457 Sanitary Brass Works, Inc. v. Rubin & Marcus, Inc., 110 Misc. 565, 180 N. Y. Supp. 619 581 Sanitary Can Co. v. Mullins, 86 App. Div. 450, 83 N. Y. Supp. 918 511 Sands v. Hill, 55 N. Y. 18 604 Saranac & L. P. R. Co. v. Arnold, 167 N. Y. 368, 60 N. E. 647 80, 369 Saratoga Springs, Village of, v. Saratoga Gas, Electric Light & Power Co., 191 N. Y. 123, 83 N. E. 693 828 Sargent v. Sargent Granite Co., 3 Misc. 335, 23 N. Y. Supp. 886 346 Sautter v. Atlantic & Pacific Tea Co., 92 Misc. 378, 156 N. Y. Supp. 993.. 799 Savage v. Atlanta Home Ins. Co., 55 App. Div. 30, 60 N. Y. Supp. 1105 760 Sawyer Lumber Co. v. Bussell, 84 Hun 114, 31 N. Y. Supp. 1107 754 Saxe V. Sugarland Mfg. Co., 189 App. Div. 304, 178 N. Y. Supp. 454 796 Sayles v. Central Nat. Bank, 18 Misc. 155, 41 N. Y. Supp. 1063 343 Sayles v. Jourdan, 2 N. Y. Supp. 827, 19 St. Rep. 349 612 Sayre, Matter of, 70 App. Div. 329, 75 N. Y. Supp. 386 633 Scarsdale Publishing Co. v. Carter, 63 Misc. 371, 116 N. Y. Supp. 731.63, 64, 525 Seheel, Matter of, 134 App. Div. 442, 119 N. Y. Supp. 395 277 Sehenek v. Andrews, 57 N. Y. 133 387 CXVIU TABLE OF OASES CITED. Page Sehenek Chemical Co. v. Industrial Advertising & Distributing Co., 66 Misc. 597, 121 N. y. Supp. 838 • ^08 Schenectady & Saratoga Plank Koad Co. v. Thatcher, 11 N. Y. 102. .45, 162, 168 Scherer v. Ground-Hog Min. Co., 55 N. Y. Supp. 743 797 Sohinasi v. iSchiuasi, 169 App. Div. 887, 155 N. Y. Supp. 867 60 Schlegel v. American Beer & Ale Bottling Co., 12 Abb. N. C. 280, 64 How. Pr. 196 554 Schlesinger v. Fisk, 60 Misc. 442, 113 N. Y. Supp. 578 , 469 Schlesinger v. Gilhooly, 111 App. Div. 158, 97 N. Y. Supp. 606 674 Schlesinger v. Meyer Realty Co., 114 N. Y. Supp. 341 554 Schlitz Brewing Co. v. Ester, 86 Hun 22, 33 N. Y. Supp. 143 755 Schmeer v. Gas Light Co., 147 N. Y. 529, 42 N. E. 202 824 Schmid v. Neuberger, 174 App. Div. 670, 160 N. Y. Supp. 701 360 Schmidt v. Nelke Art Lithographic Co., 17 Misc. 124, 39 N. Y. Supp. 353. 551 Sehmitt v. Edison Electric Illuminating Co., 58 Misc. 19, 110 N. Y. Supp. 44. 833 Schoharie Valley R. Co., Matter of, 12 Abb. Pr. (N. S.) 102 273 Schreyer v. Bailey & Co., 97 App. Div. 185, 89 N. Y. Supp. 870 512 Schryver v. Met. Life Ins. Co., 29 N. Y. Supp. 1092 546 Schuetz V. German-Am. Real Est. Co., 31 App. Div. 163, 47 N. Y. Supp. 500. 160 Schulz, Jr., Co. V. Raimes & Co., 100 Misc. 697, 166 N. Y. Supp. 567 767 Schulze V. Sizer, 14 App. Div. 274, 43 N. Y. Supp. 463 700 Schurz V. Cook, 148 U. S. 397 915 Schurz, People ex rel. v. Cook, 110 N. Y. 443, 18 N. B. 113 99 Schuyler's Steam Tow-Boat Co., Matter of, 136 N. Y. 169, 32 N. E. 623.. 609, 684 Schwab V. Potter Co., 194 N. Y. 409, 87 N. E. 670 . . 14, 342, 360, 409, 412, 427 Schwab V. Potter Co., 129 App. Div. 36, 113 N. Y. Supp. 439 115 Schwarting v. Van Wie N. Y. Grocery Co., 60 App. Div. 475, 69 N. Y. Supp. 978 714 Schwarting v. Van Wie N. Y. Grocery Co., 69 App. Div. 282, 74 N. Y. Supp. 747 714 Schwartzreich v. Beauman, 112 Misc. 464, 183 N. Y. Supp. 440 381 Schwarzenbach v. Oneonta Light & Power Co., 144 App. Div. 884, 139 N. Y. Supp. 384. 819 Scott V. Central R. & Banking Co. of Georgia, 52 Barb. 45 217 Scott V. Middletown R. R. Co., 86 N. Y. 200 532 Scruggs V. Cotterill, 67 App. Div. 583, 73 N. Y. Supp. 882 176 Seagrist v. Reid, 171 App. Div. 755, 157 N. Y. Supp. 979 254 Seaieh, Matter of, 170 Appl*Div. 686, 156 N. Y. Supp. 579 90 Searle v. Halstead & Co., 139 App. Div. 134, 123 N. Y. Supp. 984 549 Searles v. Gebbie, 115 App. Div. 778, 101 N. Y. Supp. 199 217 Sedgwick v. Seward Development Co., 144 App. Div. 455, 129 N. Y. Supp. 309 348, 25R Second Methodist Episcopal Church v. Humphrey, 31 N. Y. Supp. 89, 49 St. Rep. 467 25 Second National Bank v. Curtiss, 3 App. Div. 508, 37 N. Y. Supp. 1038 .... 138 Second National Bank v. Pettier & Stymus Mfg. Co., a N. Y. Supp. 644, 18 St. Rep. 954 _' 510 Security Life Ins. & Annuity Co., Matter of, 31 Hun 96 70l> TABLE OF. CASES CITED. Cxix Page Security Warehousing Co. v. Am. Exchange Nat. Bank, 118 App. Div. 350, 103 N. Y. Supp. 399 514 Selser Bros. Co. v. Potter Produce Co., 77 Hun 313, 28 N. Y. Supp. 438 783 Selwyn-Brown v. Superno Co., Inc., 181 App. Div. 420, 168 N. Y. Supp. 918 185 Seneca Oil Co., Matter of, 153 App. Div. 594, 138 N. Y. Supp. 78 124, 181 585, 596, 601 Senior v. New York City Ky. Co., Ill App. Div. 39, 97 N. Y. Supp. 645. . . 280 Seventeenth Ward Bank v. Webster, 67 App. Div, 228, 73 N. Y. Supp. 648. 389 Seventy-Eighth St. & Broadway Co. v. Purssell Mfg. Co., 92 Misc. 178, 155 N. Y. Supp. 359 98 Seydel v. Corporation L. Co., 46 Misc. 576, 92 N. Y. Supp. 235 731 Seymour v. Spring Forest Cemetery Assn., 144 N. Y. 333, 39 N. E. 365 35 355, 532 Shalek v. Jetter, 171 App. Div. 364, 155 N. Y. Supp. 975 396 Shaped Seamless Stocking Co. v. Snow, Church & Co., 19 Misc. 421, 44 N. Y. Supp. 331 557 Shaped Seamless Stocking Co. v. Snow, Church & Co., 20 Misc. 319, 45 N. Y. Supp. 849 557 Shaw V. Ansaldi Co., Inc., 178 App. Div. 589, 165 N. Y. Supp. 873 136, 198 345, 376, 399, 450, 451 Shaw V. Saranac Horse Nail Co., 144 N. Y. 230, 39 N. E. 73 481 Shayne v. Evening Post Publishing Co., 168 N. Y. 70, 61 N. g. 115.. 558, 560 583, 603, 715 Shebley v. Angle, 37 N. Y. 636 330 Sheehy v. Clausen, 26 Misc. 269, 55 N. Y. Supp. 1000 818 Sheehy v. McMillan, 36 App. Div. 140, 49 N. Y. Supp. 1088 819 Shelby Steel Tube Co. v. Burgess Gun Co., 8 App. Div. 444, 40 N. Y. Supp. 871 763, 779 Sheldon Hat Blocking Co. v. Eiekeraeyer Haf, Bioeking M.iiili. Co., 90 N. Y. 607 535 Sheldon Hat Blocking Co. v. Eickmeyer Hat Bioeking Co., 56 How. Pr. 70. . 358 Shelley v. Westchester Lighting Co., 119 App. Div. €1, 103 N. Y. Supp. 951. 831 Shelley v. Westchester Lighting Co., 139 App. Div. 690, 124 N. Y. Supp. 484 831 Shellington v. Howland, 53 N. Y. 371 183, 298 Shellington v. Howland, 67 Barb. 14 297, 301 Shepard v. Morgan, 123 App. Div. 138, 108 N. Y. Supp. 379 511 Shepard & Morse Lumber Co. v. Burleigh, 27 App. Div. 99, 50 N. Y. Supp. 135 769, 786 Sheridan v. Sheridan . Electric Light Co., 38 Hun 396 245 Sheridan v. Tucker, 138 App. Div. 436, 122 N. Y. Supp. 80O 955 Sheridan v. Tucker, 145 App. Div. 145, 129 N. Y. Supp. 18 955 Sheridan Elec. Light Co. v. Chatham Nat. Bank, 127 N. Y. 517, 28 N. E. 467 328 Sheridan Elee. Light Co. v. Chatham Nat. Bank, 52 Hun 57S, 5 N. Y. Supp. 529 , ■ 328 Sherman v. Dwight, 138 App. Div. 595, 123 N. Y. Supp. 89 504 CXX TABLE OF CASES CITED. Page Sherwood v. Holbrook, 178 App. Div. 462, 165 N. Y. Supp. 514 468 Sherwood v. Holbrook, 188 App. Div. 712, 177 N. Y. Supp. 330 456 Sherwood v. Holbrook, 98 Misc. 668, 163 N. Y. Supp. 336.. 386, 398, 449, 468 Shipman v. Treadwell, 200 N. Y. 472, 93 N. E. 1104 735, 736 Shirk V. Brookfield, 77 App. Div. 295, 79 N. Y. Supp. 325 507 Shoe & Leather Bank v. Brown, 9 Abb. Pr. 218, 18 How. Pr. 308 768 Shoe & Leather Bank v. Thompson, 18 Abb. Pr. 413 555 Shorer v. Times Pi-int & Publishing Co., 119 N. Y. 483, 23 iST. E. 979 553 Shorer v. Times Print & Publishing Co., 53 Hun 88, 6 N. Y. Supp. 63 553 Short V. Medberry, 29 Hun 39 391, 304 Shotwell V. Mali, 38 Barb. 445 141 Shpunt V. Machinery Merchants, Inc., 112 Misc. 457, 183 N. Y. Supp. 90..492, 495 Shulman v. Star Suburban Realty Co., 113 App. Div. 759, 99 N. Y. Supp. 419 382 Shumaker v. Doubleday, Page & Co., 116 App. Div. 302, 101 N. Y. Supp. 587. 548 Sigua Iron Co. v. Brown, 171 N. Y. 488, 64 N. E. 194 79, 80, 163, 557, 732 737, 767 Silaski, Matter of, 175 App. Div. 199, 161 N. Y. Supp. 513 273 Silver v. Western Assur. Co., 3 App. Div. 573, 38 N. Y. Supp. 335 803 Simmons v. Thompson, 39 App. Div. 559, 51 N. Y. Supp. 1018 493 Simon v. Sheridan & Shea Co., 21 Misc. 489, 47 N. Y. Supp. 647 777 Simon v. Southern R. Co., 236 U. S. 115, 59 L. ed. 492. . 795, 796 Simonds Furnac^Co., Matter of, 30 Misc. 209, 61 IST. Y. Supp. 974 611, 756 Simonds Mfg. Co., Matter of, 39 App. Div. 576, 57 N. Y. Supp. 776. .585, 596 607, 705 Simonds Soap Co., Matter of, 61 Hun 637, 16 N. Y. Supp. 328 608, 610 Simons v. Lehigh Mills Co., Ltd., 53 Misc. 368, 104 N. Y. Supp. 739 551 Simpson v. Jersey City Contracting Co., 165 N. Y. 193, 58 N. B. 896. . .134, 194 Simpson, Matter of, 36 App. Div. 563, 55 N. Y. Supp. 697 682 Sims v. Bonner, 16 N. Y. Supp. 801, 42 St. Rep. 14 183 Sinclair v. Fuller, 158 N. Y. 607, 53 N. E. 510 174, 311 Sinclair v. Dwight, 9 App. Div. 397, 41 N. Y. Supp. 193 174 Singer Mfg. Co. v. Granite Spring Water Co., 66 Misc. 595, 123 N. Y, Supp. 1088 ,. 761, 771 Singer, People ex rel. v. Knickerbocker Trust Co., 38 Misc. 446, 77 N. Y. Supp. 1000 726, 728 Singer Sewing Machine Co. ». Foster, 75 Misc. 641, 133 N. Y. Supp. 1072. 772 Sinnott v. Hanan, 214 N. Y. 454, 108 N. E. 858 721, 785 Sivelli V. New River Coal Co., 184 App. Div. 62, 171 N. Y. Supp. 429 786 Skaneateles Water Works Co. v. Village of Skaneateles, 161 N. Y. 154, 55 N. E. 562 901 Skinner v. Anderson, 12 Barb. 648 : 886 Skinner v. Smith, 134 N. Y. 340, 31 N. E. 911 246^ 359 Skinner v. Smith, 56 Hun 437, 10 N. Y. Supp. 81 369, 586 Slee V. Bloom, 19 Johns. 456, 10 Am. Dec. 373 ^43 Sluiter, People ex rel. v. Holstein-Friesian Assn., 41 Hun 438, 3 St Rep 142 ■ " 75 Smallwood v. Smith, 197 App. Div. 533, 189 N. Y. Supp. 427 345 348 TABLE OF CASES CITED. CXxi Page Smith V. American Coal Co., 7 Lans. 317 : . . . i7g Smith V. Berndt, 1 N. Y. Supp. 108 409 Smith V. Danzig, 64 How. Pr. 320, 3 Civ. Pro. Rep. 127 324, 667 Smith V. Great South Bay Water Co., 83 App. Div. 427, 81 N. Y. Supp. 812. 897 Smith V. Havens Relief Fund Society, 44 Misc. 594, 90 N. Y. Supp. 168 . . 13 Small V. Herkimer Mfg. & H. Co., 2 N. Y. 330 160, 161 Smith V. Law, 21 N. Y. 296 338 Smith V. Long Island R. Co., 102 N. Y. 190, 6 N. E. 397 351 Smith V. Manhattan Ins. Co., 4 Hun 127 704 Smith V. Martin Anti-Fire Car Heater Co., 19 N. Y. Supp. 285, 47 St. Rep. 26 494, 500 Smith V. Kew York Consol. Stage Co., 18 Abb. Pr. 419, 28 How. Pr. 377 . . 464 Smith V. New York Consolidated Stage Co., 28 How. Pr. 208 616 Smith V. New York Consolidated Stage Co., 28 How. Pr. 377 682 Smith V. Quale, 86 Misc. 359, 148 N. Y. Supp. 448 305 Smith V, Union Milk Co., 70 Hun 348, 34 N. Y. Supp. 79 783 Smith V. Westchester Bronxville Realty Co., 78 Misc. 75, 137 N .Y. Supp. 690 485 Smith V. Western Pacific Ry. Co., 138 App. Div. 344, 132 N. Y. Supp. 888. 792 Smith V. Woodruff, 6 Abb. Pr. 65 680 Smith Co., Matter of, 31 App. Div. 39, 53 N. Y. Supp. 877 708 Smolik V. Pennsylvania & Reading Coal & Iron Co., 233 Fed. 148 794 Smyth V. Pm-e Ice Co. of Williamsburg, 193 App. Div. 479, 184 N. Y. Supp. 305 955, 956 Snow V. Church, 13 App. Div. 108, 43 N. Y. Supp. 1072 317 Snow, Church & Co. v. Hall, 19 Misc. 655, 44 N. Y. Supp. 427 552 Snow, Church & Co. v. Snow, Church Surety Co., 80 App. Div. 40, 80 N. Y. Supp. 512 777 Snyder v. Lindsey, 92 Hun 432, 36 N. Y. Supp. 1037 620 Snyder, Matter of, 29 Misc. 1, 59 N. Y. Supp. 993 480 Snyder, People ex rel. v. Hylan, 212 N. Y. 236 265 Society of 1813 v. Society of 1812, 46 App. Div. 568, 62 N. Y. Supp. 355. . 58, 60 Socorro Mountain Mining Co. v. Preston, 17 Misc. 320, 40 N. Y. Supp. 1040. 36i' Sodus Bay &, Corning R. Co. v. Hamlin, 24 Hun 390 155 Solar Baking Powder Co. v. Royal Baking Powder Co., 128 App. Div. 550, 112 N. Y. Supp. 1013 ^ 547, 549 Solomon, People ex rel. v. Brotherhood of Painters, 218 N. Y. 115, 112 N. E. 752 781 Soloway v. Junius Coal & Wood Co., Inc., 186 App. Div. 879, 175 N. Y. Supp. 1 238, 243 Sommer v. Armour Gas & Oil Co., 71 Misc. 211, 128 N. Y. Supp. 383 12] Sorrentino, Matter of, v. Ciletti, 75 App. Div. 507, 78 N. Y. Supp. 322. .. . ,31.'i . Southworth v. Morgan, 143 App. Div. 648, 128 N. Y. Supp. 196 287 South Amboy Terra Cotta Co. v. Poerschke, 45 Misc. 358, 90 N. Y. Supp. 333 ,: 753 South Bay Co. v. Howey, 190 N. Y. 240, 83 N. E. 26 752 South Bay Co. v. Howey, 113 App. Div. 382, 98 N. Y. Supp. 909 771 South Buffalo Natural Gas Co. v. Bain, 9 Misc. 425, 30 N. Y. Supp, 264.. . 157 CXXU TABLE OF OASES CITED. Page South Olens Falls, Village of. People ex rel. v. Public Service Commission, 235 N. Y. 216, 121 N. B. 777 823, 836 South "Publishing Co. v. Fire Assn., 67 Hun 4,1, 21 N. Y. Supp. 673 803 Southern Cotton Oil Co. v. Wemple, 44 Fed. 34 .'V 765 Southern Railway Co. v. Greene, 216 U. S. 400, 54 L. ed. 53« 5 Southworth v. Morgan, 205 N. Y. 293, 98 N. E. 490 737 Southworth V. Morgan, 143 App. Div. 648, 128 N. Y. Supp. 196 760, 763 Southworth v. Morgan, 71 Misc. 214, 128 N. Y. Supp. 598. 761 Speare v. Troy Laundry Machinery Co., 44 App. Div. 390, 60 N. Y. Supp. 1080 :.j:... : :..: 71, 541, 548 Speir, Matter of, 69 App. Div. 149, 74 N. Y. Supp. 555 130, 131 Spellissy v. Cook & Bernheimer Co., 58 App. Div. 2'83, 69 N. Y. Supp. 995. . 184 Spellman v. Loosehen, 163 N. Y. 268, 56 N. E. 741 467 Spencer v. Clarke, 1 N. Y. Supp. 533, 23 Wk. Dig. 490 252 Spitzer v. Born, Inc., 194 App. Div. 739, 185 K Y. Supp. 875 497, 525 Spitzer v. Born, Inc., Ill Misc. 595, 182 N. Y. Supp. 337 490, 491, 493, 495 Split Rock Cable Co., Matter of, 58 Hun 351, 12 N. Y. Supp. 116 876 Springfield Fire Ins. Co. v. Village of Keeseville, 148 N. Y. 46, 43 N. E. 405. 897 Springs v. Bowery Nat. Bank, 63 Hun 505, 18 N. Y. Supp. 574 634 Squire v. Preston, 83 Hun 88, 31 N. Y. Supp. 174 896 Squires v. Thompson, 73 App. Div. 553, 76 N. Y. Supp. 734 373 St. Albans Beef Co. v. Aldridge, 112 App. Div. 803, 99 N. Y. Supp. 398..762, 77] St. Clair v. Cox, 106 U. S. 350 734 St. George Vineyard Co. v. Fritz, 48 App. Div. 233, €3 N. Y. Supp. 775 79 330, 404 St. John v. Eberlin, 33 Misc. 585, 51 N. Y. Supp. 998 343 St. Lawrence & Adirondack R. Co., Matter of, 133 N. Y. 270, 31 N. E. 218. 541 St. Louis & San Francisco R. Co. v. Guaranty Trust Co., 205 N. Y. 609, 99 N. E. 163 444 St. Louis & San Francisco R. Co. v. James, 161 U. S. 545 4 Stafford Mfg. Co. v. Newman, 75 Misc. 636, 133 N. Y. Supp. 1073 770 Stahlberger v. New Hartford Leather Co., 92 Hun 345, 86 N. Y. Supp. 708. 505 Stamford Water Co. v. Stanley, 39 Hun 434 90] Standard Fashion Co. v. Sifegel-Cooper Co., 44 App. Div. 121, 60 N. Y. Supp. 739. . 497 Standard Nat. Bank v. Garfield Nat. Bank, 56 App. Div. 43, 67 N. Y. Supp. 473 ♦. - : .733 Standard Oil Co. v. U. S., 231 U. S. 1, 55 L. ed. 619 5 Standard S. S. Co. v. Corn Exchange Bank, 320 N. Y. 478, 116 N. E. 386..513, 514 Stanley v. Franco-Amer. Ferment Co., 97 Misc. 401, 161 N. Y. Supp. 365 . . 492 493, 519 Stannard v. Eeid & Co., 114 App. Div. 135, 99 N. Y. Supp. 567 fiOn Stannard v. Reid & Co., 118 App. Div. 304, 103 N. Y. Stipp. 521 496 Stanton v. United States Pipe-Line Co., 90 Hun 35, 35 N. Y. Supp. 629 .... 797 Star Printing Co. v. Andrews, 9 N. Y. Supp. 731, 31 St. Rep. 188 437, 441 Starbuttk v. Housatonlc R. Co., 83 Hun 534, 33 N. Y. Supp. 87. 343 Starin v. Edison, 112 N. Y. 206, 19 N. E. 670 , . 1533 Stark V. Soule, 9 St. Rep. 555 3g5 TABLE OF OASES CITED. CXXiii Page State Bank of Rock VaJIey v. Andrews, Z Misc. 394, 21 N. Y. Supp. 948 . . 403 State Line Telephone Co. v. Ellison, 131 App. Div. 499, 106 N. Y. Supp. 130. 863 State of Indiana v. Woram, 6 Hill (N. Y.) 33, 40 Am. Dec. 378 5 State of Wisconsin v. Pelican Ins. Co., 137 U. S. 265 4 Staten Island Rapid Transit R. R. Co., Matter of, 37 Hun 423 157 State Island Rapid Transit R. R. Co., Matter of, 38 Hun 381 157 Stauffer, People ex rel. v. Bonwit Bros., 69 Misc. 70, 135 N. Y. iSupp. 958..330, 562 Steam Navigation Co. v. Weed, 17 Barb. 378 766 Steele v. Isman, 164 App. Div. 146, 149 N. Y. Supp. 488 : . 381 Steiger Trunk & Bag Co. v. Wharncliffe, 62 Misc. 14, 114 N. Y. Supp. 463. 771 Steinway, Matter of, 159 N. Y. 350, 53 N. E. 1103 231, 322, 234, 236, 327 Steinway v. Steinway, 2 App. Div. 301, 37 N. Y. Supp. 743. . 364, 519 Steinway v. Steinway & Sous, 17 Misc. 43, 40 N. Y. Supp. 718 410, 522 Stephen Merritt Burial & Cremation Co. v. Stephen Merritt Co., 155 App. Div. 565, 140 N. Y. Supp. 895 61 Stephens v. Fox, 17 Hun 435 ,308 Stephens, People ex rel. v. Greenwood Lake Assn;, 18 N. Y. Supp. 491, 44 St. Rep. 914 .333 Sterling Mfg. Co. v. National Surety Co., 94 Misc. 604, 149 N. Y. Supp. 979. 779 Stern v. Childs, 36 Misc. 419, 56 N. Y. Supp. 193 758 Stern v. McKee, 70 App. Div. 143, 75 N. Y. Supp. 157 156 Sterne v. Metropolitan 'Telephone & Tel. Co., 19 App. Div. 316, 46 N. Y. Supp. 110 i 870 Sterne v. Metropolitan Telephone & Tel. Co., 33 App. Div. 164, 53 N. Y. Supp. 467 ; 872 Stevens v. Episcopal Church History Co., 140 App. Div. 570, 135 N. Y. Supp. 573 30, 133, 134, 137, 172, 219, 286 Stevens v. Olus Mfg. Co., 73 Misc. 508', 130' N. Y. Supp. 32 436 Stevens v. Phoenix Ins. Co., 41 N. Y. 149 774 Stevenson v. Cowan, 84 App. Div. 135, 82 N. Y. Supp. 78 434 Stewart v. Bramhall, 11 Hun 139 , 475 Stewart, Matter of, 39 Misc. 275, 79 N. Y. Supp. 525 560 Stiefel V. New York Novelty Co., 14 App. Div. 371, 43 N. Y. Supp. 1012.467, 630 Stiefel V. New York Novelty Co., 35 Misc. 221, 55 N. Y. Supp. 90 467 Stillman v. Associated Lace Makers Co., 14 Misc. 503, 35 N. Y. Supp. 1071. 544 Stiner v. Tennessee Cofvper Co., 176 App. Div. 209, 161 N. Y. Supp. 986 • 784 Sto'bo, People ex rel. v. Eadie, 63 Hun 320, 18 N. Y. Supp. 53 326 Stoddard v. Lum, 159 N. Y. 365, 53 N. E. 1108 163, 737 Stokes v. Continental Trust Co., 186 N. Y. 285, 78 N. E. 1090 130, 36R Stokes v. Stickney, 96 N. Y. 323 390 iStokes v. Stokes, 33 App. Div. 552, 48 N. Y. Supp. 733 390 Stokes V. Stokes, 87 Hun 153, 33 N. Y. Supp. 1034 391 Stokes V. Stokes, 91 Hun 605, 36 N. Y. Supp. 350 355, 391 (Stone V. Cleveland, C, C. & St. Louis Ry. Co., 202 N. Y. 352, 95 N. B. 816. 380 Stone v. Penn Yan, K. P. ,& B. R. Co., 197 N. Y. 279, 90 N. B. 843.. . .745, 764 Stonebridge, Matter of, 57 Hun 441, 10 N. Y. Supp. 727 ., . ., 625, 695 Stondbridge, Matter of, 13 N. Y. Supp. 770, 37 St. Rep. 617 569 CXxiv TABLE OF CASES CITED. Page Stout V. Security Trust & Life Ins. Co., 83 App. Div. 129, 81 N. Y. Supp. 708. 345 etrahmann v. Yorkville Bank, 148 App. Div. 8, 133 N. Y. Supp. 130 173 Stratton V. City Trusty Safe Deposit & Surety Co., 69 App. Div. 333, 74 isr. Y. Supp. 670 '^^ Stratton v. City Trust, Safe Deposit & Surety Co., 86 App. Div. 551, 83 N. Y. Supp. 780 ''06 Strauss v. Casey Machine & Supply Co., 68 Misc. 474, 124 N. Y. Supp. 33. . . . 669, 742 Strauss Putz Co. v. Axson, 157 N. Y. Supp. 733 ''55 •Strawn v. Bardt-Dent Co., 71 App.. Div. 334, 75 N. Y. Supp. 698 777 Strobel v. Brownell, 16 Misc. 657, 40 N. Y. Supp. 702 36S Strong V. Brooklyn Crosa-Tovpn K. Co., 93 N. Y. 426 119 Strong V. Smith, 15 Hun, 223 27T Strong V. Wheaton, 38 Barb. 616 308, 520 .'Strong Co., Matter of, 138 App. Div. 308, 113 N. Y. Supp. 557 598 Stuhing V. Met. Life Ins. Co., 78 Hun 610, 28 N. Y. Supp. 960 545 Studebaker Bros. Co. v. Rose Co., 65 Misc. 322, 119 N. Y. Supp. 970 505 Sturges V. Vanderbilt, 73 N. Y. 384 324, 558, 559, 560, 580, 635 Sturgis V. Crescent Jute Mfg. Co., 10 N. Y. Supp. 470, 33 St. Rep. 848 ... , 793 (SufEolk County Telephone Co. v. Gammon, 113 App. Div. 764, 99 N. Y. Supp. 295 866 Sukosky v. Philadelphia & Reading Coal & Iron Co., 189 App. Div. 689, 179 N. Y., Supp. 33 , 745, 794 iSulliyan v. Parkea, 69 App. Div. 231, 74 N. Y. Supp. 787. 270 /Sullivan County Club v. Butler, 26 Misc. 306, 56 N. Y. Supp. 1 113 iSunrise Lumber Co., Inc. v. Biery Lumber Co., 195 App. Div. 170, 185 IST. Y. Supp. 711 , , 793, 8QB Supreme Council, Catholic R. & B. Assn., Matter of, 142 App. Div. 307, 137 N. Y. Supp. 143 375-277 Sutherland v. Oleott, 95 N. Y. 93 115 Sutton V. MacBride, 176 App. Div. 363, 163 N. Y. Supp. 1033 342 'Suydam v. Smith, 52 N. Y. 383 889 /Swan V. Stiles, 94 App. Div. 117, 87 JST. Y. Supp. 1089 439, 457 (Swift V. Matthews Engineering Co., 178 App. Div. 301, 165 N. Y. Supp. 136. . , 797, T98 Syracuse, Chenango & N. Y. R. Co., Matter of , 91 N. Y. 1 377 Syracuse Lighting iCo. v. Maryland Casualty Co., 226 N. Y. 35, 132 N. E. 723 ,, 84, 85 Syracuse, Phoenix & 0. R. Co. v. Gere, 4 Hun 392, 6 T. & C. 636 157 /Syracuse Water Co. v. City of Syracuse, IIR N. Y. 167, 32 N. E. 381 897 T Talcott V. Standard Oil Co., 149 App. Div. 694, 134 N. Y. Supp. 617.. 124, 178 Tallapoosa Lumber Co. v. Holbert, 5 App. Div. 559, 39 N. Y. Supp. 432 .... 763 Talmadge v. Sanitary Security Co., 31 App. Div. 498, 52 N. Y. SUpp. 139 lS4 Tallmadge v. Fishkill Iron Co., 4 Barb. 382 ggg TABLE OF CASES CITED. CXXV Page Talmage v. Pell, 7 N. Y. 338 10, 698 Talmage's Sons Co. v. American Dry Dock Co., 93 Misc. 535, 157 N. Y. Supp. 445 770 Tanenbaum v. Higgins, 190 App. Div. 861, 180 N. Y. Supp. 738 419 Tapley Co. v. Keller, 133 App. Div. 54, 117 N. Y. Supp. 817 363, 582, 605 Taplinger & Co. v. Ward & Co.,* 114 Misc. 115, 186 N. Y. Supp. 77 797 Tarrytown, White Plains & M. R. Co., Matter of, 133 App. Div. 397, 117 N. Y. Supp. 695 585, 603, 611 Tasker v. Wallace, 6 Daly 364 133 Tate v. Neary, 52 App. Div. 78, 65 N. Y. Supp. 40 432 Tautphoeiis v. Harbor & Suburban Assn., 96 App. Div. 33, 88 N. Y. Supp. • 709: 553 Tauza v. Susquehanna Coal Co., 220 N. Y. 2.o9, 115 N. E. 91.5 .746, 778, 789 SOO, 801 Taylor y. Attrill, 31 Hun 133 403 Taylor v. Baldwin, 14 Abb. Pr. 166 673 Taylor v. Granite State Prov. Assn., 136 N .Y. 343, 33 N. E. 993 799 Taylor, Matter of j 117 App. Div. 348, 101 N. Y. Supp. 1039 338 Taylor v. New York Telephone Co., 97 Misc. 160, 160 N. Y. Supp. 865 868 Taylor v. Thomas, 55 Misc. 411, 106 N. Y. Supp. 538 371 Teele v. Consolidated Amusement Co., 103 N. Y. Supp, 666 507 Tepfer v. Ideal Gas & Electric Fijcture Co., 58 Misc. 396, 109 N. Y. Supp. 664 317 Terry v. Rothschild, -83 Hun 486, 31 N. Y. Supp. 1119 397 Thalmann v. Hoffman House, 27 Misc. 140, 58 N. Y. Supp. 337 119, 571 Thayer v. Burr, 301 N. Y. 155, 94 N. E. 604 315 Thayer v. Schley, 137 App. Div. 166, 121 N. Y. Supp. 1064 80 Theile v. Merlis, 85 Misc. 351, 147 N. Y. Supp. 405 322 Third Avenue R. Co., People ex rel. v. Newton, 113 N. Y. 396, 19 N. E. 831. 409 Third Avenue R. Co., People ex rel. v. Public Service Commission, 203 N. Y. 299, 96 N. E. 1011 ; 98 Thistle V. Jones, 43 Misc. 315, 93 N. Y. Supp. 113 38 Thomas v. Musical Mutual Protective Union, 121 N. Y. 45; 24 N. E. 24 75 Thomashefsky v. Edelstein, 193 App. Div. 368, 183 N. Y. Supp. 707 7 Thompson v. Denner, 16 App. Div. 160, 44 N. Y. Supp. 723 706 Thompson v. Erie R. Co., 45 N. Y. 468. ! 210 Thompson v. Knight, 74 App. Div. 316, 77 N. Y. Supp. 599 287, 295 Thompson v. McLaughlin, 138 App. Div. 711, 123 N. Y, Supp. 762 403 Thompson v. New York Trust Co., 107 Misc. 345, 177 N. Y. Supp. 399 ... . 312 Thompson v. Nicolai, 2l' Misc.' 700, 49 N. Y. Supp. 433 295 Thompson v. Stanley, 20 N. Y. Supp. 317, 29 Abb. N. C. 11 181, 340 Thompson v. Western Union Telegraph Co., 40 Misc. 443, 82 N. Y. Supp. 675 : 871 Thorn, People ex rel; v. Pangburn, 3 App. Div. 456, 38 N. Y. Supp. 217. . . 274 Thornton v. Netherlands-Amer. Steam Nav. Co., 178 App. Div. 604,. 165 N. Y. Supp. 682 ■, 516, 517 Thousand Island Park Assn. v. Tucker, 173 3*f . Y. 203, 65 N. E. 975 94 Throop v. Hatch Lith. Co., 125 N. Y. 530, 26 N. E. 743 450, 451 Thurber v. Thompson, 21 Hun 472 288 CXXvi TABLE OF CASES CITED. Page T&urston v. Duffy, 38 Hun 337 • ■ '^^^ Tiffany & Co., People, ex rel. y. Campbell, 144 N. Y. 166, 38 N. B. 990. . . . 410 Tighe V. Lavery, 98 Mise. S45, 168 N. Y. Supp. 1005 339, 340, 342 Tilley v. Coykendall, 17S N. Y. 587, 65 N. E. 374. , 380, 733 Tiltori V. Gaus, 90 Misc. 84, 152 N. Y. Supp. 981 346, 348, 350 tTimmis, Matter of, 300 N. Y. 177, 93 N. E. 523 '. • 472 Timolat v. Held Co., 17 Misc. 556, 40 N. Y. Supp. 693 76, 545 Tinkham v. Borst, 31 Barb. 407 ■ • ■ • ... .635, 636 Tischner v. Sickinger, 183 App. Div. 816, 169 N. Y. Supp. 883: 331 Tismer v. New York Edison Co:, 338 N. Y. 156, 136 N. E. 739 834 Titus V. Great Western Turnpike Eoad Co., 61 N. Y. 337 140, Titua V. Great Western Turnpike Road Co., 5 Lans. 350 , 139 ,Tod, Matter of, 85 Misc. 398, 147 K. Y. Supp. 161 312 Tompson v. Stanly, 73 Hun 348, 25 N. Y. Supp. 890 177 Tonawanda Valley & C. K. Co. v. New York, L- B. & W. E. Co., 43 Hun 496, 4 St. Rep. 744 ; - 533 Torbett v. Godwin, 17 N. Y. Supp. 46 402 Toronto General Trust Co. v. Chicago, B. & W. R. Co., 33 Hun 190 777 Towar V. Hale, 46 Barb. 361 651 Town of Port Edward v. Hudson Valley Ry. Co., 127 App. Div. 438, 111 N. Y. Supp. 753 563 Town of Hancock v. First Nat. Bank, 93 N. Y. 83 548 Town of North Hempstead v. Public Service Corporation, 231 N. Y. 447, 132 N. E. 144 823 Town of North Hempstead v. Public Service Corp. of Long Island, 193 App. Div. 324, 183 N. Y. Supp. 788 83!) Town of Palatine v. New York Central & H. R. R. Co., 23 App. Div. 181, 47 N. Y. Supp. 1024 892 Townaend v. Davis, 153 App. Div. 599, 138 N. Y. Supp. 758 339 Townsend v. Felthousen, 156 N. Y. 618, 51 N. E. 379 371 Townsend, Matter of, 24 Mise. 80, 53 N. Y. Supp. 289 376 townsend v. Oneonta, C. & R. S. R. Co., 88 App. Div. 208, 84 N. Y. Supp. 437 565, 573, 639 Townsend v. Winburn, 107 Misc. 443, 177 N. Y. Supp. 757 236, 361, 366 Townshend, Matter of, 18 N. Y. Supp. 905, 46 St. Rep. 135 371, 378 Tracy v. Bank of Selma, 3'i^N. Y. 523 5,57 Tracy v. Yates, 18 Barb." 152 :•••.,. 319- Traitel Marble Co. v. Brown Bros., 159 App. Div. 485, 144 N. Y. Supp. 563 493^ 502 Trask v. PeekskiH Plow Works, 6 Hun 336 91 Travis v. Knox Terpezone Co., 315 N. Y. 259, 109 N. E. 250 185, 731, 782 Travis v. Railway Ed. Assn., 33 Misc. 577, 68 N. Y. Supp. 893 797 Treadwell v. Clark, 190 N. Y. 51, 83 N. E. 505 . ; igg Treadwell v. Clark, 114 App. Div. 493, 100 N. Y. Supp. 1 194 igp, Treadwell v. United Verde Copper Co., 47 App. Div. 613, 63 N. Y. Supp 708; '■::■■;■■■■. ■-■■: :..:..:.'. ': 578 TABLE OF CASES CITED. CXXVll Pago Treadweil v. United Verde Copper Co., 134 App. Div. 394, 119 N. Y. Supp. 113. . 535, 579 Trelford v. Coney Island R. Co., 6 App. Div. 204, 40 N. Y. Siipp. 1150 648 Tri-BuUion Smelting & Development Co. v. Corliss, i^6 App. Div. &13, i74 N. Y. Supp. 830.. ..■:■ 357 Troughton V. Grace,; 151 App, Div. 655, 136 N; Y. Supp. SOO. ,..'.....::.. . 340 Trpughton v. Grace, 84 Misc. 577, 147 N. Y. ^Sujjp. 993 ....;.. 341, 342 Trowbridge v. Troy & New England Ry. Co., 113 App. 'Div. 335, 99 N.'Y. Supp. 435. . . , 574 Troy Auto Car Co,, Matter of, 11 St., Dept Rep. 430 ; .860 Truesdell v. Chumar, 75 Hun 416, 27 N. Y. Supp. 87.,..ij ...;.;.<.;- 308 Trustees of Exempt Firemen's Bene v. Fund v. Robme, 93 N. Y. 313...... 8 Trustees of Masonic Hall v. Fontana,. 99 Misc. 497, 164 N. Y. Supp. 370.. 397 . . : ■ -.A .... ■■ 398, 450 Trustees for Vincennes University v. State of Indiana, 14 How. (U. S.) 268. ■ - 8 Tuobband v. Chicago & Alton R. Co., 115 N. Y. 437,. 23 N. E. 360. . ... 799 Tucker v. Gilman, 121 N. Y,. 1«9, 34 N. E. 302 301, 308 Tuerk Hydraulic: Power Co. v. Tuerk, 92 Hun 65, 36 N. Y. Supp. 384 . . 60 Tupper Lake W. Co., People ex rel. v, Sisson, 75 App. Div. 138, 77 N. Y. Suppi 3,76.. , ..;..... ;.. 896 Turk v. Koehler, 144 ApP- Piv. .53, 128 N. Y. Supp. 809 . . , . . . . ....... 548 Tuttle V. Iron National Bank, 170 N. Y. 9, 62 N..E. 761 ,...11, 229 Twin State ,Gas& Electric Co. v. : Knickerbocker , Trust Co., 135. App. Div. 467, 130 N.. Y. Supp. 764 ••.,.... :...... 445 Tyler; V. Aetna Fire Ins* Co., 2 Wend. 380 /,. i 553 .Tyler v. Anglo-American Sav. Assn., 30 App, Div. 404, 53 N. Y. Supp. .77. . 505 ,:Tyng V. Corporation Trust Co., 104 App. Div. 486, 93 N. Y: Supp. 938 738 .Tysen v. Fritz, 44 App. Div. 462, 60 N. Y. Supp. 923 320 u Union Associated Press v. Heath, 49 App! Div. 347, 63 N. Y. Supp. 96... 555 Union Bank v. U. S. Exchange Bank, 143 App. Div. 128, 127 N. Y. Supp." 661. . . . . .. :. ...' '. 113, 173, 178 Uition Bridge Co. v. Troy & Lansingburgh E. R. Co., 7 Lans. 240. 327 Union Hotel Co. v. ilefsee, 79 N. Y. 454 ......:..; 15.t Union National Bank v. Dean, 154 App. Div. 869, 139 N. Y. Supp. 835. .'81, 503 Union National Bank v. Scott, 53 App. Div. 65, 66' N. Y. Supp. 145... 79, 267 316, 537 Union Steaimboat Co. v. City of Buffalo; 83 N. Y. 351 71 Union Trust Co. v. Oliver, 214 N. Y. 517, 108 N. E. 809 ■. . . .124, 125 Union Trust Co. v. Sickels, 125 App. Div. 105, 109 N. Y. Supp. 262 702 '■ ■ 769, 773 United Building Material Co. v. Odell, 67 Misc.' 584, 123 N. Y. Supp. 3l3. 771 United Glass Co. v. Vary, 152 N. Y. 121, 46 N. E. 313 : .298, 300 Uiited Glass Co. v. Vary, 79 Hun Kn, 29 N.'Y. Supp. B.^fi. ...... ; 29.-5, 61S United Gold & Platinum Mines Co. v. -Smith, 44 Blisc. 567, 90 N. Y. Supp. 199 280 CXXVm TABI,E Oi; CASES CITED, United Growers Co. v. Eisner, 2a,App. Div. 1, 47 N. J. Supp. 906 155, 159 167, 316, 330, 411, 503 United States v. Amedy, 11 Wheat. (U. S.) 392 5 United States v., Cruikshank, .92 U. S. 542 , '. . 4 United States v. Union Supply Co., 215 U. S. 50, 54 L. ed. 87. . .....;:-. . . 5 United States Asphalt /Kefining Co. v. Compton' National lyEscOmpte De ■ PariSj 166 App. Div. 64v 151 JSV Y..Supp. 604... ........■.:.....;... 780 United States Bank v. iStearna, 15 Wend. 314 ... . ; . . . : ; . . . . 31 United States Cast Iron Pipe & Foundry Co. v. Roberts & Co., Inc., 114 Misc. 560, 187 N. Y. Supp. 95. .; .V. ... J i .,.....;......;...... :. 543 United States Glass Co. v. Levett, 24 Misc. 429, 53 N". Y. Supp. 688. . ... . 306 United States Grand Lodge, i People ex rel. v. Payn, 161 N. Y. 229, 55 N. E: 849. ....,..: :..,:.. :.. .; 54, 55 United- tStates Grand Lodge, People ex rel. v. Payn, 28 Misc. 375, 59 N. Y. Supp. 851. ■■:■ '. ,. ;.'... 65 United States L. & H. Co. of Maine v. United States L. & H. Co. of New York, 181 Fed. 182 -. . , .58, 755, 774 United States Mercantile Beporting & Collecting Co. Agency, Matter of, ll5 N. Y. 176, 21 N. E. 1034.-. .'. ; 67 United States Mercantile Reporting & Collecting Assn., Ltd., Matter of, 52 Hun 611, 4 N. Y. Supp. 916....'... ': ........... .. «1 United States Mortgage Co., Matter of, 83 Hun 572; 32 N. Y. Supp. 11.. 64, 68 United States Mortgage & Trust Co. v. Eastern It-On Co., 120 App, Div. 679, 105 N. Y. Supp. 2i91 444 United States Radiator Co. v. State of New York, 208 N. Y. 144, 101 N. E. 783. .'.'..■.■.'.... ........■; ..; 945, 946 United States Title Guaranty Co. v. Brown, 166 App. Div. 688,^ 152 N. Y. Supp. 470 ..; :. 420 United States Trust Co. v. Heye, 224 N. Y. 242, 120 N. E. 645 213 United States Trust Co. v. New York, W. S. & B. Ry. Co., 101 N. Y. 478, 5 N. E. 316 V- 607, 634, 687, 709 United Statep Trust Co., People ex rel. y. Barker, 36 Huii. 131, 33 N. Y.. Su|>p. 388. . . : , .'..!_ 207 United States Vinegar Co. v. Foehrenbach, 148 N. Y. 58, 43 N. E. 403 . . 14, 106 , 167, 769 United States Vinegar Co. v. Schlegel, 143 jN. Y. ,537, 38. N. jE. 729., 45, 551, 767 United States Vinegar Co. f. Schlegel, 67 Hun 356, 22 N. Y. Supp. 407..1-56, 738 United States Vinegar Co. v. Spamer, 143 N, Y. 676, 38 N. E, 731.. ...... 557 United Surety Co. v. Meenan, 211 N. Y. 39, 105 N. E. 106. . ..... .... 70 United V«rde Copper Co., People ex rel, v. Hugo, 181, App, Div. 149, 168 N. Y. Supp. 558 , , , . 749 United Water Works Co. v. Omaha Water Co., 164 N. Y. 41, 58 N, E. 58. . loi Uptegrove v. Schwarzwaelder, 46 App. Div. 30, 61 N. Y. Supp. 623 72 73 Urban Water, Supply. Co., People ex rel. v. Connolly, 164 App. Div. 163 149 N. Y. Supp. 6«3 , , . . . . .... . . _ ' gQ2 Usher v. N. Y. Central & H. R. R. Co., 76 App. Div. 422, 78 N. Y. Supp. ;508. 533 Utica, City of, v. Utica Telephone Co., 34 App. Div. 361, 48 N, Y. 916. , 863 TABIiE OF CASES CIT'ED. CXXIX Page Utica Fire Alarm Telegraph Co., Matter of, 115 App. Div. 821, 101 N. Y. Supp. 109 261, 374, 376 Utica Ins. Co. v. Gad-ttrell, 3 Wend. S96 44 Utica Ins.' Co. v. Tillman, 1 Wend. 5S5 44 Utica Nat. Brewing Co., Matter of, 154 N. Y. 368, 48 N. E. 531 93-94 Utica Tnist & Deposit Co. v. Kellogg & Sons Co., 126 App. Div. 176, 110 N. Y. Supp. 1048 219 V Van Allen v. Assessors, 3 Wall (U. S.) 573 r Van Allen v. Dunton, 24 Misc. 230, 53 N. Y. Supp. 636 819 Van Alien, Matter of, 37 Barb. 335 , 677, 680, 697 Van Amburgh v. Baker, 81 N. Y. 46 •. 320, 321 Van Cleave v. Demorest, 174 App. Div. 938, 160 N. Y. Supp. 923 538 Van Cott v. Van Brunt, 82 N. Y. 535 135 Van Dam v. Tapscott, 40 App. Div. 36, 57 N. Y. Supp. 534 : 150 Van Dyck v. McQuade, 85 N. Y. 616 - 677, 697 Van Schaick v. Mackin, 129 App. Div. 335, 113 N. Y. Supp. 408 690 Van Schaick v. Third Ave. R. Co., 49 Barb. 409 , 38 Van Siclen v. Jamaica Electric Light Co., 45 App, Div. 1, 61 N. Y. Supp. 210. , , . ., 833, 837 Van Sloehem v. Villard, 154 App. Div. 161, 138 N. Y. Supp. 853 165, 37i Van Slyck v. Warner, 118 App, Div. 40, 103 N. Y. Supp. 1 455 Van Slyck v. Woodruff, 118 App. Div. 47, 103 N. Y. Su-pp- 139 463 Van Tuyl v. Eobin, 80 Misc; 360, 143 N. Y. Supp. 535 183 Van Tuyl v. Seharmann, 308 N. Y. 53, 101 N. E. 779 396 Van Vleet v. Jones, 75 Hun 340, 26 N. Y. Supp. 1082 134 Van Wagenen v. Clark, 33 Hun 497 690 Vail y. Hamilton, 85 N. Y. 453 , 436, 439 Vail V. Hamilton, 30 Hun 355, 439, 440 Valente v. International Milling Co., 119 App. Div. 137, 103 N. Y. Supp. 966 69, 509 Vanamee, In re, 55 Hun 606, 8 N. Y. Supp. 319 635 Vandeaburgh v. Broadway Bailway Co., 39 Hun 348 319 Vanderbilt v. Garrison, 3, Abb. Pr. 361, 16 How. Pr. 393. . , 250 Vanderbilt v. Richmond Turnpike Co., 3 N. Y. 479 517 Vanderpoel v. Gorman, 140 N. Y. 563, 35 N. E. 932 733 Varnum v. Hart, 119 N. Y. 101, 23 N. E. 183 459, 461 Vaughn Machine Co. v. Lighthouse, 64 App. Div. 138, 71 N. Y. Supp. 799 760, 763 V^eder v. Horstmann, 85 App. Div. 154,. 83 N. Y. Supp. 99. 364 Veeder v. Mudgett, 95 N. Y. 295 , 120, 122, 134, 158 Veiller v. Brown, 18 Hun 571 302 Venner v. American Telephone & Telegraph Co., 110 Misc. 118, 181 N. Y. Supp. 45 115, 481 Venner v. New York Central & H. R. R. Co., 160 App. Div. 137, 145 N. Y. Supp. 725 . . . 437 CXXX TABLE OF CASES CITED. Page Venner, People ex rel. v. New York Life Ins. Co., Ill App. Div. 183, 97 N. Y. Supp. 465 77 Verdi v. Nocenti Co., 177 App. Div. 489, 164 N. Y. Supp. 236 549 Village of Bolivar v. Bolivar Water Co., 63 App. Div. 484, 70 N. Y. Supp. 750 896 Village of Carthage v. Central New York Tel. Co., 185 N. Y. 448, 78 N. E. 165 '. 864 Village of Fredonia v. Fredonia Natural Gas Light Co., 169 App. Div. 690, 155 N. Y. Supp. 212 819 Village of Fredonia v. Fredonia Natural Gas Light Co., 84 Misc. 150, 145 N. Y. Supp. 830 620, 832 Village of Freeport v. Nassau & Suffolk Lighting Co., Ill Misc. 671, 181 N. Y. Supp. 830 824, 839 Village of Hempstead v. Ball Electric Co., 9 App. Div. 48, 41 N. Y. Supp. 124 821 Village of Long Beach v. Long Beach Power Co., 104 Misc. 337, 171 N. Y. Supp. 824 824 Village of Pelham Manor, People ex rel. v. New Rochelle Water Co., 119 App. Div. 472, 104 N. Y. Supp. 92 897 Village of Saratoga Springs v. Saratoga Gas, Electric Light & Power Co., 191 N. Y. 123, 83 N. E. 693 838 Village of South Glens Falls, People ex rel. v. Public Service Commission, 225 N. Y. 216, 121 N. E. 777 823, 836 Village of Walton v. Walton People's Telephone Co. (Opinion of Public ■Service Comm., 2d Dist., 1917), 13 St. Dept. Rep. 264. 869 Village of Warsaw v. Pavilion Natural Gas Co., 195 App. Div. 716, 187 N. Y. Supp. 350 839 Village of Warsaw v. Pavilion Natural Gas Co., Ill Misc. 565, 182 N. Y. Supp. 73 837 Vincennes University, Trustees for, v. State of Indiana, 14 How. (U. S.) 268 8 Vio Chemical Co. v. Studholme, 53 Misc. 470, 103 N. Y. Supp. 463 763 Virgil, Matter of, 36 Misc. 320, 57 N. Y. Supp. 58 561 Virgil V. Virgil Practice Clavier Co., 33 Misc. 200, 68 N. Y. Supp. 335 528 Vitolo V. Bee Pub. Co., 66 App. Div. 582, 73 N. Y. Supp. 273 797, 799 Von Au V. Magenheimer, 115 App. Div. 84, 100 N. Y. Supp. 659 187 Von Au V. Magenheimer, 126 App. Div. 257, 110 N. Y. Supp. 620 337 Vogt V. Vogt, 119 App. Div. 518, 104 N. Y. Supp. 164 580 Vonnoh v. 67th Street Atelilr Bldg., 55 Misc. 222, 105 N. Y. Supp. 155 364 Voshefsky v. Hillside Coal & Iron Co., 31 App. Div. 168, 47 N. Y. Supp. 386 775 Vought V. Eastern Bldg. & Loan Assn., 172 N. Y. 508, 65 N. E. 496. . .153, 533 Vulcan V. Myers, 58 Hun 161, 11 N. Y. Supp. 663 550, 552 w Waddle v. Cabana, 330 N. Y. 18, 114 N. E. 1054 187, 188, 955 Wadsworth v. Equitable Trust Co., 153 App. Div. 737, 138 N. Y. Supp. 842. 726 TABLE OF CASES GITBD. CXXXl Page Wagner Trading Co. v. Battery Park National Bank, S38 N. Y. 37, 126 N. E. 347..... ! 513, 514 Waisikoski v. Philadelphia & E. Coal & Iron Co., 173 App. Div. 538, 159 N. Y. Supp. 906 780 Wait V. Ferguson, 14 Abb. Pr. 379 402 Wakefield v. Fargo, 90 N. Y. 213 291 Wakeman v. Dalley, 51 N. Y. 27, 10 Am. Rep. 551 373 Waleott V. Little, 46 Misc. 96, 91 N. Y. Supp. 411 233 Walker v. Anglo-Am. Mtg. & T. Co., 72 Hun 334, 25 N. Y. Supp. 432 36 Walker v. Gaywood, 31 N. Y. 51 880 Wall & H. St. E,. Co., People ex rel. v. Miller, 181 N. Y. 328 765 Wallace v. Long Island E. E. Co., 12 Hun 460 338 Wallace v. Walsh, 125 N. Y. 26, 25 N. E. 1076 314 Waller v. Eothfield, 36 Misc. 177, 73 N. Y. Supp. 141 764 Walsh V. New York & Brooklyn Bridge, 96 N. Y. 427 13 Walsh V. Seger Bros., 1 St. Eep. 189 603 Walter v. McAlister Co., 21 Misc. 747, 48 N. Y. Supp. 26 742 Walton V. Coe, 110 N. Y. 109, 17 N. E. 676 283 Walton V. Godwin, 58 Hun 87, 11 N. Y. Supp. 391 401 Walton, Village of, v. Walton People's Telephone Co. (Opinion of Public Service Comm., 2d Dist., 1917), 13 St. Dept. Eep. 264 869 Wamsley v. Horton & Co., 87 Hun 347, 34 N. Y. Supp. 306 558, 635 Wamsley v. Horton & Co., 12 App. Div. 312, 42 N. .Y. Supp. 767 363, 781 Wamsley v. Horton & Co., 17 Misc. 327, 39 N. Y. Supp. 963 560 Ward V. City Trust Co., 192 N. Y. 61, 84 N. E. 585 107, 499, 513 Warfield v. Wire Wheel Corporation, 184 App. Div. 687, 172 N. Y. Supp. 390 506 Warner v. Watson & Gibson, 4 Misc. 12, 23 N. Y. Supp. 922 195 Warner Instrument Co. v. Sweet, 65 Misc. 57, 119 N. Y. Supp. 166 770 Warren v. Bigelow Blue Stone Co., 74 Hun 304, 26 N. Y. Supp. 649 441 Warsaw, Village of, v. Pavilion Natural Gas Co., 195 App. Div. 716, 187 N. Y. Supp. 350 - , 839 Warsaw, Village of, v. Pavilion Natural Gas Co., Ill Misc.' 565, 182 N. Y. Supp. 73. . . 837 Warsaw Water Works Co. v. Village of Warsaw, 161 N. Y. 176, 55 N. E. 486. 898 Warth V. Moore Blind Stitcher, etc. Co., 146 App. Div. 28, 130 N. Y. Supp. 748 305 Washburn v. National Wall Paper Co., 81 Fed. 17 134 Washington Lighting Co. v. Dimmick, 41 App. Div. 596, S8 N. Y. Supp. 682. 766 Washington Trust Co. v. Morse Iron Works, 106 App. Div. 195, 94 N. Y. Supp. 495 ••..• 444 Waterbury, Matter of, 8 Paige 380 605 Waterloo Organ Co., In re, 134 Fed. 341 135, 480 Waters v. Waters & Co., 201 N. Y. 184, 94 N. E. 602 121, 237 Waters v. Waters Co., 130 App. Div. 678, 115 N. Y, Supp. 432 176 Waters-Pierce Oil Co. v. Texas, 177 U. S. 28, 44 L. ed. 657 1, 4, 407 eXXXii TlBLE OF CASES CITED. Page Wat^rtowii Gas Light Co., Matter of, 13T App. Div. 462, 111 N. Y. Supp. 486. ■ . ^^^ Watertown National Bank v. Bagley, 134 App. Div. 831, 119 N. Y. Supp. 593 : ^^'' Watertown National Bank v. Westchester County Water Works Co., 19 Misc. 685, 44 N. Y. Supp. 1101 554 Watkins v. Watkihs & Turner Lumber Co., 11 App. Div. ^17, 43 N. Y. Supp. 41 383 Watkins v. Watkins & Turner Lumber Co., 17 Misc. 337, 40 N. Y. Supp. 1043 337 Watson v. Boston Woven Cordage Co., 75 Hun 115, 36 N. Y. Supp. 1101. . 778 Watson V. Gugino, 304 N. Y. 535, 98 N. B. 18 35 Waverly Co. v. Worthington. Co., 4 Misc. 447, 34 N. Y. Supp. 331 609 Weatherwax, People ex rel. v. Watt, 115 Misc. 130, 188 N. Y. Supp. 559 .:.860, 861 Weaver v. Barden, 49 N. Y. 386 : 181 Weber v. Wallerstein, 111 App. Div. 693, 97 N. Y. Supp. 846 246 Weber v. Wallerstein, 111 App. Div. 700, 97 N. Y. Supp. 853 358 Webster v. Kings Couilty Trust Co., 80 Hun 430, 30 N. Y. Supp. 357 636 Webster v. Turner, 12 Hun 364 .! . . .;; ....... 586 Weeks v. Esler, 143 N. Y.- 374, 38 N. V.. ;(;7 . . T:'; V'. ;,'. . . '. .'!?. '.'. .... 70 Weeks v. LovB) 50 N. Y. 566. ,.!... ..[.,... ... '.\ 394 Wehrenberg v. New York, New Haven & H. R. Co., 124 App. Div. 305,. 108 N. Y. Supp. 704 .: 785 Weiser v. Mariiialax Mfg. Co., 95 Mise. 530, 159 N. Y. Supp. 671 449 Weinreb v. Coleman Stable Co., 70 Misc. 535, 137 N. Y. Supp. 343 556 Welch \. Importers & Traders' National Bank, 132. N. Y. 177, 35 N. B. 269 . .311, 367, 440, 650 Welch V. Old Doriiinion Min, & R. Co., 10 N. Y. Supp. 174, 31 St. Kep. 916. 30 Weleke v. trageser. No. 1, 131 App. Div. 731, 116 N. Y. Supp. 166. 333 Weld V. Postal Telegraph Cable Co., 310 N. Y. 59, 103 N. E. 957 874 Welling v. Ivoroyd Mfg. Co., 15 App. Div. 116, 44 N. Y. Supp. 374 452 Wells V. Town of Salina, 119 N. Y. 380, 33 N. E. 870 435 Welsbach Co. v. Norwich Gas & Electric Co., 96 App. Div. 53, 89 N. Y. Supp. 384 , 769 Wendler Maeliine Co., M«tU-r of, 2 A|)p. Div. 16, :\1 N. Y. Kiipj.. 444. . . .4:W, 614 Wendover Athletic Assn., Matter of, 70 Misc. 373, 128 N. Y. Supp. 561 31 Werner v. Hearst, 177 N. Y. 63, 69 N. E. 321 , . , 380 Wesp V. Muckle, 136 App. Div. 341, 130 N. Y. Supp. 976 81, 400 Wessei v. Chapman, 77 Hun 144, 38 N. Y. Supp. 431 678, 679 West V. GroBvenor, 102 App. Div. 366, 92 N. Y. Supp. 429 423 West V. Guaranty Trust Co., 162 App. Div. 301, 147 N. Y, Supp. 421 272 West Side Blectric Co. v. Consolidated Tel. Co., 110 App. Div. 171, 96 N. Y. Supp. 609., 831 Westchester Eire Ins. Co. v. Syracuse, Binghamton & New York R. R. Co., 193 App.. Div. 463,' 183 N. Y. Supp. 603 ' 942 TABLE OF CASES CITED. CXXXlll Page Westch9,ster 5'ire Ins. Co. v. Syrapuse, B. ^ N. Y. R. Co., 97 Misc. 471, 161 N. Y. Supp. 759 847, 430 Westchester Iron Co., Matter of, 1^5 How. Pr. 7 593 Westchester Mortgage Co. v. Mclntire, Inc., 171 App. Div. 518, 157 N. Y. iSupp. 735 509 Westchester Mortgage Co. v. Mclntire, Inc., 174 App. Div. 446, 161 N. Y. Supp, 384. . . 584, 535 Westchester St. R. Co., People ex rel. v. Public Service Comm., 310 N. Y. 456, 104 N. E. 953 9S Westchester Trust Co. v. Hobby Bottling Co., 103 App. Div. 464, 93 N. Y. Supp. 483 , 446 Westchester Trust Co., Matter of, 186 N. Y. 315, 78 N. E. 875. 316 Western National Bank v. Faber, 39 Misc. 467, 63 N. Y. Supp. 83 433 Western R. R. Co. v. Bayne, 11 Hun 166 490 Western Transportatipn Co. v. Scheu, 19 N. Y. 408 71 Western Turf Assn. v. Greenberg, 304 U. S. 359, 51 L. ed. 530 4, ") Western Union Telegraph Co., People ex rel. v. Public Service Comm., 330 N. Y. 95, 139 N. E. 230 , 873 Wetmore v. Parker, 53 N, Y. 450 433 Wiialen v. Hudson Hotel Co., 183 App. Div. 316, 170 N. Y. Supp. 855 108 158, 411 Wheatland v. Pryor, 14 N. Y. Supp. 533, 38 gt. Rep. 947 705 Wheeler, Matter of, 3 Abb. Pr. N. S. 361 367, 368 Wheeler v. Miller, 34 Hun 541 308, 309 Wheeler Syndicate, Inc. v. Wheeler, 99 Misc. 389, 163 N. Y. Supp. 817... 54 Whitaker v. Kilby, 55 Misc. 337, 106 N. Y. Supp. 511 ! .121, 861, 865 White V. New York State Agricultural ^ociety, 45 Hun 580, 10 St. Rep. 594 371 White V. Price, 39 Hun 394 179 White V. Boss, 15 Abb. Pr. 66, 19, 32 White V. Sheppard, 41 App. Div. 113, 58 N. Y. Supp. 563 533 White v. White, 160 App. Div. 709, 145 N. Y. Supp. 743 63 White Furnace Co. v. Miller Transfer Co., 131 App. Div. 559, 115 N. Y. Supp. 635 , 760 White Corbin & Co. v. .Jones, 155 N. Y. 475, 50 N. E. 289 388 White Corbin & Co. v. Jones, 167 N. Y. 158, 60 N. E. 432 288, 389 Whitehead v. O'SuUivan, 13 Misc. 577, .33 N. Y. Supp. 1098: 339 Whitehouse v. Staten Island Water Co., 101 App. Div. 113, 91 N. Y. Supp. 544 897 Whitford v. Laidler, 94 N. Y. 145 , 69 Whitman v. Holmes Publishing Co., 33 Misc. 47, 68 N. Y. Supp. 167 341 Whitney v. New York & Atlantic R. Co., 32 Hun 164, 66 How. Pr. 436... 569 571, 695 Whitney v. Union Trust Co., 65 N. Y. 576 70 Whitney v. Wilcox, 58 App. Div. 57, 68 N. Y. Supp. 667 633 Whitney Arms Co. v. Barlow, 63 N. Y. 62 533 Whittlesey v. Delaney, 73 N. Y. 671 , , 678 Whittlesey v. Frantz, 74 N. Y. 456 155, 540 CXXXIV TABLE OF CASES CITED. Page Wichelman v. Western Union Telegraph Co., 30 Misc. 450, 63 N. Y. Supp. 491 ■. 870 Wicke Co. v. Kaldenberg Mfg. Co., SI Misc. 79, 46 N. Y. Supp. 937. .. i 523 Wigton V. Kenney, 51 App. Div. 215, 64 N. Y. Supp. 924. . ; 737 Wilbur V. New York Electric Construction Co., 12 N. Y. Supp. 456, 58 Super. Ct. (26 J. & S.) 539 37 Wilcox V. Nat. Shoe & Leather Bank, 67 App. Div. 466, 73 N. Y. Supp. 900 609 Wilcox V. Philadelphia Casualty Co., 136 App. Div. 626, 121 N. Y. Supp. 368 797 Wilds V. Robinson, 50 App. Div. 192, 63 N. Y. Supp. 811 186 Wile & Brickner Co. v. Rochester & Kettle Falls Land Co., 4 Misc. 570, 25 N. Y. Supp. 794 312, 365 Wilkie v. Rochester & State Line Ry. Co., 12 Hun 243 , "... 562 Will V. Postal Telegraph Cable Co., 3 App. Div. 23, 37 N. Y. Supp. 933. .. . 873 Willard v. Holmes, Booth & Haydens, 143 if. Y. 492, 37 N. E. 480 714 Willcoeks, Ex parte, 7 Cow. 403 268 Williams v. Bank of Michigan, 7 Wend. 539 31, 44 Williams v. McClave, 168 App. Div. 192, 154 N. Y. Supp. 38 134, 350 Williams v. Montgomery, 148 N. Y. 519, 43 N. E. 57 175 Willis V. Sharp, 134 N. Y. 406, 26 N. E. 974 701 Williamson v. Wadsworth, 49 Barb. 394 290 Williams v. Western Union Telegraph Co., 93 N. Y. 163 202, 203 Williams v. Western Union Telegraph Co., 1 Civ. Proo. Eep. 294, 47 Super. Ct. 380 548 Wills V. Rowland & Co., 117 App. Div. 122, 102 N. Y. Supp. 386. ... . 540 Wills V. Venus Silk Glove Mfg. Co., 170 App. Div. 352, 156 N. Y. Supp. 115 ; : . 457 Wilson V. Aeolian Co., 64 App. Div. 337, 72 N. Y. Supp. 150 429 Wilson v. Brentwood Hotel Co., 16 Misc. 48, 37 N. Y. Supp. 655. . .'-. . .324, 544 Wilson V. Brown, 107 Misc. 167, 175 N. Y. Supp. 688 i . 583 Wilson V. Israel, 185 App. Div. 816, 173 N. Y. Supp. 843 5 Wilson V. Kings County E. R. Co., 114 N. Y. 487, 21 N. E. 1015 490 Wilson V. Little, 3 N. Y. 443, 51 Am. Dec. 307 194 Wilson V. Metropolitan Elev. R. Co., 130 N. Y. 145, 34 N. B. 384 511 Wilson V. Tennent, 61 App. Div. 100, 70 N. Y. Supp. 3 15 Wilson V. Tennent, 32 Misc. 373, 65 N. Y. Supp. 853 816, 833 Wilson V. Van Dorn Iron Works Co., 106 Misc. 443, 174 N. Y. Supp. 684. 786 Winchester, People ex rel. v. Coleman, 133 N..Y. 379, 31 N. E. 96 3 WindmuUer v. Standard Distilling Co., 166 App. Div. 346, 94 N. Y. Supp. 53. 428 Winne v. Ulster CoUnty Sav. Inst., 37 Hun 349 ." 519 Winslow V. Staten Island Eapid T. Co., 51 Hun 298, 4 N. Y. Supp. 169 544 Winsor v. Bailey, 55 N. H. 218 242 Winthrop Press v. Perkins, 47 Misc. 460, 95 N. Y. Supp. 931 433 Wintringham v. Rosenthal, 25 Hun 580 Igg Wise V. Wise Co., 153 N. Y. 507, 47 N. E. 788 .637, 699 Wisner v. Osteyee Bros., 24 Misc. 704, 53 N. Y. Supp. 793 484 Witcher v. Holland Water Works Co., 66 Hun 619, 20 N. Y. Supp. 560 . . ". . 902 TABLE OF CASES CITED. CXXXV Page Witherbee v. Bowles, 301 N. Y. 427, 95 N. E. S7 120, 263 Witherlow v. Slayback, 158 N. Y. 649, 53 N. E. 681 425 WoeriahoflFer v. North River Construction Co., 99 N. Y. 398, 2 N. E. 47 686 Wolf V. Arminus Copper Mine Co., 6 Misc. 562, 37 N. Y. Supp. 642 435 Wollman v. Newark Star Publishing Co., 191 App. Div. 881, 180 N. Y. Supp. 513 802 Wollman v. Newark Star Publishing Co., 190 App. Div. 933, 179 N. Y. Supp. 899 792 Wood V. Knapp, 100 N. Y. 109, 2 N. E. 632 78 Wood V. Lary, 47 Hun 550, 15 St. Rep. 209 203, 209 Wood V. Manchester Kre Ins. Co., 30 Misc. 330, 63 N, Y. Supp. 427 496 Wood V. Simpson, 149 App. Div. 471, 133 N. Y. Supp. 1069 463 Wood & Selick v. Ball, 190 N. Y. 217, 83 N. E. 21 769, 770, 773 Wood & Selick v. Ball, 114 App. Div. 743, 100 N. Y. Supp. 119 772 Woodard v. Holland Medicine Co., 15 N. Y. Supp. 128, 39 St. Rep. 411 567 Woodhaven Bank v. Brooklyn Hills Improvement Co., 69 App. Div. 489, 74 N. Y. Supp. 1023 80, 330 Woodridge Heights Construction Co. v. Gippert, 93 Misc. 204, 155 N. Y. Supp. 363 761 Woodruff V. Erie R. Co., 93 N. Y. 609 533 Woods Motor Vehicle Co. v. Brady, 181 N. Y. 145, 73 N. E. 674 152 Woodside Water Co. v. Long IslaYid City, 23 App. Div. 78, 48 N. Y. Supp. 686 ' 895 Woolson Spice Co. v. Columbia Trust Co., 193 App. Div. 661, 184 N. Y. Supp. 484 386 Workum v. Caldwell, 27 Misc. 72, 58 N. Y. Supp. 175 463 World's D. M. Assn. v. Pierce, 203 N. Y. 419, 96 N. E. 738 60 Wormser v. Metropolitan St. Ry. Co., 184 N. Y. 83, 76 N. E. 1036 535 Worrall v. Judson, 5 Barb. 210 309 Worthington v. Pfister Bookbinding Co., 3 Misc. 418, 23 N. Y. Supp. 295..459, 733 Worthington v. Worthington, 100 App. Div. 332, 91 N. Y. Supp. 443 497 Woven Tape Skirt Co., Matter of, 85 N. Y. 506 709 Woven Tape Skirt Co., Matter of, 8 Hun 508 591, 709 Wright & Co. V. Faulkner, 52 Misc. 100, 101 N. Y. Supp. 807 772, 773 Wright V. Gansevoort Bank, 118 App. Div. 281, 103 N. Y. Supp. 548. .457, 465 Wright V. Glen Telephone Co., 112 App. Div. 745, 99 N. Y. Supp. 85 869 Wright V. Glen Telephone Co., 48 Misc. 192, 95 N. Y. Supp. 101 864 Wright V. Skinner Mfg. Co., 162 Fed. 315, 89 C. C. A. 23 464 Wrightsville Hardware Co. v. Assets Realization Co., 159 App. Div. 849, 144 N. Y. Supp. 991 779 Wygant, Matter of, 101 Misc. 509, 167 N. Y. Supp. 367 234, 326 Wyllys Co. v. Nixon, 165 App. Div. 373, 150 N. Y. Supp. 944 187 Wynn, People ex rel. v. Grifenhagen, 167 App. Div. 573, 153 N. Y. Supp. 679 739 Y Yates V. Van De Bogert, 56 N. Y. 526 *30 Yonkers Gazette Co. v. Jones, 30 App. Div. 316, 51 N. Y. Supp. 973 151 CXXXVl TABLE OF CASES CITED. Page Yoniers Gazette Co. v. Taylor, 30 App. Div. 334, 51 N. T. Supp. 969 150, 153 159 Yorkville Bank y. Zeltner Brewing Co., 80 App. Div. 578, 80 N. Y. Supp. 839 '._ 324, 544, 6.67 Young V. Prake, 8 Hun 61 343, 245 Young V. Godwin, 19 N. Y. Supp. 656, 46 St. Eep. 934.'. 402 Young V. New; York & L. S. S, Co., 15 Abb. Pr. 69 ; 306 Young V. United States Mortgage & Trust Co., 214 N. Y. 279, 108 N. B. 418 344, 490 Young & Fletcher Co. v. Welsbach L. Co., 55 App. Div. 16, 66 N. Y. Supp. 1024. 798 Yuengling Brewing Co., Matter of, 34 App. Div. 223, 49 N. Y. Supp. 12. . 559 560, 604 z Zartman v. First National Bank, 1,89 N. Y. 267, 82 N. E. 127 443, 446 Zeltner v. Zeltner Brewing Co., 174 N. Y. 247, 66 N. E. 810 489, 589, 667 Zeltner v. Zeltner Brewing qo., 79 App. Diy. 136, 80 N. Y. Supp. 338 324 Zeltner v. Zeltner Brewing Co., 85 App. Div. 387, 83 N. Y. Supp. 366 545 Ziegler v. Hoagland, 52 Hun 385, 5 N. Y. gupp. 3f>5 _. . 351 TABLE OF STATUTES [exxxvii] TABLE OF STATUTES. United States Constitution Cited, U. S. Constitution, art. 4, § 2 PAGE. PAGE. 777 U. S. Constitution, Fourteenth Amendment 792 United States Revised Statutes Cited. PAGE. U. S. Revised Statutes, § 906 769 United States Judicial Code Cited. PAGE U. S. Judicial Code, §§ 65, 66.... 800 New York State Constitution Cited. PAGE N. Y. Constitution, art. 8, §. 1 . . . 7 N. Y. Constitution, art. 8, § 3 . 13, 52 New York Revised Statutes Cited. PAGE 1 R. S. 603, § 4 463 2 R. S. 458, §§ 8, 9 PAGE 3 PAGE 553 Consolidated Laws Cited by Short Titles. PAGE. SEC. 19. . . . Banking Law. , . . 298 196. . . . . . . 296 487-496. . , .. 83 Business Corporations Law. 2 14, 18, 329 2, first par 9 2, subd. 6 ,23 2-a 16, 415 3 114, 411 4 42, 96 5, 114, 559, 619, 635 6. . 17, 282 7. . 86 8 88, 90 9 89 lb. . 89 11 91 12 904 13, 14 905 15 894 16 432 PAGE. 25, 26 908 27-29 909 30-32 910 33-35 911 36-37 912 38 909 38a . 912 Civil Rights Law. 51. 62 County Law. j 72 810, 885 174. Debtor and Creditor Law. 29 9S 724 51 Domestic Relations Law. 312 59. . 62. . Education Law. 9 64 [cxxxix] cxI TABLE OF STATUTES. 8E0. PAGE. 66, Bubd. 1 66 26, BuMs. 2-8. 10, 11, 1,5 29 Executive Law. 42, subds. 1-3 29 General Associations Law. 8 :...,... 446 Creneral Business Law. 320-323 :.......... 818 340 346. . 350, 351 . 352. . . 353. . . . 354. . . . 355 356. . . 357 358. .... 359 .. . .'. 374. . . . 04 94 14.3 i43 144 144 144 145 145 146 556 General City Law. 13.0-132 918 General iConstruction Law. 11 25 45 69 General Corporation Law. 2 9 3 218 3, subds. 1-3 10 3, subd. 4 IP 3,, subd. 5 10, 720 3, subd. 6 310 3, subd. 7 18 3, subd. 8. . . .....:... 204 3, subd. 10 407 3, subd. 11 A. .. 6 3, suW. 12 431) 4. 86, '98 5, subd. 1 19, 26, 83, 6 18, 54, 6, subd. 1 '.. .: . .45, 7 8, 9, subd. 3 93, 86, 10 22, 315, 407, 409, IP, subd. 2 19, 408 172 87 84 46 27 44 89 820 SEC. I'-^i^E- 11. .........174, 335, 407, 430 U, subd. 1. . . ..': 23 U, subd. 2 68 11, subd. 5 7.), 318 12 433 13 432 14, 433 15 58,746-749,752-755, 761 771-773, 801 16. . . .•- . .750, 751, 778, 788, 794, 795 16-a 751 17, 18 744 19 745 20 722, 723 21 722, 723 22 413 23 261, 270 23-a. . 266 24.. ... ..,..264, ^68 .25. . . .^.. ..'::......'!]'! 272 26. . . 270, 271 27. ... 269 28 320, 324 29 321 30. 255, 322 31 , ^,.. 322 32. . . 262, 273, .278 33 561 34 74, 312, 318, 325, 331 35 362, .559, 583, 605 36 650, 651 37 21, 41 38. . . : 43 39 '.' 43 ^0, 41 42 42 266,320, 579 43. . 332 44. 536 45. . , . 766 46 775,781, 782 47. . ... .766, 776, 778, 781, 782, 785 60 47, 64, 65 61. . ; 64, 65 62.... 54, 64, 66, 67, 266 63 64, 67 Q4. 64, 68 65 64, 68, 540 fip 64j 467 70 . ^ 446 71, 72. 447 TABLE OF STATUTES. CXli KJiO. PAGE. SEC. PAGE. 73-76 448 179 596, 619 90 :. 107, 248, 323, 375-377, 380 180,181 596 619 757 381, 382, 387, 390, 391, 665 132 . .606, 619, 708,' 757 183 607, 61!) 666, 738 ""'^"^■^•^ 358 184 91 323,376,378,380,381, 391 .^^ ' '""!' 91-a 376,385,386,467, 665 ^^^' ^^^ 92 .376, 377, 386 100 564, 574, 741 101 559, 617, 619, 635, 649 102 543, 619, 620 103 569, 619, 626 186 598, 619 187, 188. 599, 619 189 594, 619 190. ...600, 619 191. . 614, 619 192. 614 fiU) 104...570, 571, 612, 619, 629, 630, 631 ,6, "'*' ^,„ lOS 572,619, 630,.. 631 ^ f'^f' 106 572,619, 632 ^"^^ ^^^' ^'^ 95 584, 619 752 202 654 220 577, 582 221 363, 378, 580-5-83, 587 221, 8uM. 1 579 221, 8ubd. 3 559 225 675 226 075 227 ;;. 705 230 668 231 669 131 619,647,649,650,658, 661 ^gg " ]Z '^'■^''' ''' 20d,2oi:;:::::::;:::::;:fl54; 10s 607,619, 633 109 567, 619, 623 110 568, 619, .623, 624 111 ,,,.,,.. 568, 619, 623, 624 112 ,,.,...575, 619, 636, 637 113 570, 619, 638 114. . .: 570, 619, 638 115 fin, 619 116 638 130 646. 650 132 650, 65 133 650, 659 134 650, 660 135. ego 136 : 650, 661 150 639 151 640 1.52, 153 640 154 641 155 642 156 642 157 643 158, 159 644 160 645 161 639 170 584, 592, 594, 619 171 590, 608, 619 172 591, 592, 619 174 592,593,608, 619 354 695 175. 594, 619 255 701 176 59.5, 619 356 69C 177 ..584, 619 257 '. 681, 69fi 1^8 595, 819 358,3.59 697 233 685 234 674 -.^35, 336, 237 679 238 670 239 ...; 676 240. 692 241 681, 693 343 681 243 685 344 689 345 686 346 687 347, 348, 249 '. 694 350 ,. ,, 68« 351 :-::.':';.; ess 353 689 253 695 cxlii TABLE OF STATUTES. SEC. PAGE. 260 689 261 698, 700 263 702 363 703 264 702 365, 866, 367 703 368 704 369 705 370 706 271 706 373 707 273 670 374 671 375 672 376 679 377 707 378 708 300 376, 564, 617, 650 301 563, 626, 659 302 389, 569, 627, 660 303 389, 566, 628, 659 304 379, 621, 656 305 389, 561, 570, 626, 660, 788 306 334, 388, 639, 665-667, 740 741, 782 306, subd. 3 692 307 323, 379, 739 308 739, 740, 741, 788 309 303 310 634, 686 311 064, 671 313 568, 597, 624, 625, 642 313 665 314 566, 621, 655 315 •«32, 659 316 674 330 53 331. ,..6, 875 331 6 Highway Law. 53-a 864 72 885 270-273 809 274 810 Insurance Law. 30 803 Lien Law. SEC. PAGE. 85-107 846 331 445 Military Law. 241 ; 56 Personal Property Law. 163 188 163 189 164 190 165 190 166 190 167 190 168 , 191 169 191 170 191 171 191 172 192 173 192 174 ;. 193 175 192 176 113, 172 177 136 178 128, 139 179 129 180 188 181 189 18» 189 183 189 184 188 185 188 Public Health Law. 203 421 Public Officers' Law. 66-a 30 Public Service Commission Law. ^^ 858, 860 54 • 427 55 98, 115, 133, 435 56, SUbd. 2 ggg 58- ■ • ■ •■ 860 63, subd. 3 g3o 66, subd. 5 ggg 66, subd. 12 g3g TABLE OF STATUTES. Cxliii SEC. PAGE. SEO. PAGE. «9 115, 435 35 318,401, 403 71 839 50 183, 170 74 816,830, 840 51 172 79...' 906 52 ;i..426, 437 83 435 53 147, 156 101 115, 435 54 160,163, 307 55 133, 133, 137, 479 Real Propery Law. 56 173, 383, 305, 309, 624 Art. 15' 555 57 289 58 391 SEC. PAGE. 59 383, 896, 298, 300, 304, 308 261 818 60 112, 804, 285 61 31, 109, 110 • Stock (Corporations Law. 63 114, 119, 385 5 48, 83, 94, 98-100, 103, 436 63-a 113 443,469,470, 477 63 115, 117 6 435,481, 723 ^^ 118 7 443 65 Ill 8 477 66 174,397,449,450, 458 9 97 461-465, 468 10 99 67 188 11 103 68 • 128. 130 12 100 69 Z26, 33P 13 73, 541 ''0 733-735 14 94, 438 15 83, 84 16 469,471,473, 875 Tax Law. 17 470,471, 875 11 71 X8 48 180 27,88,87,116, 915 19 23,111, 126 181 746,747,753,755,756, 758 20 .114, 804, 400, 401, 411 759, 770, 773, 917 21 918, 948 183 918 38 122 183, 184 919 33 113 185, 186 9Sn 24 51 187, 188, 188-a 921 S4-b 51 189. 190 922 24-e 52 191 923 85 88,863,311,316,319,331, 324 192,193 934 26 23, 314, 315 194-196 925 27 319 197 926 28 200,201,399,426,479, 735 198-300 927 29 394 301, 203 928 30 327,487, 489 303-205. 929 31 367 206-808 930 .32 ....77,78,182,219, 221 -209,210 , 931 226, 232 211-213 933 33 785-730 314, 314-a, 815 935 34 438 319, 319-a, 819-b 937 exliv TAJJiiii OE" STATUTES. SEC. PAGE SEC. ^^^^ 219-c. 938 67 842 319-d. 219-e, 319-f 939 80. . 894 319-g •.. 940 81.. :;:.....; SQS, 898 219-h, 219-i 941 82 899 319-j, 219-k, 219-1 94'^ 270 943 271 948 271-a :. 949 372 950 273, 374 950 275, 279-a .. .7:: ...;..'. 951 276 947, 953 3'77 954 278 954, 95fi 279 950 280 957 83, 84 901 85 ...., "02 100 861 101 865 102 862, 864 103 870, 872 104 -169, 87-5 )05 875 106 862 120 ■. 877 121. . , 879 122. 880 123 881 124, 125 882 126-128 883 129 884 130. .885 Transportation Oorporationa- Law. ' , ^^^ ogg Town Law. 260-263 81S 2. SO'.i 3 80» 4 810 5 809 133 887 1,^4 889 135. 8'82 136. 888 6 810 jgy 877^ 10 •••'•• 844 138 - 878 11, 12, 13, 14 84.-, 139 878 30-23 850 140 892 23 ; 85T 141 , 891 24,25 858 142-144...;:....^ 890 26 859, S60 145 879 30-33 876 146 891 40 850 147. 878 41-43 85J 148 879 44-46 852 149, 150 , . , 893 47, 48 853 151 890 49,50 «. 854 152... 878 51-54 855 153 813 60 816, 819 154 811 61 .f 819 155. „. ,,.... 813 61, sulbd. 1 818 156 814 62 828, 834 157, 158, 1.59..... 815 63 840, 842 64 '. . ■■ 841^ Village Law. 65 '. ■ 842 220-235 895 66 ■■■-. 841, 846 240-24^. 818 TABLE OF STATUTES. Cxlv Session Laws Cited. PAGE. PAGE. 1825, eh. 325, § 4 553 1880, ch. 537 695 1832, eh. 295 559 1881, ch. 213 896 1838, oli. 2'60 179 1881, ch. 639 695 1847, eh. 210.. .; :......... 885 1882, eh. 92 885 1848, ch. 37, § 18 821 1888, oh. 462 ; . 876 1848, ch. 40 172 1889, eh. 422 818, 821 1848, oh. 40, §.23 390 1893, eh. 638 471 1848, eh. 140 648 1895, oh. 240 752, 758 1849, oh. 258 2 1895, ch. 947 818 1849, eh. 258, §5 2 1897, oh: 378 821 1851, ch. 122 10 1898, ch. 151 885 1862, oh. 472, §. 1 341 1901, ch. 354 110, 293 1866, ch. 651 818 1905, oh. 737 ., ., 828 1873, ch. 171 129 1906, ch. 125 818 1873, eh. 737 896 1910, oh. 140 9 1875, eh. 611, § 38 635 1920, eh. 540 816 Code of Civil Procedure Cited. Code of Civil Procedure. Sec. page SEC. PAGE. 1650 - 555 872 546 2463. ; .' 563 Civil Practice Act Cited. Civil Practice Act. sec. page SEC. PAGE 332 44 7, subd. T.... 11, 720 333 129, 484 49 304 340 520 49, subd. 4 10, 645 342 69 58 ■ 555 373 731, 732 82 • 767 374 732 83 382,557,560, 767 377 795 , 74 781 378 ;. 26:1 138... 538 411... 5S0 182 542 413, 414 550 184 403 452 488 224 778 465, pt 621 228 542, 543 493 787 229 788,789,792, 803 505, suibd. 4 391 229, subd. 4 794 520 788 230 543 645 788 231 544 684 352 232 307, 791 883 546 252 552, 785 790 581 258, subd. 6 403 798 546, 788 277-283 539 903 782, 783, 784 288 547 920 846 289 546 914 739 294 549 915 124 296 548 916 478 CXlvi TABLE OF STATUTES. SEC. PAGE SEG. PAGE 918 124 1209 710 928 846 1215 710 930 847 121« 711 931 847 1217 711. 804 932, 933 847 1218, 1219, 1220, 1221 ....;. 712, 805 936-939 848 1522. 952-957. ■ 848 1524 ;...... .768 961 846 15-38 768 902,963 •: 849 1547,1549 ■.■.'.:■ 708 966 849 1551 ■.:: '661 1208 ...710, 843 Penal Law Cited. Penal Law. sec. PAGE SEC. PAGE 663 .....^ 759 29 860 664 .! 392 380 16, 416 665 \ .'. .. 393, 403 421 146 666. , / , .c. ^.: 56 660 17 667 393 661. 17 668 270 662.... 142, 479 669 856 Rules Cited. '- ^ Rules of Civil Practice. page. PAGE Rule 99, subd. 1 540 Rule 53 791 Rule 100 541 Rule 63, subd. 4 278 Rule 107 539 Rule 86 552 Rule 122 548 Rule 93... 538, 551 Rule 175 678 Rule 93, subd. 1 537 Rule 176 674 Rule 93, subd. 2 550 Rule 178 .'-.''.■...• 663 Rule 93, subd. 3 540 Rule 179 664 Rule 99 768 Rule 180 682 CORPORATIONS CHAPTER 1. Intkoductoey. 1. Definition and nature of corporation. 2. Corporation distinguished from joint stock company. ?,. "Citizen" as including corporation. 4. "Person" as including corporation. 5. Conflicting corporate laws : Construction. 6. Power to create. 7. Corporation as distinct from its members. 1. Definition and nature of corporation. Legal definitions invite and provoke criticism, because the instances are rare in which they prove to he perfectly accu- rate. A definitioii of a corporation that has met with general approval and which is general enough and flexible enough to be useful was given by Chief Justice Marshall in the Dart- mouth College case. The Chief Justice said: "A corpo- ration is an artificial being, invisible, intangible and existing only in contemplation of law."^ A corporation has otherwise been defined as an artificial person created by the sovereign from natural persons and in which artificial person the natural persons of which it is composesd become merged and non-existent,^ and, as an artificial person existing only by force of the law which creates it.' The abstract idea of a corpo- ration, the legal entity, the infallible and intangible creation of human thought is itself a fiction, and has been appropri- ately described as a figure of speech, but it serves very well to designate the collective action and agency of many indi- 1. iDartmoutih College v. Woodward. . 2. People ex rel. Winchester v. Cole- i. Wheat. (U. S.) ,518, 4 L. ,ed- ^29: m:an, 133 N. Y. 379, 31 N. E. 96. Louisville. C. & C. B. Co. v. Letson. 2 3. Anglo-American Prov. Oo. v. How. (U. S.) 497; Waters-Pierce Oil Daris Pror. Co., 169 N. Y. 506, «2 X. Company v. Texas, 177 U. S. 38. 44 I>. E. 587, affd. 191 U. S. 373; Jemison v. P,1. 657. Citizens' Savings Banlc. 122 ?r. Y. 135, 140, 25 N. E. 264. [1] '1 CORPORATIONS. viduals as permitted by the law.^ Being a mere creature of law, a corporation possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. These are such as are sup- posed best calculated to effect the object for which it was created. Among the most important are immortalty, and if the expression may be allowed, individuality; properties by which a perpetual succession of many persons are considered the same, and may act as a single individual. They enable a corporation to manage its own affairs, and to hold property, without the perplexing intricacies, the hazardous and endless necessity, of perpetual conveyances for the purpose of trans- mitting it from hand to hand. It is chiefly for the purpose of clothing bodies of men, in succession, with these qualities and capacities, that corporations were invented, and are in use. By these means a perpetual succession of individuals are capable of acting for the promotion of the particular object, like one immortal being.^ 2. Corporation distinguished from joint stock company. In 1849 the New York Legislature explicitly recognized the existence and validity of joint stock associations, founded upon contract and evolved from the common-law rights of the citizens.^ But the Legislature explicitly disclaimed any pur- pose of converting the joint stock associations recognized as existing, into corporations by prohibiting any such con- struction of the statute.' Since then the Legislature, while steadily preserving the distinction of names, has with equal persistence confused the things by obliterating substantial and characteristic marks of difference, and almost the full measure of corporate attributes has, by legislative enactment, been bestowed upon joint-stock associations, until ttie differ- ence, if there be olie, is obscure, elusive and difficult to see and describe. And yet the truth remains that g,ll along the line of legislation the distinctive names have been retained as indicative and representative of a difference in the organi- zations themselves. It is an essential and inherent character- istic of a corporation that it alone is primarily liable for its 4. People V. iJortli Biyer Sugar Ee- S.) 514; Tx)uisville C. & C. R. Co. v. fining Co., 121 N, Y. 621, 84 N. E. 834. Letson, 2 How. (U. S.) 497. 5. Dartmouth College V. Woodward, 6. L, 1849, cli. 258. 4 Wheat. (U. S.) 518, 4 L. ed. 629; 7. L. 1849, oh. 258, § 5. Providence Bank v. Billings, 4 Pet. (tJ. INTRODUCTORY. 6 debts, because it alone contracts them, except as that natural and necessary consequence of its creation is modified in the act of its creation by some explicit command of the statute which either imposes an express liability upon the corpo- rators in the nature of a penalty, or affirmatively retains and preserves what would have been the common-law liability of the members from the destruction involved in the corporate creation. Exactly the opposite is true of joint-stock com- panies. Their formation destroys no part or portion of their common-law liability for the debts contracted. Those debts are their debts for which they must answer. Legislative per- mission to sue their president or treasurer is only a conve- nient mode of enforcing that liability, but in no manner creates or saves it. It may thus be seen upon what the legislative intent to preserve them as separate and distinct is founded and what distinguishing characteristics remain. The for- mation of the one involves the merging and destruction of the common-law liability of the members for the debts and re- quires the substitution of a new or retention of the old lia- bility by an affirmative enactment which avoids the inherent effect of the corporate creation ; in the other, the common-law liability remains unchanged and unimpaired and needing no statutory intervention to preserve or restore it; the debt of the corporation is its debt and not that of its members, the debt of the joint-stock company is the debt of the associates however enforced ; the creation of the corporation merges and ■ drowns the liability of its corporators, the creation of the. stock company leaves unharmed and unchanged the liability of the associates ; the one derives its existence from the con- tract of individuals, the other from the sovereignty of the State. The two are alike but not the same. More or less, they crowd upon and overlap each other, but without losing their identity, and so, while it cannot be said that a joint-stock com- pany is a corporation, it can be said that a joint-stock- company is a partnership with some of the powers of a corporation.* The New York Constitution provides that: "the term corpora- tion as used in this article (VIII), shall be, construed to include all associations and joint-stock companies having any of the powers or privileges of corporations not -possessed by indi- riduals or partnerships. "^ 8. People ex rel. Winchester v. Cole- 9. New York Constitution, art. VIII, man, 133 N. Y. 279, 286, 31 N. E. 96. § 3. 4 GOBPORATIONS. 3. "Citizen" as including corporation. Citizens are the members of the political community to which they belong. They are the people who compose the community, and who, in their associated capacity, have estab- lished or submitted themselves to the dominion of a govern- ment for the promotion of their general welfare and the pro- tection of their individual as well as their collective rights.^*' And it is the general rule that a corporation is not a citisien within the meaning of the constitutional provision that the citizens of each state shall be entitled to all the privileges and immunities of citizens in the several states.^^ Likewise a cor- poration is not a citizen within the meaning of the Fourteenth Amendment of the Constitution of the United States, forbid- ding a state to make or enforce a law which shall abridge the privileges or immunities of citizens of the United States.^^ But on the other hand it is now well settled that a corporation created by a state is a citizen of the state within the meaning of those provisions of the United States Constitution and the statutes of the United States which define the jurisdiction of the federal courts.^^ This is based on the conclusive pre- sumption that, for purpos.es of^ suit by or against it in the courts of the United States, the members of a corporation are citizens of the state creating, such corporation.^* And a cor- poration existing under the laws of two states is a citizen of jjoth for jurisdictional purposes in the federal cpurts.^^ 4. *'Person" as including corporation. While many statutes provide that the word " person " shall 10; Minor , v. Happersett, 31 Wall. , 13. Bank of United , Spates v. De- (U. B.) 163; United States v. Cruik- veaux, 5 Cranch (U., S.) 61, 89; Lo,uia- shank, 92 U. S, 542, 549. vllle 0. & C. R Co. v. Letson, 3 How. 11. Bank of ' U. ' S. v. DeveaUx, 5 (U. S.) 497; Marshall v. Baltimore & Cranch (U. S.) 61; Bank ., 139 N. Y. 474, 483, 39 veaux, 5 Cranch (U. S.) 61; Goss v. N. E. 959. Goss, 147 App. Div, 698, 133 N. Y. Supp. 10. Constitution of New York, art. 76, affd. 307 N. Y. 743; Kornow v. VIII, I 1. Simplex Cloth Cutting Mtft. Co,, Inc., 11. Van Allen v. Assessors, 3 Wall 109 Misc. 358, 179 N. Y! Supp. 683. (U. S.) 573; Higgins Co. v. Higgins 13. Thomashefsky v. EdelsteJn, 193 Soap Co., 144 N. Y. 463. 39 N. E. 490. App. Div. 368, 182 N. Y. Supp. 707. See also post, par. 305. See also post, par. 305. O COBPORATIONS. CHAPTER n. Classification of Cobporations. 8. In gMieral. 9. Statutory classification. 10. Particular corporations defined- 8. In general. Corporations may be classified into two grand subdivisions ; public and private. Public corporations are those organized for purely public ends as distinguished from those in which the members have a personal and pecuniary interest. A cor- poi:ation, private in nature, is not changed to a public cor- poration by gifts to it from the state to enable it to carry out the objects for which it was incorporated." Likewise a cor- poration may be private although it performs a public duty, and even though its funds are provided by the state.^^ Every act incorporating a company for private gain and generally all ^cts relating to a single corporation are private acts, whUe fin act, relating to, all corporations is a public act. The mere fact that a corporation is obligated to perform public duties and is endowed with certain rights which depend upon public use does not make it a public corporation, nor the a^ct under which it is incorporated a public act.^? 9. Statutory classification. The statutes of this state have classified corporations as follows : ' ' A corporation shall be either, 1. A municipal corporation, 2. A stock corporation, or 3. A non-stock corporattion. A stock corporation shaft be either 1. A moneyed corporation, 2. A railroad or other transportation corporation, or 3. A business corporation. A non-stock corporation shall be either, 1. A religious corporation, 14. Trustees for Vincennea Univer- Benev. Fund v. Roome, 93 N. Y. 313, Tesity V. State of Indiana, 14 How. (U. 381. S.) 368. 16. Economic P. & 0. Co. v. City of 16. Trustees of Exempt Firemen's Buffalo, 195 N. Y. 286, 88 N. E. 389. CLASSIFICATION OF COBPOKATIONS. 9 2. A membership corporation, or 3. Any corporation other than a stock coi-poration. A reference in a general law to a class of corporations described in accordance with this classification shall include all corporations theretofore formed belonging to such class. ' ' 17 But since the enactment of Section 59 of the Education Law, L. 1910, ch. 140, this classification seems incomplete, in that it fails to include stock corporations chartered by the State Board of Regents for educational purposes, which can no longer be regarded as business corporations.^^ 17. General Corporation Law, § 2. Consolidators' Note. — The proposed amendments to this section relating to classification of corporations are made , necessary in order to conform its, pro- visions to the present classification of corporations. This section, when en- acted,- was intended; to indicate the classification into which all porporfi- tions were to be divided. The revis- ers, however, did hot adhere to the classification as laid down, and a^ new general laws were enacted, the origin- al- , cdassiflcation was . i in great part abandoned. Thus, there is no "mixed corporation", known to our laws, and all '' matter relating to such a class of corporations has been omitted. The words "railroad or other" relating to. transportation c&rpoirations , have been , inserted so as to make the ,applica,tion of £he language plainer. jThis will make unnecessary further' sut-clasSi- ficatiohs of either • "moneyed" • or "transportation" corporations. ■ ' The: words "Any ..corporation, other than a stock corporation" have been inserted as descriptive of all non-stock corporations, authorized by .lassts other than the Eeligious and Membership corporation laws. This,, classifi^cation of non-stock corporations corresponds to the actual classification now in use. It vill include corporations organized under the proposed ."Education Law," under the Health Law, and all other general or special laws. The different chapters of the general laws relating to the organization and regulation of corporations for purposes peculiar to themselves sufficiently de- fine and describe such corporatipfls. Therefore, an enumeration of all the corporations organized for all kinds of purposes under all existing lav^s, as was attempted in the section, is unneces- sary and only tends to confusel The number and variety of such corpora- tions has greatly increased since the - section was enacted, and will ^ probably J fvirtheri increase in tie.f.uture and piake constant amendment of the section necessary. In ifact the section lias lieen open to nluch criticism for some years. ' 1- The pai^graph providing that mem- bership corporations ^ha.11 include bene- volent orders has been omitted for the . reason that , beneyolent orders are now governed by a separate chapter of the general laws, and fire and soldiers' monument corporations are expressly provided for in the Membership Cor- porations Law. This paragraph, there- fore, is obsolete ,and unnecessary, as the nature of such corporations- a,re suf- ficiently described in the laws referred to. ; Educational corporationi Yale college, Matter of Lampson, 33 App. Div. 49, 53. N. y. Supp. 531, afld.,161 N. Yi 611, 56 N. J). 9» . 18. See first paragraph of, section 8, Business Corporations Law. 10 CORPORATIONS. 10. Particular corporations defined. "1. A 'municipal corporation* includes a county, town, school district, village and city and any other territorial division of the state established by law with powers of local government. 2. A 'stock corporation' is a corporation having a capital stock divided into shares, and which is authorized by law to distribute to the holders thereof divi- dends or shares of the surplus profits of the corporation. A corporation is not a stock corporation because of having issued certificates called certificates of stock, but which are in fact merely certificates of membership, and which is not authorized by law to distribute to its members any dividends or share of profits arising from the "operations of the corporation. 3. The term 'non-stock corporation' includes every corporation other than a stock corporation. 4. A 'moneyed corporation' is a corporation foiined under or subject to the banking or the insurance law. 5. A 'domestic corporation' is a corporation incorporated by or under the laws of the state or colony of New York. Every corporation which is not a domestic corporation is a foreign corporation, except as provided by the code of civil pro- cedure (now Civil Practice Act) for the purpose of construing such code. ' '19 It has been held that a building-loan banking company, organized under the Laws of 1851, chapter 122, as amended, although issuing so-called shares of stock, is not a stock cor- poration, but a membership corporation.^ A moneyed cor- poration includes ibanking associations/ companies formed for the purpose of loaning money on real and personal prop- erty, and of buying and selling bonds and mortgages,^ com- panies formed for the purpose of storing goods and loaning money ,^ and the term, as used in section 49, subd. 4 of the Civil Practice Act, and defined in subdivision 4 of section 3 of the General Corporation Law, is broad enough to include a foreign mortgage trust company.* A domestic corpora- tion is defined by the Civil Practice Act as *' a corpora- tion created by or under the laws of the state; or located in the state, and created by or under the laws of the United States, or by or pursuant to the laws, in force in the colony 19. General Corporation Law, § 3, shares, is a stock corporation within subds. 1-5. the meaning of the Stock Corporation 20. Preston v. Reinhart, 109 App. Law. Div. 781, 96 N. Y. Supp. 851, affd. 185 1. Talmage v. Pell, 7 N. Y. 338. N. Y. 555, 78 N. E. 1111. 2. Kept, of Atty.. Genl. (1893) 183, But see Leighton v. Leighton Lea As- 187. sociation, 63 Misc. 73, 114 N. Y. Supp. 3. Kept, of Atty. Genl. (1893) 193. 918, holding that a building assoeia- 4. Hobbs v. National Bank of Com- tion incorporated under L. 1851, ch. meree, 101 Fed. 75. 123, having capital stock divided into CLASSIFICATION OF COEPOKATIONS. 11 of New York, before the nineteenth day of April, in the year Seventeen Hundred and Seventy-five. Every other cor- poration is a foreign corporation."^ For purposes of pro- cedure the provision of the Civil Practice Act are controll- ing.^ A corporation created and organized under federal law is a domestic corporation in each state in which it transacts business.'^ National banks are to be deemed citizens of the states in which they are respectively located.^ And a corpo- ration, formed by the consolidation of foreign and domestic corporations, is a domestic corporation.^ A railroad cor- poration organized under the laws of the United States for the purpose of constructing a railroad in states other than New York, is a domestic corporation for the purpose of de- termining whether its property is subject to an attachment as a foreign corporation, where its charter and certificate of in- corporation do not specify the location of its main or princi- pal office, but does specifically a,uthorize the holding of stock- holders' meetings in New York, where the company main- tains its executive offices.^" 5. Civil Practice Act, § 7, subd. 7. N. Y. 9, 63 N. B. 761; People ex rel. 6. Gould V. Texas & Pao. R. Co., 176 Lorge v. Consolidated Nat. Bank, 105 App. Div. 818, 163 N. Y. Supp. 479. App. Div. 409, 94 N. Y. Supp. 173. 7. McLanahan v. Mott, 73 Hun 131, 9. Sage v. Lake Shore & M. S. E. 35 N. Y. Supp. 893; Gould v. Texas & Co., 70 N. Y. 230; Matter of Oooley, Pac. R. Co., 176 App. Div. 818, 163 186 N. Y. 230, 334, 78 N. E. 939. N. Y. Supp. 479; Matter of Gushing, 10. Gould v. Texas & Pac. R. Co., 176 40 Misc. 505, 83 N. Y. Supp. 793. App. Div. 818, 163 N. Y. Supp. 479. 8. Tuttle v. Iron National Bank, 170 12 OOEPORATIONS. CHAPTER in. Incoepobation and Oeganizatiost. In General. ' 11. luooiporation by act of legislature. 12. Number and qualification of incorporators. 13. Purposes of incorporation. 14. Organization of corporation to do work of learned professions prohibited, 15. Fraud in organization of corporation. 16. Full liability corporations. Certifioate of I'lieorporation. 17. Nature and contents generally. . , . 18. Eequi sites of certificate. 19. Provisions that may be put into certificate generally. 20. Particular' provisions. 21. Provisions a^ to directors and duration of existence. 22. Corporation issuing stock without nominal or par value.' 23. Execution of certificate. 24. Filing and recording. 25. Lost or destroyed (Sertificate of incorporation.' 26. Organizaition'tax. ' 27. Filing, reeotdiiLg and other fefes.' ^ ,_ .; De Feoto Corporations. 28^ In general. 29. Bights, duties and liabilities. , , Corporators and Promoters. 30. In general. 31. Sale of property to corporation. 32. Promoters' contracts. 33. Liability for fraudulent representations. 34. Liability of corporation on contracts of promoters. In General. 11. Incorporation by act of legislature. The power of creating corporations is one appertaining to sovereignty, and is exercised by that branch of the govern- ment in which it is constitutionally invested. Formerly the right to corporate existence was always by special charter or act of incorporation, but the power of special legislation of INCORPORATION AND ORGANIZATION. 18 this kind is now restricted.^}' Section one of Article eight of the New York Constitution provides that ' ' corporations may be formed under general laws; but shall not be created by specialact, except for municipal purposes, and in cases where, in the judgment of the legislature, the objects of the corpo- ration cannot be attained under general laws." And corpo- rations are usually formed by persons complying with the gen- eral laws of the state on this subject.^ In the absence of a constitutional requirement, no certain terms or express words are necessary to effect the granting of a corporate franchise. Any expression whatsoever showing the legisla- tive intention to confer the right to exercise corporate fran- chises is sufficient, and this intention may be deduced from the whole of the legislative act. The use of the word " incor- porate " or of a similar expression is unnecessary.^^ But while express words of incorporation are not essential to create a corporation, and one may arise without such words out of the general language of a statute^ if a corporation is necessary to accomplish the purpose of the act, where no such necessity exists, it may not beheld that a corporation is created by implication." It is not required by section 16 of article 3 of the constitution, that the title of an act incor- porating a company should set forth all the powers of the company or contain an abstract of the law. So long as the objects of the corporation are limited by the act to one body corporate, they constitute, in mass, the single subject which the act must contain:^^ The legislature, being the power authorized to prescribe the formalities requisite to the for- mation of, a corporation, has the right to dispense with such formalities or to legalize the existence of a corporation whose organization was defective because of a failure to comply with such requirements.^^ 11. Bradley Fertilizer Co. v. South 14. Walsh v. N. Y. & Brooklyn Pab.' Co., 4 Misc. 172, 23 N. Y. Supp. Bridge, 96 N. Y. 427. 675. 15. Freeman v. ■ Panama E. Co., 12. Bradley Fertilizer Co. v. South Hun 132. Pub. Co., 4 Misc. 172, 23 Nl Y. Sfipp. 16. Smith v. Havens Belief Fund So- 675 ' • ' eiety, 44 Misc. 594, 90 ]Sl. Y. Supp. 168, 13. Smith V. Havens Relief Fund So- affd. 118 App. Div. 678, 103 N. Y. Supp. eiety, 44 Misc. 594, 90 N. Y. Supp. 168, 770, affd. 190 N. Y. 557, 83 N. E. affd. 118 App. Div. 678', 103 N. Y. 1132. 770, affd.' 190 N. Y. 557, 83 N. E. 1132. 14 COBPOBATIONS. " "^ 12. Number and qualifications of incorporators. "Except as provided in section two-a of this chapter (business corporation law), three or more persons may become a stock corporation for any lawful business purpose or purposes other than a moneyed corporation, or a corporation pro- vided for by the banking, the insurance, the railroad and the transportation corporations laws, or an educational institution or corporation which may be in- corporated as provided in the education law, by making,' signing, acknowledging and filing a certificate which shall contain: "17 The statements and facts re- quired by statute.is "A certificate of incorporation must be executed by natural persons, who must be of full age, and at least two-thirds of them must be citizens of the United States and one of them a resident of this state. This section shall not apply to a corporation formed by the reincorporation or consolidation of exist- ing corporations, or to the reorganization of a corporation upon the sale of the property and franchises of a previously existing corporation or otherwise. "19 It is well settled that one stock corporation may not law- fully incorporate another or control its action otherwise than by a majority stock control, where that is anthorized!^" 13. Purposes of incorporation. The certificate of incorporation must disclose the purpose or nature of the business of ' the proposed corporation, and that it is lawful,^ but when on its face the proposed corpo- ration is for objects not necessarily of an illegal nature, it will be presumed that they are within that legitimate class of ob- jects for which corporations may be formed.^ In determining the purpose for which a business corporation may be organ- ized it is necessary to proceed by- a process of elimination whereby any purpose for which a corporation may be organ- ized under some other general law will be excluded.,^ All the 17. Busineas Corporations Law, § 2, 17 N. Y. Supp. &53, affd. 135 N". Y. pt., as amd. by L. 1909, ch. 484. 380, 32 N. E. 123. ■ Forms: Certificates of ineorpora- Forms: . Gertifieatea of incorpora- tion, Form Nos. 10, 43, ^4. tion, Form Nos. 10, 43, 44. 18. See poat, par. 17. 20. Schwab v. Potter Co., 194 N. Y. 19. General Corporation Law,'§ 4. 409, 87 N. E. 670; Herman v. Broofclyn Minors as Incorporators. — It was fre- Savings Bank, 196 App, Div. 369, 187 quently held prior to the present stat- N. Y. Supp. 738. ute that where a statute authorizes 1. Rept. of Atty. Genl., Jan. ?5, 1911. persona to form a corporation, al- 2. United States Vinegar Co. y. though the statute^ does not, in ex- Foebrenbach, 148 N. Y. 58, 42 N. E. press terras., say that they must be of 403. full age, yet 'it is implied that they 3. Rept. of Atty. Genl. (1907), 556. shall be of full age. Matter of Globe Authorized purposes under Business Mutual Benefit Assn.. 63 Hun 263, 265, Corporations Law. — ^Pawnbrokers may INCOBPOKATION AND ORGANIZATION. 15 powers stated in a proposed charter should be such as may be exercised by the kind of corporation being formed, and the provisions of a given statute providing for the incorporation of a company to do certain branches of business should not be construed so as to permit such corporation to do a business thereunder which is specially provided for by any other statutes.* 14. Organization of corporation to do work of learned professions pro- hibited. The legislature in authorizing the formation of corpor rations to carry on " any lawful business " did not intend to incorporate, Kept, of Atty. Genl. (1901), 238; Kept, of Atty. 6enl.,.Aug. 11, 1914; companies formed for the purpose of furniBhing water for manu- facturing or liydraulic purposes may be incorporated under this act, Kept, of Atty. Gen. (1893), 184; a corpora- tion incorporated December 31, 1895, for the purpose of boring natural gas wells and' piping and delivering the gas to consumers for hire, was properly or- ganized under the Business Corpora,- tions; Law (Laws of 1890, chap. 567), and not under the Transportation Cor- porations Law (Laws of 1890, chap. 566). Wilson v. Tennent, 61 App. Div. 100, 70 N. Y. Supp. a, affd. 179 N. Y. 546, 71 N. E. 1143. Unauthorized purposes under Busi- ness Corporations Law. — A corporation cannot be organized under the Busi- ness Corporations Law to exercise the powers expressly given to corporations incorporated under the Banking Law, Kept, of Atty. Genl. (1913), Vol. 3, p. 188; (opinion of Atty. Genl., Jan. 23i 1918), 14 State Dept. Rep. 518; to transfer or register certificates of stoclc «)f other corporations which power, is ex- pressly conferred upon trust companies by the Banking, Law, Kept, of Atty. Genl, (1913),. Vol. 2, p. 187; for the pur- pose of storing "old records, documents and paperSj" this' being one of the-j>ur- poses for whieh a safe deposit compan.y may be organized pursuant to the Bank- ing Law, Kept, of Atty. Genl., June 3, 1910; for the purpose of conducting a private sanitarium or hospital giving treatment, etc.. Kept, of Atty. Genl;, April 31, 1909; for the purpose of book- ing bets or wagers and selling pools, Rept. of Atty. Genl. (1893), 131; to engage in the business of examining and certifying the titles to real property, Kept. Of Atty. Genl. (1913), Vol. 3, p. 345; to carry on th© business of plate glass insurance, Kept, of Atty. Genl., June 8, 1914; nor for the purpose of engaging in the practice of dentistry and dental surgeiry, Kept, of Atty. Genl. (1911), Vol. 3, p. 567. ''A- corporation may not T)e incor- poi-ated under the Business Corpora- tions Law to engage in navigation. Kept, of Atty. Genl. (1913), Vol. 2, p. 73.. 4. Opinion of Attorney General (1916), 10 State Dept. Rep. 483, hold- ing that proposed objects in certificates of incorporation of busisiess corpora- tions relative to the business of trans- portation and of managing and of con- trolling railroads are xit'^i'i the provi- sions of the Transportation Corpora- tions Law and the Railroad Law and are improper, and such certificates should not be filed until suqh objects are eliminated. > 16 OOBPOBATIONS. include the work of the learned professions. Such an inno- vation with the evil results that might follow would require the use of specific language clearly indicating the intention.^ And it is now provided by statute that "No corporation shall ibe organized ox created under the jjrovisions of this chapter (Business Corporations Law) for the purpose or purposes of con- ducting any branch of the practice of law or of retaining or employing an attorney or attorneys to furnish legal advice, draw legal papers or perform legal services of aily kind or description, either directly for the person, persons or corporation for whose use such services are rendered, or for the corporation retaining such attorney in compliancy with any contract of eroployment of tne corporation or of the attorney made by the corporation with any other person, persons or corporation. The statement of the purpose or purposes of a corpora- tion, in any certificate filed under the provisions of this chapter, in whatsoever language the same may be set forth, shall not be held or construed to confer on the corporation the power to transact any business specified in this section as a purpose for which the creation of a corporation under this chapter is pro- hibited; and particularly when the stated objects of a corporation include the collection of debts or accounts, in words or substance, they shall not be con- strued to include the employment or furnishing of attorneys to prosecute any action or pursue any legal or equitable remedy in aid of such collections. ' ' 6 The purpose of this provision and section 2^0 of the Penal Law was to put a stop to a rapidly-growing practice by im- personal corporations of exercising functions which can prop- erly be exercised only by a duly admitted and licensed attor- ney who is under the strict supervision of the court and amen- able to its discipline.'' IS. Fraud in organization of corporation. "A person who: 1. Without authority subscribes the name of another to or inserts the name of another in any p*ospeetUs, circular or other advertisement or announcement of any corporation or joint-stock association existing or intended to be formed, with intent to permit the same to be published, and thereby to lead persons to believe that the person whose name is so subscribed is an officer, agentj member or promoter of such oorpoft,tion or association ; or; 2. Signs the name of a fictitious person to any subscription for or agreement to take stock in any corporation, existing Or proposed; or, 3. Signs to any such subscription or agreement the name of any person, knowing that such pereson does not intend in good faith to comply with the terms 5. Knitter of Go-operative Law Co., as added by L. 1909, ch. 484. 19» N. Y. 479, 9a N. E. 15; Godfrey 7. People ex rel. Floersheimer v; v. Medical Society of County of N. Y., Purdy, 174 App. Div. 694 163 N. Y. 177 App. Div. 684, 164 N. Y. Supp. 846. Supp. 70, revd. on other grounds, 231 8. Business Corporations Law, § 2a, N. Y. 481, 116 N. E. 390. INCOEPOBATION ANT) ORGANIZATION. 17 thereof; or under any understainding or agreement, that the terms of such sub- seriptioii or agreement are not to be complied with or enforced, R guilty of a misdemeanor. "8 "An officer, agent or clerk of a corporation, or of persons proposing to or- ganize a corporation, or to increase the capital stock of a corporation, who knowingly exhibits a false, forged or. altered book, paper, voucher, security or other instrument of evidence to any public officer or board authorized by law to examine the organization of such corporation, or to investigate its affairs^ or to allow an increase of its capital, with intent to deceive such officer or board in respect thereto, is punishable by imprisonment in a state prison not exceeding ten years, "9 An indictment charging the president of a state bank with having knowingly exhibited a false cash hook to a bank exam- iner which is otherwise suJKcient is not invalidated by the mere omission of the words " in respect thereto."-^" 16. Full liability corporations. "Every corporation formed under this chapter (business corporations law) may be or become a full liaibility corporation by inserting a staitement in the certifi- cate of incorporation,- that the corporation thereby formed is intended to be a full liability corporation; and in case of an existing corporation, which is not a full lia;bility corporation, it may become such by filing In the offices where certificates of inooi^oration are required to be filed, a supplemental certificate atating that thereafter the corporation intends to be a full liability corporation, which certificate shall be executed and acknowledged by the president and treasurer of the corporation or by the board of directors, and shall have annexed thereto a copy of a resolution, adopted by a two-thirds vote of the board of' directors, and the written consent of all the stockholders of the eorpotation, authorizing and consenting to the change of the corporation to a fiill liability corporation. " ii Certificate. 17. Nature and contents generally. The organic articles of incorporation constitute an agree-- ment, to which a certain publicity is given by the require- ments for filing,. recording and indexing, both in the County Clerk's office and the office of the Secretary of State.^ ^ 8. Penal Law, § 660. Forms: No forms have been pre- 9. Penal Law, § 661. pared to meet the requirements of this 10. People V. Helmer, 154 N. Y. 596, section as the privilege granted 49 N. E. 249. thereby is never taken advantage of. 11. Business Corporations Law, § 6, The section should be stricken but of pt.; liability of stockholders, see post, the law. par. 249; fcbhtribution between stock- 12. Millspaugh v. C^ssidy, 191 4pP- holders, see post, par. 248. Div. 221, 181 N. Y. Supp. 276. 2 18 , COBPOBATIONS. ' ' The term ' oertifleate of incorporation ' shall include articles of association or any other written instruments required by law to be filed, to effect the incorpora- tion of a corporation, including a certified copy of an original certificate of. in- corporation filed for such purpose in pursuance of law. ' ' 13 The certificate of a stock corporation must contain : ' ' 1. The name of the proposed corporation. < 2. The purpose or purposes for which it is to be formed. 3. The amount of the capital stock, and if any portion be preferred stock, the preferences thereof. 4. The numbei- of shares of which the capital stock shall consist, each of which shall not be less than five nor more than one hundred dollars, and the amount of capital not less than five hundred dollars, with which said corporation will begin business. 5. The city, village or town in which its principal business office is to be located. If it is to be located in the city of New York, the borough therein in which it is to be located. 6. Its duration. 7. The number of its directory, not less than three. 8. The names and post-office addresses of the directors for the first year. 9. The names and post-office addresses of the subscribers to the certificate, and a statement of the number of shares of stock which each agrees to take in the corporation. Any certificate of incorporation filed, prior to April twenty-second, -eighteen hundred and ninety-six, under the provisions of the business corporations law theretofore in force which shall contain the names and post-office addresses, either of the subscribers to the stock or of the subscribers to the certificate, and a statement of the number of shares of stock which each agrees to take in the corporation, shall be deemed to . have complied with the requirements of section two, subdivision nine of said law. If meetings of the board of directors are to be held only within the state the certificate or by-laws must so provide. ' ' 14 The name of a proposed corporation must not conflict with the name of existing corporations.^^ In the natijre of = things there can be no stockholders at the date of incorporation, and hence the provision in the statute, that the directors shall be chosen from the stockhoMei's by a majority of the vote of the stockholders voting, has no application to ' ' the directors for the first year" named' in the certificate pursuant to law.^" .1 , 13. General Corporation Law. § 3, pt.. as anid. in other particulars ,by subd. 7. L. 1911. eh. 638, L. 1912, di. 2, and 14. Business Corporations Law, § 2, L. 1913, eh. 24. As to name of oor- pt., as amd. by L. 1909, eh. 484. poration, see post, pare. 47-53. Forms: Certificate of incorporation, 16. Hamilton Trust Co. v.\qiemes, :p'orm Nos. 10, 43, 44. , , 163 N. y. 423, 57,Jir. E. 614. See alan 15. General Cprporation Law, '§,.6, post, par. 375 et, seq. INCOKPORATION AND OBGANIZATION. 19 When a certificate is materially altered without the consent of all the suhscribers^ after their subscription and before the complete organization such articles cease to be binding upon the non-consenting subscribers." 18. Requisites of certificate. ' ' Every eertiflcate of ineoiporation and every amended or supplemental certifi- cate, and every certificate which alters the provisions of any certificate of in- corporation or any amended or supplemental certificate hereafter executed, shall be in the English language ' * * : Nothing herein contained, however, shall be deemed to prohibit a corporattion from having and using a corporate name or title in a language other than the English language if the same be in English letters or characters. ' ' 18 ; The certificate must be entirely in English.^^ A certificate of incorporation should state concisely the objects for which it is to be formed, without any modification's or statements to the effect that the purposes and powers to be exercised by it are only those permitted under the provisions of' the law imder which it is ihcorporatedV so that any person deal- ing with it may know exactly the extent of its powers with- out the necessity of an opinion of the attorney general or the courts construing its powers and approving or disapproving the filing of such certificate by the Secretary of State.^ 19. Provisions that may be put into certificate generally. "The certificate of incorporation of any corporation may contain any pro- vision for the regulation of the business and the cond,uct of the affairs of the corporatioii, and any limitation upon its pow«rs, or upon the powers of its directors and stockholders, which does not exempt them from the performance of any obligation or the performance pf, any duty imposed by law. ' ' i Persons seeking to form a corporation under any general law must have a reasonable latitude as to what they may in- sert in the certificate = of incorporation. They must insert therein all the matter particularly required by the law, and 17. Burrows v. Smith, 10 N. Y. 550. mode of formation of a corporation un- 18. General Corporation, Law, § 5, der a general act are cured by a special subd. 1,. pt., as amd. in "other par- act recognizing existence of the eorpor- ticulars by L. 1913. eh. 479 and L. ation and changing its name. White v 1921, ehv 131.,- - Ross, 15 Abb. Pro. 66. Forms: Certificate of incorporation, 1. General Corporation Law, § "10, Form Noa. 10, 43, 44. subd. 2. See also "Power of Oorpora- 19. Kept, of Atty. Genl. (1889), 136. tions," post, chap. XXI. 20. Opinion of Att/. Genl. (1916), 10 ' Forms:' Certificate of incorpora- State Dept. Rep. 483. tion, Form Noa. 10. 43, 44. Any errors or informalities in the •. > 20 OOBPOBATIONS. they may insert other provisions not inconsistent with law or public policy which are germane to the purposes of the cor- poration, and necessary, convenient or appropriate to the ac- complishment of such purposes.^ It seems clear that any limi- tation upon the powers of the stockholders which does not result in an exemption in the performance of any obligation or duty imposed by law is lawful.^ 20. Particular provisions. A certificate of incorporation may contain reasonable re- strictions upon the transfer of the stock. Accordingly a pro- vision that no certificate should be transferred to a person who is not a stockholder until it has first been offered for sale to the other stockholders on terms to be fixed by the by- laws or agreement, but in case the offer to sell is refused, the condition shall no longer attach, is valid and enforceable.* But a provision in a certificate of incorporation of a business corporation that the directors may, with the consent of the holders of two-thirds of the capital stock issued and outstand- iS. People ex rel. Fairehild v. Pres- ton, 1^0 N. Y. S'49, 552, S5 N. E.'9T,9; 3. Authorized provisions. — A certi- ficate of incorporation containing pro- visions that stockholders 'may be en- titled to one vote irrespective of the number of shares they own, is proper. Rept. of Atty. Genl., March 21, 1910. Unauthorized provisions. — A provi- sion that the stockholders Of 'a busi- ness corporation, both present and future,' will sell and deliver to it all' milk produced upoii their farms from COWS: . owned i or controlled by them, witji the exception of milk consumed at home and that delivered to a cheese factory located iUr the vieiiflty of said farms, is unauthorized. Rept. of Atty Genl. (1911), Vol. 2. ' A : clause in the certificate of a di-ug company providing that shares of stock cannot be trans!ferred without the con- sent in writing of the board of direc- tors is invalid, being in restraint of trade and against public poliey.r Rept. of Atty. Genl., Feb. 7, 1910., ■ Provisions limiting right to vote. — The Secretary of State is not required to file a certificate of incorporation which provides that the Stockholders of record are npt entitled to vote upon (a) the question whether any of the premises owned by the corporation shall be sold, exchanged, mortgaged, leased' or otherwise disposed of or en- cumbered, and the terms anil condition's upon which such sale, exchange, mort- gage, lease or other disposition , shall be effected; and (b) the question whether the business of the corpora- tion shall be; discontinued,' and its affairs liquidated and its assets con- verted into cash and disposed of accord- ing to law, and placing the disposition of these questions in the hands ■ of the holders of certificates of indebtedness of the oorjooration to be issued' by it after its organization, for such provi- sions are not authorized by law. Rept. of Atty. Genl. (1912), Vol. 2, p. 238. 4. Blooimingdale v. Bloomingdale, 107 Misc. 646, 177 N. Y. Supp. 873. As to Transfers of Stock, see post, chap xn..' INCOEPOBATION AUD ORGANIZATION. 21 ing, sell, assign, transfer or otherwise dispose of the whole property of the corporation, not including franchises, to any person or corporation, domestic or foreign, is not authorized by law, nor can it he justified under section 2 of the Business. Corporations Law, as a provision regulating the business or relating to the conduct of the affairs of the corporation, being rather for the purpose of closing up its a:tfairs.^ It may be pointed out that it is improper to fix a definite date for the holding of the annual meeting, as that date may fall on Sun- day, and the law discountenances the use of that day for such purposes.* In the absence of statutory provision to the con- trary, the certificate of incorporation of a business corpo- ration may make such preferences between stockholders, as to its stock as seems best.'' And the statute provides that the certificate of incorporation may provide for preferred stock and common stock, and different classes of preferred stock.^ The amount of the capital stock may be subsequently in- creased or reduced or the par value of the shares changed.* "Th,e oertifieate of incorporation of any corporation whose duration is limited by such eertifieate or by la,w, may require that the consent of the stoclsho^era o'^rn.- ing a greater percentage than two-thirds of the stock, if a stock corporation, or of more than two thirds of the members, if a iion-stoefc corporation, shall be requisite to effect an' extension of corporate existence as authorized by this section." 10 21. Provisions as to directors and duration of existence. A provision in a certificate of incorporation that the mlm- 5. People ex rel. Barney v. Whalen, Importing Corporation v. Hugo, 191 119 App. Diy, 749, ,104 N. Y. gupp. Ap.p. ,Div. 628, 183 N. Y. Supp. 9. , See 555, aflfd. 189 N. Y. 560, 83 N. E. 1131. also post, par. 101. . See also post, par. 69, 8. Stock Corporation Law, § 61, as G. Matter' of Wendover Athletic aimd. in other particulars by L. 1917, A'ssn., 70 Misc. 373, 128 N. Y. Supp. ch. 542, L. 1920, ch. 609; and L. 1931, 561. ' Chi 131. Matter of Hakehiloth, 18 Mi?e. 717, Subscriptions to stock.— See post; 42 N. Y. Supp. 895, holding that a eer- cbap. XI. , ,:r| tifieate of incorporation of a member- Forms: Certificate of ineorporatioB ship corporation which appoints " the Form Nos. 10, 43, 44. aimual meetings to be held "On each 9. See post, pars, ill-118. and every! second Sunday of .January of Forms: Increasing or reducing capi- each and every year" will not be ap- tal stock. Form Nos. 36, 46; changing proved, because the holding of corpor- par value, Form No. 60. ■= .'■ ate meetings fot the transaction of 10. General Corporation Law, § 37, secular business on Sunday is contrarv pt., as amd. in other pa-rtieulafs by to the public policy of the state. L. 1913, ch. 306 and L. 1931, ch. 131. 7. People ex rel. Recess Exporting & 22 COBPORATIONS. ber of directors fixed by the certificate shall not be changed except by the unanimous consent of all the stockholders is authorized by section 10 of the General Corporation Law. It is true that this provision is in conflict with the statutory regulation for increase of directors under section 26 of the Stock Corporation Law, but unless it was intended by section 10 to allow the corporators at the time of the organization of the corporation to prescribe regulations for the conduct of its affairs and limitations on the powers of the corporation and its members different from those prescribed by the statute,, the privilege granted to the corporators would be of little or no efficacy. Of course, this privilege must be exercised in one direction. It must limit, not increase, the powers of the cor- poration or those of its directors or stockholders.^ It is to be noted, however, that a similar provision in the by-laws would be invalid.^^ But a provision in a certificate of incor- poration of a stock corporation that the directors can only be elected upon the unanimous consent of all the stockholders is violative of the provision of section 25 of the Stock Corpo- ration liaw that " directors of every stock corporation shall be chosen * * * by a plurality of the votes at such election ; ' ' the wording of said section justifies an interpretation that it it mandatory. To permit a certificate of incorporation to contain a provision requiring a unanimous vote of all the stockholders would be a violation of the common-law rule as well. It would also be contrary to public policy since it may work a fraud upon the public who may purchase such shares in ignorance of the provision.^^ As there is no statutory pro- vision limiting the existence of a corporation, the incorpo- rators may fix the time, which may be extended, but probably not reduced since that might operate as the equivalent of a dissolution.^* Where no period of succession is specified in the certificate of inc(irporation, it will be perpetual. But this rule does not obviate the necessity of stating the term of duration in the certificate of incorporation when the statute specifically requires such statement. It is operative only with respect to corporations formed under laws which do not re- H. Ripin V. United States W. L. Co., Realty Co., 195 App. Div. 518, 186 N. a05 N. Y. 443, 98 N. E. 856. Y. Supp. 430, affd. 231 N. Y. 107. 12. See post, pars. 273, 276. 14. Forms: Extending corporate 13. Matter of Boulevard Theatre & existence, Form Nos. 17-20. INCORPOBATION AND ORGANIZATION. 23 qtiire the period of existence to be fixed by the certificate of incorporation.'^^ 22. Corporation issuing stock without nominal or par value. "Upon the formation of any stock corporation, other than a moneyed corpo- ration, provision may be made for the issuance of the shares of stock of such corporation of any one or more classes, without any nominal or par value, by stating in the certificate of incorporation; (1) The number of shares with a nominal or par value and the number of shares without a nominal, or par value that may be issued by the corporation and the classes if any into which such sliares are to be divided, together with a statement of the distinguishing preferences, rights, privileges and restrictions of each class; (2) The nominal or par value ■ (which shall be the same for all shares of the same class) of shares other than shares which it is stated are to have no nominal or par value; (3) Either a. The amount of stated capital with which the corporation will begin busi- ness which amount shall not be less than five hundred dollars; and that the corporation will carry on business with a stated capital which shall not be less than the aggregate amount of the preference to which all issued and out- standing stock having a preference as to principal is entitled, and in addition thereto an amount therein stated in respect to every share of stock issued and outstanding other than stock having a preference as to principal, which amount ■hall not be less than five dollars for each share and such additional amount as from time to time may by resolution of the board of directors of the corpora- tion be transferred thereto ; or b. The amount of stated capital with which the corporation will begin busi- ness which in no event shall be less than five hundred dollars; and that the corporation will carry on business with a stated capital consisting of the ag- gregate of the amounts received by it as consideration for the issuance of its shares with no nominal or par value, the aggregate par value of all issued and outstanding shares, if any, having a nominal or par value, and such additional amounts as from time to time may by resolution of the board of directors of the corporation be transferred thereto. Such statements in the certificate shall be in lieu of any statements pre- scribed by the law under which the corporation shall have been formed as to the amount or the maximum amount of its capital stock or the number of shares into which the same shall be divided, or of the amount or the par value of such shares. ' ' 16 15.' General Corporation Law, S 11, 16. Stock Corporation Law, § 19, pt., subd. 1. as added by L. 191», ch. 351, and Business Corporations Law, § 3, amd. by L. 1917, ch. 500, L. 1920, cli. subd. 6, requires a statement of the 508, and L. 1931, ch. 694. duration of a corporation's existence. Amendment of certificate to change As to extension of corporate existence. to shares without nominal or par see post, pars. 36-38. value, see post, par. 45. 24 CORPORATIONS. The provision was first brought into the statute in 1912. At the time of its enactment corporations were issuing vari- ous kinds of preferred stock; some stocks were preferred as to dividends, some as to principal, some as to both, and some had other preferences, and the statute must be construed with reference to the then existing conditions." 23. Execution of certificate. Although the subscribers must themselves determine the various facts to be stated in the articles of incorporation and cannot delegate the power to agree upon the terms of the organization of the company, yet after they have come to an agreement upon these matters, they may delegate to another person the power to do the formal act of affixing their signa- tures. The statute does not forbid it ; the ordinary riiles of law justify rather than condemn it; and there seems to be no adequate reason for denying the right.^^ However, a certifi- cate of incorporation must be acknowledged by the incorpo- rators and proof of execution by a subscribing witness is not sufficient tq satisfy the statute." The acknowledgment may 17. People ex rel. Recess Exporting & Importing Corporation v. Hugo, 191 App. Div. 628, 183 N. Y. Supp. 9, wherein the court in construing the provision j>rior to the amendment of 1921, held that the provisions of sec- tion 19 of the Stoeli Corporation Law, providing for the "issuance of shares of stock without nominal or par value," show that the par value of preferred stock is not the precise amount the holder may receive from the surplus assets upon dissolution, but that that matter may he con- trolled by the certificate at incorpora- tion. The words, "preference as to principal" are used in describing the stock as distinguishing it from stock which is preferred as to dividends ofily. The section does not purport to limit the preference,' but only requires that it be made definite and certain. Hence, a corporation is entitled to have its certificate of reorganization filed which changes the common stock to stock without any nominal or par value and provides that upon the liquidation, dis- tribution of capital assets, dissolution or winding iip of the c6rporation, the assets and funds shall be distributed, so far as the same may be lawfully done, among the holders 'Of the stock, by paying to the preferred stockhold- ers 120 per cent of the pai* value there- of, together with all unpaid accumu- lated dividends and the accrued divi- dends thereon, and to the common stockholders the remainder of the assets. As to value 6f shares, see post, par. 104. Certificates of shares, see post, par. 122. Organization tax, see post; par. 20. Forms: Certificate of incorporation pi-oviding for issuance of stock without nominal or par value. Form Nos.! 43-44. 18. Matter of New York, L. & W. E. Co., 35 Hun 830, afld. 99 N. Y. 18, 1 N. E. 27. 19. Kept, of Atty. Genl. (1911), Vol. 3, p. 651; Kept, of Atty. Genl., June 4, 1914. INOOEPOBATIOW AND OEGANIZATION. 25 be made before any officer authorized to take the acknowledg- ment or proof of the execution of a deed of real property to entitle to be recorded.^" But one incorporator cannot, as a notary, take the acknowledgment of other incorporators.' The official character of the officer who takes the acknowledg- m,ent need not appear in the subscription where it appears in the body of the certificate.^ Although a county clerk's authen- tication of a notary's signature is not required by the Secre- tary of State, such certificate is required where the duplicate certificate is to be filed in another county.^ 24. Filing and recording. ' ' 1. Every certificate of incorporation and every amended or supplemental certilj- oate, and every certificate which alters the provisions of any certificate of in- corporation or ajiy amended or supplemental certificate hereafter executed, shall be in the English language, and except as otherwise provided by law, shall be filed in the office of the secretary of state, and, shall be by him duly indexed m books spepially provided therefor, and a certified copy of such certificate or amended or supplemental certificate with, a certificate of the secretary of state of such £lmg, or a duplicate original of such certificate or amended or sup- plemental certificate shall be filed and recorded and indexed in the office of the clerk pf the county in which the office of the corporation is to be located, or, if it be a non-stock corporation, and such county be not determined: upon at the time of executing the certificate of incorporation, in such county clerk's office as the judge approving the certificate shall direct. . Nothing herein contained, however, shall be deemed : to. prohibit a corporation from , having and using a corporate name or title in. a language other than the English language if the same be in English letters or characters. AH. taxes required by law to be paid before or upon incorporation and the fees for filing and recording such certificate must be paid before ffiing. No corporatioa shall exercise any corporate powers or privileges uitil such taxes and fees have been paid. 2. Whenever under any law now or heretofore in force the certificate of in- corporation 'of any corporation other than a stock corporation was or is required to be filed in more than one public office, a certified copy of such certificate so ffled in any one of such public offices mayTje filed in such other office with the like effect as if the original had been duly 'filed therein, provided, however, that no rights . accrued prior fo the filing of such copy shall be impaired or affected 20. General Construction Law, § 11. Board of R. E. Commissioners, 10.5 App. Commissioner of deeds may prop- Div. 273, 93 N. Y. Supp. 584. erly take such acknowledgment. See- 2. Second Methodist Episcopal ond Methodist Episcopal Church v. Church v. Humphrey, 31 N. Y. Supp. Humphrey;, 31 N. Y. Supp. 89, 49 St. 89, 49 St. Eep. 467, affd. 142 K Y. Rep. 467, affd. 143 N. Y. 137, 36 N. E. 137, 36 N. E. 813. 813. 3. Rept. of Atty. Genl., Jan. 13. 1911. 1. People ex rel. Erie R. Co. v. 26 OOBPOBATIONS. thereby, provided also, that such filing of a copy shall not cause a duplication or similarity of corporate names in violation of the next succeeding section. ' ' 4 The right to file certificates of incorporation in the office of the secretary of state exists only in behalf of those who bring themselves within the terms of the act nnder which they seek to incorporate.^ The secretary of state ias a right, upon presentation for filing in his office of a certificate of incor- poration, to pass upon the question as to the form of the cer- tificate and as to whether or not it is entitled to be filed under 4. General Corporation Law, § 6, as amd. bj- L. 1913, eh. 479, and L. 1921, ch. 131. Consolidators' note. — ^Tliis section re- lates to filing of certificates in the of- fice of the secretary of state by cor- porations generally, and it also con- tains exceptions. Thus, except in the case "of a i-eligious, cemetery, moneyed, municipal or fire department corpora- tion." The wording of the exception has been changed in the proposed sec- tion to "except as otherwise provided by law." This change is necessary be- cause the exceptions referred to are incorrect. (a) In the case of religious corpora- tions it is provided by the Relij,ious Corporations Law (L. 1895, ch. 723, § 3), that in some cases the ceitificate should be filed in the office of the secre- tary of state, and so the exception of this class of corporations is too broad. (b) In the case of cemetery corpor- ations it is now provided by the Mem- bership Corporations Law (L. 1895, ch. 559, § 41) tjiat the certificates of. such loorporations should be file* in the of- fice of the secretary of state.,,.. This exception, therefore, is erroneous. (c) In the case of moneyed corpora- tions the Insurance Law (L. 1893, ch. 690, § 363) provides that the certifi- cates of town and county co-operative insurance companies shall he filed in the office of the secretary of state. The exception of moneyed corpora- tions is., therefore, not entirely cor- rect. (d) As to the exception of fire de- partment corporations, it is sufficient to say that there are none such now provided for. Fire companies are in- cluded in the Membership Corpora- tions Law' (L. 1895, ch. 559), and they do not belong in the exception. (e) There are also district dental societies whose certificates must be filed with the secretary of State Den- tal Society (Public Health Law; L. 1893, ch. 661, § 162) and library cor- porations which may be chartered by the Regents. (University Law, L. 1892, ch. 378, § 27.) So to make the exception accurate it would have to include these and there may be others. All these peculiar provisions and ex- ceptions are, however, provided for by the phrase "except as otherwise pro- vided by law," and it. will be less con- fusing, if the specific exceptions are not set forth in full. Under the sec- -tion, as proposed, it will, not have to be amended, every time, the legislature creates an exception to the general law providing ,for the filing of certi- ficates in the office of the secretary of state. 5. People ex rpl. Blossom v. Nelson, 4ft N. Y. 477; People ex rel. Barney V. Whalen, 56 Misc. 378, 106 N. Y. iSupp. 434, aflfd. 119 App. Div. 749, 104 N. Y. Supp. 555, affd. 189 N. Y. 560, 82 N. E. 1131. INCOKPOKATION AND ORGANIZATION. 27 the statute, subject to review in a proper proceeding." He will be justified in withholding his assent to the filing of a cer- tificate of incorporation where it contains provisions which purport to give the proposed corporation powers, or the right to exercise powers not given by law.'' An application for a mandamus to compel the secretary of state to file a cer- tificate of incorporation must be made within the third judi- cial district, which includes the city of Albany, where the office of that official is located.^ A certified copy of a certifi- cate of incorporation should not be filed by a county clerk un- less the certificate of the clerk of the county where the ac- knowledgments of the incorporators were taken is attached, showing the authority of the notarj^ public.^ 85. Lost or destroyed certificate of incorporation. "If either of the certificates of incorporation shall be lost or destroyed after filing, ci certified copy of the other certificate may be filed in the place of the one so lost or destroyed and as of the date of its original filing, and such certi- fied copy shall have the same force and effect as the original certificate had when filed. "10 26. Organization tax. "Every stock corporation ineOrpotated under any law of this state shall pay to the state treasurer a tax of one-twentieth of one per centum upon the amount of capital stock which the corporation is authorized to have, and a like tax upon any subsequent increase." But the tax ill no case shall be less than five dollars.ii This tax should be sent to the State Treasurer and not to the Secretary of State. Payment may be made in cash or by certified check, New York draft, postoffice money order or express order. The State Treasurer upon receipt of pay- ment of tax in due form notifies the Secretary of State of its 6. People ex rel., Davenport ». Kice, a certificate of incorporation can only 6'8 Hun 34, SZ N. Y. Supp, 631. be made in the third judicial district 7. People ex rel. Barney v. Whalen, or a county adjoining thereto. 119 App. Div. 749, ,104 N. Y. Supp. 9. Kept, of Atty. Genl., Jan. 13, 555, aflfd. 189 N. Y. 560, «3 N. E. 1131. 1911. 8. People ex rel. Davenport v. Rice, 10. General Corporation Law, § 8. 68 Hun 34, 33 N". Y. Supp. 631. See 11. Tax Law,. §180, as amd. in other also Civil Practice Act, §§ 1317, 1334. particulars by L. 1910, ch. 47S, L. 1911, But see Mason v. Willers, 7 Hun 33, ch. 91, L. 1915, ch. 317, L. 1917, oh. holding that a motion for a mandamus 493, and L. 1931, ch. 705. See also to compel the secretary of state to file poet, chap. XXXVI. 28 COEPOKATIONS. receipt. The organization tax payable under section one hundred and eighty of the Tax Law by any corporation issuing such shares without designated monetary value shall be at the rate of five cents on each such share which the corpora- tion is authorized to issue, and a like tax upon any subse- quent increase thereof.^ The provision of section 180 of the Tax I/aw, that the organization tax upon corporations shall not in any case be less than five dollars, is applicable to cor- porations having shares of corporate stock without nominal or par value.^' 27. Filing, recording and other fees. ' ' The secretary of state shall collect the following fees : ■* .2. For searching the records in his office for any one year and for every other year in which such search is made, six cents. 3. For a copy of any paper or record not required to be certified or otherwise authenticated by him, ten cents per folio. 4. For a certified or exemplified copy of any law, record or paper, fifteen cents per folio, and one dollar additional for the certificate under seal of his office, attached thereto; and this fee shall be the same whether such copy be made by the secretary of state or previously prepared and presented to him for certifi- cation, any other law to the contrary notwithstanding. - : ' 5. For ' a certificate under the great seal of the state, two dollars. 6. For recording a certificate, notice or other paper required to be recorded, except as otherwise provided by this section, twenty-five cents per folio. 7. For a certificate as to the official character of a commissioner of deeds resid- ing in another state or a foreign country, twenty-five cents, and for every other certificate under the seal of his office, two dollars. 10., For filing the original certificate of incorporation of a railroad corporatioi, fifty dollars; for filing the original. certi^cat« of incorporation of any other corporation, thirty dollars ; for filing a certificate of increase of capital stock pur- suant to section six of the stock corporation law, fifteen dollars ; for filing a eon- sent or certificate of a change of the amount of capital stock pursuant to either sectioii sixty-three or sixty-four of" the stock corporation law, fif tefen dollars ; for filing a certificate of merger, pursuant to section fifteen of the Stock corporation law, twenty-five dollars; Jor filing an agreement for the consolidation of two or more railroad corporations, fifty dollars; for filing an agreement for the con- solidation of two or more corporations other than railroad corporations, 'twenty- five dollars; for filing an amended certificate of incorporation, pursuant to either section seven of the general corporation law or section four of the membership corporations law or section eighteen or twenty-two of the stock corporation law, fifteen dollars; for filing a consent or certificate to, or transcript of minutes of 12. Tax Law, § 180, as amd. in other post, chap. XXXVI. particulars by L. 1910, ch. 473, L. 1911, 13. Rept. of Atty. Genl. (1913), Vol ch. 91, L. 1915, ch. 317, L. 1917, ch. 2, p. 391. 493, and L. 1921, ch. 705. See also INCORPORATION AND ORGANIZATION. 29 change of number of directors, pursuant to either section twenty-six of the stock corporation law or section fourteen of the membership corporations law, fifteen dollars; for filing- a certificate of re-organization, pursuant to either section nine or twenty-four of the stock corporation law, twenty-five dollars; for filing a certificate of change of name, pursuant to section sixty-six of the general corpo- ration law, fifteen dollars; for filing a certified copy of an order to assume another corporate name, pursuant to section sixty-three of the general corpora- tion law, fifteen dollars; for filing a consent to, or certificate of change of loca- tion of principal office, pursuant to section thirteen of the stock corporation law, fifteen dollars; for filing a certificate or affidavit of payment of capital stock, five dollars ; for filing a consent to, or certificate of classification of capital stock, pursu- ant to section sixty-one of the stock corporation law, fifteen dollars ; for filing a cer- tificate of change of number and par value of shares, pursuant to section sixty- five of the stock corporation law, fifteen dollars; for filing a certificate of sur- render of authority; pursuant to section sixteen-a of the general corpofaition law, fifteen dollars; for filing a ti-anscript of minutes relative to change of time of holding of an annual meeting, pursuant to section fifteen of the membership corporations law,, fifteen dollars; for filing a certificate of election of trustees, fifteen dollars; for filing a certificate of extension or revival of corporate ex- istence, twenty-five dollars. 11. For filing the statement and designation and copy of certificate of incorpo- ration of a foreign corporation desiring to dO|business iii the state, fifty dollars. 15. For a certificate under subdivision three of section nine of the general corporation lawy twenty-five dollars.' No fee shall be collected for copies of records fuiiiished to public' officers for use in jthejr official capacity."14 _ :_; ' ' The comptroller shall eollect the following fees : 1. For eo.pies of, all papers and records not required to be certified or otherwise authenticated by him, , ten cents per folio. , <, , .-i , 2. For cprtified or exemplified copies of all records and papers, fifteen cents per folio. 3. For every certificate under the sealof his office, one doUari"lB "A county clerk is entitled, for the sei-vices specified in this section, except where another fee is allowed therefor by special statutolry provision, to the following fees to be paid in advance: ^ » '^ 2. For a copy of an order, record, or other paper, entered or filed in his office, eight cents for each folio^ 3. For riecording any instrument, which legally must or may be recorded by him, ten cents for each folio. 13. For filing any papcj- reciuired by law to be filed in his office, other than as expressly provided for in this section, six cents." 18 "Whenever there shall be presented to any public officei; for certificatidii or exemplification, a previously prepared -legibly typewritten or printed copy of any document, paper, book or record in such officer 's custody, the fees in such case, for certification or exemplification, shall be at the rate of three cents for 14. Executive Law, §|„?6, subds. 3-7, 15. Executive Law, § ^^3, subds. i-3. 10, 11. 15, as amd. by L. 1917, eh. 69. 16. County Law. § 174. adcied by L. and L. 1921, ch. 131. 1920, oh. 931. 30 CORPORATIONS. each folio; but the minimum total charge for certification or exemplification in all cases shall be twenty-five cents. ' ' IT Corporations De Facto. 28. In general. A corporation de facto arises with all the rights and liabili- ties of a corporation "de jure, except as against the state, where there is a charter or some law under w'hich a corpo- ration with the powers assumed might lawfully be created, a defect in the proceedings to organize the corporation arising in an honest attempt to comply with the provisions of the law regulating the manner of its creation, and a user by the cor- poration of the rights conferred on a corporation legally created.^^ In the absence of any one of these elements a cor- poration de facto does not exist. There must be an attempt to comply with the statute for mere user alone will not create a corporation de facto.^' Accordingly the execution of a cer- tificate of incorporation without any action directing or authorizing the filing thereof and without the filing thereof does not, though followed by user, create a corporation de facto, since the act did not constitute an attempt to comply with the requirements of the statute. At most it merely con- stitutes an agreement among the corporators, and in trans- acting business in the name of the corporation they doubtless become liable as copartners ; but in no view of the case can it be maintained that the mere execution of the certificate- creates a corporation de facto.^" On the other hand an in- effectual attempt to organize a corporation does not give rise to a corporation de facto where the organization has exer- cised none of the functions of , a corporation.^ Very, little 17, Public Officers' ; Law, § , 66a, as 19. Hethodist Episcopal Union added by L. 1920, ch. 931. Church v. Pickett, 19 N. Y. 483 ; Welch 18. Mej;hodist Episcopal . Union v. Old Dominion J(tm. & R. Co., 10 N. Church V. Pickett, 19 N. ^ 48a, 485; Y. Supp. 174, 31 St. Rep, 916. Lamming v. Galusha, 81 Hun. 247, 30 20. Card v. Moore, 68 App. Div. 337, N. Y. Supp. 767, affd. 151 N. Y. 648, 337,-74 N. Y. Supp. 18, affd. 173 N. 45 N. E. 1133; Emery v. De ,Peyster, Y. 598, ie N. E. 1105; Stevens v. 77 App. Div. 65, 78 N. Y. Supp. 1056; Episcopal Church History Co., 140 Bradley Fertilizer Co. v. South Pub- App. Div. 570, 578, 135 N. Y. Supp. lishing Co., 4 Misc. 173, 175, 33 N. Y. 573. Supp. 675; Bradley Fertilizer Co. v. 1. Matter of Kings, Queens and Suf- South Pub. Co., 17 N. Y. Supp. 587, folk R, Co., 6 App. Div. 341, 344, 39 44 St. Rep. 119. X. Y. Supp. 1004. INCORPORATION AND ORGANIZATION. 31 evidence of user is required to satisfy the rule however,^ So acts and admissions of a party, such as serving as president of the corporation, and giving a note to it in its corporate name, are prima facie evideince of user.^ Corporations organ- ized under unconstitutional statutes having assumed and exercised corporate powers thereunder become corporations de facto if not de jure.* There is a distinction between cor- porations receiving their charters directly from legislative enactment and those created pursuant to general laws, inas- much as a failure of the former to perform certain conditions imposed, to enable them to take the benefit of the charter, will not subject their corporate character to attack by third per- sons, while it is otherwise in respect to corporations sought to be created under general laws when there is a failure to comply fully with the conditions precedent to their creation. If by proceedings taken for the purpose of incorporating a company there has been an attempt to comply with the gen- eral statute under which it is sought to be created, and articles of association have been filed, from which the formation of the corporation may be presumed, the corporation, by user, as such, becomes a corporation de facto, with all the rights as to third persons which that imports, although its articles filed are in some particulars defective. It then stands on the same footing as does a corporation de facto whose charter has come directly from legislative enactment, and by which certain con- ditions made requisite to its creation or organization have not been performed.^ 29. Rights, duties and liabilities. ^ "When a company becomes a corporation de facto a relation^ exists between it and its officers which will be recognized as effectual to enable them through such relation to justify the ■a.- United States Bank v. Steiarna, against a subscriber to its capital, be 15, Wend; 314; Buffalo and Allegany held a corporation de faeto, upon proof Railroad Company v. Gary, 26 N. Y. of the feeblest user. 75,, holding, that where a xaib-oad cpi- 3. Williams v. Bank of Michigan,, 7 poratioH,! attempting, to organize un- Wend. 539. der the general law, has filed papers 4. Coxe v. State, 144 N. Y. 396, 39 having color : of, compliance with the N. E. 400. statute, but so defective as to be -in- 5. Lamming v. Galusha,. 81 Hun 347, capable of supporting the incorporation 30 N. Y: Supp. 767, affd. 151 N. Y. as against the people, it may yet, as 648, 45 N. B. 1132. 32 OOKPOBATIONS. exercise of their functions -in the control, management and operation of the business of the de facto corporation which they represent, and for that purpose it is as to third persons no less effectual than a corporation de jure.^ And stock- holders who participate as such in the acts of a corporation de facto are estopped from denying its corporate existence^ Persons who have contracted obligations with a de facto cor- poration, cannot be permitted to attack it because of any de- fect in its organization in order to affect its capacity to sue thereon. Such objections are only available on behalf of the sovereign power of the state, and cannot be raised by private persons to avoid a just liability.^ Irregularity in the incor- poration of a de facto company is not a defense to assess- ments by it to pay an indebtedness.' One who has received property of an assumed corporation through a contract made with it in its corporate, name, where there is also extrinsic proof of the user by it of corporate powers,ls estopped from disputing the incorporation in an action brought to compel an accounting for such property.^" While parties assuming to act in a corporate capacity, without a legal organization as a corporate body, are liable as partners ; to those with whom they contract, to charge any one of them as such, it must be shown that he was so acting at the time the contract sued upon was made, or that upon some consideration he agreed to become liable with the other s.^^ Corporators omd Promoters. 30. In general. The word ' ' promoter ' ' has no precise and inflexible mean- ing. In a comprehensive sense " promoter " includes those who undertake to form a corporation and to procure for it the rights, instrumenta,lities and capital by which it is to carry out the purposes set forth in its charter and to estab- lish it as fully able to»do its businessj- Their work may begin long before the organization of the corporation, in seeking 6. Lamniing v. Galusha, 81 Him 247. v. DarKng, 91 Hun 236, 36 N. Y.' Supp. 30 N. Y. Supp. 7f>7, affcl. 151 X. Y. 153; White v. Eossy 15 Abb. Pr. 66. fi48, 45 N. E. 1133. 9. Rockland & H. Town F. Ins. Go. 7. Aspinwall v. Sacelii. 57 N. Y. 331. v. Buaaey, 48 App. Div. 359, 63 N. Y. 8. Metliodist Episcopal Union Supp. 86. CJiurcli V. Pickett, 19 N. Y. 482, 485; 10. Goimtttereial Bank v. Pfeiffer. 108 Bank of Toledo v. Internatiunal Bank. N'. Y. 242, 15 N. E. 311. ■>1 N. Y. i'i42; Bank of Port Jefferson 11. Fuller v. Rowe, 57 N. Y. 2,^. INCORPORATION AND ORGANIZATION. 33 the opening for a venture and projecting a plan for its de- velopment and may continue after the incorporation by at- tracting the investment of capital in its securities and provid- ing it with the commercial breath of life. A promoter has been defined also as a person acting, by whatever name, in the forming and establishing of a corporation at any period prior to its actual incorporation.^^ Corporators are the associates engaged in organizing a company, and whose functions cease with its organization.^^ A promoter is treated as standing in a confidential relation to the proposed company, and is bound to the exercise of the utmost good faith." The promoter is the agent Of the Corporation and Subject to the disabilities of an ordinary agent. His acts are scrutinized carefully, and he is precluded from taking a secret advantage of the other stockholders.^^ The promoters of a corporation are not the corporation. The legal body is distinct from the individuals who compose it.-^® Any agreement by incorporators which constitutes an' attempt to deprive the board of directors of the proposed corporation of the free exercise of its judgihent with respect to the business of the corporation is void as against public policy." The fact that the proraotiers of a cor- poration have purchased for it a patent right of which they were the owners, at an exorbitant price, furnishes no defense to a stockholder in an action by a receiver of the corporation to recover the amount due on the stock held by him.^' There is no principle of public policy which forbids competent par- ties from entering into an agreement to form a corporation 12. Dickerman v. Npi'tlierii Trust iiim given to obtain secret profits. See Company, 176 U. S. 181. Hyde Parl[ Terrace Co, v. Jacicson Issuance of stock for services in pro- Brothers Realty Co., 161 App. Div. moting a corporation is in violation of noo, 146 N. Y. Supp. 1037. the Stock Corporation Law. See post. Promoters' agreement as to holding par. 139. and transfer of stock construed. See For a general discussion of the law Burden v. Burden, 159 N. Y. 387, 54 concerning prompters, the reader is N. E. 17. - referred 4^0- Ehrich on Promoters. 15. Dickftrman v. Northera Trust 13. ciase v. Lord, 77 N. Y. 1. Co., 176 TJ. S. 181; Brewster v. Hatch, 14. Dickerman v. ISforthern Trust 12^ N. Y. 349, 35 N. E.^ 505; Coltoii Co.. 176 U. S. 181; Brewster v. Hatch, Improvement Co. v. Richtei-, 26 Misc. 1S3 N. Y. 349, 25 N. E. 505. 36, S5 N. Y. Supp. 486. Secret agreement with promoters for 16. Munsoh v. Syracuse 6. & C. R. profits of the corpoi-ation. See Dillon Co., 103 N. Y. 58, 8 N. E. 355. V. Gbminercial Cable On., 87 Hun 444, 17. Rosentlial v. Light, 185 App. 34 N. Y. Supp. 370. Mv; 703, 173 N. Y. Supp. 743. Mortgage by promoters of corpora- 18. Don-is v. French, 4 Hun 393. 3 34 CORPORATIONS. and providing for its future management and control, if the corporation is created according to statutory requirements, and the objects contemplated are lawful and proper.^*"- An agreement providing for the details of management made in advance, might not be binding upon the trustees of -the cor- poration when organized, but such an agreement is not illegal.!*" 31. Sale of property to corporation. Al promoter owes an obligation to every subscriber to dis- close fully all the facts concerning the purchase of property for the corporation and especially the price at which he ac- quired it. Neither law nor equity countenances the making of secret profits by a promoter of a corporation on the sale of property to the corporation.^® A promoter who is also an in- corporator and director stands in the attitude of selling as owner and purchasing as trustee. The law permits no one to act in such inconsistent relations. It does not stop to inquire whether the contract was fair or unfair. It stops the inquiry when the relation is disclosed, and sets aside the transaction or refuses to enforce it, at the instance of the party whom the fiduciary undertook to represent, without undertaking to deal with the question of abstract justice in the particular case. It prevents frauds by making them as far as may be impossible, knowing that real motives often elude the most searching in- quiry, and it leaves neither to judge nor to jury the right to determine upon a consideration of its advantages or dis- advantages, whether a contract made under such circum- stances shall stand or fall.^° It is only where the promoter informs every subscriber that he is personally interested, and of the amount of profit he expects to make on a sale to the corporation, that he will be permitted to make or retain a profit on such sale, and the burden is on him to show that his dealings w8re fair and that no undue advantage has been taken of his fellow subscribers.^ The. sale of property to. a corporation by its inco.rporg.tors for more than its full value for which they received the corporate bonds in pay- ■ 18a. King V. Barnes, lao N. Y. ,a67. 20. Munspn v. Syracuse 6. & C. R. 18b. Lorillard v. Clyde, 86 N. Y. 3B4. Co., 103 N. Y. 58, 8 N. E. 355. 19. Colton Improvemeijt Co. v. 1. CoHon Improvement Co. v. Ritli- Riehter, aS Misc. 36, 55 N. Y. Supp. ter, 26 Misc. 26, 55 N, Y. Supp. 486. 486. INCORPORATION AND ORGANIZATION. 35 ment, which by their terms were to be paid out of the net re- ceipts from the resale of the land, cannot be attacked as fraudulent where the corporation thereafter recognized and ratified the transaction.^ But the promoters of a corporation selling their own property to the corporation at a great ad- vance in price over that which it cost and under circumstances of fraudulent concealment will be compelled to account to the bona fide subscribers of the corporation for the profits made by such sale.^ 32. Promoters' contracts. Agreements between incorporators before incorporation are sometimes embodied in the charter and by-laws of the corporation, in which case they presumably release the orig- inal incorporators from liability to each other, but many times they are not so embodied in the charter and by-laws, in which case the incorporators may remain liable between themselves upon the agreement.* Promoters may make thena- selves personally liable for work done by third persons at their request for the proposed corporation.^ But an agreement to form a company or corporation does not constitute the parties thereto partners, whatever the relation, in the event of a suc- cessful termination; if the scheme proves abortive, the parties are remitted to their former situation.* An agreement be- tween promoters to organize a corporation whereby one of the parties agreed to secure the property and the others to finance the proposition, and for a division of the stock to bo issued between the parties is not void as against public; policy.'' An agreement entered into between promoters or in- corporators that one of them should devote his entire time and attention to the business of the corporation, and no period of service is specified, is a hiring at will and he may quit the -service of the corporation at any time.* 2. Seymour v. Spring Forest Ceme- 541 ; Davis v. Valley Electric Light tery Assn., 144 N. i Y. 333, 39 N. E. Co., . 61 N. Y. Supp. 580, 95 St. Rep. 365. 580. 3. Getty v. Devlin, 54 N. Y. 403 ; 6. Schantz v. Oakman, 163 N. Y. Getty V. Devlin, 70 N. Y.- 504. ,. 148, 57 N. E. 388. 4. Lorillard V. Clyde, 86 N. Y. 884; 7. Queen v. Bejiesch, 191 App. Div. Higgins v. Appelhaum, 186 App. Div. 83, 180 N. Y. 'Supp. 856. 683, 174 N. Y. Supp. 807. , _8. \y"at?on y, Gugiho, 204 N. Y. 535. 5. Hub Publishing Co. v. Richard- 1)8 N. E. 18. son, 13 N. Y. Supp. 665, 37 St, Rep. 36 COKPOKATTONS. 33. Liability for fraudulent representations. Persons who undertake to form a corporation and induce others to subscribe to stock therein, by issuing statements and prospectuses, occupy a position of trust and confidence toward the persons so induced to subscribe, for shares to be issued, and they are bound to exercise the utmost good faith in their transactions. If they make material misrepresenta- tions or conceal material facts in respect to the enterprise, to the injury of tLose who are induced to subscribe, they become liable for damages.^ A promoter's liability is not limited to subscribers w;hom he personally induces to take shares, but it extends to all those who are induced by his agents to sub- scribe for shares,^" and where there are a number of such promoters all the coadventurers are liable in damages for the fraud of an agent employed by them to effect the sale of the corporate securities, without reference to their own moral guilt or innocencCi^^ And whether promoters themselyes actually cause the stock and bonds to be put on the market or merely have knowledge that it is being done by one or more of them in the interest of all, all are severally liable to the purchaser of such bonds and stock for any fraud arising out of false statements contained in the prospectus, although it was signed by only one of them.^^ A fraudulent intent on the part of the author and publisher of a prospectus may be in- ferred from the falsity of the statements therein contained. Where a prospectus is circulated as an inducement to take stock in a corporate enterprise its language is to be interpre- ted by the effect which it would produce upon an ordinary mind, and in estimating the probability of subscribers being 9. Brewster v. Hatch, 132 N. Y. 349, No proceedings taken under section twenty-four of the Stock Corporation Law, shall be deemed to Avork a dissolu- tion, or to create a new corporation or to interrupt in any way the continuity of existence of the corporation at¥ected.* "Every corporation which shall obtain authority to issue shares with no nominal or par value in exchange for par value shares, in accordance with the provisions of the next preceding sections, shall pay to the state treasurer for such privilege a tax of the same amount, and computed in like manner qs upon the organization of a new corporation, authorized to issue shares of the same number and kinds, less one-half of the aggregate amount of all sums previously paid for the privilege of organizing or of increasiiig the capital stock, except that, if less than all the classes of outstanding stock shall be converted into shares wnth no nominal or par valuej the credit shall be one-half of the sums previously paid to the state on account of the creation or issue of the stock so converted; provided, however, that every corporation which shall issue shares with no nominal or par value in accordance withthe provisions of the preceding sections, shall pay a tax for such privilege, which in no case shall be less than twerity-flve' dollars. Neither the secretary of state nor the county clerk shall file any such certificate of aniendment under this article until he is furnished with a receipt for such tax from the state treasurer. The public service commission and transit commission shall have authority and 3. Stock Corporation Law, § 24, ciut normal or par value, see ante, par. added by L. 1 917. eh. 484, and amd. 32. by T.. 1921, chs. 131, &94. Incorpora- 4. Stock Corporation Law. § 24b, as tioti of corporation issuing stock with- added by L. 1921, ch. 694. 52 CORPORATIONS. jurisdiction over the issue and sale of shares of stock with no nominal or par value of any public service corporations in the same manner and to the same extent as such commissions now have or hereafter may have veith respect to shares of stock with par value and nothing contained in this act shall be construed to change or modify the jurisdiction of such commissions or to exempt or relieve a corporation from any requirement of law as to the amount in dollars of paid in capital in cash or otherwise which it must have at any time. ' ' E 46. Alteration and repeal of charter by legislature. The New York Constitution provides that all general laws and special acts passed pursuant to section one of article eight may be altered from time to time or repealed.^ And it is provided by statute that "The charter of every cor- poration shall be subject to alteration, suspension and re- peal, in the discretion of the legislature. ' ''' While the privil eges and franchises granted to a private corporation are vested rights and cannot be divested or altered except with the consent of the corporation or by forfeiture declared by the proper tribunal,^ still a corporation is subject to the gen- eral statutes of the state of its organization applicable to its conduct and management, as well as to the reservation of the right on the part of the legislature to. alter its charter by sub- sequent laws, and a stockholder must be regarded as consent- ing not only to the existing law, but to such alterations as may be made." So charter provisions exempting charitable cor- porations from taxation may be altered or repealed by thp legislature." The fact that a federal circuit court, upon the application of foreign corporations which were merely gen- eral creditors and without notice to the attorney general or any other public official of this state, appoints receivers of a domestic street railway company will not preclude the state from revoking the charter of such corporation in a proper case, and thus prot|cting its own rights and the interests of those resident within its territory." 6. stock Corporation Law, § 34-c, 5 App. Div. 1, 7, 38 N. Y. Supp. 1114. as added by L. 19S1, ch. 694. As to forfeiture of corporate franchise. 6. New York Constitution, art. VIII, see post, chap. XXVIII. 5 1. 9. Martin v. Eemingtou-Martin Co., 7. General Corporation Law, § saO, 95 App. Div. 18, 88 N. Y. Supp. 573. see People ex rel. D. & H. Co. v. Pub- 10. People ex rel Cooper Union v. lie Service Commission, 140 App. Div. Gass, 190 N. Y. 323, 88 N. E. 64. »39, 135 N. Y. Supp. 1000. 11. People v. New York City Railway 8. Boyer v. Village of Little Falls, Co., 57 Misc. 114, 107 N. Y. Supp. 347. COKPOKATE,.NAME AND SEAL. 53 CHAPTER V. CoEPOEATE Name and Seal. Name. 47. Similarity to names of existing corporations. 48. Construction and application of statute. 49. Use pf words "University" or "College." 50. Name indicating connection with national guard or naval miUtia. 51. Unlawful use of certain titles in connection with corporate name. 52. Conflict between names of domestic and foreign corporations. 53. Remedy upon acceptance of improper name by secretary of state. 54. Injunctive relief against improper use of corporate names. 55. Basis of equitable relief. 56. Particular instances. 57. Penalty under civil rights law for unlawful use of name. 58. Duty to use corporate name. 59. Change of corporate name generally. 60. Petition to change name. 61. Procedure on presentation of petition: Eeservation of proposed name by secretary of state. 62. Order authorizing change: Review. 63. When change to take effect. 64. Substitution of new name in pending actions and proceedings. 65. In general. 66. Effect of seal. Seal. Name. 47. Similarity to names of existing corporations. "1. No certificate of incorporation of a proposed corporation having the same name as a corporation authorized to do business under the laws of this state, or a name so nearly resembling it as to be calculated to deceive, shall be filed or recorded in any office for the purpose of effecting its incorporation, or of authorizing it to do business in this state; nor shall any corporation except a religious, charitable or benevolent corporation or bar association be authorized to do business in this state unless its name has such word or words, abbreviation, affix or prefix, therein or thereto, as will clearly indicate that it is a corpora- tion as distinguished from a natural person, firm' or copartnership; or unless such corporation uses with its corporate name, in this state, such an aflOtx or prefix. A corporation formed by the reincorporation, reorganization or consolidation of other corporation or upon the sale of the property or franchises of a corporation, or a corporation acquiring or becoming possessed of all the estate, property, rights, privileges and franchises of any other corporation or corporations by merger, may have the same name as the corporation or one of the corporations to whoso franchises it has succeeded. No corporation shall be hereafter organized under the laws of this state with the word 'trust,' 'bank,' 'banking,' 'insurance,' 54 ' COBPOBATIONS. 'assurance/ 'indemnity,' 'guarantee,' "guaranty,' title,' 'casualty,' 'surety,' 'fidelity,' 'savings,' 'investment,' 'loan' or 'benefit' as part of its name, ex- cept a corporation formed under the banking law or the insurance lavr. 2. No corporation, society or association, whether now existing or hei'eafter organized under or by virtue of the laws of this state, shall ever employ the words 'Lucretia Mott' to designate, describe or name any hospital, infirmary or dispensary, or any part thereof, or any similar institutipn. ' ' 12 And no certificate of incorporation of a proposed corpora- tion, having the same name as tlie namo proposed in a petition for the change of a corporate name, or a name so nearly re- sembling it as to be calculated to deceive, shall be filed in any office for the purpose of effecting its incorporation." 48. Construction and application of statute. The main object of the statute is to prevent a proposed cor- poration about to organize from assuming the name of an ex- isting corporation or one so nearly resembling it as to be cal- culated to deceive and mislead the public.^* The prohibition thus enacted by statute as to corporations is equally appli- cable under general and well-recognized principles to the adoption of a trade name by an individual or copartnership.'^^ It would seem to be clear that the use of the word " Com- pany " in a corporate name, not immediately preceded by tlie conjunction "and," is a compliance with the provision of the statute, that the name of the corporation, or an affix or prefix thereto, must clearly indicate that it is a corporation as dis-, tinguished from a natural person, firm or copartnership,^^ and that the use of the word " Limited " in a corporate name is in compliance therewith." However the application of the " American Cigar Lighter Company " for leave to change its corporate name to " Electric Cigar Lighter Company " Avas denied, on the ground that thie proposed name had not, as a part thereof, some word, abbreviation, affix or prefix thereto, which clearly indicated that the applicant was a corporation.^^ 12. General Corporation Law, § 6, as 99 Misc. 289, 163 N. Y. Supp. 817. amd. by L. 1911, ch. 638, L. 1912, ch. X5. German-American Button Co. v. 2, L. 1913, eh. 24, L. 1916, ch. 22S, Heymsfeld, Inc., 170 App. Dlv. 416, 156 and L. 1917, ch. 594. See also post, N. Y. Supp. 223. par. 51. 16. Eept. of Atty. Genl., Jan. 8, 1912. 13. General Corporation Law, § 62, 17. Eept. of Atty. Genl., Feb. 7, 1912. as amd. by L. 1910, ch. 296. 18. Matter of American Cigar 14. People ex rel. TJ. S. Grand Lodge Lighter Co., 77 Misc. 643, 138 N. Y. V. Payn, 161 N. Y. 229, 232, 58 N. E. 8u|)p. 4.55. 849 ; Wheeler SjTidicate Inc. v. Wheeler, COBPOEATB NAME ASID SEAL. 5') Certificates of authorization to a foreign corporation, the name of which is not in conformity with the statute, should be issued permitting it to do business in this state only with an added affix or prefix conforming to the statute.^^ Existing corporations desiring to reincorporate, reorganize, consoli- date or assume the franchises of a company purchased, are made exceptions to the general provisions of the statute and may take the name of the corporation to which they respec- tively succeed.^" Since all personal loan associations must now be incorporated under the Banking Law, they are ex- cepted from the prohibition contained in this section, and may make use of any words contained therein as part of their cor- porate title, unless prohibited by some other provision of law .^ But the provisions of the statute that no corporation, except one formed under the banking or the insurance law, shall be organized with the word ' ' benefit ' ' as part of its name, pro- hibits the use of the word " aid " in the name as that would clearly lead the general public to believe that some ' ' benefit ' ' was to be derived from membership in the corporation.^ The word ' ' Lloyds ' ' has become synonynious with insurance and the secretary of state should refuse to file a certificate incor- porating a business corporation under such a designation upon the ground that it should be incorporated under the In- surance Law. The object of the statute is to prevent any cor- poration, except one subject to the control of the insurance department, from using in its corporate name the word "in- surance " and posing as an insurance company, when it is not in fact. The statute does not expressly prohibit the use of the word " Lloyds," but its use would none the less be an im- position upon the public and contrary to the public policy as indicated by the statute.^ 19. Kept, of Atty. Gehl., Jan. 8, 1913. tion contained in § 6 of the General 20. People ex rel. U. S. Grand Lodge Corporation Law as to the use of the V. Payn, 161 N. Y. 339, 55 N. E. 849, word "loan" has no application to a holding that a mutual benefit frateraity corporation formed under § 310 of the duly incorporated under the laws of this Banking Law (L. 1909, ch. 10) . Bept. state has an absolute legal right to re- of Atty. Genl., Jiine 30, 1909. incorporate under its present name, by a. Matter of Antipoller Mutual Aid virtue of § 6 of the General Corpora- Society, 100 Misc. 589, 166 N. Y. Supp. tion Law. 386; In re Incorporation of Howard 1. Kept, of Atty. Genl., Sept. 17, Aid Society, 160 N. Y. Supp. 789. J90^ 3. Matter of Barker, 135 App. Div. Use of word "loan."— The prohibi- 16, 119 N. Y. Supp. 777. 56 COEPOBATIONS. 49. Use of words "University" or "eoUege." "No iiidi\'idual, association or corporation not holding- university or college degree — conferring powers by special charter from the legislature of this stato or from the regents, shall confer any degrees, or transact business under or in any way assume the name university or college, till written permission to use such name shall have been granted by the regents under their seal. ' ' 4 » This provision does not apply to a corporation formed under the Business Corporations Law, to conduct a cafe and restaurant but not to engage in anj- educational pursuits.^ But the unrestricted use of the words "university" or "col- lege " in the names of corporations organized under the Busi- ness Corporations Law might lead to abuses and deceptions ; and, it seems, that the discretionary power as to the use of such words . is intended by the statute to be vested in the regents and not in the secretary of state.* 50. Name indicating connection with national guard or naval militia. "No body of men shall be granted a certificate of incorporation under any corporate name which shall mislead, or tend to mislead, any person into be- lieving that such corporation is connected with or attached to the National Guard or Naval Militia of this state in any capacity or way whatsoever. ' • T 51. Unlawful use of certain titles in connection with corporate name. "Any persoii, association or coi-poration, other than a moneyed corporation, who shall within this state directly or indirectly, or through agents or repre- sentatives transact business under, or in anywise use a corporate name or a corporate title with the words 'trust,' 'bank,' 'banking,' 'insurance,' 'as- surance,' 'indemnity,' 'guarantee,' 'guaranty,' 'savings,' 'investment,' 'loan,' 'benefit,' as a part of such name or title, is guilty of a misdemeanor; provided, however, that any domestic corporation, other than a moneyed corporation, here- tofore duly organized and heretofore duly authorized by law to use and on April twenty-ninth, nineteen hundred and four, lawfully using either or any of such words as a part of its lawful corporate title, may lawfully continue to use such corporate title, provided and if it, being a corporation other than a moneyed corporation, shall wherever the name shall be printed, written, engraved or displayed, add, in legibile English characters, of substantially the same size and style as the name, diaeotly under the said name or immediately in connec- tion therewith, wherever so used, the words 'not a moneyed corporation.' "8 52. Conflict between names of domestic and foreign corporations. A certificate should not be granted authorizing a foreign 4. Education Law, § 66, subd. 1, as 7. Military Law, § 341, pt., as amd added by L. 1910, ch. 140. by L. 1911, ch. 210, L. 1912, ch. 69^ 6. Opinion of Atty. Genl,, March 34, L. 1913, ch. 41, and L. 1916, ch. 664. ^^^^- 8. Penal Law, § 666. See also ante 6. Eept. of Atty. Genl. (1907), 282. par. 47. CORPORATE NAME AND SEAT.. 57 company to do business in this state, where there is already a corporation in existence having a similar name.^ While it has been broadly stated that a domestic corporation of the same name as a foreign corporation may file certificates with the secretary of state,^" still the statute clearly indicates an intention to prohibit a domestic corporation from adopting tlie name of a foreign corporation duly authorized to do busi- ness in this state, But where a foreign corporation comes into, and does business in this state without complying with the statutes entitling it to transact business here, a domestic corporation subsequently organized, which adopts the same name as that used by the foreign corporation without knowl- edge of the existence of such corporation, and after its pro- moters had been assured by the secretary of state that no other corporation of that name existed or did business within this state, will not be restrained, upon a motion for a prelim- inary injunction made in an action brought against it by the foreign corporation, from using the name adopted by it dur- ing the pendency of the action." 53. Remedy upon acceptance of improper name by secretary of state. Where the secretary of state files and records a proposed certificate of incorporation, having a name conflicting with that of an existing corpora:tion, and the cancellation thereof may complicate business transactions affecting not only the incorporators and stockholders but those who have had deal- ings with the corporation so formed, relief will not be af- forded to the aggrieved corporation under a writ of certiorari, as the action of the secretary of state is not conclusive and the aggrieved corporation has an adequate remedy by suit in equity.^^ 54, Injunctive relief against improper use of corporate names. The public policy of this state against permitting the use of misleading names by corporations of any character is evi- denced by the legislation on the subject.^' The right to in- 9. Rept. of Atty. Genl. (1904), 348. Co. v. O'Brien, 101 App. Div. 296, 91 10. Eept. of Atty. Genl. (1900), 312. N. Y. Supp. 649. 11. American Tartar Co. v. American 13. B. & P. O, Ellis v. Improved B. Tartar Co., 57 App. Div. 411, 68 N, T. & P. O. Elks, 205 N. T. 459, 464, 98 N. Supp. 236. E. 7S6. 12. People ex rel. Columbia Chemical 58 CORPOBATIONS. junctive relief against the improper use of a corporate name is not limited to cases where the business is of a cominercial or trading character," but may be claimed by charitable, benevolent and patriotic soeieties,i^ and religious corpo- rations.i^ The failure of a foreign corporation to take out a license under section 15 of the General Corporation Law does not prohibit it from bringing a suit in the federal courts to re- strain the use of its corporate name by a domestic corpora- tion, nor is it prevented from bringing such a suit in the state courts.^'' 55, Basis of equitable relief. An injunction lies to restrain the simulation and use by one corporation of the name of a prior corporation which tends to create confusion and to enable the later corporation to ob- tain, by reason of the similarity of names, the business of the prior one. The courts interfere in these cases, not on the ground that the state may not affix such corporate names as it may elect to the entities it creates, but to prevent fraud, actual or constructive. Whether the court will interfere in a particular case must depend upon circumstances ; the identity or similarity of the names ; the identity of the business of the respective corporations ; how far the name is a true descrip- tion of the kind and quality of the articles manufactured or the business carried on; the extent of the confusion which may be created or apprehended, and other circumstance which might justly influence the judgment of the judge in granting or withholding the remedy.^* It is the liability to deception 14. Society of 1813 v. Society of 181 Fed. 183. 1813, 46 App. DiT. 568, 63 N. T. Supp. 18. Higgins v. Higgins Soap Co., 14+ 355. N. Y. 463, 468, 39 N. E. 490; Coming A membership corporation may Glass Works v. Corning Cut Glasa. Co., maintain an action for an infunction re- 197 N. Y. 173, 90 N. E, 449. straining a similar corporation from Use of words "Material Men's" regu- using the same or a similar name. B. lated. Material Men's Mercantile As- & P. O. Elks V. Improved B. & P. O. sociation v. New York Material Men's Elks, 305 N. Y. 459, 98 N. E. 7'56. Mercantile Association, 169 App. Div. 15. Salvation Army v. American Sal- 843, 155 N. Y. Bupp. 706. vation Army, 135 App. Div. 368, 130 Combination of geographical names. N. Y. Supp. 471. — The fact that the distinctive and 16. Matter of Baker, 94 Misc. 661, similar features of both plaintiff's and 158 N. Y. Supp. 633. defendants' names consists of a com- 17. United States L. & H. Co. of Me. bination of geographical names does T. United States L. & H. Co. of N. Y., not deprive the plaintiff of the CORPORATE NAME AND SEAL. 59 and consequent injury which justifies the issuance of an in- junction, and if the court can see that confusion and deception are liable to result from the similarity of names, it will not refuse injunctive relief because damage has not already been done. The right to an injunction does not depend upon the intent with which a name has been adopted.^^ But relief will hot be granted where the only confusion results^ from similar- ity of names and not from the manner of their use/'^ Courts right to protection. German-American Button Co. V. Heymsfeld, Inc., 170 App. Div. 416, 156 N. Y. Supp. 323. Corporate mail addressed to indi- vidual — distribution by referee. — Where one engaged in the manufacture and sale of certain proprietary medi- cines sells to a corporation his business and the sole and absolute and only right to use his name and address, viz., the names, "Dr. David Kennedy of Eondout, N. Y., or Dr. D. Kennedy, Bondout, N. Y., in connection with the manufacture of proprietary medicines, ' ' which business was largely carried on by advertising and correspondence un- der such names, the purchaser has the absolute right and property in such names and addresses, and the sole right to use the same in the business; and where it subsequently appears that the seller is recei%'ing and opening let- ters belonging to the corporation, ad- dressed in the forms aforesaid, such acts are properly restrained by injunc- tion; but the parties by their contract having made it difficult to so separate the letters as to give each his or its own, where their relations are so un- friendly that neither should be allowed to receive and open letters of a confi- dential character intended for the other, a referee should be appointed with power to receive, open and read all letters sent to such names and ad- dresses, and to niake prompt distribu- tion of the same according to their true destination. Dr. David Kennedy Corp. V. Kennedy. 16.5 N. Y. 353; 59 N. ' E. 133. In suit by transferee of assets of dissolved corporation to restrain use of its corporate name, injunction pendente lite granted. Metropolitan Tel. & Tel. Co. V. Met. Tel. & Tel. Co., 156 App. Div. 577, 141 N. Y. Supp. 598. 19. German-American Button Co. v. Heymsfeld, Inc., 170 App. Div. 416, 156 N. Y. Supp. 233. 20. Corning Glass Works v. Corning Cut Glass Co., 197 N. Y. 173, 90 N. E. 449. The manner of using the name is all that will be enjoined, not the simple use of it; for every man has the ab- solute right to use his own name in his own business, even though he may thereby interfere with or injure the business of another person bearing the same name, provided he does not re- sort to any artifice or contrivance for the purpose of producing the impression that the establishments are identical, or do any thing calculated to mislead. Where the only confusion created is that which results from the similarity of the names the courts will not inter- fere. Meneely v. Meneely, 62 N. Y. 437, 30 Am. B. 489. Where, after two brothers named Schinari had established and built up a successful cigarette business under the firm name of "Schinasi Bros.," two brothers of the same name but of a different family established another cigarette business under the same firm name but manufactured cigarettes of a different name and printed on the outside and inside of each box a notice 60 COBPOBATIOWS. of equity must, in such cases, assume that the public will use reasonaiale intelligence and discrimination with reference to the names of corporations with which they are dealing or in- tend to deal, the same as in cases of individuals bearing the same or similar names. It is timely enough in such cases for equity to use its extraordinary powers when it appears that deception or confusion has in fact resulted from the use of a word or a name or when it clearly appears that such result is likely to follow.^ Equity will restrain a corporation from assuming a copartnership name with intent to acquire part of its business and prevent its incorporation.^ While it is a gen- eral principle of law that one's name is his property, and he has the same right to its use and enjoyment as he has to that of any other species of property, it is also true that no man has a right to sell his products or goods as those of another. He may not through unfairness, artifice, misrepresentation or fraud injure the business of another or induce the pu>>lie to believe his product is the product of the other.^ 56. Particular instances. The following corporate names have been held to be con- flicting and relief granted : ' ' The Society of the War of 1812 in the State of New York " and " The Society of the War of 1812;"* " The Tuerk Water Motor Company " and " The Tuerk Water Meter Company;"^ " The German- American Button Company " and " German- American Hand Crochet Button Works;"* "The Little Shop" and "The Little Antique Shop;"'' "The Salvation Army in the United stating that they had no connection 712, 167 N. Y. Supp. 335. with the first firm, and there was no 8. Pettes v. American Watchman's unfair competition arising from an Clock Co., 89 App. Div. 345, 85 Supp. imitation of the packages and wrap- 900. pers of the first firm, fn injunction 3. World's D. M. Assn. v. Pierce, 303 pendente lite should not be granted re- N. Y. 419, 96 N. B. 738. straining the second firm from using 4. Society of 1813 v. Society of the name "Schinasi," or any combina- 1813, 46 App. Div. 568, 63 N. Y. Supp. tion of words in which "Schinasi" 355. forms a part. iSchinasi v. Schinasi, 5. Tuerk Hydraulic Power Co. v. 109 App. Div. 887, 155 N. Y. Supp. Tuerk, 93 Hun 65, 36 N. Y. Supp. 384. 867. 6. German-American Button Co. v. 1. Hygeia Water Ice Co. v. New Heymsfeld, Inc., 170 App. Div. 416, 156 York Hygeia Ice Co., 140 N. Y. 94, N. Y. Supp. 333. 98, 35 N. E. 417; Romecke, Inc. v. 7. Crawford v. Laus, 39 Misc. 348, Romecke & Co., Inc., 179 App. Div. 60 N. Y. Supp. 387. CORPORATE NAME AND SEAL. 61 States " and *' The American Salvation Army;"* the " Ste- phen Merritt Company " and the " Stephen Merritt Burial and Cremation Company;"^ " The Columbian Chemical Com- pany " and " Columbia Chemical Company;"^" " Co-opei»- ative Legal Aid Society " and " The Legal Aid Societv;"^^ " The Howes Grain Cleaner Co." and " The S. Howes Co;"i^ " Lock City Canning Company " and " Lockport Canning Company ; "is " Camm-Eoy Watch Case Co. ' ' and ' ' Roy Watch Case Co.;"" " United States Commercial Agency & Collect- ing Company" and "United States Mercantile Reporting Company ; "^^ ' ' Higgins Soap Company ' ' and ' ' Chas. S. Higgins Company. "^^ But the following names have been held to be non-conflicting and relief refused : ' ' Eichardson & Boynton Company" and "Richardson & Morgan Com- pany ;"" " Buffalo Commercial Bank ". and "Bank of Com- merce of Buffalo;"^* " Corning Cut Glass Company " and " Corning Glass Works ;"^^ " The Hygeia Water Ice Com- pany " and " The New York Hygeia Ice Company;"^" " Gay- 8. Salvation Army in tlie U^iitcicl States , y. ^American Salvation "Army, 135 App. Diy. 268, 120 N. Y. Supp. 471. 9. Stephen Merritt Burial & Crema- tion Co. V. 'Stephen Merritt Co., isr) App. Div. 565, 140 N. Y. Supp. 895. 10. Feople ex rel. .Columbia Chemi- tal Co. V. O'Brien, 101 App, Div. 2&6, 91 N. Y. Supp. 649. 11. Legal Aid Soc. v. Co-op. Legal Aid Soc, 41 Misc. 127, 83 N. Y. Supp. 926. 12. S. Howes Co. v. Howes Grain Cleaner Co., 34 Misc. 83, 52 N. Y. Supp. 468. 13. Lockport Canning Co. v. P'usa- ter, 79 Misc. 293, 139 N. Y. Supp. 640. 14. Roy Watch C. Co. v. Camm-Roy Watch d Cd., 28 Misc. 45, 58 N. Y. Supp. 979. 15. Matter of United States Mercan- tile Reporting '&' Cdllectirig Assn., Limited,' 53 Hun 611, i N. Y. Supp. 916. 16. 'Higgins Co. \. Higgins Soap Co., 144 N. Y. 462, 39 K E. 490. 17. Richardson & Boynton Co. v. Richardson & Morgan Co., 55 Hun 606, 8 N. Y. Supp. 52, holding that a cor poration will not be restrained from using the name of the Richardson & Morgan Company on; account of con- fusion arising from its similarity to the name of plaintiff, the Richardson &, Boynton Company, where the two companies manufactui'e different goods, and where there is no further evidence of confusion than that it occurred in plaintiff's correspondence, not in the ("orporate namfe, but in the address; that in one instance credits were wrongly posted; and that, according to the testimony of a single salesman tof plaintiff, mistakes daily occur, during busy times, as to plaintiff's locality. 18. In re Bank of Attica, 12 N, Y. Supp. 648, 35 St. Rep. 708. 19. Coriiing Glass Works v. Corning Cut Glass Company, 136 App. Div. 919, 110 N: Y. Supp. 1125, affd. 197 N. Y. 173, 90 N. E. 449. 20. Hygeia Water Ice Co. v. New York Hygeia Ice Company, 140 N. Y 94, 35 N. E. 417. 62 COBPOBATIONS. nor Independent League" and " Independencfe League;":^ "Material Men's Mercantile Association Limited " and " Material Men's Credit Agency, Inc."^ A religions corpo- Kation which has adopted the name ' ' The New Thought Church " cannot claim an exclusive right to the use of any such words, and cannot enjoin another from conducting ser- vices under the name of " New Thought Church services."^ 57. Penalty under civil rights law for unlawful use of name. Where a person, having conducted a business under his own name, transferred the business together with the good will to a company incorporated under his individual name, he is deemed to have given to the corporation the right to use his name, and he cannot thereafter maintain an action under sec- tion 51 of the Civil Eights Law creating a penalty for the use of a name or portrait for advertising purposes without writ- ten consent.* 58. Duty to use corporate name. Hyphenating the corporate name or amputating one-half of it is not using the corporate name. And where two corpo- rations have been unified into one corporation there is no war- rant for the use of the name of either as a substitute for the corporate name. So a contract for the sale of property sign,ed by a corporation with a fragment of its entire corporate name, is not well executed; and a check drawn to a corpo- ration designating such corporation by a like fragment of the corporate name is insufficient to form the basis of a recover)^ in an action by the corporation against the drawer.^ 1. The name "Gaynor Independent Inc., 191 App. Div. 73, 180 N. Y. Supp. League," not so nearly resembling that 801. 9f the membership corporation, "Inde- 3. New Thought Church v. Chapin, pendence League," as to be calculated 159 App. Div. 723, 144 N. Y. Supp. to deceive, it may be accepted for re- 1026. cording Vfith the: propos^ certificate 4. White v. White, 160 App. I)iv. of a membership corporation. The: sec- 709, 145 N. Y. Supp. 743. , retary of state is not required to re- 5. Scarsdale Publishing. Co. v, (Jaj- _eord, however, representations of a ter, 63 Misc. 271, 116 N'. Y. Supp. 731. shovel • enclosed in ,a black square, See also postj par. 433. which is included in the proposed cer- A domestic corporation is entitled '■o tificate, as the emblem of the Gaynor use only the corporate name Stated in Independent League. Kept, of Atty. its certificate of incorporation. It may Genl. (1913), Vol. 8, p. 573. not do business under other corporate 2. Material Men's Mercantile Assn., names. Kept, of Atty. Genl., .Feb". 21, Ltd. V. Material Men's Credit Agency, 1912. CORPORATE KAME AND SEAL. 63 59. Change of corporate name generally. "Any corporation now existing or hereafter organized under the business cor- porations law, the transportation corporations law or the membership corporations law, or organized under any law repealed by either of those laws, may at t^y time change its name, provided such change has been authorized by vote of the holders of record of at least two-thirds of the entire capital stock issued and outstanding, irrespective of class or classes of stock; or if the corporation is one authorized to issue any or all of its shares without nominal or par value, then by vote of the holders of record of at least two-thirds of the entire number of shares issued and outstanding, irrespective of class or classes of shares; or if it is ^ nonstock corporation, then by a vote of at least two-thirds of its members, un- less such corporation has more than five hundred members, in which case by a vote of at least two-thirds of its members present, in person or by proxy at the meeting. A vote required by this section shall be taken at a meeting of the stockholders, shareholders or members specially called for that purpose. The notice of the meeting shall state the time and place thereof, the present name of the corporation and the name it proposes to assume. Such notice shaU be signed by the president or vice-president and the secretary and shall be pub- lished once a week for two successive weeks in a newspaper published and circu- lating in the county wherein its principal business office is located, or if it has no business office, in the county in which its principal corporate property is situated, and a copy of such notice shall on or before the day of the first publi- cation be filed in the office of the secretary of state, and a copy shall on or be- fore the first day of publication be either served personally on each stockholder, shareholder or member, or mailed to him at his last known postoffiee address. The proposed name shall be reserved for such corporation by the secretary of state for a period of forty days from the date of the filing of the copy of the notice in his ofl&ee. No action shall- be taken by the stockholders, shareholders or members to change the name of the corpora.tion unless there shall be presented to the meeting a certificate in duplicate of the secretary of state that the name which such corporation proposes to assume is not the name of any other corporation appearing on his index of corporations as authorized to do business under the laws of the state of New York, or a name which he deems so nearly resembling it as to be calculated to ' deceive. ■ ■ , No such corporation shall assume a corporate name which shall contain any word; or "words prohibited bylaw to a corporation of like character. Unless the corporation is a charitable or benevolent corporation, the name which the corpo- ration proposes to assume shall have such word or wor^s, abbreyiation> . afSx or prefix therein or thereto, as will clearly indicate that ' it is a corporation as distinguished from a natural persbn, firm, association or copartnership. ' TTpon the adoption of a resolution by the stockholders, shareholders or members to change the name of such corporation to the name proposed in said notice, the corporation shall file in the' office of the sedretaiy of state and in the office of the clerk of the county in which its' principal business office is located, or if it has no business office, in the office of the clerk of the county in which its principal corporate property is situated, a certificate sigiied, verified and acknowledged by its president or vice-president and secretary. The verification shall be in the form required of a pleading in a court of record and the acknowledgment shall be in the form required of a deed to be recorded within this state. Such certificate 64 OOBPOEATIONS. shall state and set forth the resolution adopted by the stockholder?, shareholders or members, the date of the adoption of such resolution, the date on which the certificate of incorporation was filed in the office of the secretary of state, the law under which the corporation was organized, the name under which the said corporation was originally incorporated, and any subsequent changes therein, and the name which the corporation desires to adopt. There shall be attached thereto the affidavits of service and publication of the notice of the meeting and the certificate of the secretary of state herein provided for. The corporation shall publish a copy of the resolution adopted at such meeting once a week forjwo successive weeks in the newspaper in which the notice of the meeting was pub- lished. The corporation shall file in the office of the secretary of state within forty days after the copy of the notice of meeting was filed in his office an affidavit of publication of the resolution herein required. On and after the day on which such affidavit is filed, the corporation shall be known by the name adopted in such resolution and by no other name. Any action or special proceeding, civil or criminal, commenced by Or against a corporation whose name is so changed shall not abate, nor shall any relief, re- covery or other proceedings therein be prevented, impeded or impaired in conse- quence of such change of name. The plaintiff in the action Or the party insti- tuting the special proceeding, or the people, as the case requires, may at any time obtain an order amending any of the papers or proceedings therein, by the sub- stitution of the new naiiie, without costs and without prejudice to the action or proceeding. " Ba The name of a corporation may be changed jafter incorpo- ration.^ But a domestic corporation cannot, in legal proceed- ings, be properly designated by two names, and cannot, except as authorized by law, change its name, either directly or by user, nor can the public give it a name by which it can be recognized in judicial proceedings, other than that of its creation.'' A change of a corporate name, effected pursuant to the statute, has no effect whatever upon the existence or identity of the corporation or on any right flowing to or from it.^ The change of names of corporations formed under the Education Ijaw is governed by the provisions of that law.* 60. Petition to change ^ame. ' ' A petition to assume another corporate name may be made by g. domestic corporation other than a corporation organized under the business corporation."! 5a. General Corporation Law, § 6fi, , 7. Matter of United States Mortgage as added by L. 1917, eh. 177, and I.. Co., 63 Hun 572, 32 N. Y. Supp. 11; 1919. ch. 309. Scarsdale Publishing Co. v. Carter, 63 6. See General Corporation Law, §§ Misc. 271, 116 N. Y. Supp. 731. 60-65. 8. Kept, of Atty. Genl. (1911), Vol Fprms: Changing name of corpora- 3, p. 588. tion, Form Nos. 82, 23. 9, See Education Law, § 62. COSPOEATE J!JAME AND SEAI^. 65 law, the transportation corporations law or the membership corporations law, or organized under any law repealed by either of those laws, whether incorporated by a general or special law, to the supreme court at a special term thereof, held in the judicial district in which its principal business office shall be situa- ted, or, if it be other than a stock corporation, at a special term held in the judicial district in which its certificate of incorporation is filed or recorded, or in which its principal property ia situated, or in Which its principal operations are or theretofore have been conducted. If it be a banking, insurance or rail- road corporation, the petition must be authorized by a resolution of the directors of the corporation, and approved, if a banking corporation, by the superintendent of banks; if an insurance corporation by the superintendent of insurance, and if a railroad corporation, by the public service commission. The petition to change the name of any other corporation must have annexed thereto a certificate of the secretary of state, that the name which such corporation proposes to assume is not the name of any other (domestic) corporation appearing on his index of cor- porations as authorized to do business under the laws of the state of New York, or a name which he deems so nearly resembling it, as to be calculated to de- ceive. ' ' 10 ' ' The petition must be in writing, signed by the petitioner and verified in like manner as a pleading in a court of record, and must specify the grounds of the application, its present name, and the name it proposes to assume, which must not be the name of any other corporation, or a name so nearly resembling if as to be calculated to deceive; and if it be a railroad corporation, a corporation having banking powers or the power to make loans upon pledges or deposits, or to make insurances, that the petition has been duly authorized by a resolution of the di- rectors of the corporation and approved by the proper officer. ' ' H The petition for a change of the name of a corporation must disclose fully all the facts, relevant and material, that are within the petitioner's knowledge, and so if the petition con- 10. General Corporation Law, § 60, and by its existing name, although as amd. by L. 1910, cli. 396, and L. that be very similar to the name of 1917, ch. 177. another previously incorporated bene- Consolidators' note.— Code of Civil fit fraternity. People ex rel. U. S. Procedure, §§ 3411:241'6, have been Grand Lodge v. Payn, 38 Misc. 375, 59 consolidated in article III of the Gen- N^. Y. Supp.- 851, affd. 43 App. Div. oral Corporation Law so far as they 631, 60 N. Y. Supp. 1146, affd. 161 N. relate to change of name of a corpor- . Y. 229, -55 N. E. 849. ation. The portions of these sectionH Change to similar name. — ^A corpora- relating to the change of the name of tion may chanjie its name from the an individual have been left in the "Bank of Attica" because of its simil- Code of Civil Procedure. The last arity to the "Bank of Attica in At- sentence has been omitted from § 63, tica," another banking corporation, to because consolidated in the County the "Buffalo Commercial Bank," al- Law, § 161, subd. 6. though the new name is similar to the Reincorporation under existing "Bank of Oomraeree in Buffalo." Mat- name. — ^An incorporated mutual bene- ter of Bank of Attica, 59 Hun 615, 12 fit fraternity has an absolute right to JJ. Y. Supp. 648. reincorporate under the Insurance Law 11. General Corporation Law, § 61. 66f. CORPOBATIONS. ceals the fact that it had been enjoined from using its orig- inal name the order granting the change may be vacated.^^ 61. Procedure on presentation of petition; reservation of proposed name by secretary of state. ' ' If the petition he made by a corporation located elsejyhere than in the city - and county of New York, notice of the presentation thereof shall be published once in each week for three successive weeks in a newspaper of every county in whicli such corporation shall have a business office, or if it has no business office, of the county in which its principal corporate property is situated, or in which its operations are or theretofore have been principally conducted,, which news- paper, if it be a banking corporation, shall be designated by the superintendent of banks, if an insurance corporation, by the superintendent of insurance, or if a railroad corporation, by the public service cojnmission. In the city and county, of New York such notice shall be published once in each week for three successive weeks in two daily newspapers published in such county. If the petition be made by a domestic corporation organized under or subject to the religious or mem- bership corporations law the cou,rt may dispense with the publication of the notice of the presentation, of such petition or require notice of such presentation to be. given to such persons and in such manner as the court thinks proper. A copy of the petition and notice of mption shall be filed with the secretary of state, and the proposed name shall thereupon be reserved for said corporation until three weeks after the date of such motion, and until three weeks after the date of any , adjournment of such motion ,if notice of such adjournment shall be filed with the secretary of state, and no certificate of incorporation of a proposed corporation, having the same name as the name proposed in such petition, or a name so nearly resembling it as to be calculated to deceive, . shall be filed in any office for the purpose of effecting its. incorporation, and no corporation- formed without thp state of New York having the same name or a name so nearly resembling it as to be calculated to deceive shall be given authority to do business in this state." IS The requirement that notice of the presentation of a peti- tion for a change in a corporate name be given by newspaper publication, may not be waived by the consent of stockholders , and directors of the corporation.^* 62. Order authorizing change; review. "If the court to- which the petition- is presented is satisfied thereby, or by the affidavit and certificate presented therewith, that the petition is true, and that there is no reasonable objection to the change of name proposed and that the petition has been duly authorized and that notice of the presentation Of the petition, if required by law, has been made, the court shall make an order au- thorizing the petitioner to assume the name proposed on a day specified therein, 12. Tn re Bauman Furniture Co., 163 as amd. by L. 1910, ch. 296. N. Y. Supp. 360, 197 St. Rep. 360. 14. Opinion of Atty. Genl.. Jan. 84, 13. General Corporation Law, § 62, 1913. COKPOKATE NAME AND SEAL. 67 not less than thirty days after the entry of the order. The order shall be directed to be entered and the papers on which it was granted to be filed within ten days thereafter in the office of the clerk of the county in which its certifi- cate pf incorporation, if any, Shall be filed, or if there be none filed, in which its principal office shall be located, or if it has no business office in the county in which its principal property is situated, or in which its operations are or there- tofore have been principally conducted, or in the office of the clerk of the county in which the special term granting, the order is held; and that: a certified copy of such .order shall, within ten days after the entry thereof, be filed in the office of the. secretary of state; and also, if it be a banking corporation, in the office qf the superintendent of banks, or if it be an insurance corporation in the office of the superintendent of insurance, or if it be a railroad, corporation, in the offices of the public service commissions. Such order shall also direct the publication, within ten days after the entry thereof, of a copy tliereof, in a designated newspaper, in the county in which the order, is directed to be entered, once, in each week for four successive weeks. The court may dispense with the publication of a copy of such order and require notice to be ^ven to such per- sons and in such manner as it thinks proper if the petition be made hj a domestic corporation organized under or subject to the religious or membership corporations law. "15 '■ .::•' . .While an order changing the name of a corporation may be revoked,^® the change of the name of a corporation, pursuant to sections 62 and 63 of the General Corporation Law, will not be interfered with by the courts in the absence of fraud or illegality. ' The court will respect the detierinination of those intrusted with the direction of the affairs of the corporation, even,.if it does not meet with the imanimous approval of stock- holders. Thus, where the: change of a corporate name ha,s been duly authorized by a board of directors the court will not interfere, in the absence of fraud, because holders of a large amount of stock object." The moving corporation has no absolute right to make the change, but the matter is left to the discretion of the court, and its decision, where no abuse of discretion is shown, is not reviewable by the Court of Aj)peals.^^ ' Where an application is made by a corporation for a ciiange of its name, which is opposed by another corpo- ration on the ground that the proposed new name of the peti- tioner will result in confusion, the ^ibsence.pf . any element/ of fraud is not controlling, as the court, apart frqm any question of fraud or fraudulent intent, will interfere where there is 15. General Corporation Law, § 63, 17. Matter of ffinds, Noble & Eld- as amd. by L. 1910, ch. S^B. . redge, 173 App. Div. 140, 158 N. Y. 16; Matter of Abyssinian Baptist Supp. 249. Churdi, 13 N. Y. Supp. 919, 37 St. Rep. 18. Matter of U. S. M. R. &. C. 764 AgenpT, 115 N. Y. 176, 21 N. E. 1034. 68 GOKPOBATIONS. reasonable ground to conclude that the granting of the appli- cation will result in injury to the complaining corporation, or in imposition or deceit upon the public, by destroying the identity of such corporations.^' 63. When change to take effect. "If the order shall be fully complied with, and within forty days after the making of the order, an affidavit of the publication thereof shall be filed and leeorded in the office in which the order is entered, and filed in each office in which certified copies thereof are required to be filed, if any, the petitioner shall, on and after the day specified for that purpose in the order, be known by the name which is thereby authorized to be assumed, and by no other name. No proceedings had prior to April fourth, eighteen hundred and ninety-four, under sections two thousand four hundred and fourteen and two thousand four hundred and fifteen of the code of civil procedure for the change of the name of a corporation, shall be invalid by reason of the non-filing of an affidavit of the publication of the order changing such name within twenty days from the date thereof. And no proceeding heretofore had under the provisions of article three, chapter twenty-three, consolidated laws, for the change of the name of a corporation, shall be invalid by reason of the non-filing and recording of such affidavit of the publication of the order changing such name within forty days from the making of such order. "20 64. Substitution of new name in pending actions and proceedings. ' ' An action or special proceeding, civil or criminal, commenced by or against a. corporation whose name is so changed shall not abate, nor shall any relief, re- covery or other proceeding therein be prevented, impeded or impaired in con- sequence of such change of name. The plaintiff in the action or the party insti- tuting the special proceeding, or the people, as the case requires, may at any time, obtain an order amending ainy of the papers or proceedings therein, by the sub- ttitution of the new name, without costs and without prejudice to the action or proceeding, ' ' 1 Seal. 65. In general. ' ' Every corporation as such has power, though not specified in the law under which it is incorporated, * * '^ to have n common seal, and alter the same at pleasure. ' ' 2 A corporation, like an individual, may adopt any seal that is convenient for the particular occasion. The only limitation of the rule is, that the seal adopted must be affixed as the seal 19. Matter of United States Mort- as amd. by L. 1913, ch. 731, and L. gage Co.. 83 Hun 5n, 33 N. Y. Supp. 1921, eh. 131. 11; Matter of Bank of Europe, 109 1. General Corporation Law, § 65. Misc. 363, .179 N. Y. Supp. 664. 2. General Corporation Law, § 11, 20. General Corporation I^aw, § fi4, subd. 2. COBPOEATE NAME AND SEAL. 69 of the corporation.^ And it is provided by statute that " An instrument or writing duly executed, in the corporate name of a corporation, which shall not have adopted a corporate seal, by the proper officers of the corporation under their private seals, shall be deemed to have been executed under the cor- porate seal,"^ and if an instrument, which requires a seal, is in all other respects properly signed and executed, it should not be declared invalid because the corporate seal was not at- tached, where it affirmatively appears that the " [L. S.] "was adopted and used for the occasion as the seal of the corpo- ration.^ "While it is always safer for a corporation to use its corporate seal in the execution of simple contracts, if one has been adopted, in order to avoid objections, yet its use is not absolutely necessary to the validity thereof.^ It is not neces- sary that the proceedings of a corporation, at its corporate meetings, should be authenticated by its seal.'' The officer, before whom a corporate deed is acknowledged, is not re- quired to take evidence that the corporate seal was affixed by due authority, or as to the title of the officer who executed it.* 66. Effect of seal. "A seal upon an executory instrument is only presumptive evidence of a sufficient consideration, which may be rebutted, as if the instrument was not sealed. "9 3. Kusling V. Union Pipe & Construe- 6. Hoag v. Lament, 60 N. Y. 96 ; tion Co., 5 App. Div. 448, 39 N. Y. Whitford v. Laidler, 94' N. Y. 145; Supp. ai6, affd. 158 N. Y. 737, 53 N. Linkauf v. Caiman, ItO N. Y. 50, 17 B. 1131. N. E. 389. One seal presumed to be adopted by An agreement for services with a cor- both parties. — ^Where an instrument poration is a simple contract and does recited "In witness whereof (the par- not require the corporate seal. Val- ties) have hereunto set their hands ente v. International Milling Co., 119 and seals," and was signed "Union Pipe App. Div. 127, 103 N. Y. Supp. 966. & Construction Co., by Calvin Detrick, 7. Brady v. The Mayor, etc. of Pres't, Jos. L. Eusling," and opposite Brooklyn, 1 Bai-b. 584, 591, holding the name of Eusling only there was a that whenever a corporation is acting seal, it was held that the seal would within the scope of the legitimate pur- be presumed to be the seal of both poses of its institution, all its con- parties. Eusling v. Union Pipe & Con- tracts, whether sealed or unsealed, struetion Co., 5 App. Div. 448, 39 N. written or (through its agents) by Y. Supp. 216, affd. 158 N. Y. 737, 53 parol, are valid. N. E. 1131. 8. Canandarqua Academy v. Mc- 4. General Construction Law, § 45. Kechnie, 19 Hun 62. 5. G. V. B. Mining Co. v. First Nat. 9. Civil Practice Act, § 342. Bank, 95 Fed. 233. 70 COEPOEATIONS. And so it is the rule that the seal of a corporation like the seal of an individual when aflSxed to a contract is presumptive evidence of a sufficient consideration for the contract.-^" It is an ancient and well-established rule of law that where the seal of a corporation is affixed to a contract or written instrument, to which the corporation is a party, and it is signed by the president and secretary or other proper officers, it will be pre- sumed that such officers did not exceed their powers, as the seal is prima facie proof that it was attached by proper authority, and it lies with the party objecting to its execution to show that it was affixed surreptitiously or improperly." Although the presence of the seal of a corporation upon an in- strument is prima facie proof that it Was attached by proper authority, . it is such proof as may be conclusively rebutted.^' Now that it is no longer necessary for a corporation to con- tract under seal, it does not follow that the same presumption should attend an unsealed contriact purporting to have been made by the officers of a corporation.^^ The effect of affixing' the seal of a corporation to a contract is the sarue as when a seal is affixed to the contract of an individual, it renders the instrument a specialty.^* But the commercial paper of a cor- poration negotiable in form does not lose the quality of negotiability by having attached thereto the corporate seal.^^ 10. Mutual L. Ins. Co. v. Yatea Co. 19 Hun 63; Logan v. Fidelity-Phenix Nat. Bank, 35 App. Div. ai8, 54 N. Y. Insurance Co., 161; App. Div. 404, 146 Supp. 743. N. Y. Supp. 678 11. Gay V. Hudson Eiver Electric 12. Gause v. Commonwealth Trust Power Co., 190 Fed. 773, 788 ; Whitney Co., 196 N. Y. 134, 89 N. E. 476. V. Union Trust Co., 65 N. Y. 576; 13. People's Bank v. St. Anthony's Trustees Can. Academy v. McKeohnie R. C Cliurch. 109 N. Y. 512, 535, 17 e.t al., 90 N. Y. 618; Jourdan v. N. E. 408. Long Island R. Co., 115 N. Y. 380, 384, 14. Clark v. Farmers' Woolen Mfg. 23 N. E. 153; Quackenboss v. Globe & Co., 15 Wend. 256. R. F. Ins. Co., 177 K Y. W, 69 N. E. 16. Weeks et al. v. Esler, 143 N. Y. 233 ; United Surety Co. V. Meenan, ail 74, 38 K E. 377; Chase National N. Y. 39, 46, 105 N. E. 106 ; Lovett v. Bank t. Faurot, 149 N, Y. 532, 44 N, Steam Saw Mill Assn., 6 Paige 54, 60; E. 164. Canandarqua Academy v. McKeohnie, DOMICILE AND PLACE OF BUSINESS. 71 CHAPTER VI. Domicile and Place of Business. 67. Principal office and place of business. 68. Change of place of business. 67. Principal office and place of business. The principal office of a domestic corporation, which, must be designated in its certificate of incorporation,^^ must be located within this state." The terms " principal office " and ' ' principal place of business ' ' are synonymous when used in respect to corporations organized under the laws of the State of New York.^^ And it is provided by statute that the term " office of a corporation " means its principal office within the state, or principal place of business within the state if it has no principal office therein.^' A domestic corporation at all times has its exclusive residence and domicile in the juris- diction of its origin.^" The statement in the certificate of in- corporation of the principal place of business fixes the location for purposes pjp taxation,^ and is conclusive,^ though such designation was made for the purpose of avoiding tax- ation and though its business is transacted elsewhere mainly".' Likewise on a motion for a change of venue a domestic corpo- ration is deemed to be a resident of the county in which it has its principal office and place of business,* though it may have other places of business.^ In the case of a street rail- road company, its place of residence must be ascertained by 16. See ante, par. 17. The deaig- 2. Union Steamboat Co. v. CSty of nation of the place of part of the busi- Buffalo, 82 N. Y. 351; People ex rel. nesa without the state, need not be Knickerbocker Press v. Barker, 87 Hun more definite than the designation of 341, 34 N. Y. Supp. 269, affd. 147 N. Y. the place of business within the state. 715, 42 N. E. 735. People ex rel. Belknap v. Beach, 19 3. Western Transportation Co. v. Hun 259. Scheu, 19 N. Y. 408. 17. Rept. of Atty. Genl. (1901), 353. 4. Speare v. Troy Laundry Machin- 18. People ex rel. Knickerbocker ery Co., 44 App. Div. 390, 60 N. Y. Press V. Barker, 87 Hun 341, 34 N. Y. Supp. 1080; Finch School v. Finch, l44 Supp. 269, affd. 147 N. Y. 715, 43 N. App. Div. 697, 139 N". Y. Supp. 1. Spo j;. 725. also post, par. 443. 19. General Corporation Law, § 3, pt. 6. Rossie Iron Works v. Westbrook, 20. Douglass v. Phenix Ins; Co., 138 59 Hun 45, 13 N. Y. Supp. 141; Gen- N. Y. 209, 33 N. E. 938. eral Baking Co. v. Daniell, 181 .\-p]r. 1. Tax Law, § 11. Kt. 501, 170 N. Y. Supp. 365. 72 COBPOBATIONS. its place of business, and, if it have several places of business, it must also be deemed to have several places of residence." And a railroad corporation is deemed to have a residence in nny county through which it operates its road.' But the rule applicable to railroads does not apply to other domestic cor- porations having a principal office fixed by their certificates of incorporation, and branch offices in other counties where they transact a part of their business.* However, for the pur- pose of determining the jurisdiction of a county court a domestic corporation is a resident of the county in which it has its principal place of business or in which any part of its plant, shops, factories or offices is actually located, or in case of a railroad, where any portion of the road is operated with- in the county.^ 63. Change of place of business. The provision of the statute that the certificate of incorpo- ration shall state the location of " its principal business office," does not preclude the corporation from thereafter changing its location, or require that the place of business designated in the certificate shallbe regarded as its principal place of business,^" and it is specifically provided by statute that: "Any stock corporation now existing or hereafter organized under the laws of this state, except moneyed corporations, may at any time change its princi- pal office and place of business from the city, town or county named in its certi- 6. Poland v. United Traction Co., 88 shops, factories or offices is actually App. Div. 281, 85 N. Y. Supp. 7, affd. located within the county, or in case 177 N. Y. 557, 69 N. E. 1189. of a railroad corporation where any 7. Polley V. Lehigh Valley E. Co., portion of the road operated by it is 138 App. Div. 636, 123 N. Y. Supp. within the county, it is deemed a resi- 708, aflfd. 200 N. Y. 585, 94 N. E. 1098. dent of the county; and personal ser- 8. General Baking Co. v^Daniell, 181 vice of a summons, made within the App. Dir. 501, 170 N. Y. Supp. 365. county, as prescribed in that act, or 9. For the purpose of determining personal service of a mandate, whereby the jurisdiction of a county court, in a special proceeding is commenced, either of the cases specified in section made within the county, as prescribed 67 of the Civil Practice Act, a domes- in that act for personal service of n tic corporation or joint-stock assoeia- summons, is sufficient service thereof tion, whose principal place of business upon a domestic corporation wherever is established, by or pursuant to a it is located. Civil Practice Act, § 68. statute, or by its articles of assoeia- 10. XIptegrove v. Sehwarzwaelder 46 tion, or whose principal place of busi- App. Div. 20, 61 N. Y. Supp. 633, affd, nesB or any part of its plant or plants, 167 N. Y. 587, 60 N. E. 1121. DOMICILE AND PLACE OF BUSINESS. 73 fieate of incorporation, or to which it may have been changed under the proviaions of this section, to any other city, town or county in this state, in which it may desire to actually transact and carry on its regular business froin day to day, provided that such change has been authorized, either by unanimous consent of the stockholders expressed in writing and duly acknowledged and filed in the ofiee of the secretary of state (or), by a vote of the stockholders of said corporation at a special meeting of the stockholders tjalled for that purpose, or such change has been effected by an act of legislature creating a separate and distinct county wholly within the limits and boundaries of a then existing county or counties. When such change shall be authorized by the stockholders or effected by the creation of a new county wholly within the limits and boundaries of the then existing county or counties as herein provided, the president and secretary and a majority of the directors of such corporation shall sign a certificate stating the name of said corporation, the city, town and county where its principal oflice and place of business was originally located, and to which it may have been sub- sequently changed, and the city, town and county to which it is desired to change its said principal ofice and place of business, and that it is the purpose of said corporation to actually transact and carry on its regular business from day to day at such place, and that such change has been authorized as herein provided, and the names of the directors of said corporation and their respective places of. residence, which certificate shall be verified by the oaths of all the persons sign- ing the same, and when so signed and verified, shall be filed in the office of the secretary of state and a duplicate thereof in the ofSioe of the clerk of the county from which said principal office and place of business is about to be removed or changed, and another in the oface of the clerk of the county to which said removal or change is to be made, and thereupon the principal office and place of business of such corporation shall be changed as stated in said cer- tificate. "11 The failure to file the required certificate of change may not render actual change ineffective, the statute having been otherwise complied with.^ And the fact that a corporation has changed its place of business without complying with this section is not a bar to its suit for an injunction to enforce an agreement.^' 11. stock Corporation Law, I 13, as place of business, Form No. 39. amd. by L. 1915, ch. 117. 12. Uptegrove v. Schwarzwalder, 46 Not applicable to moneyed corpora- App. Div. 20, 61 N. T. Supp. 623, affd. tions.— Stock Corporation Law, § 5. 167 N. T. 587, 60 N. E. 1121. Forms: Consent of stockholders to 13. Kfem Horse Remedy Co., Inc. v. change place of business, Form No. Seiner, 172 App. Div. 152, 158 N. Y. 38. Certificate of president; secretary Supp. 193. and majority of directors to change of 74 COBPORATIONS. CHAPTER Vir. By-Laws and Records. By-Laws. 69. Power to make by-laws: Validity: Publication. 70. Construction and effect of by-laws. 71. Power to alter, amend or repeal by-laws. Maintenance of Books of Account and Stock- Bool;. 72. In general. 73. Penalty for failure to keep books. 74. Stock book as evidence. 75. Minute books as evidence. 76. Account books as evidence. By-Laws. 69. Power to make by-laws; validity; publication. "Subject to the by-laws, if any, adopted by members of a corporation directors may make necessary by-laws of the corporation. ' ' 14 the By-laws, which are primarily for the protection of the cor- poration enacting them and its stockholders,^^ must be reason- able and adapted to the purposes of the corporation,^" and 14. General Corporation Law, § 34, as amd. in other particulars by L. 1917, oh. 538. 15. Ejiox v. Eden Milsce American Co., 148 N. Y. 441, 461, 42 N. E.- 9S8. 16. People V. ', Medical Society of County of Erie, g4 Barb. 570. . Valid by-laws. — By law conferring actual authority on a purchasing agent to make contracts. Levey v. New York Central E. Co., 4 Misc. 415, 24 N. Y. Supp. 124, affd. 144 N. Y.^649, 39 N. E. 493. ,. Defendant a corporation organized under the act "to incorporate the As- sociated Press of the state of New York" (ch. 754, L. 1867), adopted a by-law prohibiting its members from receiving or publishing "the regular news dispatches of any other news as- sociation covering a like territory and organized for a like purpose." A sus- pension of all the rights and privileges of the association was provided as, a penalty for a violation of said pro- vision. In an actioji to restrain de- fendant from enforcing this penalty, it was held, that the association had power to enact the by-law; that it was not objectionable either as unreason- able and oppressive, as tending to re- strain trade and competitioii and to create a monopoly, or as an unlawful interference with vested ' property rights, at least in the absence of evi- dence that the alleged violation for which the penalty was sought to be en- forced grew out of acts in the per- formance of a contract entered into be- fore the passage of the by-law; nor did it create a restriction upon the liberty of the press. Matthews et al. V. Associated Press of the State of BY-LAWS ASD RECOBDS. 75' must not be inconsistent with any statute or the decisions of the courts." A by-law requiring a vote of 90 per cent of the stockholders to reduce or increase the number of directors, is invalid and contrary to section 26 of the Stock Corporation Law.^^ So also by-laws which disturb vested rights are in- valid.^^ A by-law of a dairy association imposing a fine upon members not furnishing a certain quantity of milk is void.^° And by-laws of a society which forbid a member to work at his trade at such prices as he chooses to accept, and compel him to join in a " strike " by punishing him for refusing so to do, are void as against public policy.-^ A minority stock- holder of a manufacturing corporation is not entitled to have a new by-law annulled and wholly set aside, on the claim that it is unreasonable and beyond the corporate powers, when it appears that the by-law deals to a large extent with the ordi- nary business of the corporation and is not void as a whole, and it does not appear that the trustees have threatened any specific act in subversion of the charter to the injury of stock- holders.^ Urider subdivision 5 of section 11 of the General Corporation Law requiring by-laws to be " published for at least once a week for two successive weeks," it is not neces- New York, 136 N. Y. 333, 32 N. E. and void, because it disturbed vested 981. rights. Parish v. New York Produce Memljership may be limited by by- Exchange, 60 App. Diy. 11, 69 N. Y. Jaws by qualifications stated therein Supp. 764, affd. 169 N. Y. 34, 61 N. E. People ex rel. Sluiter v. Holstein-Erie- 977. sian Associatioii, 41 Hun 439, 3 St. 20. Monroe Dairy Association v. fiep. 142. Webb, 40 Aj)p. Div. 49, 57 N. Y. Supp. By-law of a trade union benefit in- 572^ in which CuUen, J., said: "I surance corporation that a reinstated have failed to find a reported case in member should not participate until this country where recovery has been six months after the arrears are paid had for a fine imposed by a by-law of n up is not unreasonable. Hart v. Adams private corporation. ' ' Cylinder & Web Press, 69 App. Div. 1. People ex rel. Doyle v. Benevolent 578, 75 N. Y. Supp. 110. Society, 3 Hun 361. "~ 17. Eaub V. Gerkin, 127 App. Div. 42, 2. Burden v. Burden, 159 N. Y. 387, 111 N. Y. Supp. 319. 54 N. E. 17. 18. Katz V. H. & H. Manufacturing Suit to have by-law declared illegal Co., 109 App. Div. 49, 95 N. Y. Supp. and void and to restrain directors from ■663, affd. 183 N. Y. 578, 76 N. E. enforcing same against plaintiff is not 1098. maintainable, where a remedy at law 19. Matthews v. Associated Press, exists, Thomas v. Musical Mutual Pro- 136 N. Y. 333, 33 N. E. 981. tective Union, 121 N. Y. 45, 24 N. E. A By-law directing a division of s 24. gratuity fund held to be unreasonable 76 "" OORPOKATIONS. sary to show publication on the same day of each week; it being sufScient if made on any day of each week for the re- quisite number of weeks.^ 70. Construction and effect of by-laws. A by-law duly made has the force and effect of a statute.* As to third persons by-laws are private regulations binding as between the corporation and its members or third persons having knowledge of them, but of no force as limitations per se as to third persons of an authority, which, except for the by-law, would be construed as within the apparent scope of the agency.^ A by-law of a corporation respecting the powers of an executive committee of a board of directors must be con- strued with reference to the statute defining their powers and term of office.® 71. Power to alter, amend or repeal by-laws. The power to make by-laws is to make such as are not in- consistent with the constitution and the law; and the power to alter has the same limit, so that no alteration can be made which will infringe a right already given and secured by a contract of the corporation. An alteration is a pro tanto re- peal ; but no private corporation can repeal a by-law so as to impair rights which have been given and become vested by virtue of the by-law afterwards repealed;'' and this although the power is reserved by its charter to alter, amend or repeal its by-laws.^ In the absence of any specific statutory author- ity or provisions in the articles of incorporation, or in by-laws duly adopted by the stockholders, the directors of a business corporation have no power to pass an amendment to the by- 3. Wood V. Knapp, 100 N. Y. 109, 2 change, «0 App. Div. 11, 17, 69 N. Y. N. E. 633. Supp. 764, affd. 169 N. Y. 34, 61 N. 4. Timolat v. Held Co., 17 Misc. 556, E. 977 ; Bookwell v. Knights Templars 40 N. Y. Supp. 693 ; MoPermott v. & Masonic Mutual Aid Assoc, 134 App. Board of Police, etc., 5 Abb. Pr. 482, Div. 736, 119 N. Y. Supp. 515. 25 Barb. 635. Reasonable amendment of by-laws 5. Eathbun v. Snow, 123 N. Y. 343, of New York Produce Exchange. 349, 25 N. E. 379. See also post, par. Parish v. New York Produce Exchange, 416. 169 N. Y. 34, 61 N. E. 977. 6. Commercial Wood & Cement Co. 8. Kent v. Quicksilver Mining Co., V. Northampton P. C. Co., 115 App. 78 N. Y. 159; Farmers' Loan & Trust Div. 388, 100 N. Y. Supp. 960, affd. Co. v. Aberle, 19 App. Div. 79, 46 N. 190 N. Y. 1, 82 N. E. 730. Y. Supp. 10. 7. Parish v. New York Produce Ex- BY-LAWS ANH RECORDS. 77 laws under which the directors may assume to expel a fellow director from the board.' Maintenance of Books of Account and Stock Book. 72. In general. "Every stock corporation shall keep at its oifice correct books of account of all its business and transactions, and a book to be known as the stock book, con- taining the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. ' ' 10 A corporation cannot be permitted to defeat the objects of the statute by omitting to keep the books prescribed.^^ A pre- sumption that books have been kept and are in existence exists in favor of the officers of a corporation in a proceeding to punish them for contempt.^ Where one stockholder contracts with another stockholder for the purchase and sale of shares of stock at the book value as shown on the accounts of the cor- poration, such a contract does not require or justify the inter- vention of a court of equity iu the management and control of the books of account of the corporation.^^ 73. Penalty for failure to keep books. "Every corporation that shall neglect or refuse to keep or cause to be kept such books (books of account and stock book), or to keep any book open for inspection as herein requiredi, shall forfeit to the people the sum of fifty dollars for every day it shall so neglect or refuse. If any officer or agent of any such 9. Raub v. Gerken, 127 App. Div. 42, poration Law, requiring stock corpora- Ill N. Y. Supp. 319. tions to keep a book containing a list 10. Stock Corporaiion Law, g 32, ,pt., of stockholders and to allow an inspec- as aind. in other particulars by L. 1916, tion thereof. People ex rel. Venner v. ch. 127, and L. 1918, ch. 137. New York Life Insurance Co., Ill App. Books of foreign cotporations.— See Div. 183, 97 N. Y. Supp., 465. post, chap. XXXII. Books of accounts of transactions in Sections 32 and 33 of the Stock Cor- other states need not be kept at the poration Law have reference to the principal ofSce. Bept. of Atty. Genl. management and control of corpora- (1901) 353. tions and have no reference to the 11, People ex rel. Richmond v. Stock Transfer Tax Law. Bept. of Pacific Mail Steamship Co., 50 Barb. Atty. Genl. (1911), Vol. 2, p. 674. 280, 34 How. Pr. 193. As, the New York Life Insurance 12. Feiilon v. Dempsey, 50 Hun 131, Company is a mutual company, with- 2 N. Y. Supp. 763. out stock, it Is not within the provi- 13. Drucklieb v. Harris, 209 N. Y. sions of this section of the Stock Cor- 211, 102 N. E. 599. 78 COfiPORATlONS. corpoiatiou shall wilfully neglect or refuse to make any proper entry in such book or books, or shall neglect or refuse to exliibit the same, or to allow them to be inspected and extracts taken therefrom as provided in this section, the corpo- ration and such officer or agent shall each forfeit and pay to the party injured a penalty of fifty dollars for every such neglect or refusal, and all damages re- sulting to him therefrom. It shall be a defense to any actiSn for penalties under this section that the person suing therefor has within two years sold or offered for sale any list of stockholders of such corporation or of any other corporation, or has aided or abetted any person in procuring any stock list for any such purpose. Nothing herein impairs the power of the courts to compel by mandamus or judgment the production for examination by any stockholder of the stock books of a corporation. ' ' 14 It will be noticed that under the statute there are two classes of penalties coritemplated. One is a penalty for fail- ing to keep in the office of the corporation certain books, in- cluding a stock book containing the names, alphabetically ar- ranged, of all persons who are stockholders of the corpora- tion, showing their place of residence and other matters. For the failure to keep or cause to be kept such books, the corpo- ration is made liable for a penalty which is given not to an individual stockholder but to the people.^^ The other class of penalties is for the refusal of the corporation, through its officers or agents to exhibit the stock book and allow it to be inspected and extracts taken therefrom.^" A stockholder of a stock corporation cannot maintain an action to recover of it the penalty imposed upon it for its failure or neglect to keep, or keep open for inspection^ such a stock book as is required by the statute, the right of action being given to the people alone." 74. Stock book as evidence. "The stock book of every such (stock) corporation and the books of account of every bank shall be presumptive evidence of the facts therein so stated in favor of the plaintiff, in any action or proceeding against sucli corporation or any of its officers, direetorajor stockholders. ' ' 18 The statutory provision making booka of a atock corpora- tion evidence in an action against the corporation or any of 14. stock Corporation Law, § 33, pt. i3 Misc. 681, 88 N. Y. Supp. 398; as amd. . by L. 1916, ch. 137, and 1-. Moore v. Institute of Educational 1918, ch. 13T. Travel, 89 Misc. 369, 151 N. Y. Supp. 16. Lozier v. Saratoga Gas, E. L. 4; 939. V. Co., 59 App. Div. 390, 69 N. "> . 18. Stock Cor[ioration Law, § 32, pt. Supp, 347. _ as amd. by L. 1916, cli. 127, and }.. 16. See post, par. 315. 1918, ch. 137. ' 17. Billingham v. Gleanoii Mfg. Co., BV'-LAVVS AND KECOKDS. 79 its officers, directors or stockholders is expressly limited, with the exception of banks, to the^stock book. The statute does not make the stock book the only competent evidence of such facts or preclude the plaintiff, in ^n action brought against a director of a corporation which neglected to keep a stock book, from showing, by common-law evidence, that he was a stock- holder and was thus qualified to act as director.^® 75. Minute books as evidence. The books of corporations for many purposes are evidence, not only as between the corporation and its members, and be- tween members, but also as between the corporation or its members and strangers. They are received in evidence gen- erally to prove the corporate acts of a corporation such as its incorporation, its list of stockholders, its by-laws, the formal proceedings of its board of directors and its financial con- dition wheh its solvency comes in question.^* Accordingly books wherein are recorded the transactions of a corporation at its meetings, the resolutions adopted or the election of of^ fleers, are evidence of the facts contained in them, whenever those facts are necessary to be proved, no matter whether they are offered in favor of the corporation or against it.^ And as between stockholders, the books of a corporation and sworn copies thereof are competent evidence to show the acts of the corporation.^ Entries in the minute books of a corpo- ration, made over fifty years ago and referring to things which were done at that tinde, showing that the corporation had exercised, from time to time, acts of ownership in respect to certain land, are competent to prove title to the land in thie corporation by adverse possession.^ The omission of the Sec- 19. Htriies a-. Wesley, 13 Hun 492; 333, 62 N. Y. Supp. 775. Union National Bank v. Scott, 53 App. 1. Blake v. Griswold, 103 N. Y. 439, Div. 65, 66 N. Y. Supp. 145. 434, 9 N. E. 434; Leonard v. Faber, 80. Sigua Iron Co. v. Brown, 171 >' 52 App. Div. 495, 65 N. Y. Supp. 391; Y. 488, 496, 64 N. E. 194. People v. Bumham, 119 App. Div. 302, In an action to enforce the UaWlity 313, 104 N. Y. Supp. 725; Matter of of an alleged director for failure of New York & Westchester Towp Site the corporation to file an annual report, Co., 145 App. Div. 633, 130 N. Y. the books of the corporation have been Supp. 414. • • , held competent to establish that the 2. Hubbell v. Meigs, 50 N. Y. 480. defendant was a director, and, possibly, 3. Hamershlag, v. Duryea, 58 App. that he was a stockliplder. St^, George Div. 288, 68 N. Y. Supp.. 1'061, aftd. ^iiieyard Co. v. Fritz. 48' App. Div. 172 N. Y. 632, 65 N. E. 1117.' 80 COEPOBATIONS. retary of a coi-poration to sign the minutes taken by him at a particular meeting and entered in the original minute book, does not render such minutes incompetent upon the trial of an issue as to whether the corporation passed a certain reso- lution at that meeting.^ 76. Acconnt books as evidence. Accounts and entries in the books of a corporation are com- petent as evidence of declarations and admissions upon the part of the corporation in a controversy between the corpo- ration and a third person or corporation, and may be proved as such.^ But in an action by a corporation its books of ac- count are mere declarations in its favor and are not admis- sible in evidence.® And the general rule is that they are not evidence against an officer, director or stockholder of the cor- poration, in an action against them, in the absence of proof that he had something to do with them or had knowledge of their contents J The mere fact that a party is a trustee of a corporation does not charge him with actual knowledge of its business transactions and of the entries made on its books, so as to render the books of the corporation per se evidence against him.* But in an action by the trustee of a bankrupt cor- 4. Woodhaveu Bank v. Brooklyn been improperly appropriated, the Hills Imp. Co., 69 App. Div. 489, 74 books of account of the corporation N. Y. Supp. 1033. See also post, par. are not per se competent evidence 432. against him to establish a liability. 5. Matter of Randall, 90 App. Div. Presumption as to books of corpora- 192, »5 N. Y. Supp. 1089. ^^°^ received in evidence and as to 6. Matter of Dittman, 65 App. Div. ''^'it to rely upon facts shown thete 343, 73 N. Y. Supp. 886. ^^' — ^* ^'^' ^^ assumed on appeal to 7. Rudd'v. Robinson, 136 N. Y. 113,'^ '^* ^°"'"* "* ^PP''^^^ ^^^^ ^he books 26 N. E. 1046; Sigua Iron Co. v. °\ ^ ^'"•P"-^""'! ^^re properly re- Brown, 171 N. Y. 488, 64 N. E. 194; Z 'l'"'^?"- ^^""'* *''' ^°"^'' Leonard v. Faber, 53 ifcpp. Div. 495 I^Z\TT' '" "\ T '^'"'* Aon i!= -NT -o- c! o«, ,T. ^"^"^ ^^ ^^^ Corporation to recover 499, 65 N. Y. Supp. 391; Minor v. ^^^ belonging to it Crosby, 76 App. Div. 561, 78 N. Y. oiin„/^ <■„ v t, • V □ ^n. tT , T, ' alleged to have been received and re- Supp. 594; People v. Bumham, 119 twined by them for their individual App. Div. 302,. 313 104 N. Y. Supp. benefit, and also that the plaintiff hS 735; Thayer v. Schley, 137 App. Div. a right to rely upon the facts shown 166 173, 121 N. Y. Supp. 1064; Eudd thereby, when ho appeal was takln by V. Eobmson, 136 N. Y. 113, 117, 36 the defendants. Saranac & L. P R N. E. 1046, holding that in an action Co. v. Arnold, 167 N. Y. 368 60 N by the receiver of a corporation against E;. 647. ' one of its directors to recover for 8. Powell v. Conover, 75 Hun 11 36 money and property alleged to have N. Y. Supp. 1038. BY-LA,W§ ANR RECORDS. 81 poration to recover unauthorized dividends from directors voting therefor, the ledger of the corporation is admissible in evidence to show its financial status at the date the dividends were declared.^ Entries in the books of a corporation, when admissible, must be proved by the production of the books themselves unless a foundation is laid for secondary evidence, and the books cannot be identified by labels thereon which are not in writing, or by the fact that they contain entries against its employees.^" 9. Wesp V. Muekle, 136 App. Div. 10. Union National Bank v. Dean, 341, 120 N. Y. Supp. 976, affd. 201 N. 154 App. Div. 869, 139 N. Y. Supp. Y. 527, 94 N. E. 1100. 836. 6 82 OOKPOKATIONS. CHAPTBE VIII. Mebgek and Consolidation. Merger. 77. Distmction between merger and consolidation. 78. Manner of merging corporation. 79. Proof of merger. 80. Name of merged corporation. 81. riights of creditors : Effect of merger. Consolidation. a. Manner of consolidating corporations. 8S. Submission of consolidation agreement to stockholders: Filing agreement. 84. Effect of consolidation generally: Proof of Consolidation. 85. Powers of consolidated corporations. 86. Transfer of property of old corporations to consolidated corporation. 87. Eights of stockholders not consenting to consolidation: Appraisal of stock. 88. Bights of creditors of old corporations. 89. Combinations effecting monopoly. Merger. 77. Distinction between merger and consolidation. There is a distinction between a consolidation and merger of corporations. Upon a consolidation a new corporation comes into existence, and the prior corporations cease to exist. Upon a merger the existence of one of the corporations is con- tinued without the formation of a new corporation, the others >)eing merged in it. The continuing corporation becomes the successor of the merged corporations subject to the rights and obligations imposed by statute.^^ 78. Manner of merging corporation. "Any domestic stock corpdiation and any foreign stock corporation authorized to do business in this state lawfully owning all the stock of any other stock corpo- ration organized for, or engaged in business similar or incidental to that of the possessor corporation may file in the office of the secretary of state, under its common seal, a certificate of sucli ownership, and of the resolution of its board of directors to merge such other corporation, and thereupon it shall acquire and become, and be possessed of all the estate, property, rights, privileges and fran- chises of such other corporations, and they shall vest in and be held and en- joyed by it as fully and entirely and without change or diminution as the same 11. Matter of Bergdorf, 149 App. 2W, N". Y. 309, 99 N. E. 714. T)iv. 529, 1S3 N, Y. Supp. 1018, affd. JVIEKaKE AND CONSOLIDATION. 83 were before held and enjoyed by 8uch other corporation, and be managed and controlled by the board of directors of such possessor corporation, and in its name, but without prejudice to any liabilities of such other corpora- tion or the rights of any creditors thereof. Any bridge corporation may be merged under this section with any railiroad corporation which shall have acquired the right by contract to run its cars over the bridge of such bridge corporation." 12 TMs section applies to moneyed corporations.-*' The certifi- eate of merger should be filed and recorded in the office of the county clerk and with the secretary of state.^* There is no inhibition against the merger of one domestic gas and electric company by another, merely because such merger will result in a foreign holding corporation becoming the owner of the stock of the corporation formed by the merger by virtue of its ownership of all of the stock of the merging corporation which has continued for many years prior to the merger.^" 79. Proof of merger. "Where two or more corporations have been or shall hereafter be consolidated and merged into a new corporation, a cartiiicate of the secretary of state under his official seal concisely stating the names of the respective corporations consoli- dated, the dates. of the filing of the certificates respectively of the incorporation of such corporations in his office, the object for which they were formed, including thfe- nature and locality of their business as set forth in their respective incorpora- tion papers on file in his bffice, the date of the filing of the consolidation agree- ment and other proceedings in his office, the name of the new corporation formed by such consolidation and merger, the term of its corporate existence, the place where its principal office is situated and the amount of its capital stock, shall be presumptive and prima facie evidence in= all actions and special proceedings for all purposes of the incorporation of the corporations so con- solidated, the incorporation of the new corporation by such consolidation and merger from the date of filing of said consolidation agreement and proceedings, and of the other facts so certified by him. " ic 12. Stock Corporation Law, § 1;'). Merger of banking corporations.— Forms: Certificate of ownership of See Banking Law, §§487-496. stock, Form No. 40. Resolution m IS. Stock Corporation Law, § r>. hoard of directors, Form No. 40. 14. See General Corporation Law, Merger not authorized.— A certi- § 5, as amd. by L. 1»13, ch. 479. flcate providing for the merger of a 15. Matter of Lockport Gas, & Elec- corporation, organized under the Rail- trie Co. (opinion pf Public Service road Law, with an electric light and Commission, 3d Dist,,; 1917),, IS State railroad company, organized under the Dept. Rep. 358. Transportation Corporations Law, 16. General Corporation Law, § 9, should not be filed by the secretary of subd., 3. sttate. Kept, of Atty. Genl., .Jan. 34, 1913. 84 CORPORATIONS. 80. Name merged corporation. "A corporation acquiring or becoming possessed of all the estate, property, rights, privileges and franchises of any other corporation or corporations by merger, may have the same name as the corporation or one of the corporations to whose franchise it has succeeded."!" But the statute fails to prescribe the method, or to furnish any special means by which the assumption of such name may be accomplished or made matter of record in any public office. Whether it is necessary to take proceedings for a change of name under Article 3 of the General Corporation Law, after the merger has been effected, or whether a resolution of the directors, adopted at the meeting held under section 15 of the Stock Corporation Law, and set forth in the certificate filed under the latter statute in- the office of the secretary of state is sufficient, has not been determined. 81. Effect of merger: rights of creditors. Under the statute, nothing is lost by a merger and the com- pany formed thereby stands in the place of those merged and any right which belonged to them may be asserted by it " without change or diminution." Accordingly where, after a written instrument had been executed and delivered to a corporation guaranteeing the payment at maturity of any and all purchases from and after the date thereof, made hj or in the name of a certain person, the corporation was merged with another corporation, the company formed by the merger stands in the place of those merged and is entitled to enforce the guaranty .^^ The statute preserves the rights of creditors as against the merged corporation enabling them to maintain an action for the recovery of a judgment j and if a recovery be had and the judgmeiit not paid, then to take such, prpceedihgs as may seem proper for the recovery of assets transferred if full value were not ^id therefor.^^ But where one corpora- tion is acquired by and merged into another corporation under this section and the latter has not contracted to pay the debts of the former, a creditor of the merged corporation can- 17. General Corporation ' Law, § 6, land Casualty Co., 326 N. Y. 25, 132 Bubd. 1, as amd. by L. 1911, eh. 638, N. B. 723 ; Irvine v. New York Edison L. 1912, ch. a, and L. 1913, ch. 24. Co., 143 App. Div. 344, 128 N. Y. Supp. 18. McBlwain Co. v. Primavera, 180 297, affd. 207 N. Y. 425, 101 N. B. App. Div. 288, 167 N. Y. Supp. 815. 358. 19. Syracuse Lighting Co. v. Mary- MERGER AND CONSOLIDATION. 85 not maintain against the possessor corporation an action to collect a debt due to Mm from the merged corporation, since there is no provision in such statute making the possessor cor- poration liable for the debts of the merged corporation. The remedy of the creditor is to sue the debtor corporation and take the property which was of the debtor corporation by execution issued upon a judgment against such debtor. Such right rests upon the express terms of the statute and does not necessarily depend upon the existence, and a finding, of a fraudulent transfer. If the property of the merged debtor corporation is not of such a nature that it can be reached directly by ex- ecution or otherwise, it constitutes a trust fund for the benefit of its creditors and can be reached as such precisely as if a merger of the debtor company had never taken place. So when the creditor has exhausted his legal remedies he may in- voke the aid of a court of equity and therein follow the equit- able assets of the debtor corporation and appropriate its property by due process of law, including any property which has been changed or altered in its nature or character, pro- vided the trust fund can be clearly ascertained, traced and identified.^" If a corporation is merged in another corpora- tion after a suit is commenced against it the possessor corpo- ration may be substituted as defendant.^ Consolidation. 82. Manner of consolidating corporations. ' ' Any two or more corporations organized under the laws of this state for the purpose of carrying on any kind of business of the same or of a similar nature, which a corporation organized under this chapter might carry on, may consolidate such corporations into a single corporation, as follows : The respective corporations may enter into and make agreement signed by a majority of their respective boards of directors and under their respective corporate seals, for the consolidation of such corporations, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the new corporation, the number of directors who shall manage its affairs, not less than three, the names and post-office addresses of the directors for the first year, the term of its existence, not exceeding fifty years, the name of the town or towns, county or counties, in which its operations are to be carried on, the name of the town or city and county in this state in which its principal place of business is to be situated, the amount of its capital stock, which shall not be larger in amount than the fair aggregate value 20. Irvine v. New York Edison Ck)., alty Co., 336 N. Y. Z5, 132 N. E. 733. 207 N. Y. 435, 101 N. E. 358; Syra- 1. Burrow v. Marceau, 133 App. Div. cuse Lighting Co. v.. Maryland Casu- 797, 117 N. Y. Supp. 537. 86 CORPORATIONS. of the property, franchises and rights of such corpora,tions, and the number of shares into which the same is to be divided, the manner of distributing such capital stock among the holders thereof, and if such corporations, or either of them, shall have been organized for the purpose of carrying on any part of its business in any place out of this state, the agreement shall so state, with such other particulars as they may deem necessary. ' ' 2 The provisioii of section 4 of the Greneral Corporation Ijaw that a certificate of incorporation must be executed by natural persons, who must be of full age, and at least two-thirds of whom must be citizens of the United States and one a resi- dent of New York, does not apply to the consolidation of ex- isting corporations.^ As domestic corporations cannot con- solidate without legislative authority and only in conformity to the method prescribed thereby,^ an oral agreement upon the part of the corporations to unite is void and does not transfer the property of a constituent corporation to an un- incorporated association designed to take the place of the two corporations.^ So also a consolidation of manufacturing cor- porations save in the manner provided by statute, whether made directly or indirectly through the medium of a trust, is unlawful and injurious to the public interests.^ Consolidation cannot be effected without the vote of a majority of the stock- holders of each corporation.'' But a corporation is not com- pelled to resort to consolidation if the power desired may be 2. Business Corporations Law, § 7. Chevra Bnai Israel v. Chevra Bikur Proof of consolidation. — See General Cholim, 24 Misc. 189, 52 N. Y. Supp. Corporation Law, § 9, subd. 3. 712. Forms: Agreement foi- ponsblida- Certificate providing for the constili- tion, Form No. 4. dation of the Dunkirk Power & Heat- 3. General Corporation Law, § 4. ing Co., organized under the provi- 4. Corporations cannot consolidate sions of the Transportation CoriK)Tn- without legislative authority.— An tions Law, and the Dunkirk Distribu- agreement of consolidation, signed by tiou Co., organized under the Busi- the president of two cornorations in- ness Corporations Law, should not be corporated under diffferent acts, one, Hied. Rept. of Atty. Genl. (1911). religions, organized under 3 R. L. 1813, Vol. 3, p. 140. ch; 60, and the other, benevolent, or- 5. Congregation Aushe Yosher v. F. ganized under Laws of 1848, ch. 319, U. R. S. Verein, 32 Misc. 369; 66 N. and also signed by the secretary of Y. Supp. 356. the alleged consolidated corporation. 6. People v. North River Sugar Re- there being no assent of the Supreme fining Co., 131 N. Y. 583, 34 N. E. 834. Court to the consolidation nor any con- 7. Matter of Kansas City Smelting firmation by the ti-ustees of unc of & Refining Co., 13 App. Div. 50. 4:1 the corporations, is of no eflfect and N. Y. Supn. 51. the corporations remain in being. MEKGEE AND CONSOLIDATION. 87 acquiredby filing an amended certificate even though the effect is the merging of two business corporations.^ The statute does not require or authorize a statement, in "the consolidation agreement, of the business to be conducted by the new corpora- tion; that is to be determined by reference to the charters of the constituent companies, and the new enterprise may do any- thing which either of its constituents was authorized to do prior to the consolidation. If the new corporation is to en- gage in operations beyond the scope of the sum of the objects stated in the several certificates of incorporation of the con- stituent companies, then, after the consolidation is completed, further, distinct and separate proceedings should be taken under section 18 of the Stock Corporation Law to extend its purposes and powers. An organization tax of one-twentieth of one per centum must be paid by the new corporation upon the amount of its capital stock in excess of the aggregate amount of the capital stock of the consolidating corporations.^ A cor- poration formed by the consolidation of other corporations may have the same name as one of the corporations consoli- dated." 83. Submission of consolidation agreement to stockholders; filing agree- ment. "Sueh agreement shall be submitted to the stockholders of each of such corporations, at a meeting thereof to be called upon notice of at least two weeks, specifying the time, place and object thereof, and addressed to each at his last known post-office address, and deposited in the post-ofSce, postage prepaid, and published for at least two successive weeks in one of the newspapers in each of the counties of this state in which either of such corporations shall have its place of business, and if such agreement shall be approved at each of sueh meetings of the respective stockholders separately, by the vote by ballot of the stockholders owning at least two-thirds of the stock, the same shall be the agreement of such corporations, and a sworn copy of the proceedings of such meetings, made by the secretaries thereof, respectively, and attached thereto, shall be presumptive evi- dence of the holding and action of such meetings. Such agreement and verified copy of proceedings of such meetings shall be made in duplicate, cue of which shall be filed in the office of the secretary of state, and the other in the office of the clerk of the county where the principal business office of the new corporation is to be situated in this state, and thereupon sueh corporation shall be merged into the new corporation specified in siich agreement, to be known by the oorpo- 8. People ex rel. Municipal Gas Co. 1921, ch. 705. V. Riee, 138 N. Y. 151, 33 N. E. 846. 10. General Corporation Law, § 6, as 9. Tax Law, § 180, as amd. by;L. amd. by L. 1911, ch. 638. L. 1912, ch. 1910, ch. 473, L. 1911, ch. 91, L. 2, and L. 1913, ch. 24. As to namc- 1915, eh. 317, L. 1917, ch. 493, and T.. .generally, see ante, chap. V. 88 CORPOBATIONS. rate name therein mentioned, and the provisions of such agreement shall be carried into effect as therein provided. " H 84. Effect of consolidation generally; proof of consolidation. It is perfectly competent for the legislature, in consoli- dation acts, to declare what shall be the status of the domestic corporations which shall avail themselves of their provisions, and also of the consolidated company. Whether the new. con- solidation shall create a mere business union between the con- stituent companies, leaving them in existence as corporations, or whether it shall operate as a surrender of the corporate franchises and an extinguishment of their corporate existence, and as creating a new corporation combining to the extent permitted by the act, the powers of the corporations out of which it was formed, and vesting in it the property of the con- stituent companies, depends upon the legislative intention.^^ On consolidation being effected the constituent companies, un- less such an intention is excluded by the language of the statute, are deemed to be dissolved, and their powers and faculties to the extent authorized become vested in the con- solidated company as a new corporation created by the act of consolidation.^^ But they do not become extinct so as to be unable to wind up their business." A judgment that proceed- ings to effect a consolidation of two corporations were valid is conclusive evidence of that fact in a subsequent action by a stockholder.^^ "Where two or more corporations have been or shall hereafter be consolidated and merged into a new corporation, a certificate of the secretary of state under his official seal concisely stating the names of the respective corporations con- solidated, the dates of the filing of the certificates respectively of the incorpora- tion of such corporations in his office, the object for which they were formed, in- cluding the nature nnd loea^it^ of their business as set forth in their respective 11. Business Corporations Law, § 8, 129 N. Y. 474, 29 N. E. 959. pt. 14. An assignment of the legal title 12. People V. New York,* Chicago & to a patent in writing to the new corpo- St. Louis R. Co., 129 N. Y. 474, 483, ration, by the president and secretary of 29 N. E. 959. one of the old corporations, after the Consolidation; right of subscriber to consolidation, in pursuance of a vote of stock in old corporation to stock in its executive committee passed prior nev/.-^Babcoek v. Schuylkill & L. V. thereto, is sufficient tn convey said title, n. Co., m Hun 583, 15 N. Y. Supp. 193. Edison Electric Light Co. v. New Haven Hffd. 133 N. Y. 430, 31 N. E. 30. Electric Co., 35 Fed.. 233. 13. Miner v. New York C. & H. E. 15. Drake v. New York Suburban R. Co., 123 N. Y. 343, 351, 35 N. E. Water Co., 36 App. Div. 499, 50 N. Y. 339; People v. N. Y. C. & S. L. R. Co., Supp. 836. MERGER AND CONSOLIDATION. 89 incorporation papers on file in his ofdee, the date of the filing of the consoli- dation agreement and other proceedings in his ofiSce, the name of the new corpo- ration formed by such consolidation and merger, the term of its corporate ex- istence, the place where its principal office is situated and the amount of its capital stock, shall be presumptive and prima facie evidence in all actions and special proceedings for all purposes of the incorporation of the corporations so consolidated, the incorporation of the new corporation by such consolidation and merger from the date of filing of said consolidation agreement and proceedings, and of the other facts so certified by him. ' ' 16 85. Powers of consolidated corporations. "Such new corporation in addition to the general powers of corporations shall enjoy the rights, franchises and privileges possessed by each of the corporations so consolidated, subject to the restrictions, liabilities, duties and provisions contained in this chapter so far as the same may be applicable to the purposes for which it shall have been organized and expressed in the agreement for consolida- tion, and may prosecute or carry on any kind of business which each of the con solidating corporations was authorized by law to conduct." 17 86. Transfer of property of old corporations to consolidated corporation, "Upon the consummation of such act of consolidation, all the rights, privi- leges, franchises and interests of each of the corporations, parties to the same, and all the property, real, personal and mixed, and all the debts due on whatever account to either of them, as well as all stock subscriptions and other things in action belonging to either of them, shall be taken and deemed to be trans- ferred to and vested in such new corporation, without further act or deed; and all claims, demands, property and every other interest shall be as effectually the property of the new corporation as they were of the former corporations, parties to such agreement and act; and the title to all real estate, taken by deed or otherwise, under the laws of this state, vested in either of such corporations, parties to such agreement and act, shall not be deemed to revert or be in any way impaired by reason of this chapter, or anything done by virtue thereof, but shall be vested in the new corporation by virtue of such act of consolidation; and all fights, privileges, franchises and property of the corporations, parties to any consolidation heretofore made under this chapter, shall vest as fully in the new corporation thereby created as they were vested in the corporations, parties to such consolidations. ' ' 18 87. Rights of stockholders not consenting to consolidation: appraisal of stock. "If any stockholder, not voting in favor of such agreement to consolidate, shall at such meeting, or within twenty days thereafter, object to such con- solidation and demand payment for his stock, such stockholder or such new corporation, if the consolidation takes effect at any time thereafter, may at any time within sixty days after such meeting apply to the supreme court at any special term thereof held in the district in which any county is situated in which such new corporation may have its place of business, upon at least eight days' 16. General Corporation Law. § 9, 17. Business Corporations Law, § 9. subd. 3. 18. Business Corporations Law. § 10. 90 . COKPOKATIONS. notice to the new corporation, for the appointment of three persons to appraise the value of such stock, and the court shall appoint three such appraisers and des- ignate the time and place of their first meeting, with such directions in regard to their proceedings as shall be deemed proper, and also direct the maimer in which payment for such stock shall he made to such stockholder. The court may fill any vacancy in the board of appraisers occurring by refusal or neglect to serve or otherwise. The appraisers shall meet at the time and place designated, and they or any two of them, after being duly sworn honestly and faithfully to dis- charge their duties, shall estimate and certify the value of such stock at the time of such dissent, and deliver one copy to such new corporation, and another to such stockholder if demanded; the charges and expenses of the appraisers shall be paid by the new corporation. Wlien the new corporation shall have paid the amount of such appraisal, as directed by the court, such stockholder shall cease to have any interest in such stock and in the corporate property of such corpo- ration, and such stock may be held or dispbsed' of by such new corporation. Where any consolidation has been heretofore or shall be hereafter effected pur- suant to the laws of this state, and the holders of ninety per centum of the capital stock of each of such corporations have voted in favor of such agree- ment to consolidate, if any stockholder not voting in favor of such opiisolida- tion shall fail to exchange his stock for stock of such new corporation within sixty days after this act shall go into effect, or, in case of a consolidation hen - after effected, \vithin sixty days after he shall have become entitled to inake such exchange, such new corporation may, at any time' thereafter, upon at least eight days' notice to such stockholder, to be given personally, vrithin the state, if possible, and if not, then in such manner as the court shall direct, apply to the court, as hereinbefore provided, for the appointment of three persons to ap- pfaise the value of such stock at the time of the expiration of such sixty days. Upon the completion of the appraisal in the manner hereinbefore provided for, and the payment by such new corporation of the amount of such appraisal, as directed by the court, such stockholder shall cease to have any interest in such stock,' and in the corporate property of such corporation, and such stock may he held or disposed of by such new corporation. " 19 Appraisers appointed for the purpose of determining the vahie of the stock of a stockholder who objects to its consoli- dation with another domestic corporation, may determine the value of the good will of the company by dividing the- total net earnings by twenty-oae and one-half, the approximate number of months during which the company had been in business, and then multiplying the yearly profits so obtained by three, but they should deduct from the average net profits interest on the capital invested in the business. Interest may be al- lowed on the value of the assets as determined by the ap- praisers on the date when the stockholder objected to the con- solidation, excluding the value of the good will.^" But where 19. Business Corporations Law, § 8, 20. Matter of Seaich, 170 App. Div. pt. 686, 156 N. T. Supp. 579. MERGER AND CdNSOLIbATION. 91 the value of the stock is unknown and it does not appear to have any market value, the stockholder's claim is unliquidated and he is not entitled to; interest upon it until the report of the appraisers w'hich' establishes its value.^ 88. Rights of creditors of old corporations. "The rights of creditors of any corporation that shall be so consolidated shall not in any manner be impaired, nor any liability or obligation for the payment of any money due or to become due to any person or persons, or any claim or demand for any cause existing against any sucli corporation or against any stockholder thereof be released or impaired by any such consolidation ; but such new corporation shall succeed to and be held liable to pay and discharge all such debts and liabilities of each of the corporations consolidated in the same manner as if such new corporation had itself incurred the obligation or liability to pay such debt or damages and the sljockhplders of the respective corporations consolidated shall continue, subject to all the liabilities, claims and demands existing against them as such, at or before the consolidation; and no action or proceeding then pending before any court or tribunal in which any corporation that may be so consolidated is a party, or in which any such stockholder is a party, shall, abate or be discontinued by reason of such consolidation, but may be prosecuted to final judgment, as though no consolidation had been entered into; or such new corporation, may be substituted as a party in place, of any corporation so consolidated,, by ordej of the court in which such action or proceed-, ing may be pending.." 2- The statute thus preserves to the creditors of the old cor- porations all their rights unimpaired, and furnishes them, a remedy concurrent in its nature. They may enforce the lia- bility either against the corporation, whose debt it was, or against the new corporation, whose debt it has become by virtue of the statute.* Where two or more companies are con- 1. Trask v. Peekskill Plow Works, different name and style. . (5 Hun 236. Liability for pajrment of notes — re- 2. Business Corporations Law, § 11. newal notes. — Where, at the time of As to actions by and against coTpora- the consolidation of business corpora- tions generally, see infra, par. — . tions, they are severally indebted to 3. Irvine v. New York Edison Co., a bank upon promissory notes, and the 143 App. Div. 344, 138 N. Y. Supp. notes mature and are renewed by notes 297 aflfd. 807 N. Y. 425, 101 N. E. 358. of the same amounts and tenor after But see Copp v. Colorado Coal & Iron the consolidation, which new notes are Co., 29 Misc. 109, 60 N. Y. Supp. 393, held by the bank at the time of the holding that where a corporation is commencement of a proceeding for the sued for services, it has a right to al- voluntary dissolution of the consoli- lege and prove as a complete defense, dated corporation, their payment as a that, when the action was begun, the claim against the consolidated corpor- eorporation had ceased to exist because ation cannot be defeated on the ground of its consolidation with another com- that the taking of the renewal notes pany, the new company assuming a after the cohsolidation paid the notes 92 COEPOBATIONS. solidated, as far as the creditors of one of the original com- panies are concerned, the consolidated company is successor of the old company, but in respect to the properties of the other companies it is a new and independent company, and such creditors have no claim against it upon their original contracts but only by virtue of its assumption of the obliga- tions of the old companies. So also the officers of the new company, so far as the trust devolves upon them of managing the property formerly of the old company, occupy in relation to its creditors the position of successors to the officers of the old company, and are bound by all proceedings had against them, but as to the properties formerly of the other companies they are successors to the officers of those companies, against whom such creditors have no right of action upon their orig- inal contracts.* Where two or more corporations are consoli- whioh were outstanding against the constituent corporations at the time of their consolidation and discharged the consolidated corporation from its statutory liability for the payment of the debts of the constituent corpora- tions, where it is established as a fact that the taking of the renewal notes was not intended by any of the parties to the notes or to the transaction as a payment, but merely as an exten- sion, of the original obligations. Nor, in such case, does the fact that the creditor bank has reduced the liability of the constituent corporations, upon the notes held by it, to judgment dis- charge the consolidated corporation from its statutory liability for the payment of the debts of the constitu- ent corporations. Matter of Utica Nat. Brewing. Co., 154 N.*Y. 268, 48 N, E. 521. Consolidation pending suit. — Where an electric light corporation, after be- ing sued, is consolidated in another similar corporation, the latter is en- titled to be and should be substituted as defendant in the action, but where this has not been done and the succes- sor corporation answers the amended complaint and its verified answer is accepted and retained by the plaintiff until the trial, he cannot then have judgment upon the theory that there is no answer before the court, as he will be deemed to have waived any objection that a defendant, not named in the summons, has answered. Klein V. East River Electric Light Co., 37 Misc. 490, 75 N. Y. Supp. 1000. Original corporation as parties de- fendant. — ^In an action by a, stock- holder against the representatives of the deceased president of the corpora- tion to recover liis portion of certain stock of a new corporation alleged to have been delivered to said president in trust for stockholders upon con- solidation with the new corporation which took over the assets, the original corporation, and other stockholders are necessary parties. Knicker- bocker V. Conger, 110 App. Div. 125, 97 N. Y. Supp. 127. 4. Prouty v. Lake Shore & M. S. R. Co., 52 N. Y. 363. Duty of corporation, formed by con- solidation of other corporations under L. 1869, ch. 917, to pay obligations of the latter secured by mortgage. The provisions of chapter 917 of the Laws of 1869 did not impose upon the new company formed under such act any Uability to pay the past due coupons upon bonds secured by a mortgage upon the property of one of the corporations MERGER AND CONSOLIDATIOST. 93 dated, and the new corporation thua formed assumes the debts and obligations of the original companies, the directors or other officers of the new organization are not necessary or proper parties to an action brought by a holder of preferred and guaranteed stock of one of the old companies to enforce an alleged contract made by it to pay specified dividends upon the stock. The claim is against the corporation only, and a judgment or decree against the corporation is binding upon the directors as well as upon all classes of stockholders. If for any sufficient reason the common stockhoders are neces- sary or proper parties, the plaintiff S'hould select other stock- holders, not having an official relation to the company to rep- resent them as defendants.^ The statutory liability of a con- solidated corporation for the debts and liabilities of its con- stituent corporations, cannot be impaired by any agreement between the corporations, as to creditors who have not joined in or assented to the agreement. But a provision in an agree- ment for the consiolidation of corporations, under the statute, signed by the stockholders, to the effect that the consolidated corporation shall owe no debts on account of the constituent corporations, while it cannot affect the rights of outside cred- itors is a bar to the claim of a signing stockholder to payment from the assets of the consolidated corporation, in case of its insolvency, of an obligation of a constituent corporation held by him.® But the pursuit, by the creditor of a corporation consolidRted under the provisions of company under L. 1869, ch. 917. Gale that act. The intention of the eon- v. Troy and Boston E. Co., 51 Hun .wlidation act, in the use of the words 470, 4 N. Y. Supp. 295. •'except mortgages," was to recover 5. Ohase v. Vanderbilt, 62 N. Y. 307, thereby debts and liabilities of the 6. Matter of Utica Nat. Brewing Co., consolidated company which were se- 154 N. Y. 368, 48 ,N. E. 531, hold- cured by mortgage. Janes v. Fitch- Ing that, where an agreement for the burg RaUway Co., 50 Hun 310, 3 N. consolidation of corporations, under the Y Sudd 165. statute, signed by all the stockholders. Chapter 917 of 1869 authorizing rail- and providing for a distribution among road companies to consolidate— the them of the common stock and a por. meaning of the words "except mort- tion of the preferred stock, provides gages," in section 5, considered and tliat the rest of the preferred stock held not to include coupons of bonds shall belong to the treasury of the con- secured by a mortgage. Polhemus v. solidated coi-poration, to be disposed of Pitchburg E. Co., 50 Hun 397, 3 N. Y. only on the order of the board of di- Supp. 327,'affd. 123 N. Y. 502, 26 N. rectors, and one of the stockholders, Ijv oj having practical control of the consoli- Eailroad company not relieved from dated eorporatioiv, sells some of its liability on its mortgage bonds by treasury stock without any resolution reason "of its consolidation with another of the directors authorizing it, and 94 COKPOEATIOSrS. livlilch has entered into a consolidation, of a remedy; against his origiual debtor presents no legal obstacle to an effort to collect his debt from the consolidated corporation J; The pro- vision of the statute, that no action shall be abated by reason of consolidation, pending suit, is binding upon the federal courts.^ 89. Combinations effecting monopoly. ' ' No domestic stock corporation and no foreign corporation doing business in this state shall combine with any other corporation or person for the creation of a monopoly or the unlawful restraint of trade or for the prevention of compe- tition in any necessary of life. "9 This section does not apply to moneyed corporations." The word " monopoly " should not be given a strict meaning so as to necessarily include all present existing means of carry- ing on a business or doing a particular thing generally, or in a particular place or locality, and the right to possess, or own, or control all means for doing that thing in that place in the future.^^ It seems that no contracts are void, as being in gen- pays k jJaVt of the proceeds over to the corporation, the payment may ' be deemed a recognition by him of a lia- bility to account for the proceeds of all the treasury stock so sold by him, and- warrants, the setting off of the balEmce of such proceeds against a note made by one of the constituent corpo- rations, held by him. . 7. Matter of TJtica National Brew- ing Co., 154 N. Y. 268, 48 N. E.'521. &. Edison Electric Light Co. v. West- inghouse et al., ^4 Fed. 233; Edison Eleatric :Light Qo.. \. United States Electric: Lighting Co.,- 52 Fed. 3&0. 9. Stock Corpbration Law, § 14. Unlawful combination o# corpora- tions in restraint of trade by means of trust deed, warranting forfeiture of franchises. People v. North Eiver Sugar Kefining Co., 3 N. Y. Supp. 401, 22 Abb. N. C. 164, affd. 54 Hun 354, 7 N. Y. Supp. 406, affd. 121 N. Y. 58B, 24 N. E. 834. Statute authorizing a residence park association to establish rules regulating trade upon grounds thereof does not authorize a monopoly, since the power to regulate does not authorize the crea- tion of a monopoly. Thousand Island . Park Assn. v. Tucker, 173 N. Y. 303. 65 N. E. 975. Monopolies, contracts for, penalty, procedure. — ^See General Business La\v, §§ 340-346. Conspiracies to control transporta- tion. — See General Business Law, §§ 350, 351. 10. Stock Corporation Law, § 5. 11. Continental Securities Co. v. In- terborough Rapid Transit Co., 165, Fed. 945,, 9-56. Traffic agreement between railroad and steamboat companies. — The stat- ute cannot be. invoked to compel a rail- road company which, for a valuable consideration, has concluded a traffic contract with a steamboat company, by which each becomes the agent of the other for the transportation of pas' sengers and freight, to enter into a similar arrangement with a rival steam- boat company and afford it the same facilities. Alexandria Bay 8. B. Co. MERGER AND CONSOLIDATION. 95 eral restraint of trade, when they operate simply to prevent a party from engaging or competing in the same business.^^ This provision of the Stoct Corporation Law, and the pro- visions; of the Generg.1 Business Law designed to prevent com- binations and monopolies in restraint of trade, do not forbid the merger of street railways, for the legislature by various en- actments upheld by the courts has expressly authorized the merger of such eorporatiojas lender certain conditions.^^ It is a violation of law for corporations to enter into a partner- ship." Unless express permission be given to do so, it is not within the general powers of a corporation to purchase the stock of other corporations for the purpose of controlling their management.^^ But the purchase of stock for the pur- pose of preventing competition is not of itself illegal, unless it results in the creation of such a monopoly as limits the sup- ply and enhances the cost of thei commodity dealt in.^^ V. N. Y C. & H. E. E. E. Co., 18 App. Div. 527, 45 N. Y. Supp. 1091. 12. Leslie v. Lorillard et al., llO N. Y. 519, 18 N. E. 363. 13. Matter of Interborough-Metro- politan Co., 125 App. Div. 804, 110 N. Y. Supp. 186. 14. People V. North Eiver Sugar Ee fining Co., 121 N. Y. 582, 623, 24 N. E. 834. 15. De La Vergue Co. v. German Savings Inst., 175 IT. S. 40, 55, 44 L. ed. 65. As to power of corporaition to hold stock in another corpoi-ation see post, pars. 362, 363. Acquisition of controlling interest in stock of all transportation lines in a certain territory constitutes a practical monopoly in Violaition of the statute. Burrows v. ItifcerbOroUgh Metropolitan Co., 156 Fed. 389; Contilienta;l Securi- ties' Co. v. Interborough EajJid Transit Co., 165 Ted. 945. 16. Consolidation of gas companies. — The organization of the Consolidated Gas Company of New York. by the con- solidation of six other companies effected under the provisions of ch, 367 of the Laws of 1884, and its subsequent purchase of stock of other gas and electric companies under the authority of § 52 Of the Stock Corporations Law, did not offend the provisions of § 14 of the Stock Corporations Law and the so- called Anti-Monopoly Acts, providing that no corporations shall combine with other corporations or persons to create a monopoly or the unlawful restraint of trade or for the prevention of competi- tion in any necessary of life. This, be- cause although the power to purchase stock of other corporations conferred by § 52 of the Stock Corporations Law must be exercised so as not to contra- vene the statutes against' monopolies, the ■ consolidation of public lighting Companies', even if effected for the pur- pose of preventing competition, does not create a monopoly within the mean- ing of the statute, for no exclusive right is thereby attained, nor can the price of gas or electricity be arbitrarily fixed by the corporation, both of thesiS matters being within the control of the Legislatuj^ which may fix' the maximum rate and compel the production and sale of gas to consumers. Matter of Atty. Genl., 124 App. Div. 401, 108 N, Y. Supp. 823.. 96 OOKPOBATIOHS. CHAPTER IX. Reincokpobatiof and Ebobganization of Existing Cobjw- BATIONS. yO. In general. 91. Eeorgauization on sale of corporate property and franchises generally. 92. Contents of plan or agreement for reorganization. 93. Assent of municipality holding stock. 94. Construction and validity of agreement. 95. Effect of reorganization. 96. Sale of property on foreclosure: Liability of new corporation. 90. In general. "Any stock corporation heretofore organized, except a moneyed or transporta- tion corporation, or a corporation the busineaa of which partakes of the nature of banking or insurance, may reincorporate under this chapter (business corporations law) in the following manner: The directors of the corporation shall call a meeting of the stockholders thereof by publishing a notice, stating the time, place and object of the meeting, signed by at least a majority of them, in a newspaper of the county in which its principal business office is situated, once a week, for at least three successive weeks, and by serving upon each stockholder, at least three weeks before the meeting, a copy of such notice either personally or by depositing it in the post-office, postage prepaid, addressed to him at hig last known post-office address. The stockholders shall meet at the time and place specified in the notice and organize by choosing one of the directors chainnan, and n suitable secretary, and shall then take a vote of those present in person or by proxy upon the proposition to reincorporate under this chapter, and if votes representing a majority of all the stock of the corporation shall be cast in favor of the proposition, the officers of the meeting shall execute and acknowl- edge a certificate of the proceedings, which certificate shall also contain the statements required by section two of this chapter, and shall be filed in the offices where certificates of incorporation under this chapter are required to be filed. From the time of such filing such corporation shall be deemed to be a corporation organized under this chapter, and if originally organized or in- corporated under a general law of this state, it shall have and exercise all such rights and franchises as i^has heretofore had and exercised under the laws pursuant to which it was originally incorporated, and such reorganization shall not in any way affect, change or diminish the existing liabilities of the corpora- tion." 17 The language of this section is permissive, making it optional with the stockholders whether they will reorganize 17. Business Corporations Law, § 4. No. 3. CertificRte of reorganization, Forms: Certificate of proceedingR Form ISfo. 3. of meeting for reorganiKation, Form BEINCOBPOKATION AND RBOKGANIZATION OF OOEPORATIONS. 97 or not.^^ AtDL organization tax need not be paid upon the re- incorporation of a manufacturing corporation.^^ 91. Reorganization on sale of corporate property and franchises generally. ' ' When the property and franchises of any domestic corporation shall be sold by virtue of a mortgage or deed of trust, duly executed by it, or pursuant to the judgment or decree of a court of competent jurisdiction, or by virtue of any execution issued thereon, and the purchaser, his assignee or grantee shall have awpired title to the same in the manner prescribed by law, he may associate with him any number of persons, not less than the number required by law for an in- corporation for similar purposes at least two-thirds of whom shall be citizens of the United States and one shall be a resident of this state, and they may be- come a corporation and take and possess the property and franchise thus sold, and which were at the time of , the sale possessed by the corporation whose prop- erty shaU have been so sold, upon making and acknowledging and filing in the offices where certificates of incorporation are required by law to be filed, a certificate in which they shall describe by name and reference to the law under which it was organized, the corporation whose property and franchises they have acquired, and the court by whose authority th« sale had been made, with the date of the judgment or decree authorizing or directing the same, and a brief de- scription of the property sold, and also the following particulars: 1. The name of the new corporation intended to be formed by the filing of such certificate; and the place where its principal office is to be located. 2. The maximum amount of its capital stock and the number of shares into which it is to be divided, specifying the classes thereof, whether common or preferred, and the amount of and rights pertaining to each class. 3. The number of directors, not less nor more than, the number required by law for the old corporation, who shall manage the affairs of the new corporation, and the names and post-office addresses of the directors for the first year. They may insert in such certificate any provisions relating to the new corporation, or its management, contained in any plan or agreement which may have been entered into as provided in section ten of this chapter. Such corporation shall be vested with, and be entitled to exercise and enjoy, all the rights, privileges and franchises, which at the time of such sale belonged to, or were vested in the corporation last owning the property sold, or its receiver, and shall be subject to all the jprovisions, duties and liabilities imposed by law on that corporation. Any proceedings heretofore taken in substantial compliance with this section as hereby amended, and any and all incorporations based thereon are hereby ratified and confirmed. "20 18. Close V. Potter, 2 Misc. 1, 6, 21 the organization tax required by oh. N. T. Supp, 1086. 143 of the Laws of 1886, as amended. 19. Payment of tax. — Reorganiza- Matter of Kansas City Smelting & Ee- tion under this section of a corporation fining Co., 13 App. Div. 50, 43 N. Y. originally incorporated undei' the Manu- Supp. 51. f acturing Act of 1848, is a corporate 20. Stock Corporation Law, § 9. act, and a new corporation is not Construction of . Statute. — See thereby created which is bound to pay Mayer v. Metropolitan Traction Co., 7 98 CORPORATIONS. This section does not apply to moneyed corporations.^ The provision of the statute that a certifica,te of incorporation must be executed by natural persons, who must be of full age, and at least two-thirds of whom must be citizens of the United States, and one of whom must be a resident of the state, does not apply to the reorganization of a corporation upon the sale of its property or franchise.^ The provision of the statute that the successor ' ' corporation shall be vested with and en- titled to exercise * * * and shall be subject to all the pro- visions, duties and liabilities imposed by law " is not broad enough to impose upon the new corporation contractual obli- gations of its predecessor which it never assumed.^ The enact- ment of the Public Service Commissions Law did not repeal the provisions of the Stock Corporation Law as to the reorgan- ization where the property and franchises of corporations are sold under foreclosure, and the provisions of the Stock Corpo- ration Law do not withdraw corporations formed on reorgani- zation from compliance with section 55 of the Public Service Commissions Law. In other words, the two statutes must be construed together, though parts of the later statute may be inapplicable to cases arising under the earlier.* A stockholder cannot modify a bondholders' reorganization agreement to which he is not a party^^ An agreement by a bondholding committee to buy in a railroad under foreclosure and convey it is not void as stifling competition at the sale.^ Where the 165 App. Div. 497, 150 N. Y. Supp. having first entered into a plan or 1036. agreement in anticipation of the read- Forms : Certificate on reorganization justment of the respective interests or sale of corporate property and f ran- of the creditors and others interested chise, Form No. Z. in the corporation, is not a reorganiza- 1. Stock Corporation Law, § 5. tion of the insolvent company within 2. General Corporation Law, § 4. the meaning of the Stock Corporation a. Seventy-Eighth StreeJ and Broad- Law. Such new corporation is subject way Co. V. Purssell Mfg. Co., 9a Misc. to the authority of the public service 178, 155 N. Y. Supp. 259, affd. 173 App. commission as provided by section 55 of Div. 887, 157 N. Y. Supp. 1145. the Public Service Commissions Law. 4. People ex rel. Third Avenue Ey. ' People ex rel. Westchester St. E. Co. v. Co. V. Public Service Commissions, 203 Public Service Comm., 210 N. Y. 456. N. Y. 299, 308, 96 N. E. 1011. 104 N. E. 952. The formation of a new corporation 5. Miller v. Dodge, 2'8 Misc. 640 59 by the purchase on a foreclosure sale N. Y. Supp. 1070. of independent parts of the property 6. Munson v. Magee, 23 App. Div. of an insolvent railway comJJany, and 333, 47 N. Y. Supp. 943, affd. 161 >f persons associated with him, without Y. 182, 55 N. E. 91«. REINCORPORATION AND REORGANIZATION OF CORPORATIONS. 99 property and franchises of a corporation are sold under mort- gage foreclosure and a new corporation organized under the statute, an organization tax must be paid.'' 92. Contents of plan or agreement for reorganization. "At or previous to the sale the purchasers thereat, or the persons for whom the purchase is to be made, may enter into a plan or agreement, for or in anticipation of the readjustment of the respective interests therein of any ereditors, mortgagees, stockholders, or any of them, of the corporation owning such property and franchises at the time of the sale, and of the holders of claims for materials, supplies and equipment furaished, and for injuries and damages sustained, in and about the operation, maintenance or construction of any. or all the property formerly owned or leased to said corporation, and for the representation of such interests in the bonds or stock of the new corporation to be formed, and may therein regulate voting by the holders of the preferred and common stock at any meeting of the stockholders, and may provide for,, and regulate voting by the holders, and owners of any or all of the bonds of the corporation, foreclosed, or of the bonds issued or to be issued by the new corporation; and such right of voting by bondholders shall be exercised in such manner, for such period, and upon such conditions, as shall be therein described. Such plan or agreement must not be inconsistent with the laws of the state and shall be binding upon the corporation, until changed as therein provided, or as otherwise provided by law. The new corporation when duly organized, pursuant to such plan or agreement and to the provisions of law, may issue its bonds and stock in conformity with the provisions of such plan or agreement, and may at any time within six months after its organization, compromise, settle or as- sume the payment of any debt, claim or liability of the former corporation or any claims for materials, supplies and equipment furnished, or any claims for injuries and damages sustained, in and about the operation, maintenance or construction of any or all the property formerly owned or leased to said corpo- ration, upon such terms as may be lawfully approved by a majority of the agents or trustees intrusted with the ean'yin'g out of the plan or agreement of reorganiza- tion, and may establish preferences in.,favor ol any portion of its capital stock and may divide its stock into classes; but the capital stock of the new corpora- tion shall not exceed in the aggregate the maximum amount of stock men- tioned in the certificate of incorporation. " 8 This section does not apply to moneyed corporations.^ 93. Assent of municipality holding stock. ' ' The commissioners, corporate authorities or proper officers of any city, towu: or village, who may hold stock in any corporation, the prbperty and franchises whereof shall be liable to be sold, 'may assent to any plan or agreeinent of re- organization which lawfully provides for the formation of a new corporation. ' . . : : I . '■ 7. People ex rel. Schurz v. Cook, 110 8. Stock Corporation. Law, § 10, a- N. Y. 443, 18 N. E. 113, affd. 148 U. S. amd. by L. 1911, ch. 858. 397 37 L. ed. 498. 9. Stock Corporation Law. § 5. 100 COKPOBATIONS. and the issue of stock therein to the propei- authorities or officers of such cities, towns or villages in exchange for the stock of the old or former corporation by them respectively held. And such commissioners, corporate authorities or other proper officers may assign, transfer or surrender the stock so held by them in the manner required by such plan, and accept in lieu thereof the stock issued by such new corporation in conformity therewith. "10 ^ This section does not apply to moneyed corporations." 94. Construction and validity of agreement. A plan for the reorganization of a corporation, prepared and tendered by a voluntary committee to bondholders, who accept it and deposit their bonds thereunder, should be strict- ly construed as against the committee and in favor of the cestuis que trust. Where a reorganization agreement pro- vides that a detailed plan of reorganization shall be submitted to the bondholders prior to the conveyance of any purchased property to a new company and that it shall be binding upon them unless a majority in interest shall within thirty days file a written dissent, the committee has no power to incorporate into it anything more than details for carrying out the general provisions of the original agreement, and the failure of the majority to dissent binds them in respeqt to such details only. And so a bondholders' committee, which is authorized by a reorganization agreement to procure the foreclosure of the mortgage securing the bonds, to purchase the property and convey it to a new company, in which event the committee, after the payment of the expenses of foreclosure and all its own expenses, is to allot to the holders of certificates, repre- senting the bondholders' interest, their proportionate interest in the new company, has no power, after the purchase of the property under such circumstances as to cut off all other in- terests in it except that of the certificate holders, to incorpo- rate into its detaile(^plan of reorganization a provision allot- ting to preferred shareholders of. the old company a large part of the common stock of the new company at ten cents on the dollar ; and the failure of a majority in interest of the certifi- cate holders to file a written dissent to the plan does not make it binding upon them, since it is a departure from, and not a mere detail of the plan contemplated by the original agree- ment. Likewise a provision in such detailed plan which authorizes the committee to control all of the stock of the new 10 stock Corporation T/aw, § 13. 11. Stock Corporaticm Law, § 5. REINCORPOEATION AND BEOKGANIZATION OF CORPORATIONS. 101 company until two issues of preferred stock shall have paid five per cent dividends for five consecutive years, at a rate of compensation for the committee to be fixed .by themselves, or, in the event of question, by two persons to be selected by them, is unauthorized and beyond the power of the committee, where there is no such provision in the original agreement and no intimation that the bondholders' property was to be controlled for an indefinite period.^^ The fact that the members of a re- organization committee, to which a controlling interest in the stock of a railroad had been issued in trust, with power to vote thereon, until such time, not to exceed five years from the date la. United Water Works Co. v. Omaha Water Co., 164 N. Y. 41^ 58 N. E. 58. When payment of old moitgage lands not assumed.— ^Upon a reorgani- zation of an insolvent corporation, which had bonds outstanding secured by. a second mortgage on its realty, the successor corporation acquired the realty through foreclosure of a prior mortgage. By the reorganization agreement, the new company agreed to provide for the outstanding bonds by issuing new ones in their stead, at a lower rate of interest, to assenting bondholders, and by a distribution, to non-assenting bondholders, of their dis- tributive share in the proceeds of the sale of the mortgaged property. The directors of the new company adopted a resolution, to the efEeet that it as- sumed all the debts and obligations of the old company, "in addition to the bonds and other obligations mentioned in the agreement of reorganization, ' ' in consideration of a transfer of the old company's personal property. A bill of sale from the old company, of all its property except that covered by the mortgage, was then delivered to the new coinpaiiy, in which it was stated that, in consideration of such transfer, the new company assumed the payment of all the debts and obligations of the old company, excepting its mortgage bonds, and excepting all other indebt- edness, otherwise provided for in tho agreement of reorganization. It was held, that tlie new company did not as- sume the payment of the old mortgage bonds. Fernschild v. Yuengling Brew- ing Co., 154 N. Y. 667, 49 N. E. 151. Railroad reorganization agreement. —See Industrial & General Trust v. Tod, 180 N. Y. 315, 73 N. E. 7. When acts of reorganization com- mittee do not constitute conversion, but a breach of contract. — ^Industrial & General Trust v. Tod, 170 N. Y. 233, 63 N. E. 285. Sale of stock to' old corporation. — , Reorganization of corporation by bond- holders. New corporation may sell its common stock at any price to stock- holders of the old corporation. Fer- guson V. Ann Arbor R. Co., 17 App. Div. 336, 45 N. Y. Supp. 173. Annulment of agreement for fi^aud. — ^Action by stockholder of railroad company to vacate foreclosure sale and annul reorganization agreement upon ground of fraud. MaeArdell v. Oleott, 189 N. Y. 368, 83 N. E. 161. Violation and modification of agree- ment.— See Cox. V. Stokes, 156 N. Y. 491, 51 N. E. 316. Suit by stockholder to compel reor- ganization committee- to acco'unt. — Complaint held to state cause of ac- tion. Mawhinney v. Bliss, 117 App. Div. 355, 103 N. Y. Supp. 279, affd. 189 N. Y. 601, 81 N. E. 1169. 102 CORPORATIONS. of the sale of the property, as the condition of the road should, in their judgment, warrant the distribution thereof among the bondholders, have disposed of certain of the stock of the road held by them individually, does not affect their authority as members of the reorganization committee to act as directors and to hold and vote upon the trust stoek.'^^ 95. Effect of reorganization. Reorganization of a business corporation under the statute will not effect an extension of its corporate existence, as fixed by its charter, or change the character of its business." A reorganized corporation, accepting from the old corporation a bill of sale of its assets, is not bound to pay obligations specifically excepted.^^ A stockholder of one of the old cor- porations which have been reorganized into a new corporation may maintain an action against the new corporation to, com- pel it to deliver to the stockholder his proportion of the stock of the new corporation in pursuance of the agreement be- tween the corporators of all of the original corporations that payment for the transfer should be made by apportioning to the original stockholders the whole of the stock of the new corporation not reserved for the use of the treasury. Such stockholder is not to be turned over for relief to his own orig- inal corporation after by agreement all its functions had ceased, although it might not be wholly dead.^^ The mere pur- pose of the stockholders of one corporation, or of the com- 13. Haines v. Kinderhook & H. R. and delivered to the respective crodi- Co., 33 App. Div. 154, 53 N. Y. Supp. tors, a complaint alleging the facts 368. aforesaid and in addition that the com- 14. People ex lel. Haberman t. mittee on demand have failed to deliver .Tames, 5 App. Div, 412, 422, 39 N. Y. said notes and asking as equitable re- Supp. 313. lief that they be required to do so, 15. Fernachild v. Yuengling Brewing states but a single cause of action for Co., 13 App. Div. 29, 44 N. Y. Supp. a single wrong, namely, the failure to 106, affd. 154 N. Y. 667, 4? N. E. 151. deliver the notes to the plaintiff. Where 16. Anthony et al. v. American Glu- the complaint alleges that the commit- eose Co., 146 N. Y. 407, 41 N. E. 33. tee failed to execute the trust to obtain Where the plaintiffs and other credi- and deliver the notes it states a cause tors of an Insolvent corporation as- against the committee as -trustees. The signed their claims to a committee new corporation itself is liable where which reorganized the corporation by it accepted the benefit of the scheme forming a new corporation to which aforesaid. McGratty v. Kranz Mfg. said claims of creditors were trans- Co., Inc., 183 App. Div. 207, 170 N. Y. ferrod upon the condition that notes of Supp. 568. the new corporation were to be made JftEINCOKPOBATION AND REORGANIZATION OF OOEPORATIONS. 103 pany itself, to acquire another does not make the company which does acquire the other liable to its creditors and stock- holders. While it is true that no schpme of reorganization which contemplates the transfer to the original stockholders of stock in the new corporation unburdened by the old debts can be upheld, this principle does not apply where title to the property of the original company was acquired by purchase on a foreclosure sale, with no agreement or understanding that those interested in the original contipany were to be bene- fited directly or indirectly by the reorganization." 96. Sale of property on foreclosure; liability of new corporation. ' ' The supreme court may direct a sale of the whole of the property, rights and franchises covered by the mortgage or mortgages, or deeds of trust f oreelpsed, ; at any one time and place to be named in the judgment, or order, either in ease of the non-payment of interest onlyj or of both the principal and interest due and unpaid and secured by any such mortgage or mortgages or deeds of trust. Neither the sale nor the formation of the new corporation shall interfere with the authority or possession of any receiver of such property and franchises,, but he shall remain liable to be removed or discharged at such time as the court may deem proper. No suit or proceeding shall be commeuqed against such re- ceiver unless founded on wilful misconduct or fraud in his trust after the expiration of sijfty days from the time of his discharge; but after the expiration of sixty days the new corporation shall be liable in any action, that may be commenced against it, and founded on any act or omission of such receiver for wMeh he may not be sued, and to the same extent as the receiver, but for this section would be or remain liable, or to the same extent that the new corporation would be had it done or omitted the acts complained of. ' ' 18 This section does not apply to moneyed corporations 19 17. Male v. Atchison, Topeka & 18. JStook Corporation Law, § 11. Santa Fe Railway Co., 330 N. Y. 158, 19. 'Stock Corporation Law, § 5. 129 N. E. 458. 104 CORPORATIONS. CHAPTER X. Capital Stock. In General. 97. Distinction between capital stock and capital. 98. Nature of property in shares. 99. Unissued stock of corporation. 100. Creditors' rights: Trust fund doctrine. 101. Issuance of preferred and common stock: Exchange of preferred for common. 102. Effect of Amendment of 1901. 103. Change in par value of Bhares. 104. Value of shares issued without nominal or par value: Sale of shares. 105. Amount of capital and of shares without nominal or par value. 106. Issuance of partly paid stock. 107. Issuance of stock to employees. 108. Lien of corporation on shares. 109. Assessment of fully paid shares. 110. Payment of capital stock. Increase and Reduction of Capital Stoch. 111. Bight to increase or reduce: Liabilities of stockholders. 112. Principles governing reduction of capital stock. 113. Manner of increasing or reducing capital stock: Meetiiig of stockholders. 114. Conduct of stockholders' meeting: Certificate of increase or reduction. 115. Bight of stockholder to avoid fraudulent increase. 116. Eight of stockholder to proportionate shares of new stock. 117. Liability of original holders where increased capital not paid in. , 118. Increase or reduction of shares or capital of corporation issuing shares without nominal or par value. Stock Certificates. 119. In general. 120. Nature of stock certificates. 121. Negotiability of stock certificates, 122. Certificate of shares witllout nominal or par value. 123. Effect of alteration of stock certificate. 124. Proceedings to compel issuance of certificate. 125. Issuance of certificates in excess of number of shares authorized. 126. Lost or destroyed certificates of stock: Proceedings to compel issuance of new certificate. 127. Constitutionality and construction of statute. 128. Procedure on application for new certificate. 129. Consideration generally. 130. Property as consideration. 131. Lawful purpose defined. CAPITAL, STOCK, 105 132. Labor and services as consideration. 133. Bights and liabilities arising out of issuance of stock without consideration. 134. Liability of corporation on forged or fraudulently issued certificate. 135. Eights of holder of spurious certificate. 136. Criminal liability of ofSeers or agents for fraudulent issue of stocks or bonds. Framdulent Fraotices in Respect to Corporate StocTcs and Bonds. 137. Investigation by attorney general. 138. Action by attorney general. 139. Exainination of vritnesses and preliminary injunction. 140. Froeedure on hearing. 141. Powers of referee. 142. Penalties. 143. Criminal prosecution. 144. Immunity of witnesses. 145. TTntrue and misleading advertisements. In General. 97. Distinction between capital stock and capital. The capital of a corporation consists of its funds, securities, credits and property of whatever kind which it possesses. The word " capital " applied to corporations is often used inter- changeably with the words " capital stock," and both are fre- quently used to express the same thing — the property and assets of the corporation. Strictly, the capital stock of a cor- poration is the money contributed by the corporators to the capital, and is usually represented by shares issued to sub- scribers to the stock on the initiation of the corporate enter- prise.^ The unissued shares of a corporation are not assets.^ 98. Natnre of property in shares. The essential characteristics of an interest in the capital stock of a corporation is well defined. Outside of the stock- holder's interest in current profits, he has an undivided inter- est in the surplus of assets over liabilities which is ordinarily represented by certificates. His property, however, consists of his interest in such surplus, and the certificates for ordi- nary purposes represent but do not constitute his interest.* Recognizing these general principles it has been established 20. Burrall v. Bushwick E. Co., 75 13 N. E. 648, N. Y. 211; Chrlstensen v. Bno, 106 2. Burrall r. Bushwick E. Co., T5 N. Y. 97, 100, IS N. E. 648, N. Y. 211; Holmes v, Camp, 819 N. Y. 1. Chrlstensen v. Eno, 106 N. Y. 07, 359, Hi N. E. 841. 106 COEPOEATIONS. that ill the absence of some statutory provision the interest of a stockholder in the capital of a corporation may be regarded as property located where the corporation is organized and' exists, and in that jurisdiction may be reached by appropriate proceedings.^ 99. Unissued stock of corporation. A corporation may use its original, unissued, authorized capital stock for any legitimate .or lawful purpose it sees fit, and is not obhgated to give to existing stockholders an oppor- tunity to purchase before making such use.* Stock issued by a corporation, repurchased and resold by it cannot be re- garded as unissued stock.^ 100. Creditors rights — trust fund doctrine. The assets of a corporation are a trust fund for the pay- ment of its debts, upon which the creditors have an equitable lien, both as against stockholders and all transferees, except those purchasing in good faith and for value.^"^ A creditor cannot be deprived of his equitable lien thereon by an agree- 3. Holmes v. Camp, 219 N. Y. 359, 114 N. E. 841, holding that an action affecting the apparent title and true ownership of that interest is one in the, natui-e of a proceedii;g in rem which may be entertained by oiir courts and in which, under their gen- eral powers and under the provisions 6t Subdivision 5 of section 438 of the Code of Civil Procedure (now Civil Practice Act, § 232), jurisdiction of a non-resident defendant may be ob- tained Tjy service of a summons by pnhlieation. 4. Archer v. Hesse, 164 ^p. Div. 493, 150 N. Y. Supp. 296, holding that where, in a representative action by a stockholder on fcehalf of himself and all other stockholders, to procure a judgment adjudging void a resolution of its board of directors and the issu- ance of certain shares of its preferred capital stock, a judgment is entered that the resolution and issue in pur- suance thereof were null ind void, and directing the surrender and cancella- tion of the stock, but not enjoining its reissue, counsel to whom certain shares of the preferred capital stock were subsequently issued for services, and two stockholders who voted for such reissuance of stock, are not lial)lc for contempt. 5. Hartley v. Pioneer Iron VPorks. 181 N. Y. 73, 73 N. E. 576. 5a. Bartlett v. Drew, 57 N. Y. 587*; Coley. M. I. Co, et al., 133 N. Y-. 164. 30 N. E. 847; Hurd v. New York'& C. Steam Laundry Co., 167 N. Y. 89, 95. 60 N. E. 327; BarCy v. Brooklyn & ISr. Y. Ferry Co., 196 N. Y. 99, 89 N. E. 461. Purchaser for valuable considera- tion. — ^Where a corporation took up a note before maturity and paid part of the same and gave a new note for the balance, with the same individual indorsers, it was held that the holder of the new note gave a valuable con sideration for the part payment Howland v. Metropolitan Bank, 2-9.h Fed. 543. CAPITAL STOCK. 107 ment between the corporation and a transferee of the prop- erty that the latter shall assiime and pay all the corporate debts. The consent of the creditor to accept the substituted debtor is essential to make such an agreement valid as against him.^'' Hence, directors who have so transferred all the prop- erty of their corporation without providing for the payment of an outstanding judgment are personally liable to the judg- ment creditor in a suit brought under sections 90 et seq. of the General Corporation Law.^" There is an implied contract on the part of the directors and officers of a corporation to at least use reasonable care and diligence to see to it that the assets of the corporation are not dissipated or wasted or misapplied or applied to payment of their own individual claims against the corporation when it is insolvent, or its insolvency is imminent, and this fact is known to them, in preference to the satisfaction of the claims and demands of other creditors of the corporation. And they are not at liberty, without liability to the creditors, to take its assets and convert them to their own use in payment of the debts of the corporation to themselves and a few of the creditors, and especially on debts of the corporation, where they personally are endorsers.^" A corporation cannot, even with the consent of all its stockholders, give away its property, provided there is not enough left to pay its debts.^*. So also where the rights of a creditor have intervened a , corporation has no power, even with the consent of all its stockholders, . to sell its plant to another corporation and to retire from business, taking payment in the stock of the purchasing corporation, which is issued, not to it, or its officers as trustees, but to an indi- vidual stockholder, who does not undertake to pay the cor- pprate debts, and who distributes it without regard to such debts, since the creditor has the right to rely upon its assets for the payment of his debt and has an equitable lien thereon, both as against stockholders and all transferees except those 5b. Darcy v. Brooklyn & N. Y. Ferry : 5c. Darcy v. Brooklyn & New York Co., 196 N. Y. 99, »9 N. E. 461. Ferry Co., lOT App. Div. 167, 111 N. Y. The lien of the creaitors of an in- Supp. 514, affd. 196 N. Y. 99, 89 N. E. solvent corporation upon its assets. in 461. the hands of its stockholders, or of 53. Pennsylvania E. Co. v. Pedrick. other persons, is a purely equitable one. 222 Fed. 75. and can only be enforced in an equitr- 5e. Ward v. City Trust Co., 192 N. able proceeding. McLean v. Eastman, Y. 61, 74, 84 N. E. 585. 21 Hun 313. 108 COEPOEATIONS. purchasing in good faith and for value, and, under such cir- cumstances, the stockholder could not become a bona fide ptar- ehaser." When two directors of a stock corporation transfer- all the corporate property to a third director for a nominal consideration they commit a breach of duty toward creditors, and become personally liable for existing claims. The third director is liable also on the additional ground that he re ceived, with notice and without consideration, property of the corporation which was impressed with a trust for the pay ment of the corporate debts.^*^ The doctrine that a cor- poration which has agreed to give common stock for property known to be worth much less than the fair value of the stock cannot recover against the stockholders for the amount un- paid on the stock, for the reason that the agreement was made by all the parties interested and binding on them, does not interfere with the generally recognized right of creditors to inquire into the value of property received for stock and lo recover from a stockholder the difference between the value of the property and the par value of the stock.^ 101. Issuance of preferred and common stock; exchange of preferred for common. Articles of incorporation may divide the stock into common and preferred, and may provide that the preferred stock- holders shall be deprived of voting power in consideration of the preferences over the common stock which is given them.'' And the statute provides that : "Every domestic stock corporation may issue preferred stock and common stock and different classes of preferred stock, if the certificate of incorporation so provides, or 1. By the unanimous consent of the stockholders expressed in writing and 5f. Hurd V. New York & C. Steam all of its liabilities, the transaction Laundry Co., 167 N. Y. 89, SO N. E. was proper and legitimate, and did not a37. render the two directors personally 5g. CuUen v. Fi-iedland, 152 App. liable to creditors, although the cor Div ia4, 136 N. Y. Supp. 659, holding poration was subsequently dissolved, that, where two of the three directors 6. Whalen v. Hudson Hotel Co., 183 of a stock corporation transferred all App. Div. 316, 170 N. Y. Supp. 855. of their stock to the third director to 7. Kent v. Quicksilver Mining Co., be paid for from the funds of the cor- 78 N. Y. 159; People ex rel. Browne v. poration, but such payment did not Koenig, 133 App. Div. 756, 118 N. Y. impair the capital stock and the assets Supp. 136. remained more than svifHcient to pay capitaij stock. 109 filed in the office of the secretary of state and in the ofSce of the clerk of the county in which the principal business office of the corporation is located, or 2. By the consent of the holders of record of two-thirds of the capital stock, given at a meeting called for that purpose upon notice such as is required for the annual meeting of the corporation. A certificate of the proceedings of such meeting, signed and sworn to by the president or a vice-president, and by the secretary or assistant secretary, of the corporation, shall be filed in the offices where the original, certificate of incorporation of such corporation was filed and recorded; and the corporation may, upon the written request of the holders of any preferred stock, by a two-thirds vote of its directors, exchange the same for common stock, and issue certificates for common stock therefor, upon such valu- ation as may have been agreed upon in the certificate of organization of such corporation, or the issue of such preferred stock, or share for share, but the total amount of such capital stock shall not be increased thereby. This section shall apply to any domestic stock corporation whether organized under a general or special law, and any such coi-poration may issue preferred stock and common stock as herein provided notwithstanding provisions relating to the issuance oJ^ stock now prescribed by any other Jaw. ' ' 8 8. Stock Corporation Law, § 61 as amd. by L. 1917, ch. 543, L. 1930. ch. 609, and L. 1931, eh. 131. Forms: Certificate of incorporation providing for issuance of preferred stock, Form Nos. 1, 56. Certificate of proceedings of meeting at which issu- ance of preferred stock is authorized, Form No. 56. Formation of fire insurance com- panies with division of stock into com- mon and preferred is not forbidden by the Insurance Law and is governed by this section. Rept. of Atty. Genl., Oct. 37, 1909. Filing certificate of meeting to class- ify stock. — The Secretary of State is not required to file in his ofSce a cer- tificate of a meeting of stockholders for the purpose of classifying stock under section 61 of the Stock Corpora- tion Law, when the papers show the capital stock of the corporation is now $100,000, and that at the meeting a resolution was passed authorizing the corporation to issue $100,000 additional stock when no proceedings have been taken to increase its capital stock as provided by law. Rept. of Atty. Genl. (1913), Vol. 2, p. 481. Classification of stock; different classes of preferred stock. — A corpora- tion which is authorized by its charter to issue from time to time preferred stock of one or more classes and classify into prefen-ed and common stock and duly authorized stock of the company, and, thereafter takes advantage of section 61 and divides its authorized increase of capital stock of $800,000 into $300,000 common and $600,'000 preferred, is empowered to divide the prefeiTed stock into two classes, known as A and B respec- tively, the first to bear a preferential dividend of six per cent, per annum and the second seven per cent, per annum. It is unnecessary to state at the time of filing the certificate author- izing such classification with the Secre- tary of State how much of said $600,- 000 shall be apportioned to class A and to class B. This is a matter for the corporation- itself to determine by some action on its part thereafter, Rept. of Atty. Genl., March 18, 1914. Where a foreign railway corporation is authorized by law to issue, upon a vote of a majority of it sstockholders, preferred stock, without any condi- tions or restrictions, the corporation may upon due issue thereof for value 110 COEPOKATIONS. 102. Effect of amendment of 1901. The amendment by chapter 354 of the Laws of 1901, of see- tion 47 (now 61) of the Stock Corporation Law, so as to allow a domestic stock corporation, whose certificate of incorpora- tion did not provide for the issuing of preferred stock, to issue snch stock upon obtaining the consent of two-thirds of the stockholders, instead of upon obtaining the consent of all the stockholders, as provided in the section prior to the amend- ment, was a valid exercise of the powter reserved to the legis- lature to alter or repeal the charter granted to any corpo- ration. Such amendment, therefore, applies to a domestic stock corporation organized under the Business Corporations Law prior to its enactment.'' And a person purchasing stock of such a corporation at a time when the statute prohibited the corporation from issuing preferred stock except with the imanimous consent of the stockholders, purchased subject to the reserved power of the legislature, which it exercised in 1901, to amend the statute by authorizing the corporation to issue preferred stock, with the consent of the holders of two- thirds of the common stock.^" attach thereto sucQi conditions as it chooses, these conditions when as- sented to by holders become the con- tract between it and them and their acquiescence follows tlieir acquisition of the stock. Hackett v. Northern Pacific R. Co., 36 Misc. 583, 73 N. Y. Supp. 1087. Changing status of preferred stock- holders. — A corporation cannot, with- out the unanimous consent of its common stockholders, increase the rights of the preferred stockholders. Kept, of Atty. Genl., MUteh 36. 1912. Right of preferred stockholder to share pro rata in subsequent issue of common stock. — See Kussell v. Amer- ican Gas & Electric Co., 152 App. Div 136, 136 N. Y. Supp. 603. 9. Lord V. Equitable Life A»!f. Y. Brooklyn Cross-Town E. Co., 93 N. Y. Supp. 337. 426. 18. Abbott v. Petersbergh Granite Where the stock of a corporation Quarrying Co., 62 Hun 633, 17 N. Y. has been increased in a legal manner, Supp. 140. 120 ooKPOKATio;isrs. him of his relative position as a stockholder.^^ But stock- holders who have voted to increase the capital stock, accepted their share and received dividends thereon, as against credit- ors, are estopped from questioning the validity of the in- crease.^" An increase in the capital stock of a corporation for the legitimate uses of the corporation will not be enjoined, at the suit of one of the two promoters of the corporation, who claims that under an agreement with the other promoter made prior to the organization of the corporation he was to have an interest therein, and that the proposed increase of stock will defeat such agreement.^ 116. Right of stockholder to proportionate shares of new stock. Stockholders, in the absence of laches or acquiescence, have a vested right to take their proportionate share of an increase in the capital stock and are entitled to a reasonable time within which to subscribe therefor.^ And while a stockholder can waive that right he cannot be deprived of it witkout his consent except when the stock is issued at a fixed price not less than par and he is given the right to take at that price in proportion to his holding, or in some other equitable way that will enable him to protect his interest by acting on his own judgment and using his own resources.^ But an issue of stock, 19. Sufficiency of complaint in action demanded the right to subscribe and by stockholders seeking to set aside a pay for his proportionate share of the sale and also an issue of stock and to new stock at par, which demand was be restored to their original position refused by the corporation and a as holders of the controlling interest resolution thereafter adopted, direct- therein. Witherbee v. Bowles, 201 N. ing the sale of all the new stock, Y. 427, 95 N. E. 27. when issued, to a third party -at a 20. Veeder v. Mudgett et al., 95 N. fixed price, which was less than the Y. 295. market value of such stock at the 1. Martin v. Remington-Martin Co., time it was issued and delivered, such 95 App. Div. 18, 88 N. Y. ^pp. 57a. stockholder, by demanding his propor- 2. Hoyt, etc., v. Great American Ins. tionate share of the new stock at par, Co., 115 Misc. 1, 188 N. Y. Supp. 257. did not thereby waive his right to 3. Stokes V. Continental Trust Co., take it at the fixed price at which it 186 N. Y. 285, 78 N. E. 1090, holding was sold to the outside party, since that where a stockholder in a domestic the price was not fixed until after he corporation consented to an increase had made his demand. After the of capital stock, but protested against price was fixed it was the duty of the the acceptance of a proposition to directors of the corporation to give sell the new stock, when issued, to a , him an opportunity to purchase ah third party at a fixed price, and that price before they could sell his CAPITAL STOCK. 121 without opportunity to the existing stockholders to- take it, is not an injury to the corporation, so as to warrant a repre- sentative action by a stockholder.* Though stockholders are required by the resolution authorizing an increase and by sub- sequent notice to pay for the new stock before a given date, if no action is taken and no notice is given that the failure of a stockholder to pay before such date will forfeit his rights, a stockholder does not lose his right to take his allotted shares by failure to pay for the same before such date, and if subse- quently and before the shares have been issued to any other person, he tenders the amount due and demands his shares, he may enforce by action his right to receive the same.^ Where it has been judicially determined that a dividend declared upon stocks held under a testamentary trust is income and belongs to the life beneficiary, subscription rights offered to stockholders by the corporation also belong to the life bene- ficiary.^ When the time during which the stockholders were entitled to purchase treasury stock pro rata had expired, the president, acting pursuant to the terms of the resolution, had property to a third party, even with the approval of a large majority of the Etockholders. The stock having been sold to a third party without any opportunity being given to the stock- holder to take it at the fixed price, he can recover from the corporation the difference between the value of his stock at that, price and the market value of the stock upon the day that it was delivered to the third party. See also Arpher v. Hesse, 164 App. Div. 493, 150 N. Y. Supp. 296. Right of preferred stockholder to share pro rata in subsequent issue of common stock. See Russell v. Amer- ican Gas & Electric Co., 152 App. Div. 136, 136 N. Y. Supp. 602. 4. Waters v. Waters & Co.. 201 N. Y. 184, 187, 94 N. B. 602. 6. Sommer v. Armor Gas & Oil Co., 71 Misc. 211, 128 N. Y. Supp. 382, affd. 147 App. Div, 919, 131 N. Y. Supp. 1144. Where the directors of a corporation in need of capital authorize the issuing of sixty-seven shares of its stock, and the superintendent afterwards reports he has secured no subscriptions, whereupon four of the seven directors of the company subscribe for and take the stock without the knowledge of the holder of a majority of the stock previously issued who was also a director, but who was ill and not present at the meeting when the stock was authorized, they will be enjoined from using stock to the detriment of the plaintiff. Whitakcr v. Kilby, 55 Misc. 337, 106 N. Y. Supp. 511, affd. 122 App. Div. 895, 106 N. y. Supp. 1149. 6. Matter of Baldwin, 189 App. Div. 126, 178 N. Y. Supp. 108, folding that where the trustee in his discretion had purchased additional stock under the subscription rights it was proper for him to transfer the stock so pur- chased to the life beneficiary upon his payment of the par value thereof. 122 COKPOEATIONS. a right to purchase the stock himself. His poS'ition as presi- dent did not disqualify him as a purehaserJ 117. Liability of original holders where increased capital not paid in. If the original capital is paid in, in full, and a certificate made and recorded, the liability of the stoekholders, where liability exists for failure to do so, thus far is ended, and cannot be revived by an increase of the capital. The holders of the original stock, therefore, are not liable thereon because of a failure to pay in the increased capital ; the liability rests solely upon the holders of the increased stock, and is limited by the par value thereof.^ 118. Increase or reduction of shares or capital of corporation issuing shares without nominal or par value. ' ' Any corporation which is authorized to issue shares with no nominal or par value may amend its certificate of incorporation so as to increase or to reduce the number of shai'es which it may issue, or so as to increase or to reduce the amount of its stated capital, with which it will carry on business as stated in its certificate of incorporation by filing, in the manner provided for the original certificate of incorporation, a certificate of amendment under the seal of the corporation executed by its president or a vice-president and by its secretary or its treasurer, stating the amendment proposed and that the same has been duly authorized by a vote of a majority of the directors and also by the vote of the holders of at least a majority of the outstanding shares issued by the corpoiation, at a meeting of the stockholders called for the purpose in the manner provided in section sixty-three hereof, and by filing with such certificate of amendment a copy of the proceedings of such meeting, made, signed, verified and acknowledged by the president or a vice-president and by the secretary or the treasurer of the corporation; but an amendment cannot be made under this section unless as so amended the certificate of incorporation could lawfully have been filed under section nineteen of this Chapter. In case of a reduction of the amount of stated capital with which a corporation will carry on business as stated in its certificate of incorporation, a certificate setting forth the whole amount of the ascertained debts and liabilities of the corporation shall be made, signed, verified and acknowl^ged by the president or a vice-president and by the secretary or the treasurer of the corpoiation and shall be filed with the certificate of amendment; and such certificate of amendment shall have endorsed thereon the approval of the comptroller to the effect that as so stated the re- duced amount of capital is sufficient for the proper purposes of the corpora- tion and is in excess of its ascertained debts and liabilities. " 9 7. Dusenberry v. Sagamore Develop- Y. 29S. ment Co., 164 App. Div. 573, 150 N. ,Y. 9. Stock Corporation Law, § 3S, as Supp. 229. added, by L. 1913, ch. 351, and amd. 8. Veeder v. Mudgett et al., 95 N. by L. 1921, ch. 694. CAPITAL STOCK. 123 Stoclt Certificates. 119. In general. ■ ' The stock of every stock corporation shall be represented by certificates pre- pared by the directors and signed by the president or vice-president and secretary or treasurer and sealed with the seal of the corporation. ' ' lo The right to issue certificates of stock is not one of the im- plied" or incidental powers of a corporation, bnt exists, if at all, solely by virtue of the charter of the corporation or the statute under which it is incorporated.^^ For the refusal of the president of a corporation to countersign a certificate of corporate stock the aggrieved stockliolder has no right of ac- tion against him personally, but his remedy is against the cor- poration.^^ 120. Nature of stock certificates. A stock certificate is a continuing affirmation of the owner- ship of the specified amount of stock by the person designated therein, or his assignee, until it is withdrawn in some manner recognized by law; and a purchaser in good faith has a right to rely thereon and to claim the benefit of an estoppel in his favor as against the corporation.^^ There is a presumption 10. stock Corporation Law, § 50, pt. to be deemed as a representation, on Action by corporation to deteimine the part of those issuing it, that the ownership of stock. — Geneva Mineral holder is entitled to a proportionate Springs Co. v. Steele, 111 -App. interest in the capital or property of Div. 706, 97 N. Y. Supp. 996. Proof the corporation. Cross v. Sackett, 6 of identity, insufficient to establish Abb. Pr. 247, l^ How. Pr. 63. title to shares of stock standing in a Where certain disputable stock has name the same as that of the claim- stood on the books of a corporation ant, in an action to establish title to for more than a year, without pro- such shares. Moss v. Manhattan Co., test, in the name of a, director and 48 App. Div. 561, 63 N. Y. Supp. 936. secretary, the court will restrain other As to transfer of .stock certificate, directors, who seek to gain control of see post, chtip. XII. the corporation at an approaching 11. Reno Oil Co. v. Culver, 60 App. election, from declaring void and not Div. 139, 69 N. Y. Supp. 969. in good standing, not only the dis- 12. Cooley v. Curran, 54 Misc. 573, putable, but also the valid stock of 104 N. Y. Supp. 751. the director and secretary until such 13. Holbrook v. New Jersey Zinc time as he has explained what has Co., 57 N. Y. 616; Hudson Trust Co. become of certain certificates which are V. American Linseed Co., 190 App. missing from a stock -book, which has Div. 289, 180 N. Y. Supp. 17. been in his custody. Hall v. Lay, 27 A certificate of stock, issued upon Misc. 603, 59 N. Y. Supp. 638. the organization of a corporation, ia 124 COEPOBATIONS. that stock lias been regularly issued and for a valuable con- sideration until the contrary is shown.^* "The rights or shares which the defendant has in the stock of an association or corporation, or in a bond negotiable or otherwise, together with the interest and profits thereon, may be levied upon; and the sheriff's certificate of the sale thereof entitles the purchaser to the same rights and privileges, with respect thereto, which the defendant had when they were so attached. ' ' K^ This section applies to shares of a domestic corporation only."*" It, in effect, recognizes that the stock of an associa- tion, as well as that of a corporation, is personal property."'' It has been held that where a certificate of stock of a foreign corporation belonging to a nonresident was in the possession of a resident of this state as security for a debt, the .interest of the owner therein is a property right within the state, which may be levied upon under a warrant of attachment.^*'* 121. Negotiability of stock certificates. A certificate of stock is not in character or form an instru- ment for the payment of money, and does not contain any of the requirements of a negotiable instrument as defined by the negotiable instruments law.^^ But while certificates of cor- porate stock lack some of the attributes of commercial paper and are, therefore, sometimes denominated only quasi- negotiable, yet parties who deal in them innocently have long been protected by the law upon an analogous principle,^^ and, 14. Holbrook v. New Jersey Zinc, or incumbrances thereon; or tho Co., 57 N". Y. 616; Matter of Seneca amount, nature and description of the Oil Co., 153 App. Div. 594, 138 N. Y. property held for the benefit of the de- Supp. 78, affd. 20« N. Y. 545, 101 N. fendant, or of the defendant's, interest E. 1121. in property so held, or of the debt or 14a. Civil Practice.Act, § 915. Upon demand owing to the defendant, as the application of a sheriff hold- the case requires. Civil Practice Act, ing a warrant of attachment, the § 918. president or other head of an aeso- 14b. Plimpton v. Bigelow, 93 N. Y. elation or corporation, or the secre- 593, tary, cashier, or managing agent 14c. Matter of Jones. 172 N. Y. 575. thereof, or a debtor of the defendant, 585, 65 N. E. 570. or a person holding property, includ- 143. Simpson v. Jersey City Con- ing a bond, promissory note, or other tracting Co., 165 N. Y. 193, ,58 N. E. instrument for the payment of money, 896. belonging to the defendant, musi 15. Talcott v. Standard Oil Co., 149 furnish to the sheriff a certificate, App. Div. 694, 134 N. Y. Supp. 617; under his hand, specifying the rights Cowles v. Kiehel, 65 N. Y. Supp.. 349. or number of shares of the defendant 16. Union Trust Co. v. Oliver 314 in the stock of the association or cor- N. Y. 517, 523, 108 N. E. 809; Amer- poration. with all dividends declare'! OAPITAL STOCK. 125 in a proper case, will be entitled to compel recognition as stockholders, where power exists to issue new certificates, or to indemnify if there is not." The Supreme Court of the United States said in reference to such instruments: " It is no less the interest of the shareholder, than the public, that the certificate representing his stock should be in a form to secure public confidence, for without this he could not negotiate it to any advantage. It is in obedience to this re- quirement, that stock certificates of all kinds have been con- structed in a way to invite the confidence of business men, so that they have become the basis of commercial transactions in all the large cities of the country, and are sold in open market the same as other securities. Although neither in form or character negotiable paper, they approximate to it as nearly as practicable."^^ As was said by the same court these prin- ciples are well known to business men and are constantly acted upon by them.^^ So where the owner of stock in a corporation places his stock certificates indorsed in blank in the hands of another to dispose of them for a prescribed purpose and the agent, disregarding the direction of his principal, pledges the certificates as a security for a loan to himself, the owner is es- topped from denying the lien acquired by the pledgees provid- ing they acted in good faith and without notice of any limi- tation upon the authority of the agent.^" An instrument known as a voting certificate which certifies that the person named therein is entitled to receive a certificate of ownership of fiill paid shares in the capital stock of a designated corporation, is negotiable like the .stock which it represents, and so if the owner thereof indorses it in blank and intrusts it to another person for a specified purpose and such person fraudulently pledges it. for a loan to himself, the owner may not assert his ownership as against a pledgee taking it in good faith and for value.^ ican Press Assn. v. Brantingham, 7.5 369, 377. App. Diy. 435, 78 N. Y. Supp. 305; 19. National Safe Deposit S. & T. liyman v. State Bank of Eandolph, 81 Co. t. Hibbs, 229 U. S. 391, 57 L. ed. App. Div. 367, 80 N. Y. Supp. 901, affd. 1241. 179 N. Y. 577 72 N. E. 1145; Hudson 20. McNeil v. Tenth National Bank, Trust Co. V. American Linseed Co., 190 46 N. Y. 325 ; Knox v. Eden Musee App. Div. 289, 180 N. Y. Supp. 17. Americain Co., 148 N. Y. 441, 42 N. 17. Jarves v. Manhattan Beach Co., E. 988. See also post, par. 426, 148 N. ir. •652, 43 N. E. 68. 1. Union Trust Co. v. Oliver. 214 N. 18. Bank v. Lanier. 11 Wall. (U. S.) Y. 517, 108 N. E. 809. 126 CORPOBATIOJiTS. 122. Certificate of shares without nominal or par value. "Every certificate for such shares without nominal or par value shall have plainly written or printed upon its face the aumber of such shares which it represents, and no such certificate shall express any nominal or par value of such shares or express any rate of dividend in terms of percentage of any nominal or par value. The certificates for preferred shares shall, state the amount, if any, which the holders of each of such preferred shares shall be entitled to re- ceive on account of principal from the assets of the corporation in preference to the holders of other shares, and shall state briefly any other rights or preferences given to the holders of such shares. "2 123. Effect of alteration of stock certificate. ' ' The alteration of a certificate, whether, fraudulent or not and by whomso- ever made, shall not deprive the owner of his title to the certificate and the shares originally represented' thereby,, and the transfer of such a certificate shall convey to the transferee a good title to. such certificate and to . the shares originally represented thereby. ' ' S 124. Proceedings compel issuance of certificate. Though it is only in an unusual case that the delivery of stock purchased will. be decreed hy specific performance,* and this will not be done where there have been sales of suffi- cient stock of the defendant corporation to enable the pur- chaser upon a trial to fix a value thereon, for in such a case the damages ascertainable are the adequate and proper remedy,^ still there is no doubt that the right exists and will be enforced when circumstances justify it. So the holder of a certificate covering a certain number of shares of stock, on tendering the same to the corporation, is entitled to have it reissue to him other certificates, dividing the stock into sev- eral blocks as indicated by him, and .he inay enforce that right, by action if his reqiiest be refused.^ And a suit in equity may be maintained to compel the . specific performance of a con- tract to issue stock certificates and a corporation may be re- quired to cancel certificates wrongfully issued to a third per- son and issue certificates to the one rightfully entitled thereto." 2. stock Corporation Law, § 19, pt., 131 N. Y. Supp. 157. as added by L. 1912, ch. 351, and amd. 5. Donovan v. Powers Film Pi-o- by L. 1917, eh. 500, L. 1920, ch., 608 (^uct^,.. Inc., Ill Misc. 276, 181 N. Y. and L. 1921, ch. 694. , Supp. 157. 3. Pers. Prop. L., § 177, as added by 6. Powers v. Universal Film Manu- L. 1913, ch. 600. facturing Co., 162 App. Div. 806, 148 4. Butler v. Wright, 186 N. Y. 259. N. Y. Supp. 114. 78 JT. E. 1002; DonovE^n v. Powers 7. Becker v. Buffalo Package Co., 85 Film Products, Inc., Ill MisQ. 276, Misc. 5Q3, 148 N. Y. Supp. 7'82. CAPITAL STOCK. 127 Likewise the rule is well settled that a suit in equity lies against a corporation to compel it to issue a certificate of stock in place of one it has wrongfully cancelled. But a cor- poration should neither be required to issue certificates in ex- cess of its capital as authorized by law, nor should it be re- quired to duplicate shares lawfully represented by outstand- ing certificates.^ 125. Issuance of certificates in excess of number of shares authorized. The number of ,sha,res of stock a corporation may issue is limited by its certificate of incorporation. A corporation can- not issue certificates for stock beyond the limit of its author- ized capital stock, for to do so would be to increase its capital stock in a way not authorized by statute. And when the stock in a corporation is once all taken, the corporation has no more at its disposal, unless it shall get back a portion of that so taken, by forfeiture ; and no person can become a stockholder, except by purchase from one of the original subscribers, or his assignee, and by assignment of stock.^ In case the officers of a corporation, authorized to issue stock certificates, fraudu- lently issue certificates for shares in excess of the number of shares the corporation is authorized to issue, the corporation is liable to an innocent holder in damages for such overissue to the extent of the value of the sharesi^" In an action against 8. Selwyn Brown v. Superrio Co., 9. Lathrope v. Kneeland, 46 Barb. Jxie„ 181 App. Div. 420, 168 N. Y. 432. Supp. 918. 10. Archer v. Dunham, 89 Hun 387. A plaintiff who alleges her title to 35 N. Y. Supp. 387. certificates of stock of a defendant Issue of false certificate; injunctibn corporation and a right to immediate restraining transfer. — Where it appears possession thereof cannot maintain that a stock company has fraudulently her action in the form of one of inter; issued false certificates of stock largely pleader by setting oUt that a third beyond the actual capital of the corn- person, made defendant and '.having pany, and the company has become in- originally a lien on the stock, has no solvent; an injunction restraining the claim thereto by reason of the fact company and its officers from opening that the amount of the lien has been their transfer books for the transfer satisfied. An allegation that the of any stock, even for owners who are plaintiff has no adequate remedy at stock brokert and require such trans- law is unavailing, for she has such rem- fers to be made in the regular eoursf edy by an action for conversion or of of their business, will be granted and replevin; and, moreover, the remedy of continued until the courts or the legis- the action by interpleader is given only lature dispose of the matter. People ex to a stakeholder, not to a claimant, rel. Jenkins, etc., v. Parker Vein Coal Brown v. Arbogast' & Bastian Co., 162 Company, etc., 10 How. Pr. 186, affd App. Div. 603, 147 N. Y. Supp. 998. 10 How Pr. 543, 1 Abb. Pr. 128. 128 COEPOEAXIOBTS. the officers of an incorporated company, for selling certificates of stock, representing stock which had been fraudulently over- issued by them, to entitle the plaintiff to' recover, he must prove that the certificates purchased by him did not represent genuine stock. But where he has proved that the whole amount of stock which the company was authorized to issue, had been issued prior to the issuing of his certificates, the bur- den of proof is thrown upon defendants, to show definitely that the certificates sold represented genuine stock. The of- ficers of the company issuing such false certificates, are liable therefor to the assignees of the certificates, when they have been purchased in good faith.^^ 126. Lost or destroyed certificatees of stock; proceedings to compel issu- ance of new certificate. "The owner of a lost or destroyed certificate of stock, if the corporation shall refuse to issue a new certificate in place thereof, may apply to the supreme court, at any special term held in the district where he resides, or in which the principal bxisin ess office of the corporation is located, for an order requiring the corporation to show cause why it should not be required to issue a new certificate in place of the one lost or destroyed. The application shall be by petition, duly verified by the owner, stating the name of the corporation, the number and date of the certificate, if known, or if it can be ascertained by the petitioner; the number of shares named therein, to whom issued, and as particular a statement of the circumstances attending such loss or destruction as the petitioner can gfive. Upon the presentation of the petition the court shall make an order requiring the corporation to show cause, at a time and place therein mentioned, why it should not issue a new certificate of stock in place of the one described in the petition. A copy of the petition and order shall be served on the president or other head of the corporation, or on the secretary or treasurer thereof, per- sonally, at least ten days before the time for showing cause. ' ' 12 This provision and section 68 of the Stock Corporation Law should be read in connection with section 178 of the Personal Property Law, which provides that : "Where a certificate has been lost or destroyed, a court of competent juris- diction may order the issue of a new certificate therefor on service of process upon th(! iiivporation and on reasonable notice by publication, and in any other way which the court may direct, to all persons interested, and upon satisfactory proof of such loss or destruction and upon the giving of a bon^ with sufficient surety to be approved by the court to protect the corporation or any person in- jured by the issue of a new certifipate from any liability or expense, which it or they may incur by reason of the original certificate remaining outstanding. H. Bruff V. Mh!!, 3R N. Y. 300, 34 12. Stock Corporation Law, J 67. How. Pt. 338. CAPITAL, STOCK. 129 The court may also in its discretion order the payment of the corporation's reasonable costs and counsel fees. The issue of a. new certificate vmder an order of the court as provided in this section shall not relieve the corporation from liability in damages to a person to whom the original certificate has been or shall be transferred for value without notice of the proceedings or of the issuance of the new certificate. " 13 "In any case not provided for by this act (personal property law), the rules of law and equity, including the law merchant, and in particular the rules relating to the law of principal and agent, executors, administrators and trustees, and to the effect of fraud, misrepresentation, duress or coercion, mis- take, bankruptcy or other invalidating cause, shall govern. ' ' 14 127, Constitutionality and construction of statute. The provisions of the statute relative to the right of an owner of a lost certificate of stock to apply to the Supreme Court for an order that the corporation issuing the stock show cause why it should not issue a new one in place of the one lost, do not conflict with the Constitution or statutes of the United States and may he invoked by a stockholder of a -national banl?: who has lost his certificate of stock therein.^ The provisions of the statute do not affect the liability of a corporation to its creditors under section 333 of the Civil Practice Act, relative to actions upon lost negotiable instruments, nor do they affect its liability to them at com- mon law.^" And the fight of the owner of corporate stock who has lost his certificate, in case the corporation refuses, upon indemnity being; tendered, to issue to' him a new cer- tificate, to maintain an equitable action to compel such issue,, was not taken away or affected, by the act of 1873 (ChaP' 171, Laws of 1873), giving a summary remedy in such cases. That act did not give a remedy at law,'but simply a cimiulative and additional equitable remedy.^'^ It seems that the same reasoning is applicable to the present statiite. This proceed- ing is statutory, and to justify the court in granting the ap- plication peirfprmance of the requirements of the statute must be alleged. It is only where the corporation has refused to issue a new certificate that a proceeding can be commenced. 13. Personal Property Law, § 178, as 16. Kolston v. Central Park, North & added by L. 1913, ch. 600. East Eiver E. Co., 31 Misc. 439, 47 14. Personal Property Law, § 179, as N. Y. Supp. 650., ,.., .-: added ^by L. 1013, ch. 600. " •, 17.,Kinnan v, Forty-Second ^trept, 15. Matter of Hayt, 39 Misc. 356, 79 etc., B. Co., 140 N. Y. 183, 35 N. E. N. Y. Supp. 845. 49S. 9 130 COEPOKATIONS. There must, therefore, be a distinct refusal of the corporatioii' to issue a certificate in place of the particular certificate lost or destroyed. A mere general request of the corporation as to the requirements for the issuance of a new certificate in place of one that is destroyed or lost -^ where the particular stock for which a new certificate is required isiuot specified or a distinct request made to issue a certificate in place of that particular stock — is hot such a demand as is contemplated' by the statute. ^^ 128. Procedure on application for new certificate. "Upon the return of the order, with proof of due service thereof, the court shall, in a summary manner, and in such mode as it may deem advisable, inquire into the truth of facts stated in the petition, and hear the proofs and allega- tions of the parties- in regard , thereto, and if satisfied that the petitioner is the lawful, owner- of the number of shares, , or any part thereof, described in the petition, and that the certificate therefor has been lost . or destroyed, and can not after due diligence be found, and that no sufficient cause has been aliown why a new certificate should not be issued, it shall make an order re- quiring the corporation, within such time as shall be therein designated, to issue and deliver to the petitioner a new certificate for the number of shares specified in the or^pr, upon depositing ^uch security, or filing a bond in such form and with such sureties as to the court shall appear sufficient to indemnify any per- son other than the petitioner who shall thereafter be found to be the lawful owner of the certificate lost or destroyed; but such provision requiring security to be deposited or bond filed is to be construed as excluding an application made by a domestic municipal corporation or by a public officer in behalf of such corporation; and the court may direct the publication of such notice, either be- fore or after making such order as it shall deem proper. Any person claiming any rights under the certificates alleged to have been lost or destroyed shall have recourse to such indemnity, but in any application under the provisions of this chapter, in which a domestic municipal corporation or a public officer in behalf" of such corporation, shall be by the foregoing provisions of this sectiori excused from depqsitingi «eeurity or filing a bond,; such municipal corporation shall be liable for all damages that may be sustaiiidd by any person, in the same case and to the same extent as sureti,es to a bond or undertaking would have been, if such bond or undertaking had been filed; and the corporation issuing- such certificate shall be discliirged from all liability to such person upon com- pliance with such order ; arid obedience to the order may be enforced by at- tachment" against the officer Or' officers ■ of the corporation oh proof of his or their refusal to comply with it. "19 18. Matter of Coats, 75 App. Div. penalty of the bond required to be fur- 469, 475, 78 N. Y. Supp. 425. nished by the petitioner upon the grant-, 19. Stock Corporation Law, ^ 68, iug. of the application should' be -at Bond. — It seems that where the par least $25,000. Matter of. Speir 69 value of the stock is $5,000 arid the App. Div. 149, 74, N. T. Supp. 555. market value thereof is $30,800, the CAPITAL STOCK. 131 The statute contemplates that, upon the return of the order to show cause, the court shall take proof of the facts stated in the petition, and unless this is done no order requiring the corporation to issue a new certificate can be granted.^" Hence to confer upon the court jurisdiction to make an order re- quiring a corporation to issue and deliver new certificates of stock to replace certificates which have been lost or destroyed, it must be proved that the petitioner is the owner of the shares and that such shares have been lost or destroyed and cannot, after due diligence, be found.^ Likewise an application by an executor to require a corporation to issue to him a duplicate of a certificate of stock which had been issued to his testator and which he claims has either been lost or destroyed, should not be granted without evidence, other than the verified peti- tion itself, of the facts alleged therein, especially where the corporation has interposed an answer denying any knowledge or information sufficient to form a belief as to each and every allegation contained in the petition except the allegation that the certificate claimed to have been lost or destroyed had orig- inally been issued to the decedent. Where there is no direct evidence that the certificate has been actually destroyed, notice of the application should be given by such publication thereof as will furnish any one claiming an interest in the stock with an opportunity to appear and be heard.^ Hence where it appears that the certificate of stock alleged to have been lost or destroyed was assigned by the person in whose name it stood on thie books of the corporation to a third per- son and was by such third person assigned to the petitioner, it is improper to require the corporation to issue a new cer- tificate of stock without notice, either personally or by pub-, lication, to the record owner of the stock and without the pub- lication of notice of the application so that any one claiming, 20. Matter of Coats, 75 App. Div. that the other shares were held by the 4:69. 78 N. Y. Supp. 426. persons named as trustees, who decli^ed 1. Matter of Biglin v. Friendship to give up the same because the bene- Assn., 46 Huu 223, 11 St. Rep. 566, fieiaries refused to consent to their sur- holding that where it appears that the rendering them to the person from shares which the petitioner claims to whom the petitioner's title was ac- own were issued to two persons named quired, the application should be de- therein as trustees, aiid that a portion nied. - of the said shares are in the posset- 2. Matter of Speir, 69 App. Div. i49_, sion of the petition unindorsed; and 74 X. T. Supp. 555. 132 CORPORATIONS. an interest in the stock may have an opportunity to have his claim passed upon by the court.^ 129. Consideration generally. "No corporation shall issue either stock or bonds except for money, labor done or property actually received for the use and lawful purposes of such corpora- tion. Any corporation may purchase any property authorized by its certificate of incorporation, or necessary for the use and lawful purposes of such corporation, and may issue stock to the amount of the value thereof in payment therefor, and the stock so issued shall be full paid stock and not liable to any further call, neither shall the holder thereof be liable for any further pajTuent under any of the provisions of this chapter; and in the absence of fraud in the transaction the judgment of the directors as to the value of the property pur- chased shall be conclusive ; and in all statements and reports of the ooj-poration, by law required to be published or filed, this stock shall not be stated or reported .as being issued for cash paid to the corporation, but shall be reported as issued for property purchased. ' ' * AVliile stock cannot be issued without consideration,^ an agreement, by an incorporated company, to sell shares of its own stock for less than par, is valid on the face of it, binding the company to deliver the stock.^ And upon the issuance of corporate stock, the stockholders have the right to permit such value to be placed upon the property of the corporation as thej'' choose and may permit the stock to be issued for such lawfiil consideration as they choose and, if no rights of credit- ors or the public are affected, the corporation: may not.be hoard to complain.'' The requirements of the statute with re- spect to the payment to be made for the capital stock of a cor- poration which were designed for the benefit and protection of creditors can only be satisfied as to creditors by labor theretofore performed, by actual payment in money or by the purchase, at what is in good faith deemed its fair and reason- able value, of pro]ierty of a substantial nature having a pecun- iary value capable of ascertainment and which the corporation might lawfully purctiase as necessary to its business.^ Ac- 3. Matter of Coats, 75 App. Div. 469, Qorder, 105 Misc. 704, 174 N. Y. Supp. 7H N. Y. Supp. 425. 38., 4. Stock Corporation Law, § 55. 8. Stevens v. Episcopal Church His- Bonds of corporations. See post, tory Co., 140 App. Div. 5TQ, 581, 135 pars. 405-410. ' N. Y. Supp. 573 ; Berger v. National 5. Barnes y. Brown, 80 N. Y. 527. Architects Bronze Co., 173 App. Div. 6. Otter V. Brevoort Petroleum Co., 680, 160 N. Y. Supp. 331; Haule v. 50 Barb. 247, 36 How. Pi-. 330. Consumer's Park Brewing. Co., 150 App. 1. East Lake Lumber Co. v. Van Div. 582, 135 N. Y. Supp. 900. CAPITAL, STOCK. 133 cordingly taking a note for the amount due upon a stock sub- scription is a violation of the statute.^ Section 55 of the Stock Corporation Law permitting stock to be issued for the value of property purchased by a corporation, was not repealed by section 55 of the Public Service Commissions Law, which in substance provides that before a public service corporation may issue stock it must be authorized to do so by the Public Service Commission and the amoimt of the issue determined. The purpose of the latter statute is to prevent the issue of watered or fictitious securities.^" 130. Property as consideration. Pull paid stock may be issued for property as well as for ca;sh, and in the absence of fraud in the transaction, the judg- ment of the directors as to the value of the property pur- chased, is made conclusive by the statute. So stock issued for patents is valid, although the directors had no personal knowl- edge of the value of patents, where they had before them the opinions of others and exercised their judgment honestly and fairly.^ It is natural that the owners of property taken by a corporation of which they are stockholders, and in payment for which stock of the corporation rs to be issued, should de- sire to realize for their property all that it is worth, and the sta,tute is not violated in respect to the issuing of stock in pay- ment for property, unless such persons in bad faith put a fictitious value upon their property for the purpose of evading 9. First Nat. Bank v. Corn'ell, 8 App. providing toi- the formation of ,a new Diy. 437, 40 K. Y. Supp; 850. But see Borporation which, is to purchase the Boyer v. Fenn, 19 Misc. 128; 43 N. Y. patents for cash by the issue of stock Supp. 533, holding that an agreement in stated amounts, is not void and on an executory purchase of stock, that against public policy prima facie on the the note given therefor should not be theory that the directors of the new valid until delivery of the stock, does corporation are to be debarred by such not violate this seetioni ' contract from determining the real 10. People ex rel. Westchester St. K. value of the property to be purchased. Co. v. P. S. Com., 158 App. Div. 351, ElOetrie Fire Proofing Co. v. Smith, 143 N. r. Supp. 148. modfd. 310 N. T. 113 App. Div. 615, 99 N. Y. Supp. 37. 456 104 N. E. 953. Payment in patent rights held not 11. Alpha-Portland Oeiiient Co. v. a payment "in money," within the Schratweisei^, 331 Fed. 358. meaning of !/,• 185,0, ch. 140, a* Contract entered into by a corpora- amended. Tasker v. Wallace (1876;. tion owning a patfflited process, with 6, Daly 364. another corporation and a partnership, 134 OOEPOEATIONS. the statute and defrauding otliers.^^ And it has been held that where an issue of the entire stock of a corporation in exchange for property, the value of which is insignificant as compared with the par value of the stock, is assented to by all the stock- holders when the same is consummated, neither the corpora-: tion, nor a subsequent purchaser of stock, although he took the same in good faith and without notice, can maintain an action to compel the return of the shares issued in excess of the value of the property and to have determined who are the lawful holders of the stock of. the corporation.^^ A leasehold of a building required by a manufacturing corporation for a manufactory is " property " necessary for the business of the corporation and may be the basis for the issuance of stock." And the good will of a business is property within the mean- ing of the statute and stock may be issued therefor.^^ A cor- poration may purchase property owned by director and pay for it with stock.^^"' But the agreement of a person to co-operate with a publisher to the extent of becoming an editor of a his- tory and to suggest competent per sons. to write the same, does not constitute property for which stock may be issued, within the requirements of the statute.^^ Neither is the exclusive right to sell the property of another corporation property within the meaning of the statute." A debt due the corpora- tion is a sufficient consideration for stock.^* So also an old 12. Van Vleet v. Jones, 75 Hun 340, dent, shoilS not be required to aceonnt 36 N. Y. Supp. 1082. on her subscription, as there was no Valuation of property transferred to fraud in the valuation of the propert)' corporation in coiisideration for sub- transferred to the corporation. Wil- scription of stock. — ^A widow who had Hams v. McClave, 168 App. Div. 192, inherited from her husband a business 154 N. Y. Supp. 38. which had been successful for over 13. Miller v. University Magazine fifty years, yielding from $25,000 to Co., 10 Misc. 311, 30 N. Y. Supp. 969. $50,000 a year in actual profits, to- 14. Close v. Noye. 147 N. Y. 597, gether with her three sons formed a 41 N. E. 570. corporation capitalized at $150,000, to 15. Washburn v. National "Wall which she transfeiTed all of the busi- Paper Co., 81 Fed. 17. ness and subscribed for 1,497 shares 15a. Knowles v. Ihiflfy, 40 Hun 485. of the stock, some of which she gubse- 2 St. Eep. 135. quently assigned to her sons. After a 16. Stevens v. Episcopal Church His- few years the company was duly adju- tory Co., 140 App. Div. 570, 125 N. Y. dicated a bankrupt. In an action by Supp. 573. the tiTistee in bankruptcy against the 17. Powell v. Murray, 3 App. Div. officers and directors of the corporation 373, 38 N. Y. Supp. 233, affd. 157 N. Y. to compel them to account, it was held, 717, 53 N. E. 1130. that the widow, acting as vioe-preai- 18. Veider v. Mudgett, 95 N. Y. 295. CAPITAL STOCK. 135 debt and the extension of time for the payment thereof is value within the meaning of the gtatute.^^ 131. Lawful purpose defined. The words ' ' lawful purposes ' ' are general in character, hut would seem to mean such property as would be germane to or connected with the business purposes of the corporation, as de- fined in its charter or articles of incorporation. It must be assumed that tiie legislature, by this carefully worded pro- vision, intended to safeguard the rights of creditors and stock- holders, and to iilsure that whatever indebtedness was incur- red by the issuance of bonds should inure to the benefit of the corporation.^** The purpose of a corporation to secure itself against ruinous competition is a lawful purpose within the meaning of the statute.^ 132. Labor and services as consideration. A corporation may issue stock in payrhent for labor and materials.^ So a contract by a raili-o ad company to pay for the construction of its road in advance by- the issue of boiids and stocks to the contractor Is not invalid under the statute.' 19. Alpha-Portland Cement Co. v. cannot maintain an action to restrain Scliiatweiaer, 231 Fed. S58. : a trustee for the bondholders from 20. In re Waterloo Organ Co., 134 foreclosing a mortgage given to secure Fed. 341 343. *^^ bonds, and to have the delivery of 1. Eafferty v. Buffalo City Gas Co., the stocks and bonds to the individual 37 APP- ^^^- 618, 5& N. Y. Supp. 388. declared void, upon the' ground that 2. Drake v^ New YorU Suburban they were' issued 'and delivered in viola- Water Co. 26 App. Div. 499, 50 N. T. ' tion of the laws of the state and in Supp. 836. fraud of the rights of the corporation, ' Corporation may issue stock to a, where it appears that the corporation contractor in payment for work, and has never offered to. return and never the assignee of the contractor cannot be has returned to the individual the prop- held liable -for the difference between erty and valuable things which consti- the par value of such stock and the ac- tuted the consideration of the agree- tual cost of the work, where the amount ment entered into between him and the expended exceeded the actual value of corporation. Pocantico Water Works the stock and bonds. Van Cott v. Van Co. v. Low, 30 Misc. 484, 46 N. Y. Supp. Brunt, 83 N. Y. 535. 633. , Where a corporation, in considera- 3. Hudson Biver & W. C. M. Co. v. tion of financial assistance rendered to Hanfield, 36 App. Div. 605, 55 N. Y- it by an maividual, issues to him Supp. 877. stocks and bonds, at the request of The receiver appointed oi the in- the directors and with the approval of solvency of a railroad is not entitled all the stockholders, the corporation to recover from contractor the alleged 136 CORPORATIONS. However the issuance of capital stock in consideration of ser- vices to be performed in the future is unauthorized by the statute,* and since the issuance of stock for services to be per- formed is prohibited, a corporation cannot he held liable for damages for refusing to issue stock for such^a consideration.^ The sole incorporators of a corporation cannot issue stock to themselves in payment for the performance, in the future, of their usual and ordinary duties as officers of pie corporation, and if they do they are liable f oX; the amount unpaid thereon, though the same is issued as fully paid and non-assessable." So also it is illegal for a corporation to issue stock to a per- son upon the sole consideration that he become president and act as such for the ensuing year so that the corporation shall have the benefit of his business and financial standing, and an action lies to compel the surrender and cancellation of stock so issued.'' But an agreement which provides for the rendition of services and for the payment therefor by stock after such services have been rendered is not subject to the prohibition of the statute that no corporation shall issue stock except for money; labor done or prpperty actually received for the use and lawful purposes of such corporation.^ It is permissible for a corporation either by an original contract or by the adoption of one which has already been made to agree with the opposite party on what should be deemed to be fair com- pensation in stock for the services to be rendered, and this contract is not to be avoided because the final result in respect to values has gone to the disadvantage rather than to the ad- vantage of the corporation.' It is improper for the directors of a corporation to issue stock in payment for services ren- dered by one as a promoter and organizer of the corporation prior to its incorporation, as the statute requires that stock value of the stocks and bou^S received App. Div. 589, 165 N. Y. Supp. 873. as compensation for the construction of 5. Morgan v. Bon Bon Co., 165 App. the road, when it is not alleged that the Div. 89, 150 N. Y. Supp. 668. cost of constructing the road and the 6. Palmer v. Scheftel, 183 App. Div. value of the properties acquired from 77, 170 N. Y. Supp. 588. the contractor were of leas value than 7. B. & C. Electrical Construction the par value of the stock and bonds Co. v. Owen, 176 App. Div. 399,' 163 delivered in payment; Bostwick v. N. Y. Supp. 31. Young, 118 App, Div. 490, 103 N. Y. 8. Morgan v. Bou Bon 5o., 223 N. Y. Supp. 609, affd.'l94 N. Y. 516, 87 N. 22, 118 N. E. 205. B. 1115. 9. Morgan v. Bon Bon Co., 323 N. Y. 4. Shaw V. Ansaldi 'Co., Inc., 178 22, 118 N. E. 206. CAPITAL STOCK. 137 shall be paid for in cash, or in property," and a resolution sub- sequently passed by the board of directors which attempts to ratify the issue of stock to a promoter is ineffectual." The provision of the statute that payments of subscriptions to the capital stock must be made in money, labor or property, ap- plies only to domestic corporations.^^ 133. Rights and liabilities arising out of issuance of stock without consideration. Directors of a corporation who issue its stock to themselves without payment therefor in property or services are guilty of conversion of the corporate assets. And the receiver of such corporation may sue the directors in tort or may waive the tort and recover upon the implied contract to pay the pur- chase price. Under such circumstances an express promise to pay is not necessary, although it seems, an express promise is necessary to bind persons outside the corporation.^^ Al- though a corporation has issued stock without the payment of the consideration in money, labor or property, as required by the statute, one who purchases such stock from the person to whom it was illegally issued cannot recover the face value thereof from his vendor under a complaint not charging him with fraud or deceit, but seeking a recovery solely upon the ground that the stock was void because illegally issued. Sec- tion 55 of the Stock Corporation Law neither makes stock so issued void, nor the directors or vendor of such stock liable to a subsequent holder for a violation of the section." The lia- bility of a shareholder to pay for stock does not arise out of his relation, but depends upon his contract, express or im- plied, or upon some statute, and in the absence of either of these grounds of liability, a person to whom shares have been issued as a gratuity does not, by accepting them, commit any 10. Herbert v. Duryea, 34 App. Div. Y. 596, 58 N. B. 1088. 478, 54 N. T. Supp. 311, affd. 164 N. 12. Boyer v. Fenn, 18 Mise. 607, 43 Y. 596, 58 N. E. 1088 ; Stevens v. N. Y. Supp. 506, affd. 19 Misc. 128, 43 Episcopal Church History Co., 140 App. N. Y. Supp. 533. Div! 570, 582, 125 N. Y. Supp. 573 ; 13. Lamphere v. Lang, 157 App. Div, Lamphere v. Lang, 157 App. Div. 306, 306, 141 N. Y. Supp. 967, revd. on 141 N. Y. Supp. 967, revd. on other other grounds, 213 N. Y. 585, 108 N. grounds, 213 N. Y. 585, 108 N. E. 82. B. 82. 11. Herbert v. Duryea, 34 App. Div. 14. Brsfeld v. Exner, 128 App. Div. 47«, 54 N. Y. Supp. 311, affd. 164 N. 135, 112 N. Y. Supp. 561. 138 CORPORATIONS. wrong upon creditors, or make himself liable to pay the nomi- nal face of the shares as upon a subscription or eoiitract.^^ 134. Liability of corporation on forged or fraudulently issued certificate. The liability of a corporation to a bona fide holder of cer- tificates of its stock, fraudulently issued or ptit in circulation by the wrongful or criminal acts of its officers or agents, is determined by, the general rules of law governing the relations of principal and agent as developed and applied to corpora- tions, acting solely through such agencies.^^ The general rule — that the principal is liable to a third person in a civil action for the fraud or other malfeasance of his agent, perpe- trated by the latter in the course of his employment, although the principal did not authorize, justify or know of the mis- conduct — is applicable to a corporation in the case of a fraudulent issue of stock certificates by its agent.^'' Accord- ingly if a stock broker receives in good faith from the trans- fer clerk of a corporation, for sale on the clerk's own account, a certificate of stock of the corporation, bearing the genuine signatures of the proper officers and of the registrar of trans- fers and having on its face all the essential evidence of genuineness, and having indorsed thereon a blank form of transfer purporting to be signed by the person named in the certificate, witnessed by the transfer clerk, and, before taking the certificate for sale or guaranteeing its genuineness, sends it to the office of the corporation for verification, and is in- formed by a person in charge and having authority in the matter that the certificate is in a condition for transfer, and, 16. Ohriatensen v. Eno, 106 N. Y. 97, within- the scope of his apparent au- 108, 12 N. E. 648. , thorHy. Hellinaji, i . Fprty-Second St., 16. Jarvis v. Manhattan Beach Co., etc., E. Co., 74 Hun 539, 26 N. Y. Supp. 148 N. Y. 652, 43 N. E. 68. 553, affd, 148 N. Y. 727, 42 N. E. 72?. The rule which imposes a liability 17. Jaivis v. Manhattan Beach Co., upon the principal for the tnauthor- 148 N. Y. 652, 43 N. E. 68. ized acts of his agent applies to a Illegal assignment. — Acts of tfeas- spurious, but apparently genuine, cer- urer and president of corporation iii tificate of stock of a street raili-oacl illegally assigning stock' held not to be company, wrongfully issued by a .per- within the scope of their employment son who was at the tiine secretary, trea,s- and not binding on their corpora- urer and transfer agent of the company tion. Second National Bank v. Cur- and invested with authority to sign, tiss, 2 App. Div. 50S, 37 X. Y. Supp. countersign and seal valid certificates 1028, affd. on opinion below, 153 N. Y. uf stock, and who, when he issued the 681, 48 N. E. 1107. certificate in question, was acting CAPITAL STOCK. 139 acting upon the faith of such assurance, sells the certificate and guarantees its genuineness, as required by the rules of the stock exchange, and on its being subsequently discovered to be in fact spurious and worthless, having been fabricated by the transfer clerk above genuine signatures, takes it back — the corporation will be estopped from denying its liability to indemnify the broker or his assignee.^^ The responsibility of a corporation only attaches when it has power under its charter to issue certificates and the officers are clothed with power, apparent or real, to perform the acts complained of.-"^^ Hence, a foreign corporation cannot maintain an action to procure the cancellation of certificates of stock alleged to have been illegally issued by its officers, in the absence of alle- gations ' showing that the corporation had the right to issue certificates of stock representing its capital or that the cer- tificates alleged to have been illegally issued were executed by an officer having authority to execute them, or that they resembled in some degree certificates rightfully issued, or that some one had been, or would be, deceived or misled, damaged or injured by the purchase of them.^* Where a general reso- lution of a corporation provides that certificates of its stock shallbe signed by its president and treasurer, it is liable for money advanced to the treasurer, upon certificates of shares of stock of the company, signed in conformity with such reso- lutions, issued to the treasurer himself, although the shares were fraudulently issued.^ The by-laws of a corporation are primarily for its own and its stockholders' protection; the neglect by its officers, therefore, in a single instance to obey a by-law which directs the cancellation of all certificates of stock surrendered for transfer, before the issuing of new certifi- cates, is not such negligence as will render the corporation liable, at the suit of an innocent third party, for the valine of certificates which should have been canceled but which were fraudulently pledged to such party, by the manager employed by the corporation, as security for a loan made to him per- sonally.^ And the act of the manager of a business corpora- is. Jarvis v. Manhattan Beach Co., Road Co.., .5. Lans. !2.50, affd. 61 N. Y. 148 N. Y. 662, 43 N. E. 68. 337. 19; Knox V. Eden Musee Amevicain 2. Neglect to cancel surrendered Co. 148 N. Y. 441, 42 N. E. 998. certificates before issuing new certifi- 20. Beno Oil Co. v. Culver, 60 App. cates. — The facts that the president Div. 129 69 N. Y. Supp. 969. of a business corporation iu a single 1. Titus V. Great Western Turnpike instance relied upon its manager, an em- 140 CORPOBATIONS. tion, without any authority, apparent or real, to issue certifi- cates for any purpose, in issuing as valid as security for a personal debt, surrendered certificates of stock directed by its president to be canceled, and of which the company had never invested the manager with indicia of ownership, is a willful and criminal act, and upon no principle of agency, either ex- press or implied, can the corporation be made liable therefor.^ Where the by-laws of a corporation, lawfully adopted in pur- suance of its charter, authorize and require its certificates of stock to be issued under the corporate seal and signed by its president and treasurer, in the absence of any express pro- vision or exception, no other or different form of certificate is required in the case of stock owned by one of the officers named; but they are authorized to issue certificates to them- selves in the same manner as to other stockholders.'' 135. Rights of holder of spurious certificate. Where a certificate of stock shows apparently all the essen- tials of genuineness a bona fide holder thereof is entitled to recogtiition as a stockholder if a new certificate can be issued to him, or to indemnity if this cannot be done.? i The fact that an official signature to the certificate has been forged does not extinguish this right, where the forgery has been done by or at the instance of an officer of the corporation, intrusted with ployee who had theretofore proved Road Co., 61 N. Y. 337, holding that trustworthy, to cancel, in pursuance of where the treasurer of such corporation his directions, certain certificates of upon the faith and pledge as collateral stock indorsed in blank and surrendered of spurious certificiates, drawn up and for transfer, and that for that purpose executed in the form and manner pre- the uncancelled certificates were left in scribed by the by-laws (the signature a safe to which the manager had access, of the president having been negligently do not constitute such actionable negli- afiSxed), purporting on their face to be gence as will estop the company from of stock owned by the treasurer ob- claiming such certificates as against a tained a loan of one acting in good bona fide holder to whoiM th^manager faith and in ignorance 6f the fraud thereafter wrongfully and fraudulently that there was nothing Upon the face delivered them, as security for a loan to of the certificates to notify the lender himself, or render the corporation liable of any defect in the title ; and that to such holder for the value of the the corporation was liable to him for certificates. Knox v. Eden Musee the damages. Americain Co., 148 N. Y. 441, 4? N. E. 5. Fifth Avenue Bank v. F. S. S. & G. 8. F. R. Co., 137 N. Y. 331, 33 N. E. 378 ; Jarvis v. Manhattai Hun 100, 26 N. Y. Suj 4. Titus V. Sreat Western Turnpike 148 N. T. 653, 43 N. B. 988. S.Knox V. Eden Musee Americain 378; Jarvis v. Manhattan Beach Co., 75 Co., 148 N. Y. 441, 43 N. E. 988. Hun 100, 26 N. Y. Supp. 1061, affd. CAPITAL STOCK. 14J the custody of its stock books, and held out by the company as the source of information on that subject.^ But spurious certificates of stock issued by the officer having apparent authority to do so, undistinguishable upon their face from the certificates of genuine stock, and outstanding in the hands of numerous holders as evidences of interests in the property of the corporation, are clouds upon the title of the genuine stock- holders Which a court of equity will remove ; the corporation may institute a suit for this purpose.'' Although the pur chaser of spurious stock has a remedy against his vendor, for a breach of the implied warranty of title, that right of action does not constitute a bar to an action against one who has in- duced the pur^chase, by a fraudulent representation that the vendor had title to the stock, where damage has resulted from the fraud. The purchaser's right of action against the officers of a corporation concerned in issuing certificates of spurious stock is complete upon the purchase, and that right will not be affected by any subsequent action of the directors of the corporation, in turning out other property to him, to an amount exceeding the sum paid by him for the false certifi- cates. The officers of a corporation, authorized to issue cer- tificates to the stockholders, as evidence of title to stock, are liable not only to the immediate purchasers from them of spurious stock, falsely and fraudulently certified by them, but to any subseqtient purchaser buying upon the faith of the false certificate, and sustaining damage thereby.^ In an acton to recover damages resulting from a fraudulent con- spiracy to sell stock in a fictitious corporation evidence is ad- missible against a conspirator of admissions made by him after the conspiracy by way of a narratiye of past facts." 6. Fifth Avenue Bank v. F. S. S. & gation (ch, 238, L. 1852), an attempted G. S. F. E. Co., 137 N. Y. 331, 33 N. E. organization does not become a corpo- 378 ; Mut. Life Ins. Co. v. Forty-Second ration de jure, and cannot legally issue St. etc. B. Co., 74 Hun 505, 36 N. Y. stock, the issue of such stock vrill not Supp. 545. alone make the directors liable for a 7. New York & N. H. E. Co. v. frauduent conspiracy to issue worthess Schuyler, et al., 17 N. Y. 592, 7 Abb. stock. Nor can an intent to deceiye be Pr. 41. inf eiTed from this circumstance and the 8. Shotwell V. Mali, 38 Barb. 445. fact that the nominal, is largely in ex- Issue of stock by corporation not cess of the actual capital. Nelson v. duly organized. — ^Where, by reason of Luling et al., 62 K. Y. 645. a fiiilure to comply with the provisions 9. Cohen v. Toole, 184 App. Div. 70, of the act authorizing the organization 171 N. Y. Supp. 577. of corporations for steam ocean navi- 142 GOBPOKATIONS. 136. Criminal liability of officers or agents for fraudulent issue of stocks or bonds, "An officer, agent or other person in the service of any joint-stock company or corporation formed or existing, under the laws of this state, or of the United States or of any state or territory thereof, or of any foreign government or country, vi^ho wilfully and knowingly, with intent to defrasud: 1. Sells, pledges or issues, or causes to be sold, pledged or issued, or signs or executes, or causes to be sighed or executed with intent to sell, pledge or issue, or. causes to be sold, pledged or issued, any certificate or instrument purporting to be a certificate or evidence of the o^vnership of any share or shares of such company or corporatioiij or any bond or evidence of , debt, or writing pur j^orting to be a bond or evidence of debt of such company or corporation,-without being first thereto duly authorized by such company or corporation, or contrary to the charter or laws under which such corporation or companj' exists, or in excess of the power of such company or corpoi'ation or of the limit imposed by law or otherwise upon its power to create or issue stock or evidences of debt; or, 2. Reissues, sells, pledges or disposes of, or- causes to be j-eissued, sold, pledged or disposed of, any, surrendered or canceled certificates, or other evidence of the transfer or ownership of any such share or shares, . Is punishable by imprisonment for a term not exceeding seven years, or by a fine not exceeding three thousand dollars, or by both. ' ' 10 FraiffJuleiit Practices iv Respect to Corporate Stocks and Bonds. 137. Investigation by attorney general. ' ' Whenever ' it shall appear to the attorney-general, either upon complaint or otherwise, that in the issuance, sale, promotion, negotiation, advertisement or dis- tribution of any shocks, bonds, notes, evidences of interest, or indebtedness or other securities, within this , state, hereinafter- called securities, any person, part- nership, corporation, company or association is employing or is about to em- play any, device, scheme jor artifice to defraud or for obtaining money or propert,y by means of any false pretense, reprcseiitation or promise, or that any person, partnership, corporation, company or association is making or attempting to make in this state fictitious or pretended purchases or sales of securities, or is engaged in or about to engage in any practice or transaction or course of busi- ness relating to the purchase or sale of securities which is fraudulent or in violation of the penal law,*allof' which devices, schemes, artifices, fictitious or pretended purchases or sales of securities, practices, transaetiorig and courses of business ktp. hereinafter referred tn r\s fraudulent )iractices, and he believes it to be in the public interest that an investigation be made, he may in; his dis- cretion either require or permit such person, partnership, corporation, company or association to file with him a statement in writing under oath or otherwise as to all the facts and circumstances concerning the subject matter which he5)e- lieves it is to the public interest to investigate, and for that purpose may pre- scribe forms upon which such statements sliall be made. Tlie attornev^CTeneral may also require such other data and information as he may deem relevant and 10. Penal Law, § 662. CAPITAL STOCK. 143 may make such special and independent investigations as he may deem necessary in connection ^ith the matter. The attorney-general, his deputy or other officer designated by him is empowered to subpoena witnesses, compel their attendance, examine them under oath before him oi a magistrate and require the production of any books or papers which he deems relevent or material to the inquiry. If a person subpoenaed to attend such inquiry fails to obey the command of a subpoena Ts-ithout reasonable cause, or if a person in attendance tlpon such in- quiry shall without reasonable cause refuse to be sworn or to be examined or to answer a question or to produce a book or paper when ordered so to do by the officer conducting such inquiry, he shall be guilty of a misdemeanor. It shall be the duty of all public officers, their deputies, assistants, subordinates, clerks or employees and all other persons to render and furnish to the attorney-general, •.his deputy or other designated officer when requested aU information and assistance in their possession or within their power. Each deputy or other officer appointed or designated to conduct such inquiry shall make a weekly report in detail to the attorney-general. Any officer participating in such inquiry and any person ex- amined as a witness upon such inquiry who shall disclose to any person other tlian the attorney-general the name of any witness eiamined or any other in- formation obtained upon such inquiry except as directed by the attorney-general shall be guilty of a misdemeanor. " 11 138. Action by attorney general. "Whenever the attorney-general shall believe from evidence satisfactory to him that any person, partnership, corporation, company or association is engaged or is about to engage in any of the practices or transactions heretofore referred to as fraudulent practices, he may bring an action in the name and on behalf of the people of the state of New York against sucli x'crson, partnership, corpora- tion, company or association, and any other person or persons concerned in or in any way participating in or about to participate in such fraudulent practices, to enjoin such person, partnership, corporation, companj- or association and such other person or persons from continuing such fraudulent practices or engaging therein or doing any act or acts in furtherance thereof. "12 _ 139. Examination of witnesses and preliminary injunction. "Whenever the attoniey-general-has determined to commence an action under this article, he may present to any justice of the supreme court, before beginning such action, an application in writing for an order directing the person or per- sons mentioned in the applieation to appear before the justice' of the supreme court or referee designated in such order and answer such questions as may be put to them or to any of them, or to produce such paper.s, documents and books concerning the alleged fradulent practices to which the action which he has determined to bring relates, and it shall be the duty of the justice 'of tho supreme court to whom such applieation for the order is made to gr^nt such application. The applieation for such order made by the attorney-general may simply show upon his information and belief that the testimony of such person 11. General Business Law, § 3.52, as 12. Generar Business Law, § 353, as added by L. 1931, ch. 649. added by L. 1921, ch. 649. 144 COBPOBATIONS. or persons is material and necessary. The provisions of the code of civil pro- cedure or civil practice act, relating to an application for an order for the exam- ination of witnesses before the commencement of an action and the method of proceeding on such examination,, shall not apply except as herein prescribed. The order shall be granted by the justice of the supreme court to whom the ap- plication has been made with such preliminary injunction or stay as may appear to such justice ■ to be proper and expedient and shall specify the time when and place where the witnesses are required to appear and such examination shall be held either in the city of Albany or in the judicial district ui which the wit- ness resides or in which the principal office within this state of the persou, partnership, corporation, ^ company or association, or one of the persons, part- nerships, corporations, companies or associations against whom the action is to be brought is located. The justice or referee may adjourn such examination from time to time and witnesses must attend aecordiagly. The testimony of each witness must be subscribed by him and all must be filed in the office of the clerk of the county in which such order for examination is filed. "3 3~ 140. Procedure on hearing. "The order for such examination must be signed by the justice making it and service of a copy thereof with an endorsement ' by the attorney-general signed by him or his deputy, to the effect that the person named therein is re- quired to appear and be examined at the time and place and before the,, justice or referee specified in such endorsement, shall be sufficient notice for the at- tendance of witnesses. Such endorsement may contain a clause requiring such person to produce at such examination all books, papers and documents in his possession or under his control relating to the subject of such examination. The order shall be served upon the person named in the endorsement aforesaid by showiiig him the original order and delivering to and leaving with him at the same time a copy thereof, endorsed as above provided, and by paying or tender- ing to him the fee allowed by law to witnesses subpoenaed to attend trials of civil actions in any court of record in this state. ' ' 14 141. Powers of referee. ' ' The referee appointed as provided in this article possesses all the powers and is subject to all the duties of a referee appointed under the code of civil pro- cedure or the civil practice act,, so far as practicable, and may punish for con- tempt any witness duly served with the papers as , prescribed in this article for non-attendance or refusal to be sworn or to testify or to produce books, papers and documents according i totthe direction of the endorsement aforesaid, jn, the same manner and, to the same extent as a referee to hear, try and determine an issue of fact or of .law. ' ' 15 142. Penalties. "Any person, partnership, corporation, company or association having been served with an order issued pursuant to the provisions of section three hundred 13. General Business Law, § 354, as added by L. 1931, ch. 649. added by L. 1921, ch. 649. 16. General Business Law, § 356, as 14. Genera,l Business Law, § 355, as added by L. 1921,, ch. 649. CAPITAL STOCK. 145 and fifty-four, staying Or enjoining any practices or transactions, or with any order or with a final judgment in an action brought by the attorney-general, as in this article provided, staying or enjoining any practices or transactions, and any person, partnership, corporation, company or association having knowledge of the issuance of any such order or judgment who, while such order or judgment is in effect, shall disobey the same, shall be deemed in contempt of court and shall be guilty of a misdemeanor and in' addition for every' violation or attempted violation of such order or such judgment shall be liable to a civil penalty of one thousand dollars, recoverable in an action brought by and in the name of the people of the state of New York. Such penalty^ shall be cumulative and more than one penalty shall be recoverable in. the same atetion in any court of compe- tent jurisdiction. An appeal from an order or judgment entered under the pro- visions of this article shall not operate as a stay, of proceedings to enforce such order or judgment, or suspend the injunction thereby granted unless, a justice of the supreme court, assigned to the appellate division to which such appeal is taken, shall, upon notice to the attorney-general, make an order granting such stay or suspending such injunction upon such terms as he deems proper. ' ' 10 143. Criminal prosecutions. The attorney-general may prosecute every person charged with the commission of an indictable offense in violation of the laws of this state; applicable to or in respect of the practices or transactions which in this article are referred to as fraudulent practices. In all such proceedings, the attorney-general may appear in person or by his deputy before any court of record or any grand jury and exercise all the powers and perform all the duties in respect of such actions or proceedings which the district attorney would otherwise be authorized or re- quired to exercise or perform; or the attorney-general' may in his discretion transmit e'yidence, proof and information as to such offense to the district at- torney of the county or counties in which the alleged ■violation has occurred, and every district attorney to whom such evidence, proof and information is so transmitted shall forthwith proceed to prosecute any corporation, company, as- sociation, or oflScer, manager or agent thereof, or any firm or person charged with such violation. In any such proceeding, wherein the attorney-general has appeared either in person or by deputy, the district attorney shall only exercise such powers and perform such duties as are required of him by the attorney- general or the deputy attorney- general so appearing. ' ' 17 144. Immunity of witnesses. "No person shall be excused from attending and testifying or producing any book, paper or other documents before the attorney-general or his deputy or other officer designated by him or before any court or magistrate, or referee, upon any trial, investigation or proceeding initiated by the attorney-general, district attorney, grand jury or court pursuant to the provisions of this article, upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to convict him of a crime or to subject him to a penalty or forfeiture, but no person shall be prosecuted or subjected 16. General Business Law, 357, as 17. General Business Law, § 358, as added by L. 1931, ch. 649. added by L. 1931, ch. 649. 10 146 COEPOBATIONS. to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may so testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be received against him upon any criminal action, suit or proceeding, investigation, inquisition or in- quiry. ' ' IS 145. Untrue and misleading advertisements. ' ' Any person, firm, corporation or association, or agent or employee thereof who, with intent to sell or in any wise dispose of merchandise, real estate, se- curities, service, or anything offered by such person, firm, corporation, or as- sociation, or agent or employee thereof, directly or indirectly, to the public for sale or distribution, or with intent to increase the consumption thereof, or to induce the public in any manner to enter into any obligation relating thereto, or to acquire title thereto, or an interest therein, makes, publishes, dis- seminates, circulates, or places before the public, or causes, directly or indi- rectly, to be made, published, disseminated, circulated; or placed before the public, in this state, in a newspaper, magazine or other publication, or in the form of a book, notice, circular, pamphlet, letter, handbill, poster, bill, sign, placard, card, label, or tag, or in any way, an advertisement, aliiibuncement or statement of any sort regarding merchandise, securities, service or anything so offered to the, public which advertisement contains any assertion, representation or statement of fact which is untrue, deceptive or misleading shall be guilty of a misdemeanor. " 19 18. General Business Law, § 359, as L. 1915, eb.- 569, and amd. by L. 1921. added by L. 1921, ch. 649. oh. 520. (In etfeot Sept. 1, 1931 ) , 19. Penal Law, § 431, as added by SUBSCRIPTION OF STOCK. 147 CHAPTER XI. • Subscription to Stock. In General. 146. Subscriptiou after incpiporation. 147. Eight to. subscribe to new issue. 148. Subscription prior to organization. 149. Agreement by corporation to take back stock or pay profits. 150. Eecissipn of subscription induced by fraud. 151. Release of subscriber from subscription. Payment. 152. Payment of ten per centum in cash. 153. Effect of failure to' pay ten per centum. 154. Time of payment of subscription to stock : Forfeiture for non payinent, il55. Assessment^ or calls generally. . 156. Liability of transferee for calls. EnfoYaemeiii of LiabiUty. 157. In general. 158. Defenses. In General. 146. Subscription after incorporation. "If the whole capital stock shall not have been subscribed at the time of filing the certificate of incorporation, the directors named in the certifeate may open books of subscription to fill up the capital stock in such places and after giting such notices as they may deem expedient, and may continue to re- ceive subscriptions until the whole capital stock is subscribed. At the time of subscribing, every subscriber, whose subscription is payable in money, shall pay to the directors ten per centum upon the amount subscribed by him in cash, and no such subscription shall be received or taken without "Such payment. ' ' 20 The precise purpose of this section is not apparent. The dl rectors ;syoTild, in the absence of such a provision, be author- ized to open books of subscription for the' purpose of filiiigup the capital stock. The section may have been drawn and con- tinued in the law without a definite idea of its utility or neces- sity. It does not prohibit or forbid any other mode of sub- scription, and it is not perceived that any public policy would be. subserved by holding that anj^ subscription valid at com- mon law is invalid ,iihder the statute, and it is evident that the 20. Stock Corporation Law, § 53. See also post, pars. 152, 153. 148 COBPOEATIOSrS. statute is permissive only and it was not intended thereby to prescribe a fixed statutory mode of making a subscription, and so any subscription good and valid at common law is still valid notwithstanding the statute.^ While the strict definition of the word " subscribe " or " subscription " involves the idea of a written signature, yet by common usage it is often employed to include an agreement, written or oral, to give or pay some amount to a designated purpose, more usually, per- haps, to some purpose for the promotion of which numerous persons are uniting their means and their efforts. And there is no statutory provision expressly or impliedly requiring a s^ubscription in writing. And so where an oral agreement to subscribe to capital stock of a corporation is accompanied by the payment of ten per cent in cash, as required by the statute, the contract is valid and enforceable. Though it may be that the statute imposes a duty upon the company to keep a record of such subscriptions for the benefit of the corporation or of its stockholders or of its creditors seeking to require the pay- ment of unpaid stock subscriptions, and that the statute still is susceptible of the interpretation that if subscriptions are taken to be paid for in the future, it is the duty of the di- rectors to open books of subscription, the penalty for the neg- lect of which might be ground for forfeiture to the public of the corporate franchise, still there is no provision of the statute making an absolute condition that to constitute a subscriber the name must be entered in a subscription book of the corpo- ration either by the subscriber or by some one in his behalf.^ A contract by a corporation to pay a contractor in full-paid non-assessable stock of the corporation for his work, labor and materials in constructing and equipping the plant is not a stock subscription by the contractor, which makes him liable for the par value of the stock. Such contract is not a purchase of the stock to be paid»for in work and property, but is a con- tract to accept fuil-pa,id stock as payment for the buildirig of the plant.^ , 1. Buffalo & Jamestown R. Co. v. A mere promise to subscritie to Gifford, -87 N; Y. 394; JefEry v. Sel- capital stock is voiil. General Electric wyn, 230 N. Y. 77, 115 N. E. 375; Co. v. Wigh,(imaji, i 3 App. Diy, lis, 39 Donovan v. Powers Eilm Products Inc., N. Y. Supp. 430. ill Misc. 276, 181 N. Y. Supp. 157. 3. Bost^vick v. Young, 118 App. Div. 2. Mills V. Friedman, 111 Misc. 353, 490, 103 N. Y. Supp. 607,' affd. 194 N. 181 N. Y. Supp.. 385. ,, . ,, Y. 516, 87 N. E.^ni5. SUBSCKIPTIOIS" OF STOCK. 149 147. Right to subscribe to new issue. It is only when the capital stock is increased by the issue of new shares that each holder of the original stock has a right to subscribe for and demand frona the corporation such a pro- portion of the new stock as the number of shares already owned by him bears to the whole number of shares before the increase. In that case the rule simply applies when the new stock is issued for money only, and not to purchase property necessary for the purposes of the corporation, or to effect a consolidation.* But a corporation may by resolution duly adopted provide that the capital stock shall be offered pro rata to stockholders up to a certain date and such a resolution is not annulled by a subsequent resolution that the corpora- tion should issue and sell bonds in order to retire Certain notes, for the two resolutions are not antagonistic.^ A stock- holder who has free access to the corporate books and who re- fuses to subscribe for any portion of treasury stock about to be offered for sale by the company, cannot subsequently main- tain a suit against the corporation, and another stockhpldei; who purchased the stock to set aside the sale and to compel an accounting after the stock had acquired a substantial value and the corporation was able to pay dividends thereon.^ 148. Subscription prior to organization. Agreements to subscribe for the stock of a corporation to be formed presupposes the organization of the corporation be- fore they become binding and enforceable.'' A mutual agree- ment by a number of persons to become stockholders of a cor- poration, thereafter to be formed, indicates an intention to become shareholders without further act upon their part, and it may be accepted by the corporation when subsequently formed and is binding upon the subscribers unless previously revoked.^ A subscription to the articles of incorporation, with 4. Archer v. Hesse, 164 App. Div. 7. Jermyn v. Searing, 335 N. Y. 535, 4^3, 150 N. T. Supp. 396. 133 N. E. 706. Eight of stockholder to proportionate 8. Buffalo, etc., B. Co. v. Gifford, share of new stock. See ante, par. 116; 87 N; Y. 394 ; Buffalo & Jamestown fe. 5. Duesenberry v. Sagainore Develop- Co. v. Clark, 33 Hun 359, 3-64, affd. 87 ment Co., 164 App. Div. 573, 150 N. Y. N. Y. 633; Avon Spriiigs Sanitarium Supp. 329. Co. V. Weed, 119 App. Biv. 560, 104 IST. 6. CoHklin v. United Construction & Y: Supp. 58, revd. on other grounds, ' Supply Co., 166 App. Biv. 2«4, 151 N. 189 N. Y. 557, 83 N. E. 1133. Y. Supp. 634. An agreement by a party to a con- 15X) CORPORATIONS. a statement of tlie number of shares opposite the name, is a sufficient and binding subscription for the stock, and takes ef- fect upon the filing of the certificate.^ So also an instrument which, after referring to a plan to form a conooration, states that " the undersigned hereby subscribe for the number of shares set opposite our names," is absolute and unconditional, contemplates no further act upon the part of the signers, and is binding when, being unrevoked, it is acted on by the corpo- ration then in contemplation of formation.^" The interest ac- quired, on the incorporation of the company, by a subscriber to its stock is a good consideration to support his implied promise to pay for such stock, and raises a sufficient mutual- ity of contract between Mm and the company to render the contract a binding one on him.^^ Although a subscriber for the stock of a corporation not yet in existence is not bound by his subscription, he becomes bound when after the due organ- ization of the company he accepts the scrip and gives his check in payment therefor, for in such case he ratifies and confirms tract for the formation of a coriwra- tion to "subscribe and pay for" $19,000 of the _ preferred stock of the said corporation "or such portion thereof as may be necessary to provide the said corporation -ndth working funds and capital as a going concern," is en- forcible after the corporation has -been organized and ,the other parties have fully performed the contract on their part. Sanders v. Barnaby, 166 App. Div. 274, 151 N. Y. Supp.,580. An agreement by one party to sell to another shares of stock in a corpora- tion to be thereafter incorporated is i sufficient eonsideratibn for the latter's promise to . purchase the stock. Van Dam V. Tapseott, 40 App. Bi-i^ 36, 57 N. Y. Supp. 534, 9. Phoenix Warehousing Co. v. Bad- ger, 67 N. Y. 2.94. Incomplete subscription agreement. — In an action to recover alleged sub- scription by defendant to the capital stock of plaintiff it appeared that de- fendant subscribed to articles of as- sociation for the purpose of organizing a ^railroad corporation, und^r the pro- fvisions of the general railroad act of 1S50 (ch. 140, L. 1850) ; at the time of signing the names of the directors were left in blank. It was held, that the instrument was incomplete and in- operative as against defendant; that here was no implied consent upon his" part to the insertion of the names of any persons as directors; and that, by the insertion of such names without Msj consent, the instrument was not made binding upon him. Dutchess & Co-' lumbia R., Co. v. Mabbett^ 58 N. Y. 397.' 10. Vonkers Gazette Co. v. Taylor, 30 ■ App. Div. 334, 51 N. Y. Supp. 960-. : 11, Buffalo & N. Y. City B. Go. v. Dudley, 14 .N., Y. .336, holding that an agreement to take a certain number of shares "of the capital stocls, of the Attica and Hornellsville. R. ,R. Co.,"- subscribed previously to the incorpora- tion of the company, creates, if not an express, certainly an implied, promise to pay for the shares. And this promise ! will sustain an action by the company, on its, complete incorporation, against its stockholders, to recover the amount of calls duly made on their stock. •• SUBSCKIPTIOK OF. STOCK. 151 his subseription.i2 ^ secret collateral agreement purporting to limit the liability of the subscriber in a way different from that of other subscribers is void and without effect on the sub- scription.^^ Likewise conditional subscriptions for the stock of corporations are contrary to public policy and void." It is not essential in order that the subscription be binding that the corporation should be organized by the parties to the agreement or by their agents.^^ Likewise the fact that the corporation was incorporated under a different name from that mentioned in the subscription agreement, because of the secretary of state's decision that such name was in violation of the General Corporation Law, is immaterial as the contract is to be regarded as having been made in contemplation of the exercise of the authority vested in the state officers.^® But a subscription to the stock of a corporation to be organized for the purpose of dealing in automobiles and motor vehicles, specifying the number of shares subscribed for, but stating neither the amount of the subscription nor the par value of the stock, is not enforceable by a corporation subsequently organ- ized for the purpose of " manufacturing, leasing, purchasing and selling of all kinds of automobiles, motor vehicles and 12. Avon Springs Sanitarium Co. v. 480. Kellogg, 135 App. Div. 51, 109 N. Y. Defendant and others signed the Supp. 153. foUoVing instrument: "We, the 13. Yonkeis Gazette Co. v. Jones, 30- undersigned, citizens of Unionville aiid App. Div. 31-6, '5,1 N. Y. Supp. 9.73, -vicinity, pledge ourselves to subscribe holding that where a subscriber to the for and take stock in and for the con- stock of a corporation, at the time of struction of the Lake Ontario Shore signing the subscription paper, leeeives Bailroad'to the amount set opposite our from the promoter of the proposed name respectively, on condition said, corporation a paper certifying that the road be located and built through or subseribeis- has decided; to take one uoith of thp village of Uniouyille, in share in the Yonkers Daily XJazette (the Parma. " In an action thereon, it was proposed corporation), "providing the held, that it was not a subscription to sum prescribed (subscribed) or the^ plaintiff's capital stock ; that it was in number of shares taken will be left to no sense a party to' the agreement, and his time and when he feels so disposed could not maintain an action thereon, in paying his part," the latter paper. Lake Ontario Shore B. Co. y. Cuvtiss. being a secret collateral contract, which SO N. Y.' 219. substantially varies' the- ostensible terms 15. Avon Springs Sanitarium Co. v. of the subscription to the stock, is void Weed, 119 App. Div. 560, 104 N. Y. and the subscription is not affected Supp. 58, revd. on other grounds, 189 thereby. ' ' N.= Y. 557, 82 N. E. 1133. '14. Generai Electric Co. v. Wight- 16. Yonkers Gazette Co. v. Taylor 30 nian, 3 App. Div. 118, 39 N. 'Y. Supp. App. Div. 334, 51 N. Y. Supp. 909. 152 COBPOBATIOBrS. other vehicles," where the subscriber was not one of the in- corporators, and refused to pay it on demand and did not sub- scribe for its stock, and did not in any way ratify the sub- scription agreement; since the element of manufacturing being new, and materially changing the character and enlarg- ing the risks of the business, discharged such of the sub- scribers as did not assent to it." There is a distinction be- tween an agreement to form a corporation and to subscribe to its stock, which, when acted upon by the corporation, is binding, and an agreement to subscribe for stock in a corpo- ration thereafter to be formed, which is not binding. In the first case it is to be noticed that the agreement is to form a corporation and subscribe to its stock. The latter case there are mutual agreements to subscribe for stock in a corporation thereafter to be formed. In the first the agreement is uncon- ditional and absolute to form the corporation and take the stock, and when acted upon by the corporation is binding, as that is all that is needful to make the contract of force. Such contracts contemplate no further act upon the part of the per- son making the agreement. In the second class the agreement is to subscribe for shares when the company shall be organ- ized. This clearly contemplates something inbi'e to be done, i. e., the actual subscription. There exists no agreement. in such case to become stockholders. When the corporation is formed such agreement is to take shares, which involves a subsequent act, that of formally subscribing for the stock.^^ Corporations may acquire title to money paid upon sub- scriptions to capital stock before the corporation has a legal existence, and such subscriptions may be in the form of prop- erty other than money .^° 149. Agreement by corporation to take back stock or pay profits. An agreement by a corporation to take back stock at the re- quest of a subscriber find to return the payments made there- on with interest is valid and enforceable.^" So also a contract 17. Woods Motor Vehicle Co. v. Barb, 335, afCd. 24 How. Pr. 76. Brady, 181 N. Y. 145, 73 N. B. 674. 19. Ameiican Silk Works v. Solomon, 18. Non-Electric Fibre Mfg. Co. v. 4 Hun 135, 6 T;. Sp C. 353. Peabody, 31 App. Div. 347, 47 N. Y. 20. Meyer, v. Blair, 109 N. Y. 600, 17 Supp. 677; Yonkers Gazette Co. t. Tay- N. E. 238; Irlb^icker v. Roth, 25 App. lor, 30 App. Div. 334, 337, 51 .N. T. Div. 390, 49 N. Y. Supp. 53«. Supp. 969 ; Reformed Protestant Dutch When shareholder may recover Church V. Brown, 17 How. Pr. 287, 29 amount named in certificate of stock. SUBSCRIPTION OF STOCK. 153 to pay percentage of accumulated profits of the corporation to a prospective purchaser of stock is valid and enforceahle at the instance of the purchaser.^ A promise by the directors of a corporation, in order to induce a purchase from the corpo- ration of a number of shares of stock, that in the event of the corporation not declaring an eight per cent annual dividend on the stock they would pay semi-annually, as long as the cor- poration should exist, such an amount of money as might be necessary to make up the eight per cent dividends on the stock, is not a promise to answer for the debt, default or mis- carriage of the corporation, and is not within the Statute of Frauds. The payment by the promisee of the purchase price of the stock furnishes a good consideration for the directors' promise.^ 150. Becission of subscription induced by fraud. Where a person has by fraud been induced to subscribe for the stock of a company, he may bring an equitable action to procure a rescission of the contract, a cancellation of his sub- scription and the removal of his name from the books of the — Where a certificate of stock, issued Assn., 172 N. Y. 508, 65 N. E. 496. by a building and loan association to In an action brought upon a con- a member thereof, provides that in con- tract made by a corporation to tepur- sideration of a membership fee, the chase its own stock, which action is agreements and statements contained in defended upon the ground tliat the his application for nlembership and full contract is not enforceable by reason compliance with the terms, conditions of the provisions of section 664 of the and by-laws printed on the front and Penal Law making it a misdemeanor back tif the certificate, the association for a director to apply any of the would pay him, or his legal' representa- funds of a corporation "except sur fives, the sura of $100 for each of the plus profits" to that purpose, tho shares held by him at the end' of sev- burden is upon the corporation nt enty-eight months from the date of the showing that there are no surplus certificate, the amount of the monthly profits out of which the purchase can installments to be paid upon each share he made. Richards v. Wiener Co., 207 and the actual date of the maturity of N. Y. 59. the certificate being fixed by an in- Guaranty of dividends.— See post, dorsement upon the back thereof, the par. 404. holder of the certificate is entitled upon 1. Miller v. Car Trust Investment Co., the maturity thereof, the required in- 130 App. Div. 442, 105 N. Y. Supp. 5, stallments having been paid, to the ma- affd. 193 N. Y. 617, 86 N. E. 1127. turity or par value of each share of 2. Crook v. Seott, 65 App. Div. 139, stock held by him under such eertifi- 72 N. Y. Supp. 516, affd. 174 N. Y. cate. Vought v. Eastern Bldg. & Loan 520, 66 N. E. 1106. 154 COEPOBATIONS. company,^ and is entitled to recover tlie amount paid for the stock with interest.^ So a subscriber, if he acts promptly be- fore the rights of creditors or subsequent stockholders have accrued, may rescind a subscription induced by the fraudulent representations of promotersiof the corporation who subse- quently became directors.^ A stock subscription may be re- scinded where it was induced by the false and fraudulent rep- resentations of one acting for the corporation as to something which was to occur in the future in the way of organization of the corporation, when the person making the representation knew perfectly well that no such thing was to occur.^ But sub- scribers to the stock of an association whose subscriptions were induced by fraud, but who, upon discovering the fraud, elected to retain their membership and sought to have their rights as members adjusted with reference to the fraud, are not entitled after the lapse, of several years to have their sub- scriptions canceled on account of the fraud and to ffeco'^er from the association the money paid in by tliemJ When a 3. Bosly Y. National Mach. Co., ip i N. Y. 550, as N. E. 990;, Talmadge v. . Sanitary Security Co., 31 App. Div. 498, sa N. Y. Supp. 139. When a vendee of corporate stock is not entitled tOr rescind the sale on the ground of fraud and to recover the purchase price of the stock frpm the vendor, considered. It seems, that if an executive ' committee appointed by the directors of a corporation, assum- ing to act as the agents of the stock- holders, make an agreement for the. sale of the stock of the corporation, an In- dividual stockholder, by accepting the benefit of such agreement, irauld neces- sarily ratify the representations made by the executive committee during the negotiations. Garrett Co. v. Appleton, 101 App. Div, 507, 02 N. Y. Supp. 136; affd. 184 N. Y. 557, 76 N. E. 1099. Complaint in a suit in equity, for tlie rescission of a contract for the pur- chase of ; corporate stock, upon the ground of innocent misrepresentations by the defendant inducing the plaintiff to purchase, examined, and' held, to state a cause of , action. Canadian Agency v., Assetg Realization Co., ,165 App. Div. 96, 150 N. Y. Supp. 758. Complaint, in a suit to rescind a eon- tract for the purchase of stock, to re- cover back money paid by the plaintiff thereon, and to, strike his name from the list . of stockholders, .need not allege offer to make restitution. CawJ^hra v. Stewart, 59 Misc. 38, 109 N. Y, Supp. 770. , CompJaint in actipn to rescind stock subscription alleged to have tfeen in- duced by false and fraudulent repre- setations held insufllcient. RitzwoUer V. Lurie, 176 App, Div. 100, 163 N. Y. Supp. 475. 4. Lambert v. Elmendorf, 134 App. Div. 758, 109 N. Y. Supp. 57*. 5. McDerniott v. , Harrison, 56 Hun 640,, 3 N. Y. Supp. 184. 6. RitzwoUer v. Lurie, 335 N. Y. 464, 138 N. E. 634. 1. Buker v. Leighton Lea. Assooiii; tion, 63 App. Div. 507,, 71 ,N. Y. Supp. 610. 1 . StTBSCEIPTION' OE STOCK. 155 corporation sues a stockholder to rescind a sale of stock made to him because induced by fraud, the court may enjoin the de- fendant from assigning or transferring the stock pendente lite, but should not enjoin him from voting thereon or exer- cising other rights incident to ownership.^ A suit in equity to rescind a subscription for corporate stock, to perpetually en- join the assertion of the validity of the agreement and the bringing or maintaining any action, legal or equitable, based thereon, upon the groimd that it was obtained by fraud, is properly brought, not only against the corporation, but also against individual ofificers of the corporation by whose alleged false representations the subscription was induced. The plaintiff in sucli a case is not confined to his remedy at law against the iiidividuar defendants, but, in ord^r to aybid ei multiplicity of suits,' a court of equity, having concurrent jur- isdiction, will interpose and afford him full and complete re- lief in one action; and the fact that the corporation and not the individual defendants received the benefit of the trans- action does not release them, from liability therepn.' 151. Release of sul)scriber from subscription. A subscriber to the stock of a corporation is not discharged from his subscription by a subsequent amendment of its charter," or by a promise to that effect made without con- sideration by the president of the corporation,^^ or by a subse- quent reduction in the capital stock,^^ or by the fact that the sigTiatures of subscribers were cut from all the individual sub- scriptions and pasted on one by the directors, and filed in that manner .^^ .But it has been held that a subscriber will be 8. Maine Products Co. v. Alexander, Alteration of subscription paper 115 App. Div. 113, 100 N. Y. Supp. after signature. See Whittlesey v. 711. Franz, 74 N". Y. 456. 9. Mack V. Latta, 178 N. Y. 525, 71 11. United Growers Co. v. Eisner, '2 N. E. 97. App. Div. 1, 47 N. Y. Supp. 906. 10. Release from subscription; 12. A complaint to recover on a amendment of charter. — Where by the subscription contract, which alleges that charter of a corporation the right is the capital was "duly" reduced, is not reserved to the Legislature to alter or subject to demurrer. If the reduction repeal it, a subscriber to its capital were illegal it is a matter of defense stock is not discharged from his sub- to be taken by answer. Myers v. scription by a subsequent amendment Sturgis, 133 App. Div. 470, 108 N. Y. to the charter, but will be regarded as Supp. 528, affd. 197 N. Y. 526, 90 N. having consented to the change. ITndon E. 116S. Hotel Company v. Hersee, 79 N. Y. 13. Sodus Bay and Corning R. Co. v. 454 Hamlin, 34 Hun 390. 156 CORPORATIONS. released by the failure of the corporation to carry out the pur- poses of its incorporation as stated in the agreement with the subscribers." But it is no defense to an action to recover on a stock subscription, that it was orally agreed between the promoters that the corporation was to be organized for an- other, a different and an illegal purpose than the purpose for which it actually was organized, and a subscriber cannot be re- lieved on that ground from his contract and agreement to pay his subscription.^^ Where a corporation has never done any business, has no creditors and none of the subscriptions to its stock have been paid in in cash, the directors who hold all the stock may release one another from the payment of their sub- scriptions to the stock, and it seems that a formal vote entered upon the minutes of the corporation is not necessary for this purpose.^'' Payment. 152. Payment of ten percentnm in cash. "At the time of subscribing, every subscriber, whose subscription is payabl.e in money, shall pay to the directors ten per centum upon the amount sub- scribed by him in cash, and no such subscription shall be received or taken without such payment. "17 14. Dorris v. Sweeney, 60 N. Y. *63, faeture,;or purchase of, buy, use, sell, holding that where a signer of a sub- lease, rent or mortgage all mechanical scription paper agrees to unite -with or other apparatus, machinery and im- other subscribers in the formation of a ; plements for metal turning machines, or corporation for certain purposps, he is any other article or articles connectfed not liable where the business of the therewith or incident thfreto, nv any or corporation includes business in which all of them, and in general to do. a he had never contracted to engage. manufacturing business," constitutes Change in proposed business. — such a material departure from the Where subscriptions to the stock of a agreement entered into by the subscrib- corporation about to be formed' are ob- ers as will render the subscriptions un- tained in connection with a prospectus enforcible .as to non-assenting sub- stating that the object of the corpora- seribeis. Stern v. McKee, 70 App. Div. tion is "to acquire all patents and 142, 75 N. Y. Supp. 1,57. rights for all countries; except the 15. United States Vineg.ir ., Co. v. United States and Canada, to metal Schlegel, 67 Hun ,336, 22 N. Y. Supp. turning machines, known as the 'Hoff- 407, afCd. 143 N. Y. 537, 88 N". E. 729. man machines,' and of which E. G. 16. Non-Electric Fibre Mfg. Co. \-. Hoffman is the inventor and patentee, Peabody, 21 App. Div. 247, 47 N. Y. as well as all improvements, additions, Supp. 677. etc.," the organization of a corpora- 17. Stock Corporation Law, § 53. pt. tion, "to make, contract for the manu- SUBSCRIPTION OF STOCK. 157 Under the statute, a subscription to the stock of a corpora- tion after its organization is not valid unless ten per cent of the amount subscribed is paid in cash at the time of the sub- scription, and if such ten per cent is not paid an action cannot be maintained upon the subscription contract by the corpora- tion or a person claiming under it.^^ Accordingly an option given by a corporation to purchase its stock at par at any time within a year from the date of the option, accepted by the optionee without the payment in cash of ten per cent of the value of the stock covered by the option, does not constitute a valid subscription, and the corporation at any time, even after a purchase of a part of the stock covered by the option and a demand and tender for the remainder, may repudiate such a subscription." Payment of the ten per cent should be made in cash..^" The delivery of a promissory note,^ or a check upon which paynient is subsequently stopped is not sufficient to autl?,orize an action on the subscription.^ But p^ayment by cer- tified check has been treated as a payment in cash.^ So also payment by services has been held sufficient where it appeared that, at the date of "the subscription the cor|)bmtion was in- 18. Black' Eiver & U. B.' R. Co. v. Clavke; ZS N. Y. 308 ; Beaoh v. Smith, 30 N. Y. 116; Ogdensburg.C. &,R. Co. v; WoUey, X 'Keyes, 118 ; Nj Y. & .Oswego M. E. Co. v.Van Horn, 57 N. Y. 473; Jeffiry v. Selwyu^ 280 N. Y. 77,, 115 N. E. 375; Kniekeibocker Trust Co. v. Hard, 67 App. Div. 463, 73 N. Y; Supp. 979; Hapgoods v. Luaeh, 123 App. Pw. 23, 107 N. Y. Supp. 331; Mills v.,JVle- Naiuee,! 194 App. Div. 933, 184 N. Y. Supp. 613; South Buffalo Natural Gas Co. V. Bain, 9 Miso, 425, 30 N, Y. Supp. 364; Mills V. Friedman, 111 Mj^se. 353, 181 N. y. Supp, 385; .ppuovan v. Pow- ers Eilm Products, Inc., Ill Misc. 376i 181 N..Y. Supp. 157. , , 19. Donovan v. Powers Film Products Inc., Ill Misc. 276, ,18jl N. Y. Supp. 157. . , ■ . , 20. Excelsior ,; Grain Binder Co, v. Stayner, 35 Hun 91, 61 How.;Pr.,,4&6, 1. Hapgoods V. Lusch, 123 App. Div. 23, 107 N. Y. Supp. 331. 2. Excelsior Grain Binder Co. v. Stayner, 25 Hutt 91, 61' How. Pr. 456. Payment of ten per cent by check. — The defendant, having been applied to by an agent .employed to procure sub- scriptions to the stock of the plaintiff, gave his cljeck for the ten per cent, re- quired by the act of 1850 to be paid in cash, upon the express agreement that he should never be called upon to pay the same. In an action brought by the company upon ,the check, it was held (1), ,that the! taking of the check for the teji per cent required to be paid in cash, was not such a violation of the act as to render it void; (3), that the agen,t. had no authority to bind the company ]>y his agreement in regard tu the liability of the defenda,ntj upon the check. Syracuse, Phqenix & O. E. Co. V. Gere, i Hun 392, ,6 T. & C. 636. , 3. Matter of Staten Island E. T. E. Co., 37 Hun 422, affd. 101 N^ Y. 63G ; Matter of Staten Island Eapid,Trat),sit R. B. ' " 158 CORPOEATIONS. debted to the subscriber in an amount greater than the cash payment required.* 153. Effect of failure to pay ten percentum. Subscriptions not accompanied by immediate cash pay- ments have not, however, been held void. The subscription, if invalid for such payment, may become enforceable by a subse- quent cash payment in compliance with the requirement of the statute.^ And the validity of the subscription does not depend on whether the payment of the ten per cent was made will- ingly or by legal compulsion.'^ And, in exceptional cases, a course of dealing between the corporation and the stockholder may be such as to render it inequitable and legaiUy wrong as against other stockbolders or creditors to defeat a sub- scription not so made.'' Thus a person who subscribed for a specific number of shares of stock and who has received divi- dends thereon and has sold the stock for a substantial price, is estopped from denying his liability on his subscription on the theory that it was void in tliat the initial ten per cent re- quired by the statute had not been paid.*. Again where sub- scriptions of that character are pledged as security for a loan to the corporation made at the request of the persons sub- scribing for the stock, and the agreement also contains dis-r tinct promises of the subscribers to pay their subscriptions on default of the corporation, an action will lie on such prom- 4. Beach v. Smith, 30 N. Y. 116; where it appears, in an action brought Veeder v. Miidgett, 95 N. Y. 295. by the trustee of a bankrupt corpora- 5. Black Eiver arid Utica E. Co. v. tion to reeovei' the total amount Clarke, 25 N. Y. 208 ; Jeffry v. Selwyn, unpaid on a subscription to the 220 N. Y. 77, 115 N. E. 275; Excelsior stock of the corporation, that defendant Grain Binder Co. t. Stayufer, 25 Hun- subscribed for a 'specific number of 91, 61 How. Pr. 456 ; Whalen v. Hudson sliares but paid for only two of them, Hotel Co., 183 App. Div. 316, 170 N. that he had received dividends on the Y. Supp. 855 ; Mills v. Friedman, 111 stock and was a director and vice-presi- Misc. 253, 181 N. Y. Supp. 285. dent of the coi'poration up to -the time 6. Ogdensburgh, 6. & R. E. Co. v. he sold the stock for a substantial ■W^ooly, 40 N. Y. (1 Keyes) 118, 3 Abb. price, a sound public policy and the Ct. App. Dec. 398, 34 How. Pr. 54. plaia rules of good faith dictate that 7. Donovan v. Powers Eilm "Products such defendant cannot avoid his lia- Inc, 111 Misc. 276, 181 N. Y. Supp. bility on his subscription upon the 157; Jeffry v. Selwyn, 220 N. Y. il, ground that he had not paid ten per 115 N. E. 275. cent of the amount of his subscription 8. Jeffry v. Selwyn, 173 App. Div. as required by the Stock Corporations 217, 159 N. Y. Supp. 430, affd. 220 N. Law. Y. 77, 115 N. E. 275, holding that SUBSCRIPTION OF STOCK. 159 ises irrespective of the invalidity of the subscriptions.^ It is clear from the statute that such payment is only required of those who subscribe after the organization of the corpora- tion.^" A subscription which is invalid for failure to pay in cash ten per centum of the amount of the subscription cannot be validated by assignment where the assignee was not a party to the subscription contract and it did not contain any provision which expressly or by implication conferred any right upon the assignee." A subscriber is not estopped from denying payment of the required per centum because of a statement in' the subscription agreement that ten per cent has been paid ; a statute cannot be evaded by estoppel.^^ 154. Time of payment of subscription to stock; forfeiture for non pay- ment. "Subscriptions to the capital stock of a corporation shall be paid at such times and in such iustallments as the board of directors may by resolution re- quire. If default shall be made in the payment of any instalment as required by such resolution, the board may declare the stock and all previous payments thereon forfeited for the use of the corporation, after the expiration of sixty days from the service on the defaulting stockholder, personally, or by mail di- rected to him at his last-known post-ofdce address, of a written notice re- quiring him to make payment within sixty days from the service of the notice at a place specified therein, and stating that, in case of failure to do so, his stock and all previous payments thereon will be forfeited for the use of the corporation. Such stock, if forfeited, may be reissued or subscriptions therefor may be 9. Knickerbocker Trust Co. v. Hard, for the purpose of making that sub- 67 App. i)iv. 463, 73 N. Y. Supp. 979. seription valid, and upon information 10. Ybnkers Gazette Co. v. Taylor, 30 given by his counsel that such payment App. Div. 334, 337, 51 N. Y. Supp. complied with the law, can the sub- 969; Harriman National Bank v. seriber' subsequently claim that he in- Palmer, 93 Misc. 431, 158 N. Y. Supp. tended that amount to pay his original 111; United Growers Co. v. Eisner, Z2 subscription in full, and that only the App. Div. 1, 47 N. Y. Supp. 906, hold- balance should be applicable to his see- ing that the failure of the subscriber to ond subscription, this balance being in- pay ten per cent upon the original sub- sufficient in amount to make that sub- scription at the time it was made, does seription valid, especially where there not render it void, as under the Stock is no proof that the corporation as- Corporations Law, § 53, such a payment sented to such intended application of is not necessary to the validity of an the money. original subscription made for the pur- 11. Harriman National Bank v. Pal- poae or organizing the corporation; nor, mer, 93 Misc. 431, 158 N. Y. Supp. 111. when it appears that, at the time the 12. New York & Oswego M. R. Co. v. second subscription in questioii was Van Horn, 57 N. Y. 473. made, a sum of money was paid by him 160 OOKPOKATIONS. received as m the case of stock not issued or subscribed for. If not sold for its par value or subscribed for within six months after such forfeiture, it shall be cancelled and deducted from the amount of the capital stock. If by such ean- eellatioii, the amount of the capital stock is reduced below the minimum re- quired by law, the capital stock shall be increased to the required amount within three months thereafter or an action may be brought or proceedings instituted to close up the business of the corporation as in the caae,of an insolvent corpo- ration. If a receiver of the assets of the corporation has been appointed, all unpaid subscriptions to the stock shall be paid at such times and in such in- stallments as the receiver or the court may direct. ' ' 13 An incorporated company has not the power to make a by- law, subjecting to forfeiture, shares owned by individuals in the stock of the company, for the non-payment of installments due upon such shares, unless the power to pass such by-law is expressly granted by the charter of the . company,^* or by statute. The right of a corporation to forfeit the shares of a subscriber for non-payment of the calls made upon him, is not in the nature of a pledge or mortgage of the stock; and the exercise of such right does not leave any further remedy, to recover the debt. The exaction of the forfeiture operates as a rescission or satisfaction of the contract.-^^ Where after an 13. Stock Corporation law, § 54. Tender of assessment upon stock, to president before sale, for non payment at its office during business hours by check is sufficient, and sale may be set aside. Mitchell, v. Veiinont Copper Mining Co., 67 N. Y. 380. 14. Matter of Long Island R. Co., 19 AVend. 37, 33 Am. i)ee. 429. 15. Small V. Herkimer Mfg. & H. Co., 3 N. Y. 330. But see Mann v. Carrie, 3 Barb. 294, holding that the general principle is well settled that the right of an incorporated company to enforce a forfeiture of stock, and a.11 previous payments, upon the f ailurlP of a, stock- holder to meet the calls made, by the company, will not prevent such com- pany, or the receiver thereof, from col- lecting the balance due upon any share of its stock. Effect of forfeiture; release of stock- holder from liability. — One whose shares of stock in a railroad corpora- tion have been forfeited by the company :f oT non-payment of calls, is not a stock- holder within the meaning of the tenth section of , the general railroad act of 1850, so as to r(mder him liable to a creditor of the company for the amount unpaid on the forfeited stock, although the debt was cont^-actod by. the. company iiefove the stock was forfeited. Mills V. Stewart, 41 N. Y. 384. , Right of subscriber to enjoin sale of stock as forfeited. — Where books of account, upon which deppnds tl}e right of a corporation to forfeit thp s^ock of a subscriber for hip failure to meet as- ijessments ^are much confused, a;nd were only in part kept during the term of the sU|b8criber as president of the coi-po- ration, he is entitled to maintain a suit in equity to enjoin the sale of his stock and for an accounting in order to have it determined whether he is indebted to the corporatipn~r.c.ertainly in a case wheie the objection that the action will not lie ill equity is not set up by the answer. Schuetz y. German-Am. Real Est. Co., 31 App. Div. 163,^47 N. ,'y, Siipp. 50<). SXJBSCKIPTION OF STOCK. 161 action has been commenced to I'ecover certain installments of the subscription which, have been duly called for, a further call is made, and the stock forfeited for non-payment thereof, the subscriber may plead such forfeiture in bar of the further maintenance of the suit. And when a corporation under such circumstances exercises its right to forfeit the stock, and the stock is of greater value than the whole amount due on. the subscription the subscriber cannot recover the surplus.^" While the statute does not specifically state that the board of directors must determine whether notice of intended forfeit- ure shall be given and when, it seems that this is the clear in- tent of the act for the reason that Jforfeiture is a corporate act involving the exercise of judgment and discretion. It can- not be considered a purely ministerial act in the ordinary coUr duct of the business of the corporation which the secretai}- can perform.^^ 155. Assessments or calls generally. Prima fa,cie, subscribers to the stock of a corporation are not -boujid to pay assessments unless the whole capital stock of the conapany has been subscribed for, but a subscriber may waive, tha,t implied condition by the payment of prior assess- ments without objection. By such payment the subscriber is prima facie estopped, when sued for subsequent assessments, from objecting that all. the stpck had not been subscribed for.^^ If a receiver of the assets of a corporation has been appointed, all unpaid subscriptions to the stock shall be paid aj; such 16. Small V. Herkimer Mfg. & H. Co.. 108 N. Y. Supp. 528, affd. 197 N. Y. 2 N. T. 330.:. . i ,536, 90 N. E. 1162. 17. Matter of K. Y. & WestcliestPT , Effect of failure . to pay assessment. Town Site, Co., 145 App. Div. 623, 130 —A reorgamzatioij committee was em- N. Y. Supp, 414, holding that, where tlic powered to giro to thr holders of tlip resolution providing for the warning common stock, for each share of their iiotiete was passed at a meeting of the stock one ^hare of the common sto,ck ;of board of directors at which there was the new company, on payment of assess- not a quonim present, any attempted meuts. Upon failui:P to pay assess- forfeiture thereunder is void. ments such stpck was to vest in other 18. A complaint in an action to re- pe::sons named., A stockholder after cover unpaid assessment is not bad on paying his first assessment died and the demurrer for failing to allege jtliat all public administrator defaultcrl in mak the stock has been subscribed foi', The ing payment of assessments. It was defense rthat the subscriptions had iiot held, that a purchaser of the stock been, eoinpleted, if available to a sub- could npt redeem the same. Dow v, soriber, must , be taken by answei;. Ipm;ii Pentr,al Ry, Co., 144 IST. Y. 426. Myers v. Sturgis, 123 App. Div. 470, 39 N^. E. 398, . . 11 162 CORPORATIONS. times and in such, installments as the receiver or the court may direct.i^ When at the time of the dissolution of the company' and the appointment of a receiver a: portion of the debts of the company are not yet due, it is not essential to the validity of an assessment upon the stockholders directed by the court that judgments should first have been recovered thereon against the company. It seems that when upon the voluntary dissolution of a corporation, on the ground of its insolvency, the Supreme Court appoints a receiver and directs an assess- ment upon the stockholders, such order, until modified or re- versed on appeal, establishes conclusively as against the stock- holders that the debts, to the payment of which the assess- ments are to be applied, are debts for which they are person- ally liable.^" It seems to be well settled that an action may be brought on the subscription agreements in the right of the corporation by the trustee in bankruptcy, that the stockholder is primarily liable on his contract for the full amount he agreed to pay, and that where the bankruptcy court has di- rected the trustee to issue a call or demand therefor, the pro- priety or validity of this order of a court of competent juris- diction cannot be questioned collaterally, for the presumption is that the necessary determination has been made that the entire amount unpaid is required to pay the debts of the cor- pora,tion.^ And in an action by a trustee in bankruptcy it is not necessary that the complaint allege a tender or delivery of the certificate of stock to the stockholder.^ 166. Liability of transferee for calls. A stockholder is liable to the corporation for the amount of his subscription, although after calls were made, and before they were payable, he assigned his stock to a responsible per- son and had it transferred to and an account opened with him on the books of the company.^ But a stockholder has a right to transfer his certificate of stock to another, provided the transaction is absolute^and done in good faith, and where the certificate so surrendered is delivered to the corporation and canceled by it and a new certificate is issued to the transferee, 19. Stock Corporation Law, § 54. 2. Mills v. T'riedman, 111 Misc. 353, 20. Cuykendall v. Douglas, 19 Hun 181 N. Y. Supp. 285. 677. 3. Scheneotady and S. PI. Road Co. 1. Mills v. Friedman, 111 Misc. 353, v. Thatcher, 11 N. Y. 102; Wintrin^- 181 N. Y. Supp. 285; Jeffry v. Selwyn, ham v. Rosenthal, 25 Hun 580. 220 N. Y. 77, 115 N. E. 275. SUBSCRIPTION OF STOCK. 163 the corporation by that act surrenders all claim upon the orig- inal stockholder and accepts the transferee in his place.^ Even if the transfer is made in bad faith, the corporation waives the fraud by receiving and canceling the original certificates of stock, accepting the transferee as a stockholder in the place of the transferor, prosecuting him for an assessment upon the stock, and recovering a judgment against him after he had been advised of the transfer of the stock to him.^ So also where a corporation has recognized a transferee of stock and has paid dividends to him, it is estopped from enforcing pay- ment of balance due on the stock against the transferor, al- though the stock was not transferred on the books.^ An im- plied promise on the part of a transferee of partly paid stock to pay future calls thereon is created by the issuance of a cer- tificate of stock to him, his receipt for it, the acceptance of the certificate from which it expressly appeared that the stock he purchased was subject to future calls to the amount unpaid thereon, plainly establishing that he became and intended to become a stockholder in the corporation and to accept all the bei^efits ^nd incur all the liabilities attending such relB.tit)n, especially where, after apparently becoming such stockholder, sevjgral calls were made upon him in response to which he sent his check for the amount thereof, in ^ach case expressly stating that the money was to pay calls upon the stock in ques- tion standing in his name.'^ Enforcement of Liability. 157. In E^eneral. A. snliscription to the stock of a corporation creates a debt enforceable at \a,w, or in equi?ty, by the corporation, or its legal representative.^ An action may be brought; upon the 4. Billings v. Bobinson, 94 N. Y. 415, Mann v. Curiie, 2 Barb. 394. 420; Eochester & K. F. Land Co. v. 5. Rochester & K. F. Land Co. v. Ray- Raymond, 4 App. Div. 600, 39 N. Y. mond, 4 App. Div. «00, 39 N. Y. Supp. Supp. 145, affd. 158 N. Y. 576, 53 N. 145^ affd. 158 N. Y. 576, 50 N. E. 507. E- 507. g Cutting V. Damerel, 88 N. Y. 410. Liability of assignee of stock- ^ ^^^^ ^ ^ ^ v^ ^^ Y. 488, 64 N. E. 194. Where a person becomes a stockholder in an incorporated company, by a trans- „ , , , J, ^ I.- j^ i.1. 4. T * r,r.i^r.«^ *• Stoddapd v. Lum, 159 N. Y. 265, fer to him of the stock of an original ' * ' subscriber, he adopts the contract of ^■^^i 53 N. E. 1108. the assignor with the company, and be- The subscription for shires is a comes Bubstitutfed in his place, both as legal obligation which can be enforced regards his rights, and his liabilities. by action, and by forfeiture for non- 164 COHPOEATIOKS. originar stibseriptibii, and it is not uecessary to aver t-alls; at least after the lapse of two years from tiie time of incorpora- tion, where the charter provides that all capital is to be paid in within two years.' A cause of action upon an uni^aid sub- scription to stock, when based merely npon an implied prom- ise .of the stockholder to make payment, dofes not accrue to the 'corpdr^tix)B;.but where there has Tbeen an express promise, it may be enforced in an action try the corporation, or, if the corporation has been adjudicated bankrupt, at the suit -of its trustee in bankruptcy.^" The balance unpaid on a subscription to the stock of a corporation is a claim or thing in action vhich is subject to sequestration in proceedings taken on a judgment recovered against the corporation.'^^ The liability of shareholders for calls made on account of unpaid stock can only be enforced by action in the nature of assumpsit andneces- sarily rests upon a promise to pay, express or implied: such promise must he proved by competent evidence,^^ and so the defendant should, be allowed to prove that when he purchased the stock, he Tvas told that it was fully paid, as such testimony would corroborate his" statement that he was so informed by the directors of the corporation at the time when he made the purchase.^" Unpaid subscriptions to the capital stock of a cor- payUienfe Battershall v. Daviei, 31 10. Bofhcster & K, F. Land Co. v. Barb. 323. EaTmoiul, 15.8: N. Y. 576, 53 N.E. 507; Obligation to pay for unissued stock Hai-ris v. Wells, 57 Misc. 17?i, 108 N. delivered at request of thitd party.— Y.Supp., 10,78, alTd. 136 App. Div. 911, The delivery of certificatc-i of nn- HO N. Y. Supp. 1131. ^ ... issued corporate stock to one party r>i\ Express promise to pay. — A siibsci ip- tlie request of a third party dofts not tion to the capital stock of a railroad raise" a)n implied obligation to pay the corporation, whereby tlic subscriber <'orlK)ration therefor. Since there was ; , promises to takfe: five shai'es of the stock, no obligation between the tliird party subject to the conditions, requirements, and the corporation, it cannot take liabilities and benefits, of the act of in- advantage of an express contract be- corporation, is equivalent to an rexpress t ween the third party *nd the party promise to pay for the stock, us it ^Ijall to whom the stock was delivered on be called for by the directors. Northern the theory of Lawreijce v. Fox, 30 N. Railroad Company \. Miller, 10 Barb. Y. 268. Tlie delivery and acceptance 360. of treasury stock, however, raises such 11. Dean v. Biggs, 35 Hun 133, affd. an obligation. Sanders v. Proctor. 1^.2 93 N. Y. 663l App. T)vi. Hi. 12. Glenn v. Garth et al., 133 N. Y. Power of receivfr to recover stoeli; 18, 30 N. E. 649, 31 N. E.;344. subscription, see post; par, 608. 13. Eocjiester & K. F. Land. Co. v. 9. Phoenix .-Warehousing Co. v. Bad- Roe, 7 App. Div. 366, -10 N. Y. Supp 73 ger, 67 N. Y. 394. SUBSCEIPTIOir OF STOCK. 165 poration are debts belonging to the corporation, and are» therefore, assets of the corporation which pass to the trustee in bankruptcy, and may be collected by him," or by a receiver of the corporation ; such an action is not an action to enf orco the statutory liability of the stockholder, nor one to enforce contribution for the benefit of creditors.^^ Inasmuch as the liability of a shareholder to pay for stock does not arise out of the relation, but depends on his contract with the corpora- tion, express ox implied, or on some statute fixing his liability, in the absence of either contract or statute, one to whom shares have been issiied as a gratuity does not, by accepting them, commit any wrong on creditors, or make himself liable to pay the face value of the shares, as incase of a sub- scription.'^ So also a bona fide; purchaser for taliie of stock issued as fully paid cannot be held liable 'thereon either to the corporation, its creditors or to other persons, even though the stock was not actually paid up as represented.^' A subscriber 14. Bathbone v. Ayer, 84 App. Div. 186, 82 N. Y. Supp. 235. 15. Myers v. Sturgis, 123 App. Div. 470, 108 N. Y. Supp. 528, affd. 197 N. Y. 526, 90 N. E. 1162. In an action brought by a receiver to recover upon a stock subscription the complaint alleged that the defendant became a subscriber to the capital stock of the corporation of which plaintiff was the receiver and thereby agreed to take a certain number of shares of stock and "to pay * " • therefor the sum of one thousand dollars as required by law and the orders of the direc- tors;" that a stock certificate was is- sued to him which represented the stock as fully paid for, but that the defend- ant did not in fact pay for the same either in, mopey, property or services. The complaint also contained an allega- tion that the ofScers and directors of the company "well knew that said stock was not fully paid ssni that such issue was in fraud of creditors and contrary to law." Plaintiff under objection and without amendment to the complaint, was allowed to give evidence for the purpose of showing that the defendant had wrpngfujly eonv«rte]3 the stock so that he could be held on an implied agreement to pay therefor, and a vey- diet as directed for plaintiff. It was held, that the complaint stated a cause of action on contract, and the allega- tions of fraud are not necessary to the pleading and may be rejected as sur- plusage; defendant cannot be held liable for a fraudulent issufi of stock on a complaint alleging that he subscribed for the stock and expressly agreed to pay par for the same, and that the evi- dence was erroneously admitted and the direction of a verdict improper. Lam- phere v. Lang, 213 X. Y. 585, 108 N. E; 82. 16. Christensen v. Eno, 106 N. Y. 97, 102, 12 N. E. 648 : Christensen v. QuintaTd, 55 Hun 60S, S N. Y. Suppt 400. 17. Van Slochem v. Villard, 154 App. Div. 161, 138 N. Y. Supp. 852, afld. 307 N. Y. 587, lOr N. E. 467. Full paid stock means stock' upon which no further payments can be de- manded by the corporation. Middle- ton v. Wooster, 184 App. Div. 165, 171 N. Y. Supp. 593. 166 CORPORATIONS. to the capital stock of a corporation who has failed to pay therefor pursuant to the terms of his subscription is properly chargeable with interest from, the time of his default.^^ 158. Defenses. The law is well settled, not only in this country but in Eng- land, that, in an action against a stockholder to recover for the call made upon his shares, it is a defense that the call was made for a purpose not warranted in the constitution of the company .^^ In this country there has never been any question of the right of a shareholder to resist an unauthorized call either by a suit to set it aside, or by answer in an action to collect the amount of it.^" Tn an action by an English corpo- ration against a New York stockholder to recover a call, the defendant was permitted to assert as a defense that the re- organization agreement, in pursuance of which the call was made, was illegal.^ When a person voluntarily subscribes to the capital stock of a corporation, his subscription must be assumed to have been to enable the corporation to carry out the legitimate objects for which it was incorporated, and if the corporation afterwards departs from the purpose of its creation and enters upon illegal projects, this misconduct must be corrected in some other way than in a suit' against the subscriber to recover his subscription.^ And so the fact that the promoters of a corporation have purchased for it a patent right of which they were the owners, at an exorbitant price, furnishes no defense to a. stockholder in an action brought by the corporation to recover the amount due upon the stock held by him.^ When a certificate of incorporation expresses no illegal purpose on the part of the promoters, and the transaction between the corporation and subscribers for 18. Gould V. Town of Oneonta, 71 IS"^. Where it is intended to prove aii Y. 298. alteration of a subscription book of a 19. Bank of China v. Morse, 44 App. corporation, as a defense, in an action Div. 435, 439, 61 N. Y. Supp. 368, affd. brought to collect a subscription to the 168 N. Y. 458, 61 N. E. 774. stock of such corporation, the answer 20. Bank of' China v. Morse, 44 App. should contain an allegation with reier- Div. 435, 439, 61 N. Y; Supp. 368, affd. ence to such alteration, to the effect 168 N. Y. 458, 61 N. E. 774. that it was fraudulently made, and that • 1. Bank of China v. Morse, 44 App. the defendant was injured thereby. Div. 435, 61 N. Y. Supp. 268, affd. 168 Armstrong v. Danahy, 75 Hun 405, 37 N. Y. 458, 61 N. E. 774. N. Y. Supp. 60. , 2. tfnited States Vinegar Co. v. Foeh' 3. Dorris v. French, 4 Hun 293, 6' T; renbach, 148 N. Y. 58, 4S'-lSr.^:E. 403. & C. 581. ' ;'.v ::., SUBSCRIPTION OF STOCK. 167 its stock is valid on its face, subsequent coi"porate acts, mani- festing, or tending to manifest, an illegal purpose on the part of the directors, will not so retroact as of the time when par- ties were engaged in promoting the formation of the com- pany as, in connection with their acts and declarations of like tenor, to affect the corporation itself with the vice of illegality and to render contracts of subscription to the stock void.^ And in an action by a corporation to recover an unpaid subscrip- tion to its stock, the court will not decline to lend its aid to the enforcement of the contract of subscription, on the ground of the existence of an illegal transaction to which the corporation and the subscriber were parties, where it appears that the cor- poration is insolvent or embarrassed and that the rights of its creditors have interven^d.^ An abandonment of its business by the corporation, either before or after the commencement of the action, is no defense where it appears that the corpo- ration is indebted to more than the amount of the sub- scription, as the action is prosecuted for the benefit of cred- itors.^ A subscriber to the stock of a manufacturing corpo- ration cannot in an action to recover an unpaid balance of his subscription, dispute the validity of the incorporation when he subscribed for the stock, acted as a trustee of the corpora- tion, took part in its management and contracted with it as a corporation.'' And where a subscriber accepts the director- 4. United States Vinegar Co. v. Foeh- through combinations or agreements 'be- renbach, 148 N. y. 58, 43 N. E. 403, tween the members of the corporation holding that in an action brought by a and which would control their dealings corporation, organized to deal in aii with the public. article of necessity, to recover unpaid 5. United States Vinegar Co. v. Foeh- subseriptions to its capital stock, a de- renbach, 148 N. Y. 58, 59, 43 N. E. fense that the plaintifE was incorporated 403. for the illegal purpose of controlling 6. Phoenix Warehousing Co. v. Bad- and limiting the production of such ger, 67 N. Y. 294. article throughout the country, based 7. Phoenix Warehousing Co. y. Bad- upon the theory that certain statements ger, S7 N. Y. 294; United Growers Co. and acts of the promoters of the corpo- v. Eisner, 22 App. Div. 1, 47 N. Y. ration, prior to its formation and relied Supp. 906. on as showing an illegal purpose on When stockholder estopped for deny- their part, were adopted by the corpo- ing validity of incorporation.— A sub- ration, is not made out by showing scriber to the stock of a corporation merely that subsequent to the ineorpo- who subsequently acts as a director is ration there were corporate acts which estopped from denying its existence and showed, or tended to show, a purpose of as against its creditors, from denying controlling the production and sale of the validity of his subscription. Eug- the article, and of regulating its cost, gles v. Brock, 6 Hun 164. 168 COBPOEATlblfS. sMip and presidency of the corporation, and does other acts which can only be done by a shareholder, he is estopped from denying the existence of that relation, notwithstanding the fact that no stock book was kept by the corporation and that he never received any certificates of stock.^ Likewise the sig- nature to a subscription for stock in an alleged railroad cor- poration which recites that a company had been formed under the general act, and that the articles of association, with the necessary affidavits, had been duly filed, is conclusive evidence of an incorporation against the subscriber.® And it has been held that a subscriber to articles of incorporation of a corpo- ration which has been reorganized by the legislature is liable for a balance due on his stock although the articles were de- fective and the corporation is de facto.-'" It is not a defense to a subscriber to stock, who as a director of the company, voted for the resolution requiring payment of subscriptions and delivered to other subscribers notices thereof, that notice of the required payments was not given to him pvirsuant to statute.^^ In an action against a subscriber for fled; subsequently he, with others, the balance unpaid on his stock, it is signed a certificate of incorporation as no defense that; the articles of incor- required by the act of 1848. In an ac- poration were defective, where there is tion brought by the receiver of the coin- proof establishing a corporation de pany to recover the amount due upon the facto. Buffalo and Allegany E. R. Co. shares subscribed for by the defendant, V. Gary, 36 N. Y. 75; Cayuga Lake K. it was held (1), that the defendant was R. Co. V. Kyle, 64 N. Y. 185. estopped from denying that the com- 8. Beals V. Buffalo Expanded Metal pany was legally incorporatied ; (2), Constr. Co., 49 App. Div. 589, 63 N. Y. that he was liable for the number of Supp. 635. shares subscribed for by him. Dorris 9. Black River & U. R. Co. v. Clarke, v. French, 4 Hun 293, 6 T. & C. 581. 25 ST. Y. 208. 10. Cayuga Lake B. Co. v. Kyle, 64 The defendant with others signed N. Y. 185. an agreement to unite in the forma- 11. Schenectady'and S. PI. Road Co. v. tion of a company, and t* take a Thatcher, 11 N. Y. 103. number of shares of stock therein sped- TRANSFER QF SHARES. 169 CHAPTER XII. Transfer of Shares. In General. 159. Right of stockholder to aell or transfer stock. 160. Kestrictions on transfer generally. 161. Transfer of stock prior to filing certificate. 162. Transfer of stock by stockholder indebted to corporation or in contempla- tion of insolvency. 163. By-laws regulating transfer of stock. 164. Agreements between stockholders regulating transfers. 165. Blank assignment and power of attorney. 166. Purchaser chargeable with constructive notice of contents of certificate: Lis Pendens. 167. What passes by , transfer. 168. Transfer on books of corporation generally. 169. Effect of failure to have transfer made on books. 170. Remedy for refusal of corporation to make transfer on books. 171. Contract for sale of stock. 172. Specific performance of contract. Transfer as Affected by Personal Property Law. 173. How title to certificate and shares may be transferred: Definitions. 174. Powers of persons lacking full legal capacity and of fiduciaries. 175. Right of corporation to treat registered holders as owners. 176. Effect of title derived from certificate on title derived from separate document. 177. Who may deliver certificate. 178. Effect of endorsement. 179. Recission of transfer. 180. Effect of delivery of unindorsed certifiicate. 181. Effect of ineffectual attempt to transfer. 182. Warranties on sale of certificate. 183. Attachment or levy on shares. 184. Creditors remedies to reach certificates. Pledge of Corporate Stock. 185. In general. 186. Sale or pledge by pledgee. 187. Attachment of pledgor's interest. 188. Right to dividends. 189. Rights of pledgor. , 190. Right of pledgee to maintain action. In General. 159. Right of stockholder to sell or transfer stock. Stock of a corporation ' ' shall be transferable in the manner prescribed in this chapter (Stock Corporation Tjaw) and in 170 CORPORATIONS. the by-laws, no share shall be transferable until all previous calls thereon shall have been fully pdid in."^ Each stock- holder of a corporation has an undoubted right to sell his stock unless his privilege of sale has been hampered by his own action, and the corporation has no power to prevent him from exercising such right.^^ And a corporation must trans- fer stock on sale in open market to bona fide purchasers where no discretionary power is expressly reserved." In the absence of special provisions to the contrary, either in the statute under which a corporation was organized or in its by-laws, an original subscriber to its stock can transfer his stock to an- other, and, if the transfer is made in good faith, his liability ceases and the transferee will be substituted in his place, with the same rights and liabilities as the original holder. And in the absence of a special provision or agreement making sub- scribers liable for the full amount of their subscriptions, the power of substitution of the purchaser of stock to the rights and liabilities of the original holder is not limited to a time after the stock has been fully paid for.^^ The legal title to stock held by an executor will be transferred by a written assignment thereof, signed by him simply with his individual name, and such assignment carries with it a right of action for the conversion of the stock.^^ One may obtain a transfer of stock for the purpose of joining in an action against a cor- 18. Stock Corporation Law, § 50, pt. 13. Playa De Oro Mining Co. v. Gage, 60 App. Div. 1, 69 N. T. Supp. 702, affd. 172 N. Y. 630, 65 N. E. 1121. The right of alienation of corporate stock is never to be restrained except by clear and explicit language. Burden V. Burden, 8 App. Div. 160, 40, N. Y. Supp. 499, affd. 159 N. Y. 287, 54 N. E. 17. When stockholders will *ot be enjoined from selling stock. — Where the president of a corporation communi- cates to its stockholders an offer made by another corporation to purchase their stock, a stockholder whose stock has been deposited with a trust com- pany and who, for that reason, will be unable to take advantage of the offer, is not entitled to maintain an action against the corporation to restrain the other stockholders, who were not par- ties to the action, frorii selling their stock pursuant to such offer, simply be- cause ho apprehends that, if the pur- chasing corporation should obtain a ma- jority of the stock of the other corpora- tion, it would use such control to the prejudice of the minority stockholders. Ingraham v. National Salt Co., 72 App. Div. 582, 76 N. Y. Supp. 1016, affd. 179 N". Y. 556. ;i N. E. 1131. 14. Ripf \. Rockefeller, 134 N. Y. 174, 31 N. E. 907. See also post, par. :170. 15. Rochester & K. F. Land Co. v. Raymond, 158 N. Y. 576, 53 N. E. 507. See also ante, par. 156. ■ - : 16. Mahaney v. Walsh, 16 App. Div. 601; 44 N. Y. Supp. 969. TRANSFER OF SHARES. 171 poration to set aside certain sales." But persons buying stock in order to bring actions for past wrongful acts of directors are not favored by courts of equity.^* The purchase of the stoc^ of a corporation, by an attorney, is not, however, a violation of the statute prohibiting an attorney from pur- chasing any bond, thing in action, etc., witii the intent and for the purpose of bringing a suit thereon. The purchase of stock is not within the prohibition; it not being one of the securities or evidences of debt mentioned, nor a chose in action, within the meaning of the statute.^" If two stockholders of a corpo- ration to whom the stock had been issued in equal lots, make an agreement by which their stock is to be pooled and sold by either for their joint account, each stockholder becomes the agent of the other and responsible for the fraud of the other in selling the same, and one of said stockholders cannot escape liability by any form of contract wherein an option is given by one to the other at a certain sum.^* The word " option " has a well settled legal meaning, and unless it clearly appears that it is not used in its ordina,ry sense, it gives to the person who holds it the right to exercise the privilege conferred or hot as that person shall choose, and does not import a legal obligation to purchase.^ A suit by a stockholder to set aside a transfer of stock alleged to have been induced by fraud is not barred on the theory that the issue is res adjudicata mere- ly because after the transfer, which disqualified the plaintiff as ia director, his transferee with the other directors instituted a proceediiig for voluntary dissolution which was granted upon a finding that the plaintiff had transferred his shares for a valuable consideration so that he was disqualified as a director, even though in that proceeding the plaintifiF appeared and denied that the assignee was a director or authorized to act as such, if in fact the issues tendered in the bomplaint to set aside the assignment were not actually litigated.^ 160. Restrictions on transfer generally. ' ' There shall be no lien in favor of a corporation' upon the shares represented fc'y a certificate issued by such corporation and there shall be no restriction upoii 17. Erwin v. Oregon Railway and 643, 162 N; Y. Supp. 514. Navigation Co., 35 Hun 544. 1. Heller v. Pope, 183 App. Div. 864, 18. Kingman v. Rome, W. & 0. R. 171 N., Y. Supp. 619. Co. 30 Hun 73. 2. MacMahon v. Stepney Spare Wheel 19. Ramsey v. Gould, 57 Barb. 398, Agency, 140 App. Div. 554, 125 N. Y; 39 How. Pr. 62. Supp. $2.^. iSO. Beers v. McNaught, 175 App. Div. 172 COBPOKATIONS. the transfer: of shares so represented by virtue of any by-law of such corpo- ration, or otherivise, unless the right of the corporation to. such lien or the re- striction is stated upon the certificate. " 3 While an absolute prohibition of the transfer of stock as to time would be against public policy, reasonable restrictions upon the transfer of stock which are imposed by the charter, articles of association, or certificate of incorporation, and notice of which is stamped on the stock certificates, are legal.^ 161. Transfer of stock prior to filing certificate. The certificate incorporating a stock corporation, when filed, becomes binding on the subscribers, and their liability is fixed by their subscription, without the formal issuance of stock to them. Where the incorporators, prior to any attempt made in good faith to comply with section 5 of the General Corporation Law, transfer all the stock of the proposed cor- poration in exchange for certain rights accruing under an al- leged contract owned by a third party, the issue is without consideration, irrespective of the good faith of the incorpo- rators. Under such circumstances, it is error to dismiss the complaint bf a judgment creditor of such corporation seeking to sequestrate its property and to recover on the personal lia- bility of the subscribers to the capital stock, and on the statu- tory liability imposed by section 56 of the Stock Corporation Law, even though the certificate of incorporation was filed after the issue of the stock ; if no subsequent action was taken ratifying the unauthorized issue.^ 162. Transfer of stock by stockholder indebted to corporation or in contemplation of insolvency. ' ' If a stockholder shall be indebted to the corporation, the directors may refuse to consent to a transfer of his stock until such indebtedness is paid, provided a copy of this section is written oi' printed upon the certificate of stock. ' ' C 3. Personal Property Law, § 176, as in force before the enactment of this added by L. 1913, ch. 600. section enforced. Reynolds v. Bank of 4. Bloomingdale v. Bloomingdale, 107 Mt. Vernon, 6 App. Div. 62, 39 N. Y. Misc. 646, 177 N. Y. Supp. 873. See Supp. 633, affd. 158 N. Y. 740, 53 N. also, post, par. 163. • E. 1131. 5. Stevens v. Episcopal Church His- A manufacturing corporation, organ- tory Co., 140 App. Div. 570, 135 N. Y. ized under the general manufacturing Supp. 573. law of this State (Chap. 40, Laws of 6. Stock Corporation Law, § ,01. 1848), lias no power, in the absfence Provision of by-law similar to and of a pTOvision to that efCeot in its ar- TRANSFER OF SHARES. 173 A corporation qannot refuse to consent to a transfer of its stock by a stockholder until his indebtedness to the corpora- tion is, paid, unless the provisions of this section are written or printed upon the certificate of stock.'' The statute is appli- cable to a domestic banking corporation and where a debtor has assigned his stock it may refuse to transfer the same to the name of the assignee until the assignor 's debt is paid. Al- though the statute only empowers a corporation to refuse to recognize an assignment of stock until the assignor's in- debtedness is paid where a copy of the section is printed upon the certificate of stock, it is sufficient if the certificate contain a copy of a by-law of the corporation making a similar pro- vision.^ But the fact that an unauthorized by-law is prinleS on the face of shares of stock, cannot be notice to a bona fide purchaser of them that his purchase will be subject to a lien on the part of the corporation for the indebtedness of the stockholder to it.^ The'payment of judgment for costs by a stockholder who brings an action against his corporation and fails, puts him in the same relation to the corporation that he occupied beforej and the directors may not resist an appli- cation for the transfer of his stock by setting up a claim that by reason of the suit the corporation was obliged to pay coun- sel fees and expenses in the litigation which were not covered by the taxable costs.^" When a copy of this section has not been written or printed upon a subscriber's stock certificate, and there is no provision in the by-laws or in the subscription tides of association, to create or declare vision in the articles of a banking as- a lien upon its stock by by-law, or to re- sociation that the shares of its stock fuse to permit a transfer until the in- shall not be transferable until the (lebtedness of the stockholder to the shareholder, shall discharge all debts due company is paid, and a bona fide pur- by him to the association, includes lia- ehaser of stock, without knowledge or bilities of the shareholder which have notice of such a by-law, is not bound not matured. Leggett v. Bank of Sing thereby and can compel the transfer Sing, 24 N., Y. 883. to him upon the books of the corpora- When lien of pledgee superior to that tion of, the stock purchased. PriscoU created by by-law of corporation for V. West Bradley & C. M. Co. et al., 59 any indebtedness due it. See Lyman v. jj y 96. State Bank of Randolph, 81 App. Div. 7. Union Bank v. United States Ex- 367, 80 N. Y. Supp. 901, affd. 179 N. change Bank, 143 App. Uiy. 128, 127 N. Y. 577> .72 N, E„ 1145. , . , Y. Supn. 661. ': 9- Buffalo German Ins. Co. v. Thiid 8. Strilhmann v. Yorkville Bank, 148 National Bank, 162 N. Y, 163, 5« N. E. App. Div. 8, 133. N. Y. Supp. 130, affid. 521. 210 N. Y. 536, 103 N. E. 1133. 10. Cassagne v. .Marvin, 143 'IST. Y. Unmatured liabilities.— The pro- 292, 38 N. B. 285. 174 COBPOBATIONS. agreement making the subscriber liable for the full amount of his subscription, or making the stock non- transferable until fully paid, a subscriber is not liable to pay in full for the stock subscribed for by him, after he has ceased to be a stockholder by a bona fide transfer of his shares.^^ .No stockholder of any such corporation shall make any transfer or assignment of his stock therein to any person in contemplation of in- solvency."^' The provision of the statute prohibiting a stock- holder from transferring his stock in contemplation of the insolvency of the corporation is aimed only at transfers made for the purpose of relieving the stockholder from his statu- tory or contractual liability, and does not affect a bona fide sale of stock by one who is under no liability as stockholder to the corporation or its creditors at the time of the trans- fgj._iib This provision preventing transfers of stock in con- templation of insolvency is to prevent solvent shareholders from escaping their statutory liability to those who are cred- itors of corporations when the transfers are made and their contractual liability to corporations not assenting to the transfer."" 163. By-laws regulating transfer of stock. Section 11 of the General Corporation Law, empowering a corporation to make by-laws regulating the transfer of its stock, only authorizes the corporation to prescribe the officer by whom the stock shall be transferred and the mode of its transfer; it does, not authorize an imposition upon tHe stock of a penalty limiting the ■ unconditional right of transferring it.^^ But a provision of the articles of incorporation of a cor- poration or its by-laws that a stockholder shall not sell his 11. Rochester & K. P. Land Co. w ration about a year iifter obtaining, such Eaymond, 158 N. Y. 576|»53 N. K. 507, judgment, seeking to hold the subscriber ■holding that where a corporation not liable as a stockholder^ is too late, even only ratified a sale of Stock by a sub- though the good faith of his transfer scriber, before fully paid up, by can- of his stock was questionable, celing his certificate and issuing a new Ha. Stock Corporation Law, § 66. one to the purchaser, but after a lapse lib. Sinclair v. Fuller, 158 X. Y. of a, year and eight months commenced 607, 53 N. E. 510. an action agaiiist the purchaser as a lie. Sinclair v. Dwight, 9 App. Div. stockholder, to recover the amount of a 297, 41 N. Y. Supp. 193, aflFd. 158 K call it had made upon the shares then Y. S07, 53 N. E. 510. standing in his name, and obtaiiied a 12. Kinnan v. Sullivan Coiinfy Club, judgment against him, whicli it satis- 36 App. Div. 313, 50 N. Y. Supp. 95. fled, an action commenced by the corpo- TRANSFER OF SHARES. 175 stock without first giving a stated period within which the corporation and the other stockholders may have opportunity to purchase the same is not contrary to pubhc policy.^* How- ever, under a by-law of a milk corporation providing that if a stockholder transferred hi s stock he should sign an agreement not to sell or deliver milk in a certain city within five years, the corporation cannot restrain a violation of such agreement by a suit against a purchaser of the stock." And a by-law, providing that a shareholder when he resigns from the corpo- ration shallreceive the amount paid on his stock, is invalid.^^ 164. Agreements between stockholders regulating transfers. A contract between stockholders imposing a perpetual re- straint on the sale of stock would be invalid,^^ but a reasonable regulation as to the mode of selling corporate stock, so as to prevent its sacrifice, is not against public policy as being a restraint, upon trade.-^'' Accordingly an agreement in writing between the promoters of a corporate enterprise owning ninety-nine one-hundredths of its capital stock as tenants in common, to partition their holdings after .first placing in the treasury one-fifth of all the stock, to be sold to provide work- ing capital, and, in order to prevent a sacrifice thereof, pro- viding for the deposit,. of their individual stock certificates with a trust company,, each agreeing that he would not with- draw the same, for. si^ months, except by rautual consent, un- less enough treasury stock should be sooner sold to realize a sum named, in which, event any , one could withdraw his cer- tificate on five days 'notice to the others, does not constitute tan unlawful suspension of the power of alienation, and is npt against public policy as being in restraint of trade..^^ So also, 13. .Moses V. Spi],le, 63 Misc., 303, 118 Stockholder deriving title under N. Y. Supp. 410, afEcl.,136 App. Div. 904, will. — Although there was an agree- 120 N, Y. Supp. 1136. ment between the original stockhoHera 14. Onondaga Cqunty Milk Associa- of a corporation providing that if uriis- tion.v, Wall, 17 Hun 494. sued' stock were offered foi' purchase all 15. Picalora v. Gr;Ulf Co-operative Co., parties should .have a right to ' purcHasf- 68 Misc. 331, 133, N. Y. Supp. 980- ail equal amount thereof, a stockholder 16. Hey v. Doiphin, 93 Hun 230, 36 . deriving her title under a will of one of N. Y. Supp. fi37; Brown v. Britton, 41 the parties to the agreement, which will App. Div. 57, 58 N. Y. Supp^ 353- ' • provided that' tlie cbnditioiis of the ' 17. Williams v. Montgomery, 148 N. agreement' should 'be binding upon his Y. 519, 43 .N. E. 57. , representatives and legatees, is Hot eu- 18. Williams v. Montgoniery,, 148, N. titled to maintain a suit as a stock- Y. 519, 43 N. E. 57. holder representing the corporation to 176 COKPOBATIONS. a joint agreement between stockholders not to pledge or sell their stock for a certain period, made for the benefit of 'all stockholders, is not void as against public policy. And an agreement between stockholders who were employees of a corporation and the corporation for the purchase of stock upon the decease of any party to the agreerhent or upon his severance of his connection with the corporation may be specifically enforced.^^ An agreement between stockholders, giving to each the first right to purchase the stock held by the other in case of the latter 's desire to sell or of his death is not a wager contract, and is enforceable.^" Under an agreement between partners, contemplating the incorporation of their business, stating that it was the desire of both to retain with- in their own control the entire management of the corpora- tion, the option to purchase each other's stock exists only during the life time of parties.^ But such a contract does not disable a party from transferring a legal title to his stock without the consent of the other parties and in violation of the agreenaent, and this although the transferee was cognizant of the agreement at the time of the transfer.^ Although the pur- chasers of shares of stock entered into a written agreement to hold the shares for a specified period, evidence is admissible of an oral contract between the parties by which the vendor agreed to repurchase a portion of the shares at the end of that period at the same price, if the purchaser so elected, as the oral contract did not tend to vary the terms of the written one, but related to a matter outside and independent of it.^ The enforcement by specific performance of such agreements Ibe- tween stockholders rests in the sound discretion of the court ; it may not be demanded as a right.^ have a sale of stock to an employee of 19. Lane v. Barnard, 185 App. Div. thfi company canceled upoiia the ground 754, 173 N. Y. Supp. 714. that she was not offered an opportunity 20. Scruggs v. Cotterill, 67 App. Div. to subscribe for a proportionate part of 583, 73 N. Y. Supp. 882. the shares sold. This, because the 1. Matter of Mitchell, 114 Misc. 370, corporation itself not being a party to 186 N. Y. Supp. 666. the agreement could not bring such ac- 2. Matter of Argus Co. et al., 138 tion and whatever rights the plaintiff N. Y. 557, 34 N. E. 388. had under the will were personal to her 3. Blair v. Minzesheimer, 124 App. and to be asserted against the parties Div. 177, 108 N. Y. Supp. 799. to the agreement. Waters v. Waters 4. Matter of Argus Co. et al., 138 Co., 130 App. Div. 678, 115 N. Y. N. Y. 557, 34 N. E. 388; Butler v. Supp. 432, a«d. 201 N. Y. 184. 94 X. Wright, 186 N. Y. 259, 78 N. E. 1002. • B. 602. TRANSFER OF SHARES. 177 165. Blank assignment and power of attorney. _ The common practice of passing the title to stock by de- livery of the certificate with blank assigninent and power, has been repeatedly shown and sanctioned in cases which have come before onr courts, and the rule is well settled that an owner of the certificate may transfer his title by delivery of the certificate with a blank power of attorney indorsed there- upon signed by the shareholder named in the certificate. Such delivery transfers the legal title to the shares, as between the parties to the transfer, and not a mere equitable right,^ and a party to whom it is delivered is authorized to fill it up, by writing a transfer and power of attorney over the signature." But the relation of stockholder is not established by the mere production of a corporation stock certificate on which is in- dorsed a blank assignment and transfer purporting to be signed by the administrator of the person named on its face as entitled to the stock, represented thereby.'' It has also been settled, by repeated adjudications, that, as between 5. McNeil v. Tenth National Bank, 46 N. Y. 335, 331, 7 Am. Rep. 341; Knox V. Eden Musee Americain Co., 14S N. T. 441, 454, 42 N. E. 988; Hudson Trust Co. V. American Linseed Co., 190 App. Div. 289, 180 N. Y. Supp. 17. Such was established to be the common practice in the city of New York, in the case of The New York and New Haven Railroad Company v. Schuyler. (34 N. Y. 30). and the rights of parties ctatining under such instru- ments were fully recognized in that case. And in the case of Kortright V. The Commercial Bank of Buffalo (30 Wend. 91, and 32 Wend. 348), the same usage was established as existing in New York and other Stites, and it was expressly held that even in the absence of such usage, a blank trans- fer on the back of the certificate, to which the holder has affixed his name. is a good assignment. 6. Indorsement in blank presumptive evidence of title.— Where an adminis- trator sues a corporation to compel it to accept a certificate of stock alleged 12 to have been owned by his intestate and to issue a new certificate to the plain- tiff as administrator and to pay accum- ulated dividends, etc., the defendant corporaition, having denied the assign- ment, should be allowed to prove by the original holder of the certificate that he neither sold nor transferred the same. Although the plaintiff's posses- sion of the certificate indorsed in blank is presumptive evidence of his title, it is not a conclusive presumption and the defendant may rebut the same by evidence showing that the certificate was not delivered, or not delivered with an intent to pass title. Hannahs v. Hammond Typewriter Co., 158 App. Div. eZO, 143 N. Y. Supp. 939. The naked possession of a stock cer- tificate and blank assignment and power of attorney is no evidence of title. Dunn v. Commercial Bank of Buffalo, 11 Barb. 580. 7. Tompson v. Stanly, 73 Hun 248, 35 'N. Y. Supp. 890, affd. 147 N. Y. 713, 42 N. E. 736. 178 COBPORATIONS. the parties, the delivery of the certificate, with assignment and power indorsed, passes the entire title, legal and equitable, in the shares, notwithstanding that, by the terms of the charter or by-laws of the corporation, the stock is declared to be transferable only on its books.* Such pro- visions are intended solely for the protection of the cor- poration, and can be waived or asserted at its pleasure, and no effect is given to them except for the protection of the cor- poration. They do not incapacitate the shareholder from parting with his interest, and his assignment, not on the books, passes the entire legal title to the stock, subject only to such liens or claims as the corporation may have upon it, and ex- cepting the right of voting at elections,® It is not necessary that an assignment of corporate stock should be dated or that all the blanks should be filled in in order that it shall be effect- ive to convey the legal and equitable title to the stock.^* And an assignment of a certificate of stock with a power of attor- ney indorsed upon the back of the certificate, although in blank, except as to signature arid witness, presents such indicia of title that an innocent holder obtains good title." 8. McNeil v. Tenth National Bank, 46 N. Y. 325, 331, 7 Am. Bep. 341; Union Bank v. United States Exchange Bank, 143 App. Div. 128, 127 N. Y. Supp. &61; Hudson Trust Co. v. Ameri- can Linseed Co., 190 App. Div. 289, 180 N. Yj Supp. 17. .See .'also., post, par. 168., . , : ; . 9. McNeil v. Tenth Naticmal Bank, 46 N. Y..,335, 331, 7 Am. Rep'.- 341; Hudson Trust Co. v, American Linseed Co., 190 App. Div. 289, 180 N. Y. Supp. 17. Delivery of : a stock certificate, as collateral, with the usual power of attorney indorsed thereon, signed . by ^ the ■ owner, in blaiikj. .transfers „all the owners title, . subject -only ,. to liens or claims of the corporation, - ^d, after such delivery the. holder of the certifi- cate and power may alone cause a trans- fer on the ; books of fhp company. Smith V. American Coal Co.; 7 , Lans. 317. A bank which obtains from its cashier a certificate qf stock, indorsed in blank by the owner and left by .him with the. cashier, as security for a loan made by it to the cashier withput . notice of any infirmity in his title to the certificate, obtains .a good title thereto as against the person .to whom the, certificate was .originally issued and .wh39, 81 N. E. 1174. Equitable owner of stock.— An owner of stock making a transfer thereof to the -president of the corporation, to en- able him to have control of all the stock and ^ind up the corporation, remains the equitable ' owner of the stock, and may sue as such. Thompson v. Stanley, 20 N. Y. Supp. 317, 29 Abb. N. C. 11. 19. Matter of Seneca Oil Co., 153 App. Div. 594, 138 N. Y. Supp. 78, afed. 308 N. Y. 545, 101 N. E. 1121. Where stock is transferred partly in payment of a precedent debt and partly for a consideration paid at the time, the purchaser will not be regarded as a holder for value as- against one haying the legal title or a prior equity, so far as the assignment was received in payment of the precedent debt, but is entitled to a lien for the amount of the consideration paid, and to a repayment of that amount, before he will be required to reconvey tlic stock. Weaver v. Barden, 49 N. Y. 286, 20. Curric v. White, 45 N. Y. 822; Richards v. Robin, 175 App. Div. 296, 162 N. Y. Supp. 12, affd. 325 N. Y. 719, 122 N. E. 889. See also, post, par. 173, et seq. 182 CORPORATIONS. corporations law), until it shall have been entered in such book as required by this section, by an entry showing from and to whom transferred. "1 The provision of the statute that no transfer of stock shall, be valid for any purpose whatever, except to render the trang^ feree liable for debts, until it shall have been entered in the stock transfer-book required to be kept by the company, is only for its protection and does not operate to prevent the passing of the entire legal and equitable title in the shares, as between the parties, by, the delivery of the tortificate with assignment and power of transfer.' And where the owner of stocTf has assigned and transferred, for a valuable consider- ation, the certificate issued to him, and the corporation, when requested to make the transfer, without a valid reason refuses so to do, this amounts to a waiver of the requirements; the transfer is complete and the corporation is bound to recog- nize the title of the assignee, precisely the same as if it had done its duty and made the proper entries upon its books.* In the absence of a provision in the charter or by-laws of a corporation that stock is transferable only on the books of the company, such provision in thie certificates of stock itself does not have the effect of limiting the unconditional right of transferring' it.^ 169. Effect of failure to have transfer made on books. The provision of the statute which declares that no trans- fer of stock shall be valid for any purpose whatever until it shall have been entered in the book prescribed, is to be con- fined in its application to. the objects sought by the section, which are the security and ease of remedy of creditors, and the information of stockholders and creditors. It does not 1. stock Corporation Law. § 32, pt. mentioned transfer, wrongfully exer- as amd. by L. 1916, ch. 127, and L. cises an active dominion over the 75 1918, ch. 137. shares which constitutes a conversion Retransfer before entry of first thereof. Mahauey \. Walsh, 16 App. transfer in books. — Where the holder Div. 601, 44 N. Y. Supp. 9R9. of fi certificate for 216 shares of corpo- ■ 2. Johnson v. Underhill, 52 N. Y. rate stock, by an instrument in writin;;, ' 203 ; Chemical National Bank v. Col- transfers 75 shares thereof, and then:- well, 133 N. Y. 250, 351, 30 N. E. 644; after, before the 75 shares thus trans- 3. Eobinson r. National Bank of New ferred are entered upon the books of Beine, 95 N. Y. 637. ■■ ' ■ the corporation in the name of the 4. Union Bank v. United States Ex- transferee, transfers all of the 316 change Bank, 143 App. Div. 128, 127 N. shares to another party, he, hy such last Y. Supp. 661. TKAKSFER OF SHARES. 18o affect, as between viendor and vendee, the validity of an assignment in reality made, although the stock is not trans- ferred in legal form. Until the transfer upon the books is in fact made, the vendor is the nominal owner, and is to be treated as the trustee of the stock for his vendee. The vendee takes the shares subject to all the burdens and liabilities at- tached to or growing out of them, and the law implies an obligation or promise upon his part that those burdens and liabilities will not come upon the vendor.^ But a transfer of stock valid as between parties, though not consummated in the form required by said statute, i. e., by entry upon the book of registry of stockholders, does not divest the trans ferror of liability as a stockholder to the creditors of the corporation.^ A purchaser who neglects to have the transfer made on the books of the corporation until after the stock is transferred to a bona fide holder without notice, loses his right to demand and have the, transfer thereof made to him. But the corporation would be liable to the holder of such cer- tificate, for permitting the stock to which he was entitled to be transferred to another, because they had constructive notice of these outstanding certificates.^ Likewise a holder of stock is not prevented from bringing an action to establish his rights as such by the fact that his stock is not registered on the books of the corporation.* A CQrporation cannot avail itself of its own negligence as a basis of a cause of action against a stockholder. But it may waive a performance of its own rules and is es- topped by its acts and official declarations the same as a natural person. Where, therefore, a stockholder transfers his stock in good faith and the corporation does not comply with the statute and its by-laws in making, the transfer, he cannot be held liable for unpaid calls upon the stock transferred, made subsequent to the transfer.' The rule that a corpora- tion, acting in good faith and without notice of the rights of 5. Johnson v. Underhill, 52 N. Y. 535, 'modfd. 160 App. Div. 41, 145 N. 203. Y. Supp. 121, affd. 311 N. y. 540, 105 6. Shellington v. Howland, 53 N. Y. N. E. 1101. 371^ 372. 7. New York & N. H. R. Co. v. Where a record stockholder upon an Schuyler, 34 N. Y. 30. assignment of his stock fails to have 8. Sims v. Bonner, 16 N. Y. Supp. it transferred on the books of the bank 801, 43 St. Rep. 14. he is personally liable to contribute to 9. Isham v. Buckingham, 49 N. Y. deficiency of assets. Van Tuyl y. 216. See also, ante, par. 156. Robin, 80 Misc. 360, 142 N. Y. Supp. 184 COKPOKATIONS. others, may treat registered shareholders, as the actual own- ers of the shares standing in their names, applies only to such transactions as are within the express or implied powers con- ferred upon the company or its shareholders collectively, and an assignee of shares having possession of a certificate, al- though holding under an unregistered transfer, is not bound by a contract between the registered shareholder and the cor- poration, which is not within such powers.™ 170. Remedy for refusal of corporation to make transfer on books. By the certificates of stock the corporation certifies that the shareholder is entitled to a certain amount of stock in the com- pany, which can be transferred on the books of the corporation in person or by attorney, and not otherwise, upon the surren- der of the certificate. This is a notification to all persons inter- ested that whoever in good faith buys the stock and presents to the corporation the certificate regularly assigned, with power of attorney to transfer, is entitled to have the stock transfer- red to him. These representations are continuing representa- tions, upon which any person to whom the certificate is offered has the right to rely.^^ And so, when a transferee presents cer- tificates duly assigned for value, and with authority to trans- fer them on the books of the company, it is the legal obligation of the corporation to accept the surrender of the certificates, and to issue new certificates to the transferee.^^ Where the refusal of a corporation to transfer stock on its books is wrongful, an action for damages is an appropriate remedy, and the transferror of the stock is entitled to maintain the action, for it is as much the right and duty of the transferror 10. Campbell v. American Zylonite attorney for Anne Callan," signed by Co., 123 N. Y. 455, 35 N. E. 853. him "Denis A. Spellissy, as attorney of 11. Hudson Trust Co. v. American Ellen Hayden," accompanied by a Linseed Co., 190 App. Div. 289, 180 N. paper purporting to be executed by one Y. Supp. 17. • Michael Ellis, as executor of the last 12. Howes V. Gas Consumers ' Bene- will and testament of Ellen Haydeji, de- fit Co., 13 N. Y. Supp. 924, 36 St. Eep. ceased, and by Anne Callan, authorizing 48. and requesting such transfers. Spell- A corporation issued certificates of issy did not present any proof that tlie stock to one Denis A. Spellissy, person signing the consent was the e.x- " attorney of Ellen Hayden," at a ecutar of Ellen Huydeu. It was held time when Ellen Hayden was dead. ^ja^^y^^c^K,»J*tiiiit, properly refuged Thereiifter Spellicy presented to the to> mai^.^Jr^nS^t^^ Spellissy v. Cook corporation formal transfers of such & Bernheinier 00.^58' App. Div. 283, G.S certificates to "Dennis A. Spellissy, as N. Y. Supp. 995. TKANSPBE OF SHAPES. 185 of shares of stock to procure the proper transfer to be made upon the books of the corporation as it is of the transferee.^* But a purchaser of stock has no right of action against the officers of a corporation personally for failure to enter the transfer on the books of the corporation. The remedy is against the corporation." It is well settled that a suit in equity by a stockholder will lie against a corporation to com; pel it to transfer his stock on the books of the corporation.^^ So, too, on tend,ering stock duly transferred to him by the original, holder, he is entitled to have the transfer made upon the books of the corporation, and to have new certificates is- sued to him.^^ Such a suit is proper where a recovery of damages for a refusal to, transfer, will furnish an inadequate compensation,^^ But a transfer of shares on the books of a corporation cannot be enforced by mandamus.^* A purchaser from one, other than the original stockholder, who receives a certificate of stock with the usual assignment and power of attorney thereon executed in blank by the stockholder, in an action against the corporation for refusal to transfer the stock on its books, is not bound to show affirmatively the title of bis immediate transferror. The presumption is that the 13. Lockwood v. United States Steel Corporation, 153 App. Div. 655, 138 N. Y. Supp. 725, revd. on other grovmds, 209 N. T. 375, 103 N. E. 697. 14. Cobley v. Curran, 54 Misc. 321, 572, 104 N. Y. Supp. 424, 751. 15. Selwyn-Brown v. Supemo Co., Inc., 181 App. Div. 420, 168 N. Y. Supp. 918.' Action to compel transfer of stock ■wrongfully withheld. — Where a di- rector of a corporation, owning one- half of its capital stock, surrenders his certificate of stock to the other direc- tors, who own the remaining half of the oajpital stock, in order to obtain new certificates of smaller denomina- tions, and the other directors issue to him certificates" for only a portion of his stock, claiming that he has di- rected the remaining portion to "be sold for the benefit of the corporation, the defrauded director is entitled to main- tain an action to compel the other di- rectors to transfer to him the shares of stock wrongfully withheld, and, under section 603, of the Code of Civil Pro- cedure (§ 827, Civil Practice Act), to an injunction pendente lite, restrain- ing tliem from transferring or issuin.? certificates for such shares to any other person. Bedford v. American Alumi- num & Specialty Co., 51 App. Div. 537, 64 N. Y. Supp. 856. 16. Powers v. tTniversal Film Mfg. Co., 102 App. Div. 806, 148 N. Y. Supp. 114. 17. Cushman v. Thayer Manufactur- ing .Tewelry Co., 76 N. Y. 365. 18. Travis v. Knox Terpezone Co., 215 N. Y. 259, 364, 109 N. E. 250, citing Kortright v. Buffalo Com'l Bank, 30 Wend. 91, affd. 22 Wend. 348 ; Cush- man V. Thayer Mfg. Jewelry Co., 76 N. Y. 365. Mandamus. — People ex rel. Rotten- berg V. Utah Gold & Copper M. Co., 135 App.: Div. 418, 119 N. Y. Supp. 852. 186 COBPORATIONS. stock was transferred and certificate delivered in the course of business, in the absence of evidence to the contrary.^* 171. Contract for sale of stock. . In regard to a business corporation engaged in carrying on its business, the mere fact that it is temporarily insolvent is not of that kind of materiality as excepts a sale of its stock by one who had knowledge of this fact, but did not disclose it to the purchaser, from the general rule of caveat emptor.^ Under a contract for the sale of stock at the book va,lue there- of, that term ordinarily means the value thereof as shown by the assets and liabilities as carried on the books of the corpo- ration.^ The fact that one stockholder contracts with another stockholder of a corporation for the purchase and gale of shares of stock at the book value as shown on the accounts of the corporation, does not require or justify the intervention of a court of equity in the management and control of the books of account of the corporation." The measure of damages for .the breach of a contract for the purchase of corporate stock is the difference between, the contract price and its market value .on the day of delivery. Market quotations of stocks are evi- dence of value only when they are based on actual sales of the stock quoted.^ So in an action to recover damages for ^the breach of defendant 's contract to purchase certain certificates 19. Hclbrook v. New Jersey Zinc Co., restore the books of account to their 57 N-. Y. 616. See also post, par. 121. original condition, that the reduction of 20. Eothmnier v. Stern, 143 N. Y. the value of the goods will be canceled, 581, 38 ^f. E. 718. and that the defendants and the cOrpo- 1. Lane v. Barnard, 185 App. Div. ratioii be enjoined from making or 754, 173 N. Y. Supp. 714. changing the accounts of the corpora 2. Agreement for purchase of shares tion or the books of account .whereby at book value. — On the organization of the book value of the capital stock of a corporation to which plaintiff paid in the corporation be reduced contrary to a sum in cash and one of the deffeiid- the fact. It was held that the action ants • assigned certain assets, it • was cannot be maintained. Drueklieb v. agreed that in case of any breach of Harris, 209 N. Y. 211, 103 N. E. 599. the agreement by the directors of the 3. Wilds v. Robinson, 50 App. Div. company, such defendant would pur- 19S, 63 N. Y. Supp. gll. chase from the plaintiff at the latter 's Purchase by a corporation of a busi- election the shares of stock held by him ness with its stock. — Contract by at the existing book value of the same vendor to give a portion of the stock to as shown at the time of such election. one who subsequently as director, votss The relief demanded in this action is to purchase the business ia illegal, that the individual defendants and the Koster v. Pain, 41 App. Div. 443, 58 N. defendant corporation be compelled to Y. Supp. 865. TRANSFER OF SHARES. 187 of stock, damages should be measured, not by the amount agreed to be paid, but by the difference between the value of the stock, title and possession of which is in the plaintiff and the amount which defendant agreed to pay.'* The good will of a business corporation may be considered in establishing the value of its stock. There is no rigid rule for the determination of the value of good will which must in each case be deter- mined in the light of the surrounding facts. The question is properly for the jury, but must rest upon evidence legiti- mately tending, to establish value. As a general rule the value of good will may be arrived at by multiplying the average net profits by a number of years to be determined by the nature and character of the business. The proper number of years is not a question of law as in England, but should be deter- mined by the jury as a question of fact.^ 172. Specific performance of contract. : A contract for stock freely sold in the market will not be enforced by requiring specific performance, for an adequate remedy at law exists in such eases, but to deny this remedy when the stock has no ascertainable value, but has a large special and peculiar value, is nearly all owned by one man and can be obtained, only from him, and only as a favor and for. special reasons, would be to deny the substantial benefit of the contract and defeat the relief which in such case should in conscience be given.^ But an action to compel specific per- formance of a contract for the sale of the stock in a specified corporation, which the plaintiff had no special interest in ac- quiring except for the pecuniary advantage which would ac- crue to him from its ownership, cannot be maintained simply because it appears that there have been no sales of the stock in question, that it is not listed on any exchange, and that the defendant is the owner of a large majority of the stock of the corporation, and, hence, that it will be difficult, although not 4. Wyllys Co. v. ' Nixon, 165 App. by it to report upon the value of prop- DiT. 373, 150 N. Y. Supp. 944. erty which was subsequently purchased 5. Von Au V. Magenheimer, 115 App. by it, is set out in full, are not com- Div. 84, 100 N. Y. Supp. 659. petent evidence of the value of such The value of the property of a cor- property. Eeilly v. Freeman, 84 App. pbration is competent evidence upon Div. 433, 82 N. Y. Supp. 929. the question of the value of its stock, 6. Waddle v. Cabana, 230 N. Y. 18, but the minutes of the corporation upon 1 14 N. E. 1054. which the report of an expert, employed 188 COBPOEATIOI' certificate or from the pefson purporting to transfer the title. ' ' V> 178. Effect of endorsement. "The indorsement of a certificate by the person appearing by the certificate to be the ovmer of the shares represented thereby is effectual, except as provided in section one hundred and sixty-eight, though the indorser or transferor, (a) Was induced by fraud, duress or mistake to make the indorsement or delivery, or (b) Has revoked the delivery of the certificate, or the authority given by tho indorsement or delivery of the certificate, or (c) Has died' or become legally- incapacitated after the indoiseraBjit; whether, before or after the delivery of the certificate, or (d) Has received no consideration. " 17 179. Recission of transfer. "If the indorsement or delivery of a certificate, (a) Was procured by fraud or duress, or (b) Was made under such mistake as to make the indorsement or delivery in equitable; pr If the delivery of a certificate was made (c) Without authoi'ity from the owner, or (d) After the owner's death or legal incapacity, the possession of the wv tifieate may ho reclaimed and the transfer thereof rescinded, unless: 14. Personal Property Law, § 164, as 16. Personal Property Law, § 166, as added by L. 3913, ch. 600. added by L. 1913, ch. 600. 16. Personal Property Law, § 165, as 17. Personal Property Law, § 167, as added by L. 1913, ch. 600. added by L. 1913, ch. 600. TRANSFER OF SHARES. 191 1. The certificate has been transferred to a purchaser for value in good faith without notice of any- facts making the transfer Wrongful, or, 2. The injured person has elected to waive the injury, or has been guilty jf laches in endeavoring to enforce his rights. Any court of appropriate jurisdiction may enforce specifically such right to reclaim the possession of the certificate or to rescind the transfer thereof and, pending litigation, may enjoin the further transfer of the certificate or im- pound it. "18 The negotiability of a certificate of stock by endorsement and delivery was expanded by the Per onal Property Law as amended in 1913. Where certificates of stock issued in the name of a firm are endorsed- and delivered by it to a bank as collateral for a loan, the legal title to the certificates is in the bank, and though in an action for the reclamation of the cer- tificates, the plaintiff, as between it and the firm, is entitled to be regarded as the legal and equitable owner of the cer- tificates, this section precludes a recovery .^^ "Although the transfer of a certificate or of shares represented thereby has been rescinded or set aside, nevertheless, if the transferee has possession of the certificate or of a new certificate rrpiesenting part or the whole of the same shares of stoclf, a subsequent transfer of such certificate by the transferee, mediately or immediately, to a purchsiser for value in good faith, without notice of any facts making the transfer wrongful, shall give such purchaser an inde- feasable right to the certificate ami the shares represented thereby." 20 180. Effect of delivery of unindorsed certificate. ' 'The delivery of a certificate by the person appearing by the certificate to be the owner thereof without the indorsement requisite for the transfer of the certificate and the shares represented thereby, but with intent to transfer such certificate or shares, shall impose an obligation, in the absence of an agreement to the contrary, upon the person so delivering, to complete the transfer by making the necessHry indorsement. The transfer shall take effect as of the time when the indorsement is actually made. This obligation may be specifically en- forfeed."! .: 181. Effect of ineffectual attempt to transfer. "An attempted transfer, of title to a certificate or to the shares represented thereby without delivery of the certificate shall have the effect of a promise to transfer and the obligation, if any, imposed by such promise shall be determined by the law governing the formation and performance of contracts. "2 18. Personal Property Law, § 168, as added by L. 1913, ch. 600. added by L. 1913, eh. 600. 1- Personal Pjoperty Law, § 170, as 19. Iowa Securities Corporation v. added by L. 1913, ch. 600. Ridgewood National Bank, 106 Misc. 2. Personal Property Law, § 171, as 33.5, 175 N. Y. Supp. 776. added by L, 1913, ch. 600. 20. Personal Property Law, § 169, as 192 GOEPOKAIIONS. 182. Warranties on sale of certificate. ' ' A person who for value transfers a certificate, . iucluding one who assigns for value a claim secured by a certificate, unless a contrary intention appears, warrants — (a) That the certificate is genuine, (b) That he has a legal right to transfer it, and (e) That he has no knowledge of any fact which wpuld impair the validity of the certificate. In the ea.se of an assignment of a claim secured by a certificate, the liability of the assignor upon such warranty shall not exceed the amount of the claim. ' ' 3 "A mortgagee, pledgee or other holder for security of a certificate who in good faith demands or receives payment of the debt for which sUoh certificate is security, whether from a party to a draft drawn for, such debt, or from any other person, shall not by so doing be deemed to represent or to warrant the genuineness of such certificate, or tho value of the shares represented thereby. ' ' * 183. Attachment or levy on shares. ' ' No attachment or levy upon shares of stock for which a certificate is out- standing shall be valid until such certificate be actually seized by the officer making the attacliment or levy, or be surrendered to the corporation which issued it, or its transfer by the holder be enjoined. Except where a certificate is lost or destroyed, such corporation shall not be compelled to issue a new certificate for the stock until the old certificate is suri'endered to it. "B 184. Creditors remedies to reach certificates. ' ' A creditor whose debtor is the owner of a certificate shall be entitled to such aid from courts of appropriate jurisdiction, by injunction and otherwise, in at- taching such certificate or in satisfying the claim by means thereof as is allowed at law or in equity, in -regard to property which cannot readily be attached or levied upon by ordinary legal process." " Pledge of Corporate Stock. 185. In general. The owner of shares of corporate stock does not divest him- self of his general property therein by a pledge of the same to the corporation, but, subject to the lieii of the pledgee, he remains the owner 8f the istockJ There may be a valid pledge of stock by written transfer without a manual delivery of the scrip. And hence, although stock has already been pledged 8. Personal Property Law, § 173, as 6. Personal Property Law, § 175, as added by L. 1913, ch. 600. added by L. 1913, ch. 600. 4. Personal Property Law, § 173, as 7. Booth v. Consolidated Fruit Jar added by L. 1913, ch. 600. Co., 62 Misc. 252, 114 N. Y. Supp. 5. Personal Property Law, § 174, as 1000. added by L. 19m, eh. 000. TRANSFER OF SHARES. 193 as security to oue party with a delivery of the scrip, it may subsequently be pledged to another party subject to the prior Hen, and the possession by the first pledgee will be regarded as the possession of the second pledgee through the agency of the former.* The general rule is that the pledgee of chat- tels loses his lien by returning them to the pledgor, but a pledgee who holds stock as collateral and returns it to the pledgor for the special purpose of having it transferred to another on the books of the company, with the understanding that the substituted certificates shall, when issued, be de- livered to the pledgee, which is done, he having no knowledge of any fraudulent intent on the part of the pledgor, no other lien having attached in the interval, the pledgee does not lose his lien as against the rights of creditors of the pledgor.^ For purposes of general definition, the relationship between dus- tonier and broker, in relation to stocks which have been ptir- chased and are being carried by the latter on a margin, is that of pledgor and pledgee. In the absence of evidence to the contrary, it is assumed that the customer has hot had- pos- session of the stocks, and that he cannot secure possession thereof from the broker until he has paid the indebtedness due thereon.^" When shares Of stock are loaned with the intention that the certificates should be placed in circulation if neces- sary, the identical certificates need not be returned.^ Where one has title to the stock as pledgee thereof , no act of the pledgor can divest him of Ms rights obtained thereby, and, with Ms rights as pledgee therein, he alone can consent to the transfer of that stock for the stock of the new corporation and moreover the pledgor not having the right to turn in the pledged stock in exchange for stock in the new corporation, hi>s right to vote that stock is a limited right, limited to the right to vote for the sale of the stock for cash at a fair valli: ation.^" 186. Sale or pledge by pledgee. If the owner of pledged stock executes a written assignment leaving the name of the transferee in blank, the certificate be- 8. First 'National :Bank of Waterloo 10. Matter of Mercantile Trust C3o., T. Baeon, 113 App. Div. 612, 98 N. Y. 210 N. Y. 83, 103 N. E. 884. Supp. 717, affd. 189 N. Y. 533, 83 N. 11. Barclay v. Culver, 30 Hun 1. . E. 1126 affd. 216 U. S. 134, 54 L. Ed. 12. Murrin v. lArchibald Consolidated 418. ' ■ Coal Co., 196 App. Div. 107, 187 N. Y. 9. Hifckok V. Cowperthwaiit, 210 N. Supp. 606. - •' ■ Y. 137, 103 N. E. 1111. 13 194 CjObpobati.ons. comes payable to the bearer, and if the pledgee sells it without notice, an innocent purchaser for value without notice relying upon the appearance of the certificate obtains a good title ; not 80, however, when the assignment is not lexecuted at, all. A transferee cannot rely upon such defective assignment as proof of the owner 's intention to assign; on the contrary, the defect. puts the transferee, upon inquiry. And when the stock is so pledged by delive;ry only and without an assignment, thereof, the pledgee cannot sell the same except at publiq auction on notice to the owner, or in an action of foreclosure, and if he sells it at private sale it is larceny and confers no title on his transferee;^^ A bailee who, after notice that he intends to sell pledged stock, waives :his right and gives fur-, ther time to, the pledgor cannot recall his waiver without further notice to enable .the pledgor to protect the pledge. When under such, circumstances the bailee sells without second notice the pledgor is ,entitled" to recover the stock, and there is no necessity that he keep. a tender of payment alive by paying the money into, court.'* The fact that a certificate of stock stood in the name of the pledgor and not in the name of the brokers to whom it waSi pledged, has been; held not to be sufficient notice to put a bank, to which the broker pledged the stock, on inquiry nor to show that it was not a bona fide holder of the stock.i5 187. Attachment of pledgor's interest. Wkere certificates of stock of a f oreigTi corporation belong- ing to a non-resident are in possession of a resident of this state as security for a debt, the interest of the owner and pledgor therein is a property right within this state and may be levied upon .under a wairrant of attachment against him, made by service of a notice on the pledgee in the manner pre- scribed by subdivision 3 of section 917 of the Civil Practice Act," • 13. Treadwell y. Clark, 114 App. Div. N. Y. 443, 51 Am. Dec. 307. 493, iqo N. Y. Supp. 1, affd. 190 N. 14. Furber v. National Metal Co., 118 Y. 51, 82 N. E. 505. App. DiV. 263, 103 N. Y. Supp. 490, Sale by pledgee of stock assigned in affd. 193 N. Y. 622, 86 N. E, 1124. blank and pledged to secure loan not 15. Fisher v. Mechanics & Metals invalid by reason of appointment of Nat. Bank, 89 Misc. 587, 153 N. Y. receiver of property of owner. Dudley Supp. 786. V. Gould,. 6 Htin 97. 16. Simpson v. Jersey City Contract- Wrongful sale by pledgee, action ing Co., 165 N. Y. 193, 58 N. E. 896. for damages. See Wilson t. Little, 2 TRANSFER OF SHARES. 195 188. Eight to dividends. Under ordinary circumstances it is the right of a pledgee of stoek to collect dividends declared thereon and it is his duty to apply them to the reduction of the indebtedness for which the stock is held. He represents not only his own interests as pledgee but also holds a duty to the pledgor.^'^ Where divi- dends have been declared on stock but ha"ve not yet become payable, a proper sale of the stock would necessarily be made with the forthcoming dividend still on it. But where divi- dends declared have been paid and have passed into the pos- session of the pledgee they are not a subject of sale.^* And if, at the time of a sale, a dividend has been declared on the stock which has become payable, then, as to that dividend, the pur- chaser of the stock would take it." But on the fraudulent sale of pledged stock to a bona fide purchaser, the pledgor is en- titled to dividends declared thereon, but not payable at time of purchase.^" . 189. Eights of pledgor. Although a stockholder who has pledged his stock has no individual right of action for an injury to the corporation common to all stockholders, although suck injury: may inci- dentally result in a depreciation of the value of his pledge, he may have a right of action for a direct injury td the stock not common to all stockholders as such.^ , An, a.p1;ion by the owner 17. Brightsoh v. Claflin, ZZ5 N. V. hy him as collateral security -with a 469, 123 N. E. 458 ; Tirst Nat; Banli of ' bank, by which they vpen^, in July, sold Waterloo v. Exchange Nat. Bank of at private sale. Op the 7th of Novem- Seneoa Falls, 2^6 N. Y. 633, 123 N. E, ber, tlie coinpaBy's agent declared the 368; Booth v. Consolidated Fruit Jar second dividend of four per cent in Co., 63 Misc. 252, 114 N. Y. Supp. 1000. pursuance of the resolution. It was 18. Brightson v. Claflin, 335 N. Y. held, that the plaintiff was the; owner 469 133 N. E. 458. of the stock at the time the dividend Sale of stock deposited as collateral; was deelared,i and that Jie, and not the depositor entitled to' dividends.- Tic purchaser, was entitled thereto. Hill board of- directors of a corporation v. Newiohawanick Company, 8 Hun 459, passed, on January 36, 1873, the.fol- affd. 71 N. Y. 593. lowing resolution: "At a meeting of 19. First National Bank of Waterloo the board of directors, held this day, t. Exchange National Bank of Seneca voted to pay a dividend of four per FaUs, 226 N. Y. 633, 133 N. E. 368. cent this day, and another of like 80. Warner v. Watson & Gibson; 4 amount at option of agent from earn- Misc. 12, 33 N. Y. Supp. 922. ings of last year." The plaintiff was 1. Milliken v. McGarah, 159 App. on that day the owner of certain shares Div. 725, 144 N. Y. Supp. 964. of the company's stock, then deposited 196 OCmPOBATIONS. to redeem a certificate of stock pledged by hini to secuie an indebtedness, which certificate was stolen from the pledgee, and was eventually purchased by the defendant, is an equit- able action and the plaintiff is not obliged to proceed at law by a possessory action or by an action for damages for con- version. Such an action is governed by th^ limitation appli- cable to equitable actions and is in time if brought within ten years after the plaintiff discovered the defendant's wrongful possession of the certificate and his determination to retain it. And the fact that the plaintiff, when he delivered the certifi- cate to the pledgee, wrote his name on the back thereof, did not under the circumstances make it negotiable and confer a good title upon the defendant, where the blank power of at- torney on the assignment attached to the certificate was not signed or witnessed.^ An owner entitled to redeem stock con- verts I by his pledgee is not required to tender the deht due the i^ledget^ to the transferee of the pledgee in order to recover the stock or its present value. Moreover, a refusal of the transferee to gi^'e up the stocl? on demand is a waiver of any siicli tender.^ A pledgor is not bound to leave the amount tendered in payment of his debt where the pledgee is unable to return the stock.* 190, Rii^ht of pledgee to maintain action. Where a corporation under its charter has power, with the consent of stockholders, to change the nature of its business, and it is provided therein that " every person who shall pledge his stock as collateral security may nevertheless repre- sent the same at all meetings and may vote accordingly as a 2. Treadwell v. Clavk, 190 N. Y. 51, appeared that the government had pur- 82 N. E. 505. chased said stdek and paid for the same 3. Ti'eadwell i. Chirk, 114 App. Div. in bonds, the ascertainment of the 493, 100 N. Y. Supp. 1, afflaintiff to defendants tn secure an in- tal stock had been doubled and the new debtednsss, together with the ihcreasiB issue was of value, the plaintiff's re- :ind earnings Of said stock, or if de- covery was properly reduced to thf fendants do not deliver said stofek for proportion the shares bore to the new an Mccpunting of its value, wherein il capiital. trans5;eb qf shabes. - 197 stockholder," a pledgee of stock, which remains in the name of the pledgor upon the books of the company, cannot main- tain an action to set aside a sale of > the coi-porate property authorized by an agreement betwej&n all of the stockholders, including the pledgor, and also authorized by the directors, although the agreement was not made at a formal meeting called for the purpose, the sale having been made in good faith, without notice of the pledge, and provision having/been expressly made for the discharge of the corporate debts. and obligations.? 5. Elyea v. Lehigh Salt Mining Co., 169 N. Y. 29, 61 N. E. 992. ] 98 COBPOBATIONS. CHAPTER XIII. Dividends. 191. Power of directors to declare dividends. 192. DivideDds to. 'tre declared from surplus proflts. 193. Capital stock not to be impaired. 194. Guaranty of dividends. 195. Stock and scrip dividends. 196. Dividends on piWtly paid sludc and ou stock without nominal or par value. 197. Suit by stockholder to compel declaration of dividend. 198. When right or title to dividend accrues. 199. Bight of preferred stockholders to dividends. 200. Effect of transfer of stock on rights to dividends. 201. Bights of life tenant and remainderman in dividends generally. 202. Bights of life tenant and remainderman in extraordinary dividends. 203. Action by stockholder to recover declared dividend. 191. Power of directors to declare dividends. The word " dividend " has a well defined legal meaning. It signifies such portion of accumulated net earnings or sur- plus as the directorate of a corporation may deem expedient to be distributed.® And it is the sole and exclusive duty of the board of directors to declare dividends, whenever in their judgment, the condition of the affairs of the corporation renders it expedient and just to aU concerned. And with the exercise of this duty in good faith, courts will never interfere, unless to prevent injustice.' Stockholders are entitled to a distribution from the corporate property as a general rule only at such times as corporate funds are made available for distribution among the stockholders by proper action on the part of the board of directors. The directors alone may say when, how and to what extent dividends are to be paid.* It does not make any difference what form a distribution of profits by a corporation takes ; such distribution is to all in- 6. Hastings v. International Paper Div. 589, 165 N. Y. Supp. 872; De. Co., 187 App. Div. 404, 175 N. Y. Jonge v. Zentgrof, 182 App. Div. 43, Supp. 815. 169 N. Y. Supp. 377; Nauss v. Nauss 7. Karnes v. Rochester & Genesee Brothers, 195 App. Div. 318, 187 N. Valley R. Co., 4 Abb. Pr., N. S., 107, Y, Supp^ 158. Ill; Reynolds v. Bank of Mt. Vernon, 8. Hastings v. International Paper 6 App. Div. 62, 67, 39 N. Y. Supp. Co., 187 App. Div. 404, 175 N. Y. 623, affd. 158 N. Y. 740, 53 N. E. 1131; Supp. 815. Shaw V. -Anaaldi Co., Inc., 178 App. DIVIDENDS. 199 teiits and purposes a dividend.^ So a division of profits with- out the formality of declaring a dividend is the equivalent of declaring a dividend.^" And stock of another corporation representing the profit on a transaction which is distributed among its stockholders, constitutes a dividend.^^ The di- rectors of a corporation in declaring dividends have no power to discriminate between its stockholders, where no such power of discrimination is conferred by the charter.^^ A contract between two stockholders, owning all the stock of the corpo- raton, for the payment of. a percentage pf all fn.ture earnings of the corporation to one of them, is enforceable, where it does not interfere with the duties of the directors.^^ Stock books are evidence of the ownership of stock, and a corpora- tion is justified in being governed thereby in paying dividends until proof or notice is given showing that other parties than those named therein are the owners of the stock." 192. Dividends to be declared from surplus profits, , , "The directorp of a stock corporation shall not make dividends, , except from the surplus . profits arising ' from the business of such corporation, nor divide, ; 9. (Groli's Sons v. Groh, 80 , App. Div. 85, 91, 80 N. Y. Supp. 438, revd. on other grounds 177 N. Y. 8, 68 N. B. 992; People ex rel. Queens pounty Vl^ater Co.' V. Travis, 171 App. Div. 631, 157 N. Y. Supp. 943. 10. When sale of stock is "dividend on."-^Separate resolutions of the board of directgra , .of . a. per cent dividend, so guaraaiteed, was 6. CJolumbus Trust Co. v. Moshier, not limited to the net earnings of the 51 Misc. 270, 100 N. Y. Supp. 1066, year in -which it was agreed that the affd. • 131 App. Div. 906, 106 N. Y. distribution of these net earnings Supp. liai, affd. ol93,, N. Y. 660, 87 should be made, but that the certifi- N. ^i. 1117. See also Mason v. Stand- cate of guaranty was, in substance, a ard Distilling and Distributing Co., 85 pledge of all the future earnings of App. Div. 520, 585, 83 N. Y. Supp- the road for the payment of this 343. yearly ten per cent diyidend. The Guaranty of dividend.-jpWlie^-e a failure of the corporation, for want certificate of stock provided that the of net earnings, to make the dividends stock was "entitled to dividends, at on the days when they fell due did the rate of ten per cent per annum, not relieve it from its obligation to payable semi-annually out of the net make them, when, the necessary earn- eamings of said company," and was ings should afterward be realized •'also entitled to share pro rata with Prouty, v. Michigan S.- & N. Indiana the other stock of the company, in any R. Co., 1 Hun 655,. 4 T. &C. 230 excess of earnings over, ten per cent 7. McVity v. Albro Co., 90 App. Div. per annum, and the- payment of divi- 109. 86 N. Y. Supp. 144, affd. 180 N dends as aforesaid" was thereby guar- Y.. 354. 7.3 N. E. 1126. See also post anteed ; it was held that tbe right ,of par. 404. DIVIDENDS. 203 a guaranty, it is estopped from denying its power to do so when the guaranty is sought to be enforced against it.* 196. Stock and scrip dividends. Under ordinary circumstances, where, a corporation has earned ia dividend, and it desires to retain the moneys so earned* for thfe purposes of the company, either in making im- provements on its property or for the payment of its debts, it may, retain such moneys and in lieu thereof issue to the stock- holders a corresponding amount of stock.^ This is known as a stock dividend, and new stock certificates so issued,, rep- resent income and not capital.^" A stock dividend does not distribute property, but simply, dilutes the shares as they existed before.^^ Where directors of a corporation after di- recting a stock dividend which had previously been authorized by the stockholders at the same meeting adopt a resolution authorizing a cash dividend out of the profits of the corpora- tion, the amount of the cash dividend should not be considered as having been deducted from the surplus of the corporation used as a basis for the declaration of the stock dividend. The right to a stock dividend becomes vested when it is authorized even though the certificates are actually delivered there- after.^^ A dividend of the stock of other corporations is in no respect a stock dividend, as the term is usually employed, i. e., an increase of the nominal capital stock of the share- holders of a company, It is precisely the same as a dividend of cash, because the corporation might have sold the stock and divided the inoney among its shareholders. In a stbck dividend, no money or property is withdrawn from the oWnei*- ship and control of the corporation. But if the dividend be in cash, or in the stock of other corporations, in either case 8. Mason v. Standard DistUling and have been used in the construction and Distributing Co., 85 App. Div. 520, 83 betterment of its railroad. Wood v. N. Y. Suppi 343. See also post^ par. Lary, 47 Hun 550, 15 St. Rep. 309. 404. 10. Lowry v. Farmers' Loan & 9. Williams v. Western Union Tele- Trust Co., 173 N. Y. 137, 64 N. E. graph Go., S3 N. Y. 163, 189; Howell 796. As to rights of life tenant and V. Chicago & N. W. R. Co., 51 Barb, remaindermen, see post, pars. 301, 378. 303. Bonds in lieu of cash dividends. — A 11. Williams v. Western Union Tele- railroad corporation may lawfully graph Co., 93 N. Y. 163, 189. issue to its stockholders bonds, in 12. Matter of Osbornej 166 App. lieu of cash dividends, to represent Div, 547, 153 N. Y. Snpp. 48. the earnings of the company which 204 CORPORATIONS. just SO much property is taken from the corpibration and the title to it vested in the shareholders individually.^^ A scrip dividend is valid and constitutes an indebtedness of the cor- poration to stockholders. Such a dividend, providing that it shall be " payable at the pleasure of the conipany," is pay- able within a reasonable time,^* and interest is payable there on from the time of its issue.^' A corporation has no author- ity to issue bonds in payment of a scrip dividend made dur- ing the previous year.*^^ 196. Dividends on partly paid stock and on stock without nominal or par valtie. Upon stock issued as partly paid : , ; .,,.., "the corporation may declare and may pay dividends upon, the basis, of the amount actually paid upon the respective shares of stock instead of upon the par value thereof. " 17 ' "No such corporation (issuing stock without nominal or par value) shall de- clare or pay any dividend vphieh shall reduce the amount of its stated capital. In case any such dividend- shall be 'declared, the directors in whose admiriiatratiofi the same shall have been declared, except those who may have caused their dissent therefrom to be : entered upon the minutes of such meetings of directors at the time or who tver.e not present when such action was tt^ken, shall be liable jointly and severally to such corporation and to the creditors thereof to the full amount nf any loss sustained by such corporation or by. its creditors respectively by reason of such dividend. "18 .. . . : .; 19?. Suit by stockholder to compel declaration of dividend. It is well settled that whether, dividends, shall tse decla/r^^ out of surplus earnings of a corporation, or whether the sur- plus shall be used to increase the business or retained for the stability and security of the business, is a matter which rests in the sound discretion of the board of directors. And as a general rule thoy are the sole judges as to the propriety of r 13. Matter of Rogers, 32 App. Div. sulation COi, 87 Hun 430', 34 N. Y. 4»8, 432, 48 N. Y. Supp. 1T5, afld. 161 Supp. 315. N. Y. 108, 55 N. E. 393. 17. Stock Corporation ; Law, ,§ 60, 14. Billingham v. Gleason Mfg. Oo., pt. 101 App: Div. 476, 91 K. Y. Supp. 18. Stock Corporation Law, § 30, as 1046, affd. 185 N. Y. 571, 78 N. E. added by L. 1912, ch. 351, and amd. 1089. by L. 19S0, ch. «06, and L. 1931};icl). 15. Bankers Trust Co. v. Dietz Co., 694. As to liability of directors for 157 App. Div. 594, 142 N. Y. Supp. unauthorized dividends, see post, pars. 847. 337, 338; 16. Merz v. Interior Conduit & In- DIVIDENDS. 205 declaring dividends, and the courts ivill not interfere with a proper exercise of their discretion.^" But the authority of directors to determine what dividends shall be declared does not confer on them the power to commit a fi'aud, and where the surplus of a corporation properly applicable to a dividend is, without doubt, ample for the purpose, and the directors, or a majority of them, recognizing that fact, but acting in bad faith and without reasonable cause, refuse to declare a divir dend, the courts will interpose in favor of those stockholders who otherwise would be without remedy.^" And likewise, where the right to a dividend is clear and fixed by contract, and requires the directors to take adtion hefore the right can be asserted by an action at law, a court of equity will inter- pos(3 to compel such action, and when necessary, to restrain, by injunction, any action adverse to such right.^ But a stock- holder cannot enjoin the accumulation of a surplus by the trustees of his corporation,' so long as the trustees are acting honestly and within their discretionary powers.^ An action may be maintained on the analogy of a suit for specific per- formance to enforce ah express contract between a,ll the stock- holders and directors in reference to the declaration aiid pay- 19. Boardman et al. v. Lake Shore assignee without a merger forms a new & M. S. R. Co., 84 N. Y. 157; Beverr corporation with said stocky and the idge v. N. Y. B. E. Co., 112 N. Y. 1, stock of two other companies, said 37, 19 N. E. 489; Nauss v. Nauss stockholder may bring a suit in equity Brothers Co., 196 App. Div. 318, '187 to ohtain his share of the accumulated N. Y. Supp. 158. profits and earnings of the corporation. A corporation which has accumu- He has a right to an accounting, and lated a surplus, at the same time pay- although it may appear that his ing large dividends, cannot be coni- money has been paid to others he may pelled by a stockholder to distribute still, elect to take a, decree against the same, when there is no evidence of the corporation instead of seeking to fraudulent intent, or unreasonable or follow the profits into the hands of capricious action by the directors. illegal holders. The fact that sue'' McNab V. McNab & Harlin Mfg. Co., stockholder signed an option to sell 63 Hun 18, 16 N. Y. Supp. 448, affd. his stock to the assignee, which he sub- 133 N. Y. 687, 31 N. E. 637. See also sequently revoked, is no defense to the ante par. 191. corporation which was not a partA- 20. Kassel v. Empire Tinware Co., thereto. Logan v. New York Sugar 178 App. Div. 176, 164 N. Y. Supp. Ref. Co., 176 App. Div. 660, 163 N. Y. 1033; Hiscock v. Lacy, 9 Misc. 578, Supp. 314. 30 N. Y. Supp. 860. 1. Boardman et al. v. Lake Shore & Where a corporation sells or assigns M. S. R. Co., ,84 N. Y. 157. all of its capital stock except that 2. Burden v. Burden, 159 N, Y. 287, held by one stockholder, and the 288, 54 N. E. 17. 206 COBPORATIONS. ment of dividends, and the Supreme Court has jurisdictipii to compel directors entering into such an agreement to declare dividends in order to prevent them from abusing their power to the injury of the other party thereto.^ A contract of incorporators that the profits shall be divided each six months, in proportion to the respective holdings of stock, either in the form of dividends or in such other form as, at the time, may seem advisable, does not take from the directors their legal right to determine what is the best inter- ests of the company and what part of its profits shall be di- vided and what part shall be retained as surplus, there being no limitation on the power of the directors contained in the certificate of incorporation, and so a stockholder is not en- titled to maintain a suit in equity to compel the directors who have surplus earnings of the company invested in new proper- ties used in carrying on its business to distribute the same as dividends.* The complaint in a suit to compel the declaration of dividends should set out the facts with respect to the assets and liabilities of the company, showing the surplus, if any, and why it is not needed in the business, A prima facie right to dividends should be shown by setting forth the facts with respect to the financial condition of the company and to rebut the presumption arising from the failure of the board to declare dividends that the directors have honestly exer- 3. Kassel v. Empire Tmyfare Co., earned by virtue of the ownership of 178 App. Div. 176, 164 JT. Y. Supp. the " certificate of stock," etc., should 1033, holding that a complaint states be divided between the personal rep- a cause of action which alleges that resentatlve of the deceased and the the plaintiff's intestate and the two survivors, in the proportion "tjasX individual defendants had executed a their respective interests in the cer- written contract reciting that they tificate in question bear to each other," owned all the capital stock of the de- and which further alleges that after fendant company in equal shares; the deatli of plaintiff's intestate de- that it was then wortk a certain fendants paid to plaintiff the first in- amount; that upon the death of any stallment; that although since the time party to the agreement within five of the death of the plaintiff's intestate years his stock should become the the net earnings of the Corporation absolute property of the other parties, have been very large, the defendants the certificate to be retained by the have refused to declare dividends in personalreprfeaentative of the deceased accordance with n scheme to withhold as security; that the survivor should the earnings of the company until pay therefor the amoumt stated in plaintiff's stock shall be paid for and specified instaHments, and that pend- so defraud the plaintiff, ing payment "all dividends that may 4. DejOnge v. Z?ntgrof, 182 App. be declared by the corporation and Div. 43, 169- N.'Y. Supp. 377. DIVIDENDS. 207 cised their discretion by showing a state of facts tending to show that they could not, acting in good faith, have deemed it necessary to refrain from declaring dividends.^ 198. When right or title to dividend accrues. The right to dividends accrues when they are declared, in- dependent of when the earnings were made.® And so a share- holder has no legal title to the property or profits of the cor- poration until a division is made or a dividend declared.'' Until divided. by the directors or trustees of the corporation, all of its property is held in joint ownership by the corpora- tors, and no several right is possessed by the individual stock- holder, until after a diAridend is declared.^ Accordingly a con- tract by him in reference to dividends and profits upon his stock includes only dividends or profits ascertained and de- clared by the company and allotted to the stockholders, and not profits to be ascertained by third persons or courts of jus- tice, upon an investigation of the accounts and transactions of the company.' On the other hand an assignment by a sjtoekholder of his shares carries with it his proportionate share of the assets including all undeclared dividends.^" Dividends def^red by a corporation, but payable in the future, become at once the property of the shareholders and are thereafter held by the corporation simply as a trustee for the shareholder, and are not surplus profits.^^ 199. Right of preferred stockholders to dividends. The doctrine that preferred shareholders are entitled to 5. Nauss V. Nauss Brotherfl Co., No. dividends were declared until April 9, 1, 195 App. Div. 318, 187. N. Y. Supp. 158. r 6. Goldsmith v. Swift, 35 Hun 201 7. Boardman et al. v. Lake Sh. & M S. R. Co., 84 N. y. 157; Beveridge v N. Y. B. R. Co., lia N. Y. 1, 37, 19 N 1872, when . a; dividend of fifteen dol- lars on each share was declared. In an action upon the contract the ref- eree found that $350 of the dividend was derived from an increase in the value of' the assets of the company, j;_ 489. P"""^ ^° January 1, 1873. Held 8. Beveridge V. N. Y. E. R. Co., 113 (Church, Ch. J., dissenting),' that K. Y. 1, 37, 19 N. B. 489. plaintiffs were not entitled to any por- 9. Title to dividends under an tion of the dividend. Hyatt et al. v. agreement.— Plaintiffs transferred to Allen, 56 N. Y. 553, 15 Am. Rep. 449. defendant twenty shares of the stock ■ 10. Boardman v. Lake Shore & M. S. of a corporation, under an agreement R. Co., 84 N. Y. 157. by which all profits and dividends 11. People ex rel. U. S. Trust Co. upon said •st6tk„ np to January 1, v. Barker, 86 Hun 131, 33 N. Y. Supp. 1873, were to be paid to paintiffSi No 388. 208 CORPOBATIONS. be first paid the amount of dividends guaranteed, and of all arrears of diyidends or interest before the other shareholders are entitled to receive anything, and that although they can receive no profits where none are earned, yet as soon as there are any profits to divide they are entitled to the same, is fully supported by authority.^^ The rights of a preferred stock- holder, however, are strictly contractual aiid their rights must depend upon the contract, accordingly where the articles of association provide that " preferred stock shall be entitled, in preference and priority over the common stock of said cor- poration, to dividends in each and every fiscal year, at such rate not exceeding four per cent per annum, . payable out of net profits, as shall be declared by the board of directors, such dividends are to be non-cumulative, and the preferred stock is entitled to no other or further share of the profits," gains and profits made by fortunate investment, and in converting its bonds into common stock are distributable as dividends in the discretion of its board of directors in precisely the same manner as gains and profits made in operation, to wit, to the common stockholders only,, to the exclusion of the preferred stockholders, whose contractual rights have been fully met.^* The purchasers of a certificate of preferred stock which gives to the holder a preference from surplus net profits when ascertained are supposed to purchase and hold the same with full knowledge of the general powers of the board of di- rectors, and with full knowledge of the discretionary powers vested in such board, not only to declare dividends but to set aside from the corporate funds and property from time to time such sums as they may deem necessary for the general purposes of the business in which the corporation is engaged. It is the duty of the board of directors to set aside sufficient funds for depreciation and for all contingencies which may be reasonably expected. to arise, as well as sufficient funds and property to enable the company to do and carry on its 12. Boardman et al. v. Lake Shore equally with common stock upon a & M. S. E. Co., 84 N. Y. 157, 174. dissolution of the corporation. People Right of preferred stockholders up- v. N. Y. Building-Loan Banking Co., on dissolution of corporation. — Pre- 50 Misc. 23, 100 N. Y. Supp. 459, f erred stock entitles the holder to a revd. on other grounds, 113 App. Div. priority in the dividends or earnings 140, 98 N. Y. Supp. 898. over common stock; but, in the ab- 13. Equitable Life Assurance So- sence of anything toi the contrary^ it ciety v. Union Pacific R. Qo.^ 212 N. seems that preferred stock shares Y. 360, 106 N. E. 92. DiyiDENDS. 209 ordinary business. And so when the purchasers of such pre- ferred stock take their certificates they take them with full knowledge of the general rules applicable thereto, and the term surplus net profits cannot be taken to mean simply surplus carried on the books of the company, but contem- plates surplus net profits over and above all surplus and reserves made by the directors in the exercise of their dis- cretion for the purpose of properly conducting the cor- porate business.^* A corporation which has property equal in. value to the amount of its outstanding capital stock, after the payment of its debts, rnay distribute th.e remainder of its assets among the holders of its coromon stock, and a preferred stockholder has no ground of complaint so long as the divi- dends upon his stock are paid.^^ However the contract be- tween the preferred stockholder and the corporation may be such that the right of preferred stockholders to dividends does not depend upon their declaration by the board of di- rectors, and is not lost by the fact that the board of directors does not declare a dividend each year, provided that the earn- ings of the corporation in each year, over and above its ex- penses, are sufficient to pay such dividends.^^ And where the charter of a business corporation and the certificates issued to holders of preferred stock provide that such stock shall be entitled td dividends, at a specified rate, out of the surplus profits arising from the business, before any dividend be paid on the common stock, and that such dividends shall be cumu- lative and in case of non-payment shall bear interest at a fixed rate from the-date when payable, such provision constitutes a valid contract between the company and the preferred stock- holders, which is binding upon all other stockholders. And the fact that the corporation, having failed to pay any divi- dends on its preferred stock for three years, reduced its capi- tal stock under the statute, giving to its stockholders their proportionate number of shares in exchange for their former holdings, does not affect the rights of the preferred stock- holders as to previous arrears of dividends; as a result -of such j-eduction, tlie preferred stockholders have a less number of shares, but, as between themsiplves and the other stock- 14. Hastings v. International Paper trie Co., 1'53 App. Div. 136, 136 N. Y. Ck),, 187 App. Div. 404, 175 N. Y. Supp. 60«. Supp. 815. ' . ^^- Wood V. I.^ry, 47 Hun .550, 15 15. Russell V. American .Gas & Elec- St. Rep. 209. " 14 210 CORPORATIONS. holders, they are still creditors for the arrears of dividends due from the company on the shares of preferred stock which they had previously held, and are entitled to be paid such arrears, Avith the stipulated interest thereon, before any of the surplus profits can be appropriated to a dividend upon the common stock. The preferred stockholders have, however, no right to any surplus created by the reduction of capital stock; such surplus cannot be regarded as " surplus profits arising from the business of the corporation," since it is not within the intendment of the agreement with respect to divi- dends on the preferred stock, and its distribution when made, can only be legally effected by dividing it among all the stock- holders ratably and without preference ; so that it is net appli- cable to the claim of the preferred stockholders for the arrears of unpaid dividends.^^ Oummulative preferred divi- dends cannot be paid from the capital of the corporation but from the accrued profits only.^* In an action by preferred stockholders against a corporation to compel the payment of a dividend alleged to be due, and charging that the funds ap- plicable thereto have been diverted to the permaijent improve- ment of and additions to the corporate property, the common stockholders may be proper, but are not necessary parties." 200. Effect of transfer of stock on right to dividends. The earnings of a corporation remain its property until a division is made or a dividend declared. Until that time whatever interest a stockholder has therein passes with a transfer of his stock as an incident thereto.^ But -^hen a 17. Roberts v. Roberts-Wicks Co., the new corporation -in stock, etc., oc- 184 N. Y. 357, 77 N. B. 13. cupies merely the position o-f an agent. 18. Michael v. Cayey-Cayuas To- When such promoter under the option bacco Co., 190 App. Div. 618, 180 N. demands and secures the delivery o^ Y. Supp. 533. the stock, and holding the same in- 19. Thompson v. Erie R. Co., 45 N. dorsed in blank procures himself to be Y. 4&8. • elected a director of the new company, 20. Robertson v. De Brulatour, 188 and before the consideration is paid N. Y. 301, 80 N. B. 938. to the seller of the sto,ek unites with A promoter engaged in the purchase the other directors in declaring a di- of the stock and properties of certain vidend on the stock of the new corn- corporations for the purpose of form- pany, he is not entitled to receive such ing a corporation embracing the prop- dividend, but it belongs to the seller erties of the companies entering into of the stock and properties of the old the combination, who procures an op- corporation. Rowe v. White 112 tion for the purchase of sudh stock, App. Div. 688, 98 N. Y. Supp. 729, which is to be turned over on demand affd. 189 N. Y. 523, 82 N. E. 1132. and the consideration to be paid by Recognition of vendees' rights, DIVIDENDS. 211 dividend has once been declared out of net earnings, the amount of such dividend is no longer a part of the assets of the company, but is appropriated or set apart for the share- holders. They receive credit for the dividends and the cor- poration simply holds them as their trustee. Therefore, be- fore a dividend has been declared, a share of stock represents the whole interest which the shareholder has in the corpora- tion, and when he transfers his stock he transfers his entire interest, and dividends subsequently declared, without refer- ence to the source from which or the time during which the funds divided were acquired by the corporation, necessarily belong to the holder of the stock at the time of the declaration. But when the dividend has once been declared and credited to the shareholder, the amount thereof has been separated from the assets of the corporation and been appropriated to his use. It is then no longer represented by his stock, and is no longer an incident thereof; and hence when he transfers his stock he does not transfer his dividend, which remains subject to his control.^ A dividend declared upon corporate stock belongs to the owner of the stock at the time, although the dividends are made payable at a future time. In the absence, therefore, of any provision to the contrary in a con- tract of sale and purchase of stock, made outside of and not subject to the rules of the Stock, Exchange, dividends previ- ously declared, but nfiade payable thereafter, belong to the seller and are not transferred by the contract.^ Likewise where the directors of a corporation deplare two dividends, The crediting of a dividend upon the tra,nsf erred "ex-dividend." Hartley v. books of the corporation to the ven- Pioneer Iron Works, 181 N. Y. 73, 74, dees, which stood unchallenged for 73 N. E. 576. over a year and a half, and the subse- 1. -Jermain v. Lake Shore & M. S. quent declaration and : payment of a R. Co., 91 N. Y. 483, holding that an dividend upon all of the shares, was assignee ,has right to payment of un- held to constitute a distinct reeogni- paid dividends falling due before he tion of the rights of such vendees, acquired title to stock but not set and to entitle them to their proper- apart from the assets of the corpora- tion of any subsequent distribution by tion. the corporation, whether in the form Book of corporation evidence as to of a declared dividend or of a division whom to pay dividends. — Payment of profits, which could not be defeated may be made to administrator of one by unauthorized changes in the books in whose name stock stands. Bris- in an attempt to make the distribu- bane v. Delaware, L. & W. E. Co., 25 tion relate back to a time prior to the Hun 438, affd. 94 N, Y. ap4. delivery to them of their shares, 2. Hopper v. Sage,' 113 "N. Y. 530, which were claimed to have been 30 N. E. 330. 212 OOKPORATIONS. the one payable on the day the same is declared, and the other at the option of their agent, stoqkholdei's, who were such on the day of .the declaration of the dividend, are the persons wiio should receive it, although no day was definitely named for the payment of the second dividend, and no tinie fixed for closing or opening books, to determine who 'Otherwise would be entitled.^ 201. Rigkts of life tenant and remainderman in dividends generally. Notwithstanding the dfl&iculty in many cases of apportion- ing dividends, it is wiser and better to leave ah apportionment to courts of equity, in preference to adhering to a rule that depends more upon its simplicity and convenience of enforce- ment than upon justice and right. The distinction between ordinary and extraordinary dividends is necessary to make a workable rule and at the same time preserve the integrity of the trust fund. The integrity of the trust ftind and rights of the life beneficiary under the trust should each be considered, determined and preserved by a court of equity. Ordinary dividends, regardless of thei tinie when the surplus out bf which they are payable was accumulated, should be paid to the life beneficiary of the trust.* A paymeiit of accumulated unpaid dividends on preferred stock, which had accumulated prior to the creating of the trust, must be regarded as an ordi- nary dividend.^ The fiindamental question involved in these questions is whether there has been a distribution or division of the earnings, profits or accumulations of the corporatioii. Until there has been such division, the life tenant is not en- titled to any increase in the value of the principal of the trust fund, or the capital and assets of the corporation, shares of which constitute the trust fund. But where there has been a division of the corporate property, no matter what form it may take, that part thereof which consists of accumulated profits or earnings belopgs to the life tenant and that which 3. Hill V. iSTeurohawaneck Co., 48 remaindermen, the surrogate must How. Pr. 437, affd. 8 Hun 459, affd. apply the latest decision of the Court 71 N. Y. 693. , of Appeals. Intention of testator 4. Matter of Osborne, 309 N. Y. 450, should be copsidered. Matter of Tod, 477, 103 N. E. 733, 823; Matter of 85 Misc. 898, 147 N. Y. Supp. 161. Sehaefer, 178 App. Div. 117, 165 N. Y. 5. Thompson v. New York Trust Supp. 19. Co., 107 Misc. 345, 177 N. Y. Supp. In a conflict of claims to "extraor- 399. dinary dividends" by life tenants and DIVIDENDS. 213 is capital to the remainderman. The statement of the di- rectors, however, in taking the corporate action, or the entry in the corporate'books, is not necessarily conclusive. Investi- gation is' always permissible, and somietimes necessary, to de- termine whether or not the corporate property is being dis- tributed or accumulations divided. The ground upon which the apportionment rule is based is that the life tenant ought to have the earnings when the company makes a disposition of them.^ 202. Rights of life tenant and remainderman in extraordinary divir dends. When questions arise under a will, between life tenant and remainderman, with respect to accumidated earnings upon capital stock of a corporation, the courts must determine them according to the nature and substance of the thing, and are not concluded from treating such earnings as income by the form of their distribution or by the terms employed by the corporation. Extraordiiiary dividends, payable from the ac- cumulated earnings of the company, whether payable in cash or stock, belong to the life beneflciary, unless they entrench in whole or in part upon the capital of the trust fund as re- ceived from the testator or maker of the trust or invested in tlie stock, in which case such extraordinary dividends should be returned to ^;he trust fund or apportioned between the trust fund and the life beneficiary in such a way as to preserve tlie integrity of the trust fund.'' Accordingly when a stock divi- 6. United States Trust Co. V. Heye, Presfervation of principal of trust 324 N. Y. 343/ 130 N. E. 645; Macy fund invested in stock. — Unless a tes- V. Ladd, 237 N. Y. 680, 135 N. E. 829. tator, creating a trust, otherwise pro- 7. Matter of Osboriie, M9 N. Y. 450, vides, the principal of a trust invested 103 N. E. 783. 833; Matter of Schae- in corporate stock should not be Im- fer, 178 App. Div. 117, ]6'5 N. Y. Supp. paired by the division of accumulated 19^ Robertson v. Ote Brulatour. 188 Surplus among life beneficiaries. The Jf. Y. 301, 80 N. E. 938. holding that capital of a corporation cannot be di- Wliere a' testameiiitary trus.t of specific vided among • the beneficiaries of a life securities is created; with- a direction estate, and the capital of the trust that "the income and profits thereof" fund shouH also be preserved, whether be paid to' a beneficiary ■ for life, with invested by the trustees in stocks of a bequest over Of such secm-ities at the corporations at a premium, or ecquired termination of the life estate, extra- from the testator or maker of the ordinary distributions or dividends, trust. The surplus of the corporation representing aecumiilatfed income and existing at the formation of the trust profits and not capital, go to the life or when the stock is purchased rep- tenant, resents ' a part of the capital of the 214 COEPOBATIONS. dend, declared by a corporation and allotted to shares of its original capital stock belonging to a testamentary trust es- tate, constitutes, as matter of fact, a distribution of accumu- lated earnings or profits, it represents income and belongs to the life tenant of the trust estate as between him and the re- mainderman.* But where shares of stock are issued to one holding certain corporate stock as trustee for another, who is entitled to the income and dividends thereof only, and such additional shares are issued simply for the purpose of equal- izing the value of the interests of the stockholders in two cor- porations about to be consolidated, such additional shares of stock constitute part of the corpus of the trust, and the trustee should hold them as part of the capital of the estate.^ Where there is a controversy between the life beneficiary of a testa- mentary trust, which consists of shares of stock of a corpo- ration, and the trustee as to the disposition of the shares of stock of subsidiary corporations distributed by the first named corporation under a decree of the Federal Courts, made in an action under the anti-trust law, such disposition depends primarily upon a consideration of the testator's in- tention as expressed in his will.^° Where a trust estate holds estate as fully as does the capital of the corporation. Matter of Osborne, 209 N. Y. 450, 103 N. E. 723, 823. 8. McLouth V. Hunt, 154 N. Y. 179, 180, 48 N. E. 648; Goldsmith v. Swift, 35 Hun 201; Lowry v. Farmers' Loan & Trust Co., 56 App. Dlv. 408, 67 N. Y.Supp. 759, affd. 172, K Y. 137. 64 N. E. 796. Although a surrogate has approved an account of trustees in which they credit a stock dividend as capital held for the benefit of remaindermen, upon the filing of a, subsequent Aicount in which another stock dividend is cred- ited as capital, the former decree is not res adjudicata. Where, upon such an accounting, there is nothing to in- dicate from what source the surplus assets of the corporation represented by the stock dividend were derived, and nothing to rebut the. presumption that such surplus represented an ac- cumulation of earnings or profits, the stock dividend prima facie belongs to the life interests, and the Jjurden is upon the trustees to prove the contrary before they can include such shares as capital. Matter of Leask, 159 App. Div. 102, 143. N. Y. Supp. 865.; 9. Goldsmith v. Swift, 25 Hun 301. 10. Matter of Megrue, 334 N. Y. 284, 130 N. E. 651. Life beneficiary entitled to stock. — Where a will directs the payment of the net income of a trust fund to a beneficiary until he shall attain the age of thirty years, and before the happening of that event the Standard Oil Company distributed to- the tes- tamentary trustees as holders of, the stock the stock of certain subsidiary corporations pursuant to a deeree of the Federal courts determining that the oil company could not continue tc hold said stocks without violating the Federal statutes, the life beneficiary is. entitled to the di9tributed stock as income and it cannot be retained by the trustees as capital, if such, divi- DIVIDENDS. 215 corporate stock on which it has received bonds and scrip in the nature of a dividend representing in part earnings and in part an increase in the value of the investments of the com- pany, the life tenant is entitled only to such portion of the bonds as represent earnings. The portion representing in- creased value of the corporate securities is a distribution of capital and belongs to the remainderman." A life beneficiary entitled to the income of trust property, which includes bank stock, is entitled to' accumulated cash dividends declared thereon as income ; such dividends are not principal which will eventually pass to the remainderman. But subscription rights which accrue to stock so held in trust on an increase in the capitalizatioti of the bank belong to the corpus of the estate as an incident to the ownership of the stock. Hence, when the life beneficiary and the remaindermen consent that the trustees purchase shares of the new issue with the moneys derived from the deferred dividend, the stock so purchased belongs to the corpus, though the life beneficiary is entitled to all future dividends thereon for life, the investment pursuant to the agreement being deemed a loan by the life beneficiary to the trustee.^ Scrip dividends have been held when de- clared to belong under the will of a testator to the life ten- ant and not to tlie remainderman.^^ 203. Action by stockholder to recover declared dividend. A stockholder may not maintain an action against a corpo- ration to recover a dividend until one has been declared. If a dividend has been declared but withheld from a stockholder, the remedy is against the cprpo;^ation to compel it to set off and pay him his share of the dividends,^* but under ordinary dend was piaid from the ; accumulated Div. 435, 159 N.,Y. Supp. 264. earniiigB; of the company, and the as- 11. Thayer v. Buir, 301 K^. Y. 155, signment thereof to the beneficiary 94 N. E. 604. will not entrench upon the capital 12. Richmond v. Richmond, 123 App. of the trust fund as received from Div. 117, 108 N. Y. Supp. 298, affd. 196 the testator. The above rule holds N. Y. 535. 89 N. E. 1111. where the stock distributed by the 13. Banker's Trust Co. v. Dietz Co., Standard Oil Company was the stock 157 App. Div. 594, 597, 142 N. Y. of certain pipe lines,: which were con- Supp. 847.. structed after the testamentary trust 14. Godley v. Crandall & Godley Co., was created and the stock represents 213 N. ,Y. 121, 105 N. E. 818. surplus profits of said companies ac- Where a bank owning capital stock cumulated after the creation of the of a surety company and holding other trust. Hazzard v. Philips, 173 App. shares as collateral security for loans 216 COKPOKATIONS. eircumstances interest is not recoverable upon dividends de- clared without a previous demand and a refusal to pay.^^ And a stockholder in a representative action against directors can- not on behalf of the corporation recover dividends paid, on the ground that the corporation discriminated in paying the dividends, where the dividends had been earned.^*' Where a corporation declares a dividend and deposits the money to pay it, ithe stockholders acquire in equity a lien upon such moneys to the extent of the.amount to which they are entitled. Such lien follows the money into the; hands of the receiver of the corporation who holds the sanqe as trustee for the benefit of such stockholders." One claiming to be a shareholder in a corporation, but who is not recognized as such by the corpo- ration, and who has elected to treat the refusal of the corpo- ration to recognize him as a conversion of his shares, and has brought an action against it for such conversion, cannot dur- ing the pendency of the action, nor can his assignee, sue for dividends.^^ Where a stockholder receives from a corporation dividends declared and admitted by it to be due to him on shares of the corporate stock, an action is hot maintainable against him in the first instance, at the suit of one claiming to be entitled to share in the dividends, but whose rights had been ignored by the corporation, to recover as for moneys had and received, the proportion of the dividends so received, which plaintiff would have been entitled to had his shares participated. It seems that the remedy of one thus wrong- fully excluded from the rights of a stockholder is against the company, for he cannot follow the assets of the company in the hands of parties to whom it has paid them, until at least was upon Its insolvency taken posses- stock acquired after the Superintend- sion of by the Superintendent of ent of Banks took possession. Matter Banks and thereafter the surety com- of Peoples Surety Co., No. 3, 186 App. pany was dissolved and fts receivers Div. 663, 175 N. Y. Supp. 74. were directed to pay a dividend upon 15. Boardman et al. v. Lake Shore its stock, the dividend upon the stock & M. S. R. Co., 84 N. Y. 157; 187 held by the bank cannot be set oflf (interest allowed in this case). against its indebtedness to the surety 16. Qodley v. Crandall & Godley Co., company, because its stock at the 153 App. Div. 697, 139 N. Y. Supp: time it was appropriated by the Su- 336. modf. 212 N. Y. 131, 105 N. E. perintendent of Banks to the payment 818. ' of the debts of the bank was not sub- 17. Matter of Le Blanc, 14 Hun 8, JBCt to any set off and constituted no affd. 75 N. Y. 598. claim against tbe surety company. 18. Hughes v. Vermont Copper Min- The same rule applies to shares of ing Co., 73 N. Y. 307. DIVIPENP^. 217 he has established his rights as a creditor of the company and has exhausted his legal remedies against it.^^ An action by a stockholder to recover his share of a dividend declared by the directors of a corporation is an action at law and should be brought against the corporation and not against the directors personally, unless they have converted the dividend to their own use or by some act changed their relation to it. A suit in equity against the directors to recover such dividends lies only when the amount of the dividend has been segregated into a distinct fund and is under the domination of the di- rectors who refuse to use it as intended, whereby they become trustees thereof ex maleficio.^" Before a stockholder can suc- ceed in an action for a dividend, he must prove the making of the dividend, and demand of payment.^ The complaint must allege either that the plaintiff was the owner of the stock at the time the dividends were declared, or that he became en- titled to them by reason of a subsequent assignment.^ 19. Peckham v. Van Wagenen;'' 83 who had thus received it, or his trans- N. y. 40, 45, in which the court said; feree. !« Roy v. Globe Ins. Co., 3 "If the plaintiff had been an admitted Edw. Ch. 657; In re Le Blanc, 75 ST. stockholder and a dividend had been Y. 598. But the distinction between declared upon her shares with the those oases and the present is very others, and the amount of the divi- clear." dend had been placed in the hands of 20. Searles v. Gebbie, 115 App. Div. a third party for distribution, the 778, 10] N.'Y. Supp. 199, affd. 190 N. case would be within some of the au- Y. 533. 83 N. E. 1131. thorities cited, in which it was held 1. Scott v. Central S.. and Banking that a trust was .created in favor of Co. of Georgia. 53 Barb. 45. the stockholder to whom the dividends 2. Tepfer v. Ideal Gas & Electric were due, and that they could follow Fixture C(>.. 58 Hfiac. 396, 109 N. Y. the fund in the hands of the party Supp. 664. 218 COKPOBATIONS. CHAPTER XIV. Stockholdebs. In General. " 204. When relation of stockholder created; 205. Eelation of common and preferred stockholders to each other and to corporation. « . Inspection of Books. 206. Right to inspection of stock .book. 207. Purpose of inspection of stock book. 208. Bight to inspection of general books. 209. Effect of statute on common law right to inspect general books. 210. When inspection of general books will be denied. 211. Who entitled to inspection generally. 212. Inspection by directors and officers. . 213. Inspection pf by-laws. .... 214. Mandamus to compel outgoing officers to deliver corporate books and papers. 215. Penalty for refusal to permit inspection. 'Representative Actions. 216. In general. 217. Nature of action. 218. When action maintainable generally. 219. Particular instances. 220. Action by stockholder based on transaction's consummated before he ac- quired stock. 221. Demand and refusal. 222. When demand unnecessary. 223. Estoppel of stockholder to bring action, 224. Essential allegations of complaint. 225. Statement of cause of action. 226. Parties ; examination before trial. 227. Limitation of actions; abatement; trial. 228. Belief that may be granted. 229. Appointment of receiver. In General. 204. When relation of stockholder created. "The term 'member of a corporation' shall include every person having a right to vote at a meeting of the corporation for the election of directors, other than a person having a right to vote only upon a proxy. ' ' 3 The relation of shareholder in a corporation is created by the subscription agreement, and it is not essential to such re- 3. General Corporation Law, § 3. STOCKHOLDERS. 219 lation that a certificate of stot5k' be actually issued; it is merely evidence of the relation.* Aiid where one has been shown to be a stockholder at the time of the organization of the company, he will be presumed to continue to be one until the contrary is established.^ While a stock book is presump- tive evidence that a person whose name is entered thereon is a shareholder,® such presumption is subject to rebuttal and it may be shown that he was not in fact a stockholder .'' 205. Relation of common and preferred stockholders to each other and to corporation. The relation of common and preferred stockholders to each other and to the corporation is purely contractual, unless governed, by statute.^ Accordingly a corporation and its stockholders may agree as they please as to. the rights and privileges of preferred stockholders.?; And the general rule is that unless expressly forbidden by statute, ,the articles of incorporation , may divide the stock into common and j pre- ferred, and may provide that the preferred stockholders ,shall be deprived of voting power in consideration of the prefer- ences over the common stock which is given them. Such a provision is but an arrangement between two classes of stock- holders which does not concern the public and does not violate 4. Kdhlinetz v. Calkins, 16 App. Div. bank stock without the authority of 518 44 N. Y. Supp. 1031; Stevens v. the testator or of the law, they do Episcopal Church History Co., 140 not thereby constitute the estate^ a App. Div. SiO, 135 N. Y. Supp. 573; stockholder in' such bank so as to ren- Mills V. Freedman, 111 Misc. 253, 181 der it liable as such under Act of N. Y. Supp. 385. 1849, oh. 336. Diven v. Lee, 36 N. Y. Evidence of being a stockhoiaer 30®. held sufficient. Powers v. Kriapp, 71 5. Herries v. Wesley, 13 Hun 492. Hun 371, 35 N. Y. Supp. 19. 6. Stock Corporation taw,' § '33, A person who gives to a corpora- as amd. by L. 1916, oh. 137 and L. tion his promissory liote, payable at 1918, ch. 137. a future time, for a specified number 7. Hoagland' v. Bell, 36 Ba:rb. 57; of shares of its capital ' stock, and Breek vi Brewster, 150 App. Div. 202. takes a receipt from an officer of the 134 N. Y. Supp. 697. company expressing that such note, 8. Equitable Life Assurance So- when paid, will be in full for such ciety v. Union Pacific R. R. Co., 163 shares, does not become a stockholder, Apji. Div. 81, i47 N. Y. Supp. 383, until the note matures and is paid, aflfd. 313 N. Y. 360, 106 N. E. 93. and a stock certificate is issued. 9. Utica Trust & Deposit' Co. v. Tracy V. Yates, 18 Barb. 153. Kellogg& Sons Co., 126 App. Div. 176, Where executors have invested lid N. Y. Supp. 1048. funds of an estate in' the purchase of 220 CORPORATIONS. any rule of the common law or any rule of public policy.^" TJie stockholders as such cannot bind their corporation unless the latter has itself conferred authority upon them to do so.^^ Neither at law nor in equity are the stpckholders of a corpo- ration, as to third parties, the owners of the property of the corporation. Nor are the creditors of a stQ&holder: entitled to have the property of the corporation applied to, the pay- ment of the stockholders' indebtedness, or to. subject it to the obligations of the stockholders.^^ And the fact that the own- ers of jpractically all of ..the capital stock of a corporation con- duct the business thereof in a loose and irregular manner and in their individual names, and neglect to perform the ordinary corporate functions in the manner provided by law, does not make them copartners in reference to the business.^^ Still it has been held that the owners of' all the stock of a corporation having no debts are substantially partners in their relation to a contract for the sale of stock, and one of them may sue the others for the breach of a contract whereby it was agreed that the purchase of the stock carried with it the good will of the corporation.^^ Where one of two stockholders of a corpo- 10: Raberts v. Roberts-^Veeks Co., 184 N. Y. .357,, 77 N. E. 13 ; .People ex rel. Browne y. Koenig, 133 App. Diy. . 756, 118 N. Y. Supp. 136. See also ante, pars. 19, 101. 11. Harrison v. Eefette, 177 App. Div. 480, 164 N. Y. Supp. 257. Whether a corporation shall redeem its property from mortgages and by so doing, practically abandon its busi- ness and appropriate its property , to the payment of its debts, is ..a ques- tion for the corporation, acting in good faith, to decide; and a stock- holder may not maintain ,^n action to redeem the, property. l.efi v. Nachod,. ,64 JMLisc. 497, 119 N. Y. Supp. 470. 12. Cornell v. Savago. 49 App. Div. 429, 432, 63 N. Y. Supp. 540. 13. Morrison v. Griffin Corners Water Co., 190 App. Div. 45, 179 N. Y. Supp. 333. 14. Komow V. Simplex Cloth Out- ing Machine Co., : Inc., 109 Misc. 358, 179 N. Y. Supp. 682. Where several persons become stock- holders ; by subscribing stock prior to organizatio!n, and each subscribes the amount which he proposes to pay for such purpose, no implied authority can be inferred from such promise, warranting any of the parties in con: tracting debts or advancing money on the credit of, the. other parties. Sheb- ley v. Angle, 37 N. Y. 626. Where partners in a mercantile busi- ness organized a corporation to handle real estate, and, after expending all the capits^l paid, in, incurred indebted- ness in acquiring property the pur- chase pricp of \yhicli was paid by the firm, and after the creditor . of thp corporation had sued it, but before he obtained a judgment, it conveyed a,\\a.y its property in consideration of the conveyance of other property taken in exchange tp the firni, and jthe corpora- tion is left without assets, its cred- itors is entitled , to : have the firm, wjio, with their attorney, .constituted the only ptoekholfjers and the directors of STOCKHOLDEKS. 221 ration transfers his stock under an agreement providing for the payment to the transferee of a certain sum per year and giving the transferror an option to purchase and the full man- agement of the business, the transferee may maintain an action as an individual to protect his interests in the corpo- ration where the transferror has failed to make the required payments and as pursuing a course of conduct which will eventually destroy the value of the transferror's stock.^^ Inspection of Books. 206. Bight to inspection of stock book. "The stock book of every such (.stock) coipoiation shall be open daily, during at least three business hours, for inspection by any judgment creditor of the corporation; or by any person who shall have been stockholcier of record in such corporation for at least six months immediately preceding his demand ; or by any person holding stock o£ such corporation to an amount equal to five per centum of all its outstanding shares ; or by any person thereunto in writing authorized by the holders of stock of such corpoiaiiou to an amount equal to five per centum of all of its outstanding shares. Persons so entitled to inspect stock books may make extracts therefrom. ' ' * Nothing herein impairs the power of the courts to compel by mandamus or judgment the production for examina- tion by any stockholder of the stock books of a corporation." 16 There is a clear distinction between the right to in- spect the general books of a corporation, which is founded on a common-law basis, the granting or withholding of which rests in the sound discretion of the court, and the right to inspect the stock-book, which is founded on the statute and is absolute.'^^ To the extent, therefore, that an absolute tlip corporation, turn over tlie prop- 15. Tisdiner v. Siekinger, 182 App. erty taken in exchange for that of the Div. 816, 169 N. Y. Supp. 883. corporation to the corporation and to 16. Stock Corporation Law, § 32, pt. subject the same to the judgment of as amd. by L. ISM, eh. 127 and L. the corporate creditor. The directors 1918, ch. 137. in such a case might not turn over to 17. Matter of Steinway, 159 N. Y. themselves as individuals or members 250, 53 N. E. 1103; Henry v. Babcock of a firm, to repay themselves for tho & Wilcox Co.i 196 N. Y. 302. 89 N. E. purfchase price paid l>y tliem for the 942; People ex rel. Lorge ^. Consol. property conveyed to the corporation. Nat. Bank, 105 App. Div. 409, 94 N. such corporate property and deprive Y. Supp. 173 ; People ex rel. Callanan another creditor of any corporate v. Keeseville, etc. R. Co.. 106 App. Div. assets out of which his claim TOijoflii 349, 94 N. Y. Supp. 555; AlthauSe v. be satisfied. Flaum v. Kaiser Bros. Giroux, 56 Misc. 508, 510, 107 N. Y. Co., 66 Misc. 586, 590, 132 N. Y. Supp. Supp. 191. 100, aifd. 144 App. IMv. 897, 129 N. Y. The statute specifically commands Supp 1122. *'"'* ^'"* stockholders shall be per- 222 COEPOBATIONS. right is conferred by statute, nothing. is left to the discretion of the court, but a writ of mandamus should issue as a matter of course, although even then doubtless, due precautions may be taken as to time and place so as to prevent interruption of business, or other serious inconvenience.^^ And so while the court has the right to deny inspection if demanded for an illegitimate purpose,^^ and may regulate the time when the inspection may be = made, if the inspection is sought for a legitimate purpose and the application therefor is made to the corporation during business hours the right to the inspec- tion is mandatory.^" The Supreme Court has power to com- pel, by mandamus, the exhibition of the transfer-books' of a domestic corporation containing the names of the stockhold ers, at any time when the exercise of such power is shown to be necessary to preserve and protect the interests of the stockholders therein. The reasons for granting the writ should, however, be clear and cogent.^ A stockholder of pri- vate corporation has as a part of his right tb' inspect, the right to take from the stock book a copy or menioraudnm of names of stockholders,^ Though a stockholder of a corpora tion has an absolute right tq inspect the stock^book , of the company at the office of the company at any time within busi- ness hours, the officers and agents of a corporation are hot required to exhibit the book to persons who demand to see them, where such persons are unknown to them, without first exacting reasonable proof of the identity of the demandants that they are in fact stockholders of the company.' 207. Purpose of inspection of stock book. Although a stockholder has an absolute right under the statute to inspect the stoek-book of his corporation,* it has mitted to inspect the stock book of a Slu)re '&> M. S. R.. Oo., 11 Hun 1. corporation. It is a public light given 8. Ootheal v. Bro'uwer, 5 N. Y. 363. to all who are stockholders. People 3. Theile v. Merlis, 85 Misc. 351, 147 ex rel. Rottenberg v. Utah Gold & N. Y. Supp. 405, holding that the Copper M. Co., 135 App. Div. 418, 119 mere production of the certificate of N. Y. Supp. 852. stock and the demand acknowledged 18. Matter of Steinway, 159 N. Y. was no proof that the man who pro- 250, 263, 53 N. E. 1103. duced them was the person therein 19. See post, par. 207. named and the attempted identiflca- 20. People ex rel. Lorge v. Consol. tion by jajiothor man equally unknown Nat. Bank, 105 App. Div. 409, 94 N. was futile. Y. Supp. 173. 4. See ante, par. 206. 1. People ex rel. Hatch v. Lake ST?O^CI^HOJLDERS. 223 been held, nevertheless, that tho court may, in .the exercise of its discretion, deny the right where it appears that the stock- holder's purpose in seeking such inspection is "sinister and inimical " to the corporation.^ So the granting of the writ may be denied where the application is not niade in good faith but for an ulterior purpose and to aid undisclosed persons in some undisclosed scheme agaiinst the corporation. Where the facts shown justify such inference the court, before granting the writ, will require the applicant to show whethei* or not he is actiug at the instigation of others and the purpose for which the application is made. This should be accomplished by requiring the relator to submit replying affidavits, or by the appointment of a referee to take proof and report.^ But where the corporation does not deny that an inspection of its stock ledger would 'give the stockholder requiring 'an in- spection, the information which he has a right to have, it can- not justify its refusal to exhibit the same on the ground that it is a book of accounts between the company and their share- holders, and shows their dealings in the stock of the company, that it is always regarded as confidential between, the parties concerned, and that the information it contains might be used for improper purposes.'' A stockholder has the right to in- spect the stock-book of such corporation during business hours, with his attorney or other person having the requisite knowledge, to obtain information as to the financial condition of the corporation and as to the management and. the conduct of its officers, and where such request is denied the corpora- tion will be compelled by mandamus to produce such book.* 208. Right to inspeetion of general books. The right of a stockholder of a corporation to iuspeet the general business books of the corporation rests solely upon a coinmon-law basis, and the granting or withholding of it, on 5. People ex fel. Brltton v. Ameri- application." can 'Press Association," 148 App. IMv. 6. People ex rel. Hunter v. National 651, 133 N. Y. Supp. 216. Matter of Park Bank, 122 App. Div. «35, 1<>7 N. Hitchcock, 157 App'. Div. 328, 142 N. Y. Supp. 369. Y. Supp. 247, in which the court said: 7. People ex rel. Richmond v. Pacific "The gratification of idle curiosity Mail Steamship Co., 50 Barb. 38Q, 34 and the facilitation of speculative How. Pr. 193. schemes have been discouraged, and 8. People ex rel. Clason v. Nassau the manifestation of ulterior or sin- Perry Co., 86 Hun 128, 33 N. Y. Supp. ister motives has been fatal to the 244. 224 OOBPOEATIONS. refusal by the corporatioij., rests solely in the sound discretion of the court. The discretionary power of the court to require a corporation to exhibit its books and papers to one of its stockholders will only be exercised, where it appears that the inspection is sought to disclose something -which it is the right of the stockholder to know and not merely to annoy the corporation or for some purpose other than the protection of the stockholder's interests.' It should not be issued to aid a blackmailer, nor withheld simply because the interest of the stockholder is small, but the court should proceed cautiously and discreetly, according to the facts of the particular case." The small interest of the stockholder therefore has been con- sidered not to be a barrier to relief. ^^ A stockholder, who has demanded of his corporation information as to transactions whereby he alleges that bonds of the corporation were re deemed before maturity at a greater cost than the market value at the time of the redemption, which allegations are 9. Matter of Steinway, 1,>9 N. Y. :;.50, 53 N. E. 1103; People ex rel. Mc- Klwee V. Produce Ex. T. Co., 53 App. Div. 93. '65 N. Y. Supp. 936; People ex rel. Callanan v. Keeseville, ete.j.R. Co., 106 App. Div. 349, 94 N. Y. Supp, 555; People ex jel. . Leliman \. Consoli- dated Fire Alarm Co., 145 App. l~)iv. 427, 137 N. Y. Supp. 348. One who became a stockholder in good faith and holds forty-three per cent of the whole issue, may by man- damus compel the corijoration to per- mit him to examine its books, wllere it is expending large sums of money in building a factory on land ownet| by its president's sister and ihe rejator believes it to be mismanaged. People ex rel. Ludwig v. Ludwig & Co., 136 App. Div. 696, 111 N. Y. Supp. 94. Where upon the application of the one woman stockholder of a domestic manufacturing corporation, owue(jl and controlled ty tlie members ' of one family, who docs not have, the oppor- tunity or the permission or cfipacity to learn of the affairs of' the company to the same degree as all of the other stockholders, it appears that she is en tirely ignorant of the condition of the business, that np dividend has ever been received by her ' upon the shares of .stock of which slie is the owner and holder, and that she has no way of obtaining knowledge of the valut- thereof unless aided by legal process, she will be gianted a peremptorv writ of mandamus commaiiding the officers and directors of tlie corporation to ex- hibit to her and to her attorney and to a certified jrablif accountant all hooks of accounts, records and papers of the oorporation, with permission to fully examine the same and to take Kxti;acts therefrom. Matter of Wy- ,^'ant, 101 Miso. 509, 167 N. Y. Supp. 367. On a motion to require the agents of a corporation to discover its books, tlie court will not enter into the ques- tion whether the incorijoration is ficti- tious. Opdyke v. Marble, 18 Abb. Pi-. 366, 44 Barb. 64, affd. 18 Abb. Pr. 375. 10. Matter of Steinv,'av, 159 N. Y. 250, 63 N. E. 1103. 11. Mutter of Hitt'hcock, 157 App. Oiv. 3.28, 142 X. Y. Supp. 247. STOCKHOLDERS. 225 denied by the officers of the corporation, is entitled to an alter- native writ of mandamus by which his right to an inspection of the books may be determined as an issue of fact. A peremptory writ for such examination may only issue when the facts upon which the relator relies; are undisputed.^^ In- spection of the books should be granted when the petitioner claims he was induced to buy his stock by the president of the corporation, that he has been unable to ascertain the con- dition of the company, which has paid no dividends, and that it does not appear to be doing any business, and where it ap- pears no report has been made by the corporation, which has been in existence about three years, and that, notwithstand- ing the president states that he has told the petitioner that the corporation has lost a great deal of money in a transaction of which the petitioner knew the particulars and that he has answered "all reasonable inquiries," and that the petitioner is hostile to him ; in the absence of any satisfactory proof that any injury will result to the corporation therefrom, of such a nature as to render the inspection improper, or that the peti- tioner has any illegal end in view.^^ After a corporation is dissolved by the judgment of the court and a receiver ap- pointed, a stockholder who seeks information in reference to the condition of the corporation, its property, assets and lia- bilities, should, on motion, be permitted to examine its books and take extracts therefrom." Before a stockholder is en- titled to a writ of mandamus compelling his corporation to allow him to examine its books, he must establish that the in- formation desired has been refused by the corporation, after a demand made therefor, and that it was necessary for him to have the information in order to properly protect his in- terest in the corporation.^^ It has been held that an order directing an examination of the books of account of a corpo- 12. Matter of Hitchcock, 157 App. liis corporation to allow him to ex- Div. 328, 142 N. Y. Supp. 247. amine its books for the purpose of dia- 13. Matter of 0'N«il, 47 Misc. 495, covering the prices at which the eor- 95 N. Y. Supp. 964. poration retired outstanding bonds 14. People V. Cataract Bank. 5 Misc. which it purchased in the open mar- 14 25 N. Y. Supp. 129. ket, if no preliminary demand for sucii 15. Latimer v. Herzog Teleseme Co., information was made U]X)n the cor- 75 App. Div. 522. 78 K. Y. Supp. 314; poration but merely a demand for a Matter of Hitchcock. 149 App. Div. written statement of its affairs, pur- 824 134 N. Y. Supp. 174, holding that -.uant to section G9 of the Stock Qot- a, stockholder is not entitled to a per- poration Law, Whiclx latter request emptory writ of mandamus compelling was oomplied with. 15 226 (TORPOEATIONS. ration will not be granted by the court at the instance of a stockholder of such corporation, unless it appears that such stockholder has made a written request to the treasurer of such corporation for a statement of its affairs, under oath, as provided by section 69 of the Stock Corporation Law.^® 209. Effect of statute on common law right to inspect general books. It was long doubted whether the Supreme Court had the power, except in the way provided by statute," to comp.e] a corporation by mandamus to stibmit to an examination of its books. This doubt was removed by the Court of Appeals holding, that the common-law right of a stockholder with reference to the inspection of the books of his corporation still exists in this state unimpaired by legislation; and the Supreme Court has power as part of its general jurisdiction to enforce the right in its sound discretion, upon good cause shown.^^ The statute now in force is not exclusive, nor has it abridged the common-law right of stockholders' with refer- ence to the examination of corporate books. By enabling a stockholder to get some information in a new way, it did not impliedly repeal the common-law rule which enabled him to get other information in another way, for the courts do not hold the common law to be repealed by implication, unless the intention is obvious. By simply providing an additional remedy the existing remedy was not taken away. The statute merely strengthened the common-law rule with reference to one part thereof, and left the remainder unaffected. It dealt with but a single book, and as to that it amplified the qualified right previously existing, by making it absolute and extend- ing it to judgment creditors. The stock book has no relation to the business carried on by a corporation, and the change was doubtless made to enable stockholders t6 proinptly learn who are entitled to vote for directors, and judgment creditors to learn who are liaWe as stockholders for a failure to comply with the provisions of the act. The statute is silent as to the 16. People ex rel. Clason v. Nassau well, 76 App. Div. 615, 78 N. Y. Supp. Perry Co., 86 Hun 128, 33 N. Y. Supp. 607; Matter of Wygant, 101 Misc. .509, 244. 1 67 N. Y. Supp. 367. 17 Stock Corporation Law, § 32. as Discretion of court. — People ex rel. amd. by L. 1916, eh. 127 and L. 1918, Stobo v. Eadie, 63 Hun 320, 18 N. Y. ch. .137. Supp. 53, affd. 133 ?<;. Y. 573, 30 N. 18. Matter of Steinway, 159 N. Y. E. 1147. 250. 265, 53 N. E. 1103; Matter of Col- STOCKHOLDERS. 227 other books, and provides no system of inspection . as a sub- stitute for the right of examination at common law. The pro- vision for a report from the treasurer was not designed to take away an old right, but to give a new one, not as a sub- stitute but as an addition.^^ 210. When inspection of general books will be denied. The power of the court to permit an inspection of the gen- eral books of a corporation will not be exercised where the avowed purpose of the examination is to obtain proof con- cerning the character of an alleged improper loan made by the corporation and to place such proof at the disposition of the district attorney and the Attorney- General, in order that it may be used to compel the parties responsible for the loan to make good any deficit resulting from their misconduct in making the loan.^* Likewise an inspection will not be granted where it appears that the stockholder desires the inspection in order to furnish information to a. competing company,^ And a peremptory writ of mandamus will not be issued to compel a corporation to exhibit to a stockholder its books of accou^tits and records for the purpose of enabling the stock- holder to discover whether the corporation, which has re- duced the price of its product, is selling the same at a loss, 19. Matter of Steiiiway, 159 N. Y. Union L. Ins. Co., 31 Misc. 617, 64 N. 250, 364, 53 N. B: 1103. Y. Supp. 316. 20. People ex rel. McElwee v. Pro- 1. People ex rel. Leliman r. Consoli- dnce Ex. T. Co., 53 App. Div. 93, 65 dated Fire Alar^ Co., 142 App. Div. N. Y, Supp. 926.. 753, 127 X, Y. Supp. 348. . . The right of a stockholder to ex- A peremptory writ of mandanius re- amine the books of his corporation is quiring a corporation to allow the not absolute, and where lie has been executors of a deceased stockholder to defeated in a prior actiofa ■ upon his examine its books for the ostensible contention that contributors to an im- purpose of enabling the county treas- pairment of the capital of the corpor- urer to ascertain the ..value of the de- ation had' subsequently withdrawn cedent's stock in the corporation in their contributions, the court will not order to fix the value of the taxable grant him a mandamus to examine transfer under his will, should be de- and copy the by-laws, ;ininutes and en- njed where it appears that the real !tire books of the corporation, in order object of the examination is to obtain that he may' ascertain the dispof.ition information that will aid the petition- made of the said contribution^, aa to ers in injuring the business of the cor- allow such an inquisitorial research by poration for the benefit of a business a hostile and defeated party would rival. Matter of T^ennedy, 75 App. not be a proper exercise of judicial dis- Div. 188, 77 N. Y. Supp. 714. cretion. People ex rel. Mackey v. Am. 228 CORPORATIONS. and whether it its paying its fixed charges out of capital, with a view, if such be found to be the case, of preventing such action on the part of the company by an application to the Attorney-General, or by moving for the appointment of a re- ceiver, where it appears that the reduction in the price of the company's products was made to meet a reduction made by a rival company, and that the stockholder's contemplated action would be injurious rather than beneficial to the corporation and the other stockholders.^ So, also, where the information is sought, not for the benefit of the stock interest, but to secure infoiTnation in aid of a suit by a stockholder against directors personally for deceit and to recover damages sustained by reason of a false report published by them whereby he was induced to become a stockholder, the writ will be refused.* 311. Who entitled to inspection generally. A peremptory mandamus, to compel a business coi'poration to permit an alleged stockholder to examine its books, will be denied generally where the stockbook does not show tliat the moving party is a stockholder.* Where a corporation seeks to pve^-ent such an examination by denying that the applicant is a stockholder, such a denial must be positive, aiid not evasive.^ The right to examine the books and papers of a (corporation is a purely personal right, depending upon owner- ship of capital stock of the corporation. A temporary admin- istrator, holding stock pending the contest of a will upon the outcome of which the title to the stock depends, is not a mem- ber of the corporation so as to entitle him to an inspection of its books and papers.*' But the executor of a deceased stock- holder is a stockholder within the provisions of the Stock Cor- poration Law and is entitled to inspect the stock-book and is also entitled to certain specified information respecting the affairs of the corporation.'' And a pledgor of corporate stock 2. Matter of Pieraon, 44 App. Div. 106 N. Y. Supp. 938. 'JIS, 60 N. Y. Supp. 671. « An executor and sole legatee holding 3. Matter of Taylor, 117 App. Div. halt the capital atoek of a huBiriesa .'!48, 101 N. Y. Supp. 1039. corporation and not interested in any i. Reiss V . American Spirits Mfg. rival business and not adverse to the Co., 30 Miso. 234, 63 N. Y. Supp. 145. interests of the corporation is entitled 5. Matter of Martin, 62 Hun 557, to an examination of its books and 17 N. Y. Supp. 133. affd. 133 N. Y. may enforce that right by mandamus. 692, 31 N. E. 627. :\Tatter of Hastings, 138 App. Div. 516, 6. Matter of Hastings, 120 App. Div. H3 N. Y. Supp. 800, affd. 194 K. Y. 756, 105 N. Y; Supp. 834. .-.46, 87 N. E. 1120. 7. ^ratter of Hastings, 56 Miso. 45. STOCKHOLDERS. 229 is a stockholder, within the meaning of the statute, and en- titled to an inspection of the hooks.* A pledgee, however, of shares of stock still standing on the books of the corporation in the name of the deceased pledgor, is not a stockholder, so as, jto entitle him to the common-law right of inspecting the, corporate books.^ A stockholder of a corporation has the right to examine its stock book, although the stock he holds was turned over to him by another stockholder in order to en- able him to procure an inspection of the stock book for the purpose of obtaining information as to stockholders so that he might communicate with them for the purpose of buying from or selling stock to them.^" The principle upon which a stoekholde'r is allowed access to the books of a corporation is as alpplicable to the case of a banking corporation as it is to any other kind of corporation. It is his common-law right, and, unless restricted by law or by the charter, the exercise of that right will not be denied him, at a proper time and place, when the circumstances are such as seem to the court to make that right available.^^ An order granting a per- emptorj' writ of mandamus requiring a corporation to permit one of its stockholders to examine, inspect and make extracts from all the books, papers and vouchers of said corporation, should not be granted upon an affidavit made by a person who alleges that he has a power of attorney froin such stockholder authorizing and empowering him to make an examination of the books of the company, where the power of attorney is not produced and no facts are stated in the moving papers from which it can be inferred that he has been authorized by the power of attorney or in any other 'way to institute the pro- ceeding.^^ 8. Bootli V. Consolidated Fruit Jar the bank for t)ie purpose of ascertain- Co., 62 Misc. S5Z, 114 N. Y. Supp. ing the nam^s of the other stoRkhold- 1000. ers of the bank, in order that he may 9. Matter of First ./ National Bank negotiate with such other stocfehokl- of Brooklyn, 88 Misc. -662, 59 N. Y. ers Jfor the purchase of t}ieii- stock. Supp. 1042. and, as an incident to tji;s right,, anay 10. Lawshe v. Eoyal Baking Powder copy from such book and take away Co., 54. Misc. 230, 104 N. Y. Supp. 361. with him a list of the other stockhold- 11. Tuttle V. Iron National Bank, ers. People ex rel. Large v. Consol. 170 N. Y. 9, 12, 62 N. -E. 761. Nat. Bank, 105 App. Div. 409, 9^ N. A stockholder of a national bank Y. Supp. 173. located in the State of. New York is 12. latijner v. Hcrzog Teleseme Co., entitled to inspect the stock book of 75 App. Div. 522, 78 N. Y. Supp. 314. 230 COEPOKATIONS. 213. Inspection by directors and officers. Even though a stockholder's right to inspect the corporate books may be denied in the discretion of the court, the right of a director to such inspection is absolute, being necessary to enable him to perform the duties of his office. To enable a director to secure such inspection he need only show that he is a director and has demanded permission to examine the ' books and has been refused. It is no answer to say that such director is, pursuant to the by-laws, the representative of a certain stockholder who is inimical to the corporation. If the director's hostility is such as to justify his removal from office, this should be accomplished by the proper method.^^ And so a director is entitled, as a matter of law, to a per- emptory writ of mandamus requiring the president and treas- urer of such corporation to exhibit to him the books and papers of the corporation for examination by himself, alone or with the aid of a competent and proper person employed by him and approved by the court.^' But where it appears that the relator intends to make the examination with the aid of officers and employees of a business rival, the writ should provide that such hostile persons shall not be present at the examination.^^ Although a director of a corporation may be aided by an accountant or an attorney in making an inspection and examination of the corporate books, where its accounts are intricate and complicated, he cannot entirely delegate this duty to professional accountants.^^ The president of a corpo- ' 13. People ex rel. Leach v. Central torney, accountant and assistants,. Fish Co., 117 App. Div. 77, 101 N. Y. without limitation in number, to ex- Supp. 1108. limine the books, and permits the ex- Two directors of a corporation claim- luuination to range over a period of ing to be the only persons interested three months, is too broad in its in it, may not deny to the third direc- scope, where it does not appear that tor the right to examine the corporate more than one accountant will be re- books on the ground that he "is with- quired or that the examination will out interest in the corporation and a lake three months. People ex rel. Mc- mere dummy put forward by them be- Tnnes v. Columbia Bag Co., 103 App. cause the statute required three direc- Div. 308, 93 N. Y. Supp. 1084. tors. People ex rel. Sfcauffer v. Bon- 16. People ex rel. Poleti >'. Poleti, wit Bros. 69 Misc. 70, 125 N, Y. Supp. Ckida & Rebecehi, Inc., 193 App. Div. 958. 738, 184 N. Y. Supp; 368. 14. People ex rel. Poleti v. Poleti, 16. People ex rel. Bartels v. Borgs- Coda & Rebecehi, Inc., 193 App. Div. tede, 169 App. Div. 431, 155 N. Y. 738, 184 N. Y. iSupp. 368. Supp, 333, holding that the mere fact An order granting such an applica- tliat a corporation has closed its town tion whidi allows the director, his at- office and removed its books to an- STOCKHOLDERS. 231 ration is entitled, as a matter of right, to inspect the stock book of the company, and to make extracts therefrom ; and his motives in seeking to exercise such right are immaterial." 213. Inspection of by:laws. The granting or refusing of an application by a stockholder for an inspection of the by-laws of a corporation rests in the sound discretion of the court in the exercise of its equitable jurisdiction, and, if satisfied that the application is made for an improper purpose or will result in an abuse of the privi- lege, the court will deny the same. An application for an in- spection of the by-laws, which constitute part of the contract between the stockholder and the corporation, rests upon a different footing from an application for an inspection of the books and papers thereof, and it must be a strong case which will warrant the court in refusing to grant a stockholder an opportunity to inspect the by-laws.^^ 214. Mandamus to compel outgoing officers to deliver corporate books and papers. Mandamus is the. proper remedy to compel an outgoing of- ficer of a corporation to deliver over books and papers belong- ing to the corporation, and usually the writ will be granted for such purpose without question. It is no defense to such an application that the books are not in respondent's actual custody and that he has turned them over to some stranger. Where, however, there has been much litigation between the corporation under its new officers and the outgoing officers and there is pending a reference for an accounting on which the books and papers of the corporation will be necessary, the writ of mandamus should direct the respondents to deliver thera, to the county clerk subject to the inspection of either party and to the order of the referee." 215. Penalty for refusal to permit Inspection. "Every corporation that shall neglect or refuse to keep or cause to be kept such books or to keep any book open for inspection as herein required, shall for- other office about twenty miles dis- stein, 37 App. Div. 550. 56 N. Y. Supp. tant, does not authorize a director to 306. delegate his official right and duty, as 18. Matter oi Coats, 75 App. Div. such, to an audit company, and to 567, 78 N. Y. Supp. 429. subject the corporate bopks to an un- 19. People ex rel. Keeseville, A. C limited examination by such com- and L. C. R. Co. v. Powers, 145 App. pany's employees. . , Div. 693, 130 N. Y. Supp. 529. 17, People ex rel. Gunst v. Gold- 232 CORPORATIONS. feit to the peaple the sum of fifty dollars for every day it shall so neglect or. refuse. If any officer or agent of any such, corporation shall wilfully neglect or refuse to make any proper entry in such book or books, or shall neglect or refuse to exhibit the same or to allow them to be inspected and extracts taken therefrom as provided in this section, the corporation and such officer or agent shall each forfeit and pay to the party injured a penalty o<, fifty dollars for every suen neglect or refusal, and all damages resulting to him therefrom. It shall be a, defense to any action for penalties' under this section (Stock Corporation Law, § 32), that the person suing therefor has within two years sold or offered for sale- any list of stockholders of such corporation or of any other corporation, or has aided or abetted any person in procuring any stock list for any such purpose. ' ' 20 The statute imposes a penalty for a willful refusal to permit an examination of the books of a corporation and so a corpo- ration cannot be held guilty of wilful refusal to exhibit a book which it did not keep. likewise where a book is not kept by the corporation, an officer of it cannot be made liable under the statute for an alleged willful neglect or refusal to exhibit the book, or allow inspection of it, or the making of ex- tracts from it.^ Officers of- a corporation, having charge of its books, who submit them for inspection, by stockholders, but refuse to permit them to take a copy or memorandum of the names of the stockholders, subject themselves to liability for a penalty.^ But the only demand for inspection which can be made the basis of an action under the statute, is a demand made during business hours, and at the office of the corporation where the books are kept. The demand must be specific and so a demand by a stockholder for all the books of a corpoi-ation for the purpose of inspecting them is not such a demand for the " stock book "as will support an action for the penalty.^ A statement made by an employee of a corpo- ration in charge of its office to the agent of a stockholder who applied at that office for liberty to inspect the stock book of the corporation, that he could examine the book at the office of the president of tie corporation, which was only a short distance from its office, does not constitute a refusal or a neg- 20. Stock Corporation Law, § 32, ])t. 346. as amd. by L. 1916, ch. 127, and L. 4. Lozier v. Saratoga Gas Co,, 59 1918, ch. 137; Moore v. Institute of .\pp. Div. 390, 69 N. Y. Supp. 247. Educational Travel, 89 Misc. 369. 151 Refusal of com.pany to exhibit or al- N. Y. Supp. 939. ' law bOoks to be inspected by stock - 1. Billingham v. Gleason Mfg. Co., holder not shown. Kelsey \ . Pfaudler 43 Misc. 681, 88 N. Y. Supp. 398. Process Fermentation Co., 41 Hmi 30. 2. riotheal v. Brouwer, 5 N. Y. 562. 3 St. Rep. 1«7. 3. Buker v. Steele, 43 N. y. Supp STOCKHOLDERS. 233 lect to exhibit the stock book within the meaning of the Stock Corporation Law, imposing a penalty for such a neglect or refusal.* But the fact that the applicant made his demand upon the treasurer, when the by-laws of the corporation put the book in the custody of the secretary, is not a ground for refusing relief where the treasurer did not put his refusal upon that ^ound or iiefer the applicant to any other person as the proper eustbdian of the book.^ Where a stockholder, having been refused an inspection of the stock book on Satur- day, called on the following Monday and examined the books, he did not thereby waive his right to recover the penalty.^ The statute, imposing a penalty upon an officer or agent of a stock corporation for a refusal to exlubit its stock book, is highly penal, and therefore a coinplaint, in an action to recover such a penalty of an agent of the corporation, imist state all the facts material to the dtf ense, must show that the company was a stock corporation, and must state fully the circumstances of the demand. The corporation is not a necessary party de- fendant to such an action.''^ In an action brought by the stock- holder of a corporation for a refusal to allow an inspection of its stock book, the plaintiff cannot recover the costs and coun- sel fees of mandamus prdceedings by which he compelled the corporation and its officers to allow an inspection.* A party suing for penalties can recover but for one violatiori or one default prior to the commencement of the action.' And so for three separate refusals to exhibit stock books, as required by the Stock Corporation Law, the defendants are liable for but one penalty where it is admitted that the plaintiff's several demands for inspection were for the purpose of getting cer- tain definite information once for all." Representative Actions. 216. In general. As a general rule courts have nothing to do with the inter- nal management of business corporations. Whatever may 5. Matter of Martin. 62 Hun 557, 8. CUasson v. Nassau Ferry Co., 20 17 N. Y. Supp. 133, affd, 133 N. Y. Misc. 315, 45 N. Y. Supp. 675, affd. 27 692, 31 N. E. 627. App- I>iv. 621, 50 N. Y. Supp. 160. e. Kelsey v. Pfaudler Process E'er- 9. Cox v. Paul, 175 N. Y. 328, 332, mentation Company, 51 Hun 636, 3 N. 67 N. E. 586. Y. Supp. 723. .. 10. Walcott v. Litile, 46 Misc. 96, 7. Gunst. V. . GtoJdKtein, 30 Misc. 44, .91 N. Y, Supp, 411. 61 N. Y. Supp. 707. 234 COKPOKATIONS. lawfully be done by the directors or stockholders, acting through majorities prescribed by law, must of necessity be submitted to by the minority, for corporations can be con- ducted upon no other basis. AU questions within the scope of the corporate powers which relate to the policy of adminis- tration, to the expediency of proposed measures, or to the, con sideration of contracts, provided it is not so grossly inade- quate as to be evidence of fraud, are beyond the province of the courts. The minority directors or stockholders canDot come into court upon allegations of a want of judgment or lack of efficiency on the part of the majority and change the course of administration. Corporate elections furnish the only remedy for internal dissensions, as the majority must rule so long as it keeps within the powers conferred by the charter .^^ To these general . rules^ however, there are some exceptions, and the most important is that founded on fraud. While courts cannot compel directors or stockholders, pro- ceeding by the vote of a majority, to act wisely, they can com- pel them to act honestly, or undo their work if they act other- wise. Where a majority of the directors, or stockholders, or both, acting in bad faith, carry into effect a scheme which, even if lawful upon its face, is intended to circumvent the minority stockholders and defraud them out of their legal rights, the courts interfere and remedy the wrong. Action on the part of directors or stockholders, pursuant to a fraudulent scheme designed to injure the other stockholders, will sustain an action by the corporation, or, if it refuses to act, by a stock- holder in its stead for the benefit of all the injured stock- holders.^^ And so whenever a minority stockholder can show that the directors, his fiduciaries, have deviated from the path of square and honorable dealing for their own benefit, the 11. Flynn v. Brooklyn City R. Co., to show that anything proposed to be 158 N. Y. 493, 507, 53 N. E. 530. done at the meeting will be injurious Suit to restrain holding of special to the interests of the society, o;- its meeting of directors to amend by- stockholders, or to himself individu- laws. — A stockholder and officer of a' ally. Gilleian v. Springfield, L. I. cemetery corporation cannot maintain Cemetery Society, 161 App. Div. 597, an action, brought not on behalf of 146 N. Y. Siipp. 828. other stockholders similarly situated 12. Flynn v. Brooklyn City E. Co., or on behalf of the corporation, but in- 158 N. Y. 493, 507, 53 N. E. 520; dividually., for the purpose of restrain- Bloom v. National U. B. Savings Co., ing the holding of a special meeting 81 Hun 130, 30 N. Y. Supp. 700, afld. of directoi-s called for the purpose of 153 N, Y. 114, 46 N. E. 1&6. amending the by-laws where he fails STOCKHOLDERS. 235 court will exercise its power to I'ight the wrong.^^ The right of action, however, belongs to the corporation, and should be brought by it as plaintiff, but when it will not bring the suit itself, an aggrieved stockholder, after due demand and a re- fusal, or unreasonable neglect to proceed, may bring it in his own name upon making the corporation a party defendant." The action must be brought not only on behklf of the plaintiff, but also on behalf of all the other stockholders of the com- pany .^^ The action by or in the right of the corporation may be at law where the damages are susceptible of proof in such an action. Ordinarily, however, the remedy is in equity.^® And where stockholders have been forced to come into a court of equity for relief, their action against the directors of their corporation to compel them to answer for their negli- gence and breach of duty will be sustained under the alle- gations of the complaint, though the corporation itself might have maintained an action at law for the same relief." 217. Nature of action. Representative actions by stockholders are unique in that they are not prosecuted by the stockholder plaintiff for his own direct benefit, or in his own direct right, or because any right of his has been directly violated or because he is en- titled individually to the relief sought. Such actions are, as 'they are commonly designated, purely representative, the plaintiff being permitted to maintain the action, notwithstand- ing his lack of direct interest, solely to set the machinery of justice in motion, and to prevent what would otherwise be a complete failure of justice. This form of action is an inven- 13. Godley v. Crandall & Godley Co., , ciation of the value of the share stock 153 App, Div. 697, 139 N. Y. Supp. held by him. Niles v. N. Y. Central 236. . ' & H. E. E. Co., 176 y. Y. 119, 68 N". 14. Flynn'v. Brooklyn City E. Co., E. 143; Kavanaugh v. (jommonwealth 158 N. Y. 493, 53 N. E. 520; Dudley v. Trust Co., 181 N. Y. 121, 123, 73 N. Armenia Insurance Co., 115 App. Div. E. 562. 380, 100 N. Y. Supp. 818. 15. Kavanaugh v. Commonwealth Right of action Ijelongs to corpora- Trust Co., 181 N. Y. 121, 73 N. E. 562. ■ tion-^The loss of the corporate funds, 16. Niles v. New York Central & H. resulting from the misconduct of in- E. E. Co., 69 App. Div. 144, 147, 74 N. dividual directors, primarily gives a Y. Supp. 617, affd. 176 N. Y. 119, 68 cause of action to the corporation, not N. E. 142. to its -stockholders, and no stockholder 17. Moran v. Vreeland, 81 Misc. 664, can maintain an action for the loss he 143 N. Y. Supp. 622. has individually suffered in the depre- 236 COKPOKATIONS. tion of equity, and stockholders are allowed to resort to it, notwithstanding a lack of direct interest in the relief sought because, the claims of justice are superior to any difficulties arising out of technical rules respecting the mode in which corporations are required to sue. The part which a stock- holder plays in such an action is merely that of an instigator. The cause of action is that of the corporation, and the recov- ery must run in its f avor.^^ The authority of a stockholder to sue in the right of the corporation is not statutory. It rests solely on judicial decisions made for the protection of stock- holders where those who are clothed with authority to bring an action to enforce the rights of the corporation fail ar re- fuse so to do. When, however, a proper foundation is laid for such an action the control of the litigation becomes vested in the shareholder who brings it and such others as may join therein although the cause of action belongs to the corpora- tion and the fruits of the litigation inure to its benefit and consequently the corporation must be made a party defend- ant." 218. When action maintainable generally. Where the action of the majority is plainly a fraud upon, or, in other words is really oppressive to the minority share- holders, and the directors or trustees have acted with and forjiied a part of the majority, an action may be maintained by one of the minority shareholders suing in his own behalf.^" To warrant the interposition of the court in favor of the minority shareholders in a corporation, as against the con- templated action of the majority, where such action is within the corporate powers, a case must be made out which plainly shows that such action is so far opposed to the true interests of the corporation itself as to lead to the clear inference that no one thus acting could have been influenced by any honest desire to secure such "interests, but that he must have acted with an intent to subserve some outside purpose, regardless of the consequences to the company and in a manner in con- is. Holmes v. Camp, 180 App. Div. Supp. 297, affd. 320 N. Y. 877, 11« 409, 167 N". Y. Supp. 840; Holmes T. N. E. 107O. -Camp, 186 App. Div. 67.';, 17.';, N. Y. 80. Gamble v. Queens County Water Supp. 349. Co., 123 N. Y. 91, ' 25 K. E. 201; 19. Planten v. National Nassau Townsend v. Winburn. 107 Mifvc. 443, Bank, 174 .^pp. Div. 254, Iftfl- N. Y. 177 N. Y. Supp. 757. STOCKHOLDERS. 237 sistent wJtli its interests.^ A court of equity at the suit of a minority stockholder will interfere to enjoin a proposed ac- tion by the majority stockholders when the same is so detri- mental to the interest of the corporation itself as to lead to the necessary inference that the interests of the majority of the shareholders lie wholly outside of and in opposition to the interest of the corporation and of a minority of the share- holders and its consummation would be a wanton or fraudu- lent destruction of the rights of the minority stockholders.^ An action cannot be maintained by a plaintiff in a representa- tive capacity, as a stockholder of a corporation, who asserts that a wrong has been done to the corporation which it will not itself seek to remedy because it is under the control of the wrongdoers, and that he is entitled to prosecute remedial proceedings in its behalf, unless there is a cause of action made out in favor of the corporation.^ An action by a stock- holder for relief against the misconduct of the trustees, where an accounting is asked, should cover all acts of the trustees, whether active or passive, which come within the purview of the mismanagement,* In an action by stockholders to compel an accounting on the groiind of a fraudulent transfer of stock and certain bonds by the directors of a corporation to other defendants, it is not necessary for the plaintiffs to offer to 1. Gamble v. Q. C. W. Co. et al., v. American Mineral Water M. Co., 38 123 N. Y. 91, S5 N. E. 301. Misc. 371, 77 N. Y. Supp. 898, modfd. Right of minority stockholder to re- 94 App. Div. 366, 88 N. Y. Supp. 3(V8. strain a tiansactlon of majority sttfCk- An injunction will not be granted, holders clearly detrimental to his cor- at the suit of a holder of a very small poration sustained. McLeary v. Erie number of bonds or shares of stock, Tel. & T. Co., 38' Misc. 3, 76 N. Y. to enjoin a large majority of the Supp. 712. stockholders or bondholders from 2. Robinson v. New York, Westches- carrying out a plan which such ma- ter & Boston R. Co., 123 App. Div. 339, jority deem to be for their benefit, un- 108 N. y. Supp. 91. less it plainly appears that some legal Where two corporations, competi- right of the minority is infringed or tors in the same business, occupants jeopardized. Emery v. N. Y., L. E. & of the same offices, having practically W. R. Co,, 9 Misc. 310, 30 N. Y. Supp. the same agents, and under the same 306. voting control, are conducted by that 3. Waters v. Waters & Co.. 201 N. control in such a manner as to saeri- Y. 184, 94 N. E. 602. fice the interests of one corporation in 4. ^^atkins v. Watkins & Turner order to advance those of the other, Lumber Co., 17 Misc. 227, 40 N. Y. a minority stockholder of the corpora: Supp. 1042, affd. 11 App. Div. .517, 43 tion damnified is entitled to equitable X. Y. Supp. 41. relief against the situation. Jacobus 238 COEPORATIONS. return the stock ai;id bonds claimed to have been so trans- ferred. The court in the action can preserve and adjust the equities of the parties.^ A stockholder in a holding corpora- tion may maintain a representative action for the benefit of a subsidiary corporation as, indirectly, the action inures to the advantage of the holding company, it being shown that the directors of both corporations have refused to institute an action in the name of either company after due request to do so.^ While a corporation may in a proper case maintain an action to recover its books and papers or to oust an official who refuses to do his duty, no such cause of action is vested in a stockholder in the absence of an allegation of refusal by the directors to sueJ An action brought by a minority stock- holder for the purpose of obtaining a decree that the defend- ants hold certain properties in trust for the plaintiff's corpo- ration and seeking an accounting, is barred by a prior judg- ment in a similar action brought by another stockholder against the same defendants wherein the same issues were decided. And this is true, although the stockholder in the first suit sought to hold the defendant as a trustee ex malefieio, while the plaintiff in the second action ratifies the defendant's act and takes the position that the defendant holds the prop- erty upon an express trust. This, because the two actio*!? differ merely in legal theory, the substantial facts remaining the same.^ 819. Particular instances. Where it appears that the good will of a corporation has been permitted by certain directors to be appropriated* with- out compensation by another corporation in which they are interested, the unfaithful directors who permit such appro- priation may be compelled to account therefor in a repre sentatiye action by a stockholder.^ And when a contract 6. Continental Securities Co. v. Bel- the subsidiary corporation the stock of mont, 206 N. Y. 7, 99 N. E. 138. which is controlled by the holding 6. Holmes v. Camp, 180 App. Div. company. 409, 167 N. Y. Supp. 840, holding that 7. Soloway v. Junius Coal &. Wood a demurrer to the complaint in such Co., Inc., 186 App. Div. 879, 175 N. representative action should not be Y. Supp. 1. sustained upon the ground that there 8. Grant v. Greene Consolidated is a misjoinder of parties plaintiff be- Copper Co., 169 App. Div. 306, 154 N. cause one of the plaintiffs is a stock- Y. Supp. 596. holder in the holding corporation while 9. Godley v. Crandall & Godley Co., the other plaintiffs are stockholders in 153 App. Div. 697, 139 N. Y. SUpp. 336. STOCKHOLDERS. 239 founded in fraud is executed by the directors with a third person upon the express approval of a required number Cf stockholders, with the intention on the part of all concerned to defraud the non-assenting stockholders, and the scheme will naturally result in serious injury to them or to the corpora tion, a court of equity will set aside the fraudulent trans- action and compel the delinquent parties to account.^" Where the alleged wrongful acts of the individual defendants so far as they injured the company were such as would give the company, of which the plaintiff is a stockholder, a cause of action, that right of action must be asserted in a derivative as distinguished from an individual or direct action. That the wrongs are alleged to have been the result of a conspiracy does not change their essential character or the character of the action which the law affords as a remedy. Such alle- gations could be inserted in nearly every complaint against directors, based on corporate acts, which acts in the usual course are planned and agreed upon between the directors. By adopting the expedient of alleging that the corporate acts performed by the directors were performed pursuant to a conspiracy, a stockholder cannot overturn the established principles of law relating to derivative actions.^^ The damages, resulting from an alleged conspiracy entered into by the majority stockholders of a corporation to wreck it, by refusing, through officers under their control, to accept busi- ness, so that it would be un,able tO; pay the interest npon its funded debt, and a foreclosure would result by which credit- ors and the minority stockholders would be deprived of Iheir interest in the property, belong to the corporation, not to the individual stockholders, and the latter, as such, cannot maintain an action for their recovery. Such an action must be brought by the corporation or its receiver or by any stocky holder after proper demand, in behalf of the corporation and for its benefit, in' order that the interest of creditors may be protected and that they may be paid out of any recovery. Assuming that the directors^ of the corporation in such a case would he controlled by the defendants and would work against the interests of the minority stockholders, the Supreme Court has ample power to protect such interests, and the remedy would be adequate, since the measure of damages in s-uch an 10. Flynn v. Brooklyn City E. Co., 11. Lukach v. Blair, ifts Misc. 80, 158 N. Y: 493, 508, 53 N. E. 520. 178 N. Y. Supp. 8. 240 COBPOBATIONS. action would be the full value of the property and franchises of the corporation as it existed prior to the overt acts pro- ducing insolvency, less that which the property actually brought upon the foreclosure sale.^^ Where the directors of a corporation combine with others to defraud a shareholder of his interest in title corporation by acts of spoliation, such conduct is actionable, and all persons so combining may be made parties defendant in an equitable action brought by a shareholder to restrain the consummation of the wrong and to recover the damages occasioned by their acts.^^ The fact that the wrongful acts of the officer have depreciated the market value of the capital stock, held by the stockholder, to an extent greater than its share of the actual loss sustained, does not authorize an action by the stockholder in his own name, without making the corporation a party, to recover the difference between the actual loss and the depreciation.^* Cor- porate existence is not lost through mere corporate inaction or transfer of property. Unless a corporation has suffered such a complete dissolution that it must be regarded as no longer capable of holding or administering its property even for the purpose of corporate liquidation, and that it must be held that perforce of dissolution and loss of corporate existence and capacity its property and rights have passed to its stockhold- ers as ultimate owners, the corporation is the proper party to assert the right to recover misappropriated corporate assets, and a stockholder cannot disregard the corporate entity and maintain an action on his oAvn behalf to recover directly from defendant his proportionate share of the funds alleged to have been misappropriated.^^ In the foot notes will be found other instances.^^ 12. Niles V. N. Y. 0. & H. B. R. Co., poration, promoted by persona repre- 176 N. Y. 11», 68 N. E. 143. « eenting several of the oflScers and 18. Gray v. Fuller, 17 App. Div. 29, directors of one or more of four manu- 44 N. Y. Supp. 883. fftcturing corporations, was organized 14. Greaves v. Gk)uge, 69 N. Y. 154, for the purpose of acquiring the capi- 155. tal stock, or at least a majority there- 15. Brock v. Poor, 316 N. Y. 387, 111 of, of such four corporations, knovfn N. E. 229; Thompson v. Stanley, 20 as the constituent companies, and the N. Y. Supp. 317. capital stock, or properties, of several 16. When action in behalf of cor- other companies in the same business, poration, by stockholders thereof, to the capital stock of the new or hold- recover alleged unlawful secret profits ing corporation to be equal, in the ag- from organizers of the corporation, gregate, to the amount of the par cannot be maintained.— Where a cor- value of the stock of the four con- STOCKHOLDERS. 241 220. Action by stockholder based on transactions consummated before he acquired stock. In the absence of special circumstances, a stockholder may bring an action in behalf of the corporation for the benefit of himself and all other stockholders to set aside, as fraudulent, an improper transaction consummated at the expense of the stituent companies, an additional amount in cash for a working capital, and a certain amount of treasury stock to be held for future purposes; the stock of the constituent companies, or a majority thereof, to be taken up in exchange for stock of the new hold- ing corporation; the stockholders of the constituent companies, and the of- ficers and directors thereof, whom the promoters represented, being the or- ganizers of the new or holding corpora- tion, and the first stockholders there- of; a stockholder of the holding cor- poration cannot maintain, in behalf of that corporation, an action against the officers and directors of the con- stituent companies, against the pro- moters who represented them in the promotion and organization of the holding corporation, and against the latter corporation, to recover alleged unlawful and secret profits . retained by the individual defendants in cer- tain transactions relating to the ac- quisition and purchase of the consti- tuent and other companies taken over by the holding corporation to the dam- age of the latter, the latter company being made a party defendant because it refused to bring the action ; since the stockholders of the constituent companies and the individual defend- ants were the organizers of the cor- poration and became its first stock- holders; they dealt, wholly between themselves as sellers and buyers, or- ganizers and corporation; no other persons had any interest in this in- itial transaction; and even if fraud had been practiced by any one of the organizers upon those associated with him, the cause of action would have 16 vested in the party injured, and not in the holding corporation. Blum v. Whitney, 185 N. Y. 232, 77 N. E 1159. When action maintainable. — Where directors of a corporation, which is practically a family affair, sell all its assets to a relative for an extremely inadequate price, a stockholder may sue to set aside the transfer and may obtain the relief contemplated by sub- divisions 1, 2, 5 and 6 of section 90 of the General Corporation Law. The fact that the stockholder also de- manded, under subdivision 3, the sus- pension of the directors— a matter in regard to which the Attorney-General alone can sue — will not debar relief where the claim is abandoned upon the trial. Whitman v. Holmes Publish- ing Co., 33 Misc. 47, 68 N. Y. Supp. 167. A court of equity will not, at the suit of minority stotkholders of a rail- road corporation, enjoin the majority stockholder, itself a railroad corpora- tion, from selling its holdings to an- other railroad corporation so as to vest the latter with control, where there is nothing in the iomplaint showing damage to the minority stockholders as distinguished from the damages which may be suffered by the corpora- tion itself. Delavan v. New York, N. H. & H. R. Co., 154 App, Div. 8, 139 N. Y. Supp. 17. Injunction to restrain unauthorized acts by majority.— Details of a pro- posed plan by which a majority of the stockholders of a corporation author- ized, empowered and directed its direc- tors : to create a new corporation in which the old corporation should , be the only stockholders with only the 242 CORPORATIONS. corporation before he acquired his stocL^v This doctrine has been approved in this State directly or indirectly in sevei'al cases.^^ It has also been approved in many cases outside this state.-^® It is not necessary to allege in the complaint that capital of the old corporation, ex- amined, and held, to be an evasion of the law, which does not permit one corporation to create another, endow it with capital from its own assets and take all its shares of stock in ex- change and hold them for sale. A minority stockholder who opposed the scheme is entitled to an injunction, even without alleging injury or the certainty thereof in the future. That the agreement to sell was "ratified" by two-thirds of the stockholders does not validate the method of selling as to any stockholder who objected, since ratification may confirm a voidable act, but not one utterly void. Schwab V. Potter Co., 194 N. Y. 409, 87 N. E. 670. A lease between railroad corpora- tions as approved by the majority of the stockholders of the lessor, was held not to be oppressive and unfair to the ligations to such amount as might be required by the lessee for the purchase of railroad equipment and the main- tenance thereof and was not of such a nature that the lessee was not bound thereby; that the lease, con- minority stockholders because it re- quired the lessor at the request of the lessee to execute bonds and other db- strued most strictly against the'essee, impliedly bound it to guarantee the principal and interest of all obliga- tions issued by the lessor at the re- quest of the lessee, and that such was the real intent of the parties, and that, there being no suggestion or proof of bad faith or fraud on the part of either railroad company, the lease must be held to be fair and equitable and should not be set aside. Westchester Fire Ins. Co. v. Syracuse, Binghamton &, New York E. K. Co., 192 App. Div. 463, 183 N. Y. Supp. 60a. 17. PoUitz V. Gould, 303 N. Y. 11, 94 IsT. E. 10S8; Continental Securities Co. V. Belmont, 306 N. Y. 7, 99 N. E. 138. 18. Eamsey v. Gould, 57 Barb. 398; Young V. Drake, 8 Hun 61; Ervin v. Oregon Ey. & N. Co.., 35 Hun 544; Frothingham t. Broadway & Seventh Avo. E. Co., 9 Civ. Pro. Eep. 304; Sayles v. Central Nat. Bank, 18 Misc. 155, 41 N. Y. Supp. 1063, revd. on other grounds, 18 App. Div. 590, 46 N. Y. Supp. 194; O'Connor v. Virginia P. & P. Co., 46 Misc. 530, 535, 93 N. Y. Supp. 525, affd. 107 App. Div. 630, 95 N. Y. Supp. 1149, revd. on other grounds, 184 N. Y. 46, 76 N". E. 1083. 19. Winsor v. Bailey, 55 N. H. 318; City of Chicago v. Cameron, 22 III. App. 91, affd. 120 111. 447; Montgomery Light & Power Co. v. Lahey, 131 Ala! 131; Forrester v. B. & M., etc. Co., 21 Mont. 544, 565 ; Just v. Idaho, etc. Co., 102 Pac. 381; Eaiferty v. Don- nelly, 197 Pa. St. 433; Appleton v. Am. Malting Co., 65 N. J. Eq. 375. In Hawes v. Oakland, 104 U. S. 450, it was held that a stockholder might not bring ah action in behalf of the corporation to avoid a fraudulent transaction consummated before he acquired his stock. This rule has been approved in Alexander v. Searcy, gl Ga. 536; Boldenweek v. BuUis, 40 Colo. 353; Eankin v. S. W. B. Si I. Co., 12 N. Mex. 54; Moore v. Silver Valley Co., 104 N. C. 534; Clark v. American Coal Co.,, 86 la. 436; Home Fii-o Ins. Co. v. Barber, 67 Neb. 644. STOCKHOLDEBS. 243 his predecessors in title did not assent to or acquiesce in the alleged fraudulent transaction which the action is brought to set aside, since it is not necessary to negative such p.ssent or acquiescence unless it is otherwise to be presumed from the delay in bringing the action or generally from the allegations of the complaint. If it exists it is a matter of defense.^ 221, Demand and refusal. The liability of directors of a corporation for their wrong- ful acts is a purely legal one for damages, and the stock- holders, as such, have no standing to maintain an action there- for. It is only after demand made upon and refusal or un- reasonable neglect by the corporation or its legal represen- tatives to commence and continue such an action that the stockholders, as the equitable owners of an undivided f^hare of the assets of the corporation, may come into a court of equity and enforce in a representative action, the rights of the corporation against the directors or any others who have de- pleted, wasted or misappropriated the property of the < orpo- ration.^ A demand and refusal is required in order that a stockholder may not be permitted unnecessarily to maintain an a-ction in the right or for the benefit of the corporation. This rule requires that where the affairs of a corporation are in the hands of a receiver or trustee or other person who has superseded the board of directors and who is clothed with au- thority to sue, the demand must be made upon him regardless of whether or not the directors are hostile, for in such case their attitude is immaterial.^ But stockholders in order to main- tain the action need not show; that, after the directors of the corporation refused to comply with their demand that the 20. Continental . Securities Co. v. A stockholder's action to set aside Belmont, 206 N. Y. 7, 99 N. E. 138. a contract made by his corporation .1. Flynn v. Brooklyn City R. Co.. upon the ground that it was uncon- 158 N. y. 493, 53 N. E. 530; Norman scionable does not lie where he made V. Federal Min & S. Co., 180 App. no demand that the corporation bring Div. 335 167 K. y. Supp. 794; Godley the action and the corporation made V. Godley & Crandell Co., 181 App. defendant also alleges the invalidity of Div. 75, 168 X. y. Supp. 351; Soloway tlie contract. McCoy v. Gas Engine V. Junius Coal & Wood Co., Inc., 186 & Power Co., 135 App. Div. 771, 119 App. Div. 879, 175 N. y. Supp. 1; Mo- K y. Supp. 864. ran y. Vreeland, 81 Misc. 664, 143 N. 2. Planten v. National Nassau Bank, y. Supp. 522,; Dillon v. Pan-Ameri- 174 App. Div. 354, 160 N. Y. Supp. can Theatrical Co., 96 Misc. 501, 160 297, affd! 330 N. Y. 677, 116 N. E. N. Y. Supp., 549. lo™. 244 CORPORATIONS. corporation sue, they appealed to the general body of the stockholders, nor show facts which would make such an appeal futile.^ An express refusal may be established by statements or declarations of the corporation's officers or by resolutions adopted by its board of directors. An implied refusal may be established by the course and conduct of the corporation in omitting or neglecting to do what it should have done.* The question as to what is a reasonable delay on the part of ihe corporation in commencing the action is dependent upon the circumstances, the importance of the matter under consider- ation, and the amount of work necessary to be done before proceeding with, the action.^ 222. When demand unnecessary, A demand and refusal as a condition precedent to the main- tenance of a representative action may be excused where the directors are hostile to the stockholders or are in some way concerned in the transaction complained of so as to render a demand useless,^ or where for any reason it would have been futile to make such demand.'' Where the corporation is ex- clusively under the control of the trustees and officers whose acts and management are questioned a demand that the cor- poration bring the action would be idle and fruitless and in such cases equity permits the stockholder to bring the action 3. Continental SecuiitieB Co. v. Bel mont, 150 App. Div. 298, 134 N. Y, Supp. 635. affd. 306 N. Y. 7, 99 N, E. 138. 4. Kavanaugh v. Commonwealth T Co., 45 Misc. 395, 93 N. Y. Supp. 333 affd. 103 App. Div. 95, 93 N. Y. Supp, 543. 5. Kavanaugh v. Commonwealth T Co., 103 App. Div. 95, 93 N. Y. Supp 543. 6. Dillon V. Pan-American Theatri- cal Co., 96 Misc. 501, 160 N. Y. Supp, 549. 7. Planten v. National Nassau Bank 174 App. Div. 354, 160 N. Y. Supp, 397, affd. 320 N. Y. 677, 116 N. E 1070; Gk)dley v. Godley & Crandell Co., 181 App. Div. 75., 168 N. Y. Supp. 251. Where a national bank goes into voluntary dissolution under sections 5220 and 5231 of tlie United States Revised Statutes and a resolution is adopted by more than two-thirds of the shareholders authorizing the ap- pointment of a committee of seven by the stockholders to liquidate the af- fairs of the bank, a stockholder, in an action in the right of the corporation for an accounting by directors for losses resulting from the mismanage- ment, wrongful acts and negligence, need not show a demand upon and a refusal by the liquidating committee to bring the action. Nor is the plain- tiff in such action required to show a demand on the stockholders. Planten V. National Nassau Bank, 174 App. Div. 354, 160 N. Y. Supp. 397, affd. 220 N. Y. 677, 116 N. E. 1070. STOCKHOLDERS. 245 in his own name.^ Accordingly in an action by a stockholder, wio claims to have been induced by fraud to place his stock in the hands of a trustee, and with other stockholders to havebeen defrauded, pursuant to a conspiracy of the officers of the cpr- pora,tion and others to put, the corporation through bank- 8.. Sage V. Culv«r, 147 N. Y. 341, 41 N. E. 513; Jacobson v. Brooklyn Lum- ber Co., 184 N. Y. 152, 76 N. E. 1075.; Young V. Drake, 8 Hun 6i; Brown v. Buffalo, N. Y. and Erie B.. Co., 37 Hun 34a; CJurrier v. New York, W. S. and, B. E. Co., 35 Hun 355; Sheridan v. Sheridaji : Electric Light. Co., 38 Hun 396, 398; Anderton v. Wolf, 41 Hun 571, 574, 4 iSt. Rep. 101; Pondir v. New York, L. E. & W. R. Co., 73 Hun 384, 35 N. Y. Siipp. 560; Boaz v. Sterling-^ worth Railway Supply Co., 6S App. Div.l, 73 N. Y. Supp. .1039; Niles v. New, York Central & H, R. R.,Co., ,69 Ap^. Div. 144, 146, 74 N. Y; Supp. 617^ affd. 176 N.Y. 119, 68 N. E. 143; PdHiemus v. Polhemus, 114 App. i)iv. 781, 100 N. Y. Sni>p. 363; Meyers' v. Scott, 3 N.'Y. Supp. 753, 2fl:St. Rep: ' 35. Where a corporation refuses to prosecute individual directors who are alleged to have been guilty of an , abuse of their trust, or of a misap- plication of the funds of the corpora- tion, and such directors are still in control^ stockholders are entitled to sue for redress in their o^n name. Nash V. Hall Signal Co., 90 Hun 354, 351 N. Y. Supp. 940. Where an ofScer who made an illegal payment o'f corporate money controls ai majority of the corporate stock and himself elected the board of directors which is composed of his i-elatives, a situation exists that justifies the in- terposition of a 'court of equity in favor 6f a minority stockholder. In such case it is unnecessary to show a demand ujwn tlie corporation for such a demand, under the circum- stances, -rt'ould appear to ' Jie futile. Roth V. Robcirtson, 64 Misc. .343, 119 N. Y. Supp. 351. In an action brought by certain stockholders of a co'rporation to set aside as fraudulent notes given by the corporation, and a judgment entered thereon, and an order appointing a re- ceiver of the corporation, it is not necessary to shov that the plaintiffs have first demanded of the officers of the company that they should bring the action, when it appiears that the parties charged with the misconduct includes the . president, secretary, treasurer and. a director of the corpor- ation, and that the relief sought was the vacating of claims made by and allowed to themselves by the direc- tors. Kelsey v. Sargent, 40 Hun 150. Where plaintifi, who was the owner of forty per cent, of the stock of a corporation ^ capitalized at $5,000, en- tered into a contCT,ct with one of the defendants who was the treasurer of the corporation aid whose brother was its president to assign to it plaintiflF's right to produce a certain play, one other direeto)- was a brpther-in-law of the treasurer and the other director his counsel, upon a complaint that the profits from the- production of the play,, which were large, had been ex- pended almic^st all, in salaries, , office rent and other expenses, thus depriv- ing the pl,aintifl of a just return upon his investrbient, ' the plaintiiT is en- titled to maintain an action to compel the treasurer ani the other officers to render an accpuiit of their stewa.fd- ship. Lawrence v. Weber, 65 Misc- 603,,, 12<) N.Y. Supp. 389, niodfd.137 App. Div. 907, 123 N. Y. Supp. 1134. 246 COEPOBATIONS. ruptcy to defraud its creditors and stockholders other than those participating in the conspiracy, to recover the assets dissipated by the collusion of the officers, it is not necessary to allege a refusal of the corporation upon demand to com- mence such action if the only officers upon whom such demand could have been made are shown to have participated in the conspiracy.^ And where a fraudulent breach of trus;t is shown, and it is apparent on the face of the complaint that the corporation cannot move even for the protection of the stockholders who are the cestui que trust of the corporation, then a stockholder may be permitted, without a demand, to seek in his own behalf, and in behalf of such others as may join with him in the action, to undo the fraudulent and unlaw- ful acts of those who have perverted the uses and purposes of the corporation and who have despoiled the stockholders of their property.^" But a failure to make a demand that the corporation sue is not excused by alleging that the majority of the directors who authorized the contract are still in office, if there be no charge that they were guilty of wrongdoing.^' Likewise an allegation in the complaint that the reason why the action is brought by the plaintiffs, as stockholders and not by the corporation itself, is that its directors now in office are wholly under the control of another corporation and act for its advantage, is not a sufficient excuse for failure to make a demand, where there is no allegation that the directors in office at the time of the commencement of the action are the directors Avho committed the alleged wrongs.'^ 223. Estoppel of stockholder to bring action. Stockholders of a private corporation may be denied equitable relief against acts of the corporation which do not affect the public, but only the interests of its stockholders, and which, although ultra vires, are not per se illegal or malijm prohibita, where th^ stockholders asking for relief, have assented to those acts, or have acquiesced therein with full knowledge of the facts.^^ And so where third persons acting 9. Weber v. Wallerstein, No. 1, 111 12, Norman v. Federa.1 Min. & S. App. Div. 693, 97 N. Y. Supp. 846. Co., 180 App. Div. 325, 167 N. Y. Supp. 10. Anderton v. Wolf, 41 Hun 571,. 794. 574, 4 St. Rep. 101. 13. Skinner v. Smith et al„ 134 N. 11. McCoy V. Gas Engine & Power Y. 340, 31 N. E." 911. Co., 135 App. Div. 771. 119 N. Y. Supp. In a representative action by a 864. stockholder to set aside a fraudulent STOCKHOLDERS. 247 in good faith have relied upon the existence of corporate authority to do an act and have acquired rights in the prem- ises, stockholders of the corporation, who have acquiesced in the act and have neglected promptly to condemn it and seek judicial redress,, will be equitably estopped from thereafter claiming that the act was illegal or prohibited^* Accordingly the fact that the stockholders, with opportunities at each an- nual meeting of the stockholders to question the validity or good faith of a contract, never indicated any opposition there- to, and allowed the officers of the corporation to continue to perform the agreement for many years, constitutes laches fatal to the maintenance of the action, for it would be mani- festly unfair to allow minority stockholders to remain silent and take for a period of years the profits of a contract which they claim afterwards to have been made in fraud of their rights, and then seek to avoid it when, for reasons outside the contract itself, it has ceased to prove attractive.^^ It seems, that a person who has received and retained stock unlawfully issued as a bonus and has received dividends illegally declared cannot maintain a representative action on behalf of the cor co'nveyance and the foreclosure of a mortgage executed by th6 corporation, a judgment in the foreclosure action is a good defense, where the defendants in that action interposed as a defense substantially the same matters as re- lied upon in the representative action. Alexander v. P,onQhue,.143 N. Y. SfiS, 38 N. E. 363.' ' Recovery of loan by corporation. — A surviving officer and stockholder of a domestic business corporation which had consisted of only three members who brings a representative action against the corporation and the repre- sentatives of the- two deceased mem- bers, is not entitled to a judgment compelling the representative of one of the stockholders to turn over to the corporation the amount of a loan which was made by the corporation to a third person who was a relati-ve of the decease* stockholder, where it ap- pears that the loan was made from surplus prolits of the Corporation wliich had been accumulated with the con- sent of all the stockholders, arid it is admitted that the borrower, who had paid interest on the loan and greatly reduced it, is herself financially, re- sponsible, if the plaintiff had access to the books of the corporation for many years and the loan had ap- peared on the yearly ^<;atements/ with- out objection on his part. This, be- cauisa, even if the loan were ultra vires, it was riot mala prohibita, and the plaintiff, by his silence, had ac- quiesced in and ratified thfe same. Murray v. Smith, 166 App. Div. ■ 528, 153 N. Y. . Supp. 103. 14. New Britian National Bank v. Clevelaind Co;, 91 Huri 447, 36 N^. Y. Supp. 387, affd. 158 N.' Y. 723, 53 N. E. 1128; Drake v. New York Subur- ban Water Co., 36 App. Div. 49fl, 50 N. Y. Supp. 836; Westchester Fire Ins. Co. V. Syracuse B. & N. Y. R. Co., 97 Misc. 471, 161 IsT. Y. Supp. 759. 15. Norman v. Federal Min. & 8. Co., 180 App. Div. 325, 167 N. Y. Supp. 794. 248 GQRPOEATIONS. poration against the directors for f raud.^'' But where iQOi;ey was paid by the directors for a corrupt and unlawful pur- pose, it is not a sufficient answer to the suit that the stock- holder who sues on behalf of himself and the other stock- hplders acquiesced in such payment." The right of a stock- holder of a corporation, which has been dissolved and has passed into the hands of receivers, to bring an action against the directors of the corporation on behalf of himself and of all other stockholders to recover damages sustained by the corporation and the stockholders because of various breaches of trust committed by ,the directors of the corporation, the receivers having refused to bring such an action, is derived from the corporation through the, receivers and is pot based upon any inherent right in the stockholders growing out of any trust relation existing between the stockholders and the directors. Consequently, where it appears that prior to the time when the stockholder requested the receivers to bring the action, the receivers, acting in good faith and with tJie sanction of the court, released the directors from all personal claims or demands which existed against them as directpirs, the action cannot be maintained.^^ In an action by sharehold- ers of a corporation, in its behalf, to cancel a contract made by its directors and for damages, another action for the same purpose by a director under section 90 of the General Corpo- ration Law is not a bar thereto.-'® 224. Essential allegations of complaint. An action in equity cannot be maintained by individual stockholders for themselves and all others similarly inter- ested unless because of the neglect and refusal of the corpo- rate body to act. It is necessary, therefore, in such an action to set forth, first, a cause of action in favor of the corporation with the same detail of facts as would be proper in case the corporation itself had brought the action; second, the facts which entitle the plaintifif to maintain the action in place of the corporation.^" Where, therefore, a complaint states a good 16. Sedgwick v. . Seward pevelop- 19. Loewenstein v. Diamond Soda ment C!o., 144 App- Div. 455, 1^9 N. Water , Manufacturing Co., 94 App. Y. Supp. 309. Div. 383, 88 N. Y. Supp. 313. 17. Roth V. Robertson, .64 Misc. 343, 20. O'ponnor v, Virginia Passenger 118 N. Y. Supp. 351. & Power Co., 184 N. Y. 46, 76 N. E. . 18. Craig v. James, 71 App. Div. 108S; Continental Securities Go. v. 838, 75 N. Y. Supp. 813. Belmont, 306 N. Y. 7, 99 N. E. 138; STOCKHOLDBilS. 249 cause of action in favor of the corporation against the other defendants, but does not allege that a demand was made upon the corporation to bring and prosecute the action and that such demand was refused, it fails to state a cause of action in plaintiff's favor unless it contains allegations sufficient to Leslie v. Lorillard, 31 Hun 305, IS Wk. Dig. 388; Cummings v. Brown, 122 App. Div. 505, 107 N. Y. Supp. 498; Kolb V. Mortimer, 135 App. Div. 543,' ISO N. Y. Supp. 543 ; Fleitman v. United Gas Imp. Co., 174 App. Div. 781, 161 N. Y. Supp. fi50; Eothbart V. Star Wet Wash Laundry, Inc., 185 App. Div. 807, 174 N. Y. Supp. 76; Bowne v. Smith, 44 Misc. 575, 90 N. Y. Supp. 204; Meredith v. Art Metal Constr, Co., 97 Mise,: 69, 161 N. Y. Supp. 1, affd. 176 App. Div. 945, 102 N. Y. Supp. 1131. A complaint in a suit by a , stock- holder tp compel the president of the corporation, individually, and also as copartner with .another, to account, to the corporation, did not contain any allegation of . fraud, misappropriation or wrongfloing on the part of either of the individual defendants^ and the sole dereliction of duty charged, against tljem. was that they failed to cause the corporation to keep what the, plaintiff considered, proper books of, apco^int, and that the detfendants as copartners, acting as financial agents of the corporation, failed to ren- der proper accounts of their transac- tions in, behalf of the corporation, and also refused to permit the plain- , tiff to, examine the partnership books. It was held, that the complaint failed to, state,,. and the proofs failed to es- tablish, facts sufficient ,to constitute a cause of action. Cubb y. Cook, 161 App. Djv. 7,75, 147 N. Y. Supp. 94. Sale of stock by part of plaintiffs after, action commenced. — Where the complaint in an- action by stockhold- ers brought, in the right ol their cor- poration to ha, ve/ restored to,.- it certain stock of anothei' corporation alleged to , be, owned by the plaintiffs' corpora- tion, but which were sold by the de- fendant's testator in ednsummatio^ of a conspiracy to obtain' the stock for less than it was worth, sufficiently states a cause of action against the defendant in favor of the plaintifiFs' corporation, it is not subject to de- murrer because .most of the plaintiffB have exchanged their stock for the stock of the other corporation, if in fact on© of the plaintiffs was and now is tbe holder of stock in the corpora- tion for whose benefit the action is brought, there being no demurrer on the question of misjoinder of parties plaintiff. Holmes v. Camp, 176 App. Div. 771, 163 N. Y. Supp. 1014. A counterclaim in a representative! action to recover dividends claimed to liave been illegally paid by the cor- poration to the defendant, which sets forth an agreement made on the or- ganization of the corporation where- by the defendant, so long as he con- tinued to be a stockholder, should re- ceive ;Six per cent per annum on the par value of his stock, the payments to be made out of a fund representing two-thirds of all the net profits of the corporation, does not state a cause of action entitling the defendant to a de- cree that preferred stock be issued to him pursuajit to the agreement, and a demurrer to such counterclaim is prop- erly sustained. Such contract did not call for the issuance of pref errreci stock, and to entitle the defendant to such sljock a special a'gi-eeraent there- fore, either by the incorporators or by the corporation itself, .was necessary. Noble V. Eldredge, 175 App. Div., 803, 162 N.Y. Supp. 503. 250 GOfiPOBATIONS. relieve him from making such application.^ But it is not necessary for a plaintiff in addition to alleging a demand upon a defendant corporation and its board of directors to bring the action and their neglect and refusal to do so, to allege that he had given notice of the alleged fraud to the stockholders of the defendant corporation and had demanded of them that some action be taken by them to redress the wrong, and that they had neglected and refused to take action relating there- to.^ In addition to alleging a cause of action in favor of the corporation and that a demand has been made on the corpo- ration to bring the action, it must be alleged that the plaintiff is a shareholder therein and that the corporation itself has 1. O'Connor v. Virginia Passenger & Power Co., 184 N. Y. 46, 76 N. E. 1082. Complaiat by stockholders against an agent to recover moneys received by him, as such, should allege that the corporation by its officers has re- fused to bring the action. Yanderbilt V. Garrison, 3 Abb. Pr. .361, 16 How. Pr. 293. Absence of allegation of requisite demand upon corporation. — A demand upon a street railroad corporation to bring suit to annul a lease of its road, essential to a representative action for that purpose by one of its stock- holders in his own name, is not made out by allegations in the stockholder's complaint that he, as such stockholder, had demanded his share of the pro- ceeds of operating the road over and above the rental dividends paid to him under the lease ; that he had Notified the directors and officers that the lease was unlawful and injured the stock- holders, and that he had demanded a distribution among them of all the profits arising from the operation of the road without regard to the lease; followed by the further allegation that such distribution necessarily involved such action on the part of the officers and directors as would effect the an- nulling of the lease. Flynn v. Bi'ook- lyn City R. Co., 158 N. Y. 493, 53 IST. E. 520. A complaint in an action, which, after setting forth a demand upon the corporation to bring the action, alleges "But said Trust Company has wholly omitted and failed to bring said action and the plaintiff therefore brings the tame," is demurrable, in that, while it alleges omission and neglect to bring the action, it does not allege a refusal to do so. Kavanaugh v. Com- monwealth T. Co., 46 Misc. 395, 93 N. Y. Supp. 333, aflfd. 103 App. Div. 95, 92 N. Y. Supp. 543. Where the complaint, in an action brought by and in behalf of a stock- holder and of all othher stockholders and creditors of a business corpora- tion, alleges that the defendants, the directors of the corporation, at a time when it was insolvent, wrongfully and fraudulently transferred its property to themselves or to preferred cred- itors, and demands, besides damages, an accounting, the action must be deemed equitable in its nature, and cannot be maintained where the cor- poration is not made a party, and where the refixsal, upon request, of the directors to bring ihe action is not al- leged. Corning v. Barrett, 22 "Misc. 241, 48 N. Y. Supp. 1013; 2. Continental Securities Co. v. Bel- mont, 306 N. Y. 7, 99 N. E. 138. STOCICHOLDEES. 251 either refused or unreasonably failed to bring the action; ordinarily no other allegations are necessary or material.^ 225. Statement of cause of action. While a minority stockholder, in the absence of waste, mis- management or fraud, has no standing as an individual, yet a complaint which alleges a general misapplication of the funds by persons who have obtained control of the corporate man- agement states a cause of action, and an allegation that the managers of a corporation have taken sums of money from its treasury for themselves, for money loaned for improvements not made then, nor made for several years thereafter, and in fact paid out of the ordinary revenues of the company, is a direct charge of misappropriation for which there is no legal 3. Sa,vanaugli y. Commonwealth Trust Co., 181 N. Y. 131, 73 N. E. 563; Berger v. National Architect's Bronze Co., 173 App. Div. 680. 160 X. Y. Siipp. 331. Stockholder bringing action against directors for negligence must be such at the commencement of the action, — Directors are liable to a bank which through their negligence has suffered loss, and in case the bank does not. any stockholder may prosecute an action in behalf of himself and others in 3. like situation'; either after demand made that the bank should bring the action and its refusal, or without demand when the persons who com- mitted ■ the wrongful acts continue to be dirfeetors of the corporation; but it is not sufficient that the plaintiff i-- a stockholder at the time of the commission of the acts complained of; unless he is such at the time of tlie commencement of the action a judg raent in his favor must be reversed and the Complaint dismissed; when, however, a qualified stockholder has been permitted by an ord^r of tlic court to intervene in such action, which order, although appealed from, is not reversed, it is eri'oneous for tlie Ap- pellate Division, to dismiss the cam-, plaint as to such stockholder and he is entitled to a new trial. Hanna a-. Lyon, 179 N. Y. 107, 71 N. E. 778. Allegation that plaintiff is stock- holder. — A complaint, which in sub- stance sets out that the plaintiff witt other stockholders pledged all his stock, with the defendant to secure a note given by the corporation, and that the , defendant, .thus holding all the stock, wrecked the corporation by various means set forth, and sold the stock on the failure of the corporation to pay the notes and which a/sks dam- , ages by reason of the facts ' aforesaid, does not state a cause of action. This, because the plaintiff ' shows himself to be no longer a stockholder, and is in the position of an outsider seeking to recover for the depreciation of stock : formerly owned by him. Dudley v. Armenia Insurance Co., 115 App. Div. ' 380, 100 N. Y. Supp. 818. Allegation that defendants were directors. — A complaint in an action against directors for an accounting which fails to allege that defendants Avere directors does not state a cause of action against them. Brown v. Utopia Land Co., 118 App. Div. 364, 103 N. Y, Supp. 50. 252 COBPORATIONS. justification.* But a complauit in an action for fraudulent diversion of coi-pbrate assets, whicli alleges that defendants were the trustees who had the management and control of the corporation from its organization to the appointment of a receiver, which was three months before the date of the sum- mons, and doeis not state the dates when the acts complaineo of occurred, or allege that they occurred before the appoint- ment of the receiver, does not state a cause of action against the defendants.^ The complaint; in an action to restrain the majority stockholders from proceeding in fraud of the rights of; the minority must set forth the unlawful acts of the de- fendants which disclose the aU«ged fraud. In the absence of. such allegations, charges of conspiracy, fraudulent com- bination, evil intent, etc., are insufficient to make out a cause of action.^ Likewise a complaint in an action by a stockholder of a corporation seeking to enforce a right of the corporation to have certain bonds issued by it, and the mortgage given to secure the same, canceled, is defective on a motion ad- dressed to the pleading if it does not contain an offer to restore to the holders of the bonds what the corporation has received therefor.'' In an equitable action by a stock- holder of a corporation to require the officers or trustees of the corporation to account to it for a breach of their trust, allegations as to the dealing of such officers or trustees with the (30rporate property are material and proijef alle- gations in the contiplaint; and, in view of the difficulty under which the plaintiff in such an action labors in obtaining knowledge of the facts in relation to the management of the affairs of the corporation by its officers, where such officers have control and where they are, if false to their trust, inter- ested in concealing the transactions, the court should, before striking out any allegation as to the relations of the officers or trustees of the corporation to it, be careful to see that the alle- gation cannot be material.^ Where the fundamental issue in- 4. Sage V. Culver, 71 Hun 42, 24 N. 533, 22 Wk. Dig. 490. Y. Supp. 514, affd. 147 N. Y. 241, 41 _ 8. Scharf v. Warren-Seharf Asphalt N. E. 513. ' Paving Co., 15 App. Div. 480, 44 N. Y. 5. Dibblee v. Metcalf, 13 Misc. 136, Supp. 491. 34 N. Y. Supp. 122. When allegations should not be 6. Oelbermann v. New York & Nor- stricken out. — ^In a derivative, action thern R. Co., 14 Misc. 131, 36 N. Y. brot'ght by a single stockholder in her Supp. 1096. own behalf and for the benefit of other 7. Spencer v. Clarke, 1 iiv. 714, 109 16. Hay v. Brookfield, 160 App. Div. N. Y. Supp. 453. 277. 145 N. Y. Supp. 543. 256 COKPOKATIONS. court of equity, and hence the ten years ' statute of limitation applies.^' In a representative action brought by stockholders in behalf of a subsidiary corporation organized in a foreign state and indirectly for the benefit of a domestic holding com- pany, to compel the officers and directors of the subsidiary corporation to account for certain shares of stock of the holding company equitably owned by the subsidiary corpo- ration, and the profits derived therefrom, the dissolution of the subsidiary corporation pursuant to the statutes of the foreign state under which its officers and directors became trustees is not a sufficient ground for abating the action, or even halting it until the problematic action is taken by the trustees of either instituting a new action or petitipning to be substituted as plaintiffs to continue the pending action in their name.^" In a representative suit in equity brought by a minority stockholder against the directors of the corporation to compel an accounting for moneys of the corporation un lawfully diverted by the defendants and to rescind the reso- lutions pursuant to which the diversions were made, the de- fendants are not entitled to have the questions of fact stated for a trial by jury upon the ground that the issues of fraud and bad faith are involved and especially so where it does not appear that there will be any serious dispute as to the essen- tial facts or any serious conflict between the witnesses.^ The ■directors of a corporation, who are responsible for conditions which justify a representative action by a stockholder, should pay the legal fees and expenses of the defense of the action, instead of the corporation itself.^ 19. Mason v. Henry, 83 Hun 546, 31 new action; (3) where tlie trustees N. Y. Supp. 1068, affd. 153 N. Y. 539, may have made no objeotion to being 46 N. E. 837. made parties to the action; (4) where A recovery of unauthorized loans is '* ^^s been held thait the action ia governed by the ten-year Statute of ma-mtainable by the pla4ntiifs a» Limitations. Murray v. Smith.: IfiG stockholders of the holding company App. Wv. 528, 153 N. Y. Supp.#103. indirectly for the benefit of. the hold- ing cotiipany, which has not been dis- 20. Holmes v. Oamp, 186 App. Div. ^„j^^^_ ^^^ ,,g, ^^^^^^ '^^^ 675, 175 N. Y. Supp. 349, holding, objecting: is one into whose hands that the rule stated was particularly ha^e been traced the proceeds of an applicable where (1) the trustees are alleged fraud perpetrated upon the the same persons who were directors plaintiffs. at the time of dissolution, the corpora- l. Best v. Nathan, 183 App. ' Div. tion having, up to that time i-efused to 393, 170 N. Y. iSupp. 753. institute an action; (3) where the 9. (Jodley v, Orandall & Godley; Co., Statute of Limitations may have in- 153 App. Div: 697, 698, 139 N. Y tervened as a defense to any such Supp. 336. STOCKHOLDERS. * ' 257 228. Relief that may be granted. The part which a stockholder plays in a representative ac- tion is merely that of an instigator. The cause of action is that of the corporation, and the recovery must run in its favor.^ Ah executor and testamentary trustee, holding stock of a business corporation^ and suing the directors and officers as a stockholder to compel them to account to the corporation for moneys alleged to have been misapplied, and to enjoin them from performing their official functions and for iheir removal, cannot in that action compel the president of the corporation and a coexeclitor with thie plaintiff to account to the estate, the action being founded solely upon the relations of the defendants with the corporation.* And in an action by a stockholder to set aside a sale made by a director to the cor- poration as fraudulent the court has no power to affirm the sale and render a judgmfent against the directors for Ihei ex- cess of the price paid for the goods over their true value on a finding that the directors made the purchase with an intent to defraud the company, for although the facts may show that the directors negligently overvalued the goods bought and might be held liable for the excess, a judgment to that effect is only warranted in an action ' brought on the theory of negligence.^ 229. Appointment of receiver. A receiver of a corporation should not be appointed in a representative action by a stockholder asking that the direct- ors b^ enjoined and restrained from disposing of any of the assets pf the corporation, except upon clear and convincing proof that the directors are acting fraudulently and contrary to the best interests of the corporation;^ So the couirt will 3. Solmes v. rCampt 186 App. Div. — Although the eouit has power to ap- 675, 175 ;N. Y. Supp. 349. p(>int a receiver of a corporation pend- 4. Hirsch V. Jones, 115 App. Dir. ing a suit by a, stockholder brought 156, too N. Y. Supp. 687. on behalf of. the corporA.tioji against 6. Polhemua V. Polhemus, 114 App. the ofBcers and. directors to compel Div. 751, 100 N. Y. Supp. 863. -them to account for official . jniscon- 6. Brewster v. Brewster Co., 145 App. duct a,njJ, misapplication ojf : Assets, . .was , not lief, unsupported by ' legal, profvf, , es- , spijght, th.e receivership v^.puld no3...be pecially where the answering affidavits continued for the purpose of giving deny, the charges., .Fenn v. Ostrander; ' the corporation .'time to raise 'nibiiejr Inc., 133 App. ,Div..' 311, 116 'if.- Y.' to pay itS" debts, where, after'^'tHe Supp. 1083. ' cominencement of such action, a new A receiver of a corporation was ap- election of directors of the corpora- pointed in an action broiight by a tioh had beeu held, the two malfeas- stockholder thereof ag'ainlb the cor- ant director^' remdf^d and theplain- poration and two of its directors, in tiff in the action' and others ^in ac- wliich the complaint alleged that therie cord with him had: been placed in con- had been waste of the assets of the trol 6f the : corporation. Duni^n- v. corporation in consequence of the Tread well Co., 82 Hun 376, 31 "N. Y. wrongdoing and mismanagenient of Supp.' '340. '! ; >. such directors and others confederat- 7. Sedgwick v. Se ward " Develapmettt ing with' thfem, and also set forth a Co., ' 144 App. Div."''455, 139 N. -Y. scheme of said persons to wreck the Supp. 309. corporation, and demanded judgment 8. 'Weber v. Wallerstein, 111 'iApp. for an accountiiig by said directors, Div. 700, 9't- N. Y. Supp. 863. that the corporation and its officers STOCKHOLDBKS. 259 coming so, or that there is danger that the corporate property will be removed from the jurisdiction, or materially injured or destroyed. A receiver wjU not be appointed merely be- cause the representative of^ the former owner of one-half of the capital stock is dissatisfied with the management of the corporation.^ If a corporation is paying dividends both upon its preferred and common stock, a receiver will not be ap- pointed on the application of a minority stockholder who claims that the president of the corporation is violating a contract made by it.'" 9. Hastings v. Tousey, lai App. Div. 136 N. Y. Supp. 681, affd. 153 App. 815, 106 N. Y. Supp. 639. Div. 911, 137 N. Y. Supp. 1139. 10. Metzger v. Knox, 77 Misc. 271, , 260 GOBPOBATIOSrS. CHAPTER XV. Stockholders' Meetings. In General. 230. Qalification of members as voters. 231. Validity of restrictions on voting powers. 232. Voting of stock by fiduciaries. 233. Waiver of notice of meeting. 234. Inspectors of election. 235. Cumulative voting. 236. Challenge to voters. 237. Criminal liability fqr misconduct at corporate election. Proxies and Voting Trusts. 238. In general. 239. Who may act as proxy. 240. Execution, validity, duration and revocation of proxy. 241. Voting trust agreements. Powers of Supreme Court Bespecting Elections. 242. In general. 243. Construction of statute. 244. Application of statute. 245. Proceedings to test validity of election. 246. Restraining interference with officer in possession. In General. 230. Qualification of members as voters. "Unless otherwise provided in the certificate of incorporation, every stock- holder of record of a stock corporation shall be entitled at every meeting of the corporation to one vote for every share, of stock standing in his name on the books of the corporation; and at every meeting of a non-stock corporation, every member, unless disqualified by the by-laws, shall be entitled to one vote. The stockholders of a stock corporation, by a by-law adopted by a vote at any annual meeting, or at any special meeting duly called for such purpose, may prescribe a period, not exceeding forty days prior to meetings of the stock- liolders, during- which no tranifer of stock on the books of the corporation may be mafl(>. Except in cases of express trust, or in which other provision shall have been made by written agreement between the parties, the record holder of stock which shall be held by him as security, or which shall actually belong to another, upon demand therefor and payment of necessary expenses thereof, shall issue to such pledgor or to such actual owner of such stock, a proxy to vote thereon. No member of a corporation shall sell his vote or issue a proxy to vote to any person for any sum of money or any thing of vaUie. The books and papers containing the record of membership of the corporation shall be produced at any meeting of its members upon the request of any member. If the right to' vote at any such meeting shall be challenged, the inspectors of election, or other persons presiding thereat, shall require such books, if they can STOCKHOLDBBS ' MEETINGS. 261 be had, to be produced as evidence of the right of the person challenged to vote at such meeting, and all persons vpho may appear from such books. to be mem- bers of' the corporation may vote at such meeting in person or by proxy, subject to the provisions of tiiiis chapter. "11 ' " - Only stockholders of record or those holding proxies are entitled to vote at an election of directors of a stock corpora- tion.^^ As between himself and third parties, tlie person who appears upon the transfer books to be a stockholder, may have: parted with all his interest in the stock, but as between himself and the corporation, suob person, and hie only, is treated as a stockholder.^^' And so at an election of directors, tbe right of an individual to vote, must be determined by the transfer book of the company; the inspectors cannot lodk'be- yond it." The pledgee of shares of corporate stock has no legal right to vote them without the express or implied assefiit of the pledgor,^^ for the right of voting is with the legal ahd beneficial ownership.^^ And under the statute whei^e the stock stands in the name of the pledgee, the pledgor may compel him to execute a proxy authorizing the pedgor to vote the stock. A shareholder has a legal right, at a meeting of the shareholders, to vote upon a measure, even though he has a personal interest therein separate from other shareholders. In such a meeting each shareholder represents himself Eitid his own interests solely, and he in no sense acts as a trustee or representative of others.^'^^ Bo stockholders of a corpora- 11. General Corporation Law, §23. 153. ■'•'[. ; r A recital in any order, resolution or 14. Matter of Long Island E. Co., other record of any proceeding of a 19 Wend. 37;. Matter ofJBingler &;Co., meeting referred to in section forty- 304 N. Y. 30, 07 N. E. 593; Matter of one of the general; construction law Clarke, Inc., 186 App. Div. 316, 174 that such: meeting had been held or N. Y. Supp. 314. = adjourned; as provided in said section. An option for or conditional sale of or that it had been held upon notice stock does not deprive the stock- to the members, as herein provided. holder of his l right to vote. Matter shall be presumptive evidence thereof. of Neweomb, 18 N. ¥. Supp. 16, 43 Civil Practice Act, :§ 378. ... St. Rep. 443. 12. Matter of Utica Fire . Alarm 15. McHenry v. Jewett, 36 Hun Telegrapk. .Co., 115 App. Div. 831, 101 453, revd. on other grounds, •90.']sri.:Y. K. Y. Supp. 109. 58. Corporation which has purchased 16. Manson v. Curtis, 233 N. Y. stock of another corporation may: vote 313, 119 N. E. 559. thereon. Matter of Buffailo, New York 17. .Gamble v. Q. C. :W. Oo. et al., and Erie E. Co.; 37 K Y. Supp. 1048, • 133 N. Y. 91, 97, 25 N. E. 201; Town- 74 St. Rep. 345. send. v. .Winbum, 107 Misc. 443, 177 13. Roscvelt V. Brown, 11 N. Y. 148, N. Y. Supp. 757. 262 COKPOEATIOIfS. tion may vote upon a resolution to discontinue an action brought in tjie name of the corporation, although they are in- terested in the result.^^ Where the stock book and seal are withheld or concealed in order to prevent a transfer of stock in time to. permit the new stock to be voted on at the annual meeting, it is lawful for the directors to adopt a new seal and stock book to accomplish that purpose.^* When a corporation sues a stockholder to rescind a sale of stock made to him be- cause induced by fraud, the court should not enjoin the de- fendant from voting the stock.^l, A court of equity has not the power to restrain a corporatioii which ha& legally^ pur- chased'stoek of another corporation from voting on the stock so purchased, upon the allegation or proof that such corpora- tion intends to cause a board of directors to be elected, who, by their action or non-action, may injure or prejudice the in- terests of the minority stockholders of the corporation whose stock ha^ been so purchased.^ In suits to. restrain specified stockholders from voting at corporate elections ■ the stock- holders so. specified have generally been made parties.^ Sec- tion 32 of the. general Corporation Law, authorizing thei Su- preme Court to investigate in. a summary way corporate elec- tions, pTirpqi'ts .to deal with elections only, : and matters di- rectly related to them, and doeis not permit of an inquiry into the,question whether or not the stock standing in the name of the, stockholder on the books of the corporation represents more than his contribution to the purchase price of the prop- erty transferred to the company, or his investment as a stock- is. Socorro Mountain Mining Co. v. holding that, a compladBt, which al- Preston, 17 Misc. 320, 40 N. Y. Supp. lege's that certain persons not parties 1040. to the action received stock of tlie de- 19. Socorro Mountain Mining Co. v. fendant corporation in consideration of Preston, 17 Misc. 220, 40 N. Y. Supp. their personal promissory notes and 1040. in violation of section 42 of tlie Stock Adoption of new stock booj^ where Corporation Law; that said' persons stock book is inaccesible. Matter of are a inajority of the directors of the Argus Co., 138 N. Y. 557, 34 N. B. corporation and in control tliereof 388. and, by means of the stock which 80. Maine Products Co. v. Alexander. they have thus illegally received, can 115 App. Div. 112, I'OO N. Y. Supp. control the pending election of the cor- 711. poration, and which concludes by, pray- 1. Oelbermaun v. New Yorlc & Nor- ing that the defendant be enjoined them R. Co., 77 Hun 338, 29 N. Y. from permitting votes, to be cast on Supp. 545. said stock; is demurrable iupbn the 2. Jones v. Nassau Suburban Homo ground of a defect of parties defend- Co., 53 Misc. 63, 103 N. Y. Supp. 1089, ant. ' ^ ! .. ' STOCKHOLDERS MEETINGS. 263 holder; such question should be decided by an action,^ A by- law of a corporation, which provides that. "A quorum shall consist of the majorityof the stock represented in person or by proxy " at a meeting of the corporation, is in conflict with section 25 of the Stock Corporations Law, which provides that the directors shall be chosen by a plurality of the votes at an election, and is, therefore, invalid.* 231. Validity of restrictions on voting powers. .The power of the individual stockholder to vote in prbp^r- tion to the number of his shares, is vital and cannot he cut off or curtailed by the action of all the other stockholders even with the cooperation of the directors and officers.^ The right of a stockholder in a corporation to vote upon and to transfer his stock can be limited,^ if at all, only by ail express statutory provision^ or by a provision in the articles of association; a by-law by which a stockholder is prevented from voting upon 3. Matter of Clarke, Inc., 186 App.- Div. 216, 174 N. Y. Supp.' 314. 4. Matter of Keogh, Inc., 193 App.^ Div. 62i, 183 N. Y. Supp. 408. 5. Stokes V. Ciontinental . Trust Co., 186 JSr. Y; 2.8S, 396, 78 N. E. 1090,; Witherbee, V. Bowies, 301 N. ,Y. 437, 431, 95 N. E. 37. At common law the members of a corporation were each, entitled to bjut one vote and the majority ; controlled. Matter of Eflchester District Telephone Co., 40 Hun 173. Resolution placing stock in trust until paid for. — Where; a resolutioji authorizing the issuance of thirty shares of preferred and thirty shares of common stock to a certain, person, provided that theyibe held intrust fpr him by a person named, "until pay- ment of . said thirty shares of pre- ferred stoek," whereupon they, to- ; gether with share £qx share, of the common stockj: were to be transferred to the purchaser, the latter having: paid for twenty of ,the:Shares,and hav- ing made a ten : per i cent deposi,t, on the purchase price, of the balance, be- came tlie equ5tal)l§;j?wner of the shares paid fdr, and his trustee was entitled to vote thereon at an election of diyeo- tors. • Said resolution , should not, be construed to mean that the whole thiity shares remained the property pf tlie corporation as unissued stock, so tliat no ;y<}te could be taken thereon until, the .whole number .of shares, had been jgaid.for. Matter of Conlon, Elec- tric .Washer Co., 169 App, Div. 192, ]M K Y. Supp, : 866. Building, loan and investment com- panies cannot restrict the righ;t to vote to a class, of stockholders. Kept. of Atty. Genl., (1894) 108. Prior to the amendment of 1901 to section 33 of the General Corporation Tjaw, said section taken in connection, with section 33 of the Stock Corpora- tion Law, prevented a stockholder from voting at an election of directors, un,less it appeared that his stock had been entered in the stock book of the corporation for ten days immediately preceding; the election. Matter of Glen Salt Co., 17 App. Div, ,334, 45 N.^ Y. Supp. 568, affd. 153 N. Y. 688, 48 ;N. 15.). 1104. , . ' 264 COBPOBATIONS. or transferring his stock iintil all dues thereon have been paid is invalid, even as against a stockholder who agreed to take his Stock subject, to the by-laws, as to dues and transfers." But while the power to vote may not be taken from the holder in invitum, he may qualify his ownership by his own consent that another may vote for him, or may accept ownership with a condition which involves the consent of others controlling the manner of voting^ Unless expressly forbidden by statute, the articles of incorporation niay jiivide the stock into com- mon and preferred, and may provide that the preferred stock- holders shall be deprived of voting poAver in consideration of the preferences over the common stock which is given them. Such a provision is but an arrangement between two classes of stockholders which does not concern the public and does not violate any rule of the common law or any rule of public policy. The legislature did not intend to coimpel every class of stockholders to be endowed with the right to vote, nor to prohibit the formation of a corporation which deprives the preferred stockholders of voting power. The provisions of section 3, subd. 8^ and section 24 of the General Corporation Law, are not in conflict with this conclusion.^ 6. Kinnan v. Sullivan County Club,' a Jight which is vested in him at the 26 App. Div. ai3, 217, 50 N. Y. Supp. time of the purchase of his stock; The 95, holding that the corporation has povrer to take away the franchise of no more power by its by-laws to re- a stockholder stands upon the same fuse to permit a delinquent stock- footing precisely as the power to pre- holder to vote upon his Stock than it vent the transfer of stock. Neither has to refuse him the privilege of mak- of them can be exercised upon the au- ing a transfer of the stock. The right thority of a by-law, but each depends to vote upon stock of a cOtporatibn for its existence either upon express is essential for the protection of its provision of the statute; or, at least, owner. It is one of those inherent upon the articleg of association of the rights Svhioh go with the purchase of corporation. the stock, and, unless it is limited by 7. Elger v. Boyle, 69 Misc. 373, 128 the 'artictes of' associatioiL authoriz- N. Y. Supp. 946. ing the corporation to exclude from 8. People ex' rel. Browne v. Koenig, the right of voting a person who is in 133 App. Div. 756, 118 N. Y. Supp. arreairs upon his stock, the right does 136; Millspaugh v. Oassedy, 191 App. not ejdst! It cannot be arrogated by Div. 221, 181 N. Y. Supp. 276. the corporation to itself after the History of legislation. — ^The power stock has been issued. It makes no to make by-laws limiting the voting difference in this reigard whether the power of shares of corporate stock stockholder agrees to take the stock was early negatived in this state, subject to the by-laws of the corpora- People ex rel. Israel v. Tibbets, i tion or not. No by-law can be made Cow. 358. The General Corporation which >3kes away from a stockholder Law of 18&2 (Gen. Laws, ch. 35 [Laws STOCKHTOLDEES MEETINGS. 266 232. Voting of stock by fiduciaries. "Where stock is registeiecl ou the books of a corporation in the name of, oi- has passed by operation of law or by virtue of any last will and testament to, two or more fiduciaries, and dispute shall arise among them in respSct to the voting thereon, the said shares of stock may be voted by a majority of such fiduciaries, and in such manner and for such purpose as such majority shall authorize and direct, and if the number of fiduciaries shall be even and they shall be equally divided upon the question of voting such stock, it shall be lawful for the court having jurisdiction of their accounts upon petition filed by any of such fiduciaries, or by any party in interest, to direct the voting of such stock in the manner which in, the opinion of , such' court will be for the best interests of the parties beneficially Jaterested in the stock. But the above provisions of 1892, ch. 687], § 30) provided: "At every election of directors and . meeting of the member^ of any cor- poration, every member who is not in default in the payment of his sub- scriptions upon his stock or disquali- fied by the by-laws, shall be entitled to one vote, if a non-stock corporation, and, if a stock corporation, to one vote for every share of stock held by him for ten days immediately preced- ing the election or meeting." The phrase "disqualified by the by-laws" was considered by the Attorney-Gen- eral in passing on a proposed certi- ficate to incorporate the Buffalo Build- ing^ Loan and Investment Company which had sought to divide the stock into classes, and excluded certain classes from voting. The Attorneyf. General, declared in an oflScial instruc; - tion to the Superintendent of Banks: "This disqualification, it seems to me, refers to some failure on the part of s. member to comply with the rules of the corporation, and would not be broad 'eiioiigh to include a general dis- franchisement, such as is proposed by the certificate in question, which would restrict the right of voting to one of the three classes of members." Opinions Of Attorney-General, 1894, pp.' 109, 110, 111. On the interjH-eta- tion of such statutes to be adminis- tered by the state officials^, Judge Bartlett said great weight should be given to the opinion of the Attorney- General advising the executive depart- ments. People ex rel. Snyder v. Hylan, ai3 N. Y. 236, 340. In ISOl the provision of section 20 of the General Corporation Law as to qualification of -stockholders as voters was amended so as to : declare the right, to one vote for every share of stock, "Unless- otherwise provided in the certificate of incorporsutioa." Laws of 1901, ch. a5. This was re-en- acted in 1909. (Gen. Corp. Law [Consol. Laws, ch. 23; Laws of 190i9, ch. 28], § 23.) In that year the secre- tary of state, .who had, refused to re- ceive a certificate of incorporation containing limita/tions on the voting power of preferred stock, was com- peHed by writ of mandamus to accept and file the certificate. - The order for ■ the writ was affirmed and the court held: "Unless expressly forbidden by statute ' the certificate incorporating a business corporation may divide the stock into, common and preferred and deny to preferred stockholders the •right to vote in consideration of the preference over the common stock." MiHspaugh v., Cassedy; 191 App. Div. 221, 181 N. Y. Supp. 276. Secretary of State may file certifi cate ef incorporation containing pro- visions that stockholders may Tje entitled to one vote irrenpecfi've of the number of shares they own. Eept". of Atty. Genl. (1910 ) , p, 406. •266 COEPOBATIONS. of this section sliall not, after this act takes- effect, apply in any case where the instrument or order of the court appointing such fiduciaries shall otherwise direct the manner o;f voting any such stock, nor to any fiduciaries appointed by the court prior to M?iy sixth, nineteen hundred and eighteen, or by last will and testament of a decedent whose death occurred prior to such date, nor to corpo- rate stock at auj' time transferred to or held by fiduciaries so appointed. ' ' 9 Upon the death of a stockholder his administrators become vested with the legal title to the stock and they are entitled to vote it without a formal transfer on the books.^* When the legal title to stock is vested under a will in co-executors they can only vote as joint owners, and if they cannot agree as to the manner in which the shares shall be voted, they cannot vote at all where the will expressly provides that they shall vote by their joint action and not otherwise." 233. Waiver of Jiotice of meeting. "Whenever under the provisions of any of the corporate laws a corporation is authorized to take any action after notice to its members or after th? lapse of a prescribed period of time, such action may be taken without notice and without the lapse of any period of time, if such action be authorized or approved, and such requirements be waived in writing by every member of such corporation, or by his attorney thereunto authorized. "12 The waiver of notice of meeting to increase capital stock may be effected by writing signed by. every member of the corporation.^^ Where the requirement as to the publication of notice was disregarded in an election of directors but notice was served on all stockholders personally or by mail and the meeting was in every other respect legal, a waiver signed by each stockholder apprpving the vote taken pursuant to this section renders the election valid." The requirement of sec- tion 62 of the Q-eneral Corporation Law, that notice of a pre- sentation of a petition for a change in a corporate name be 9. General Corporation Lfw, § 83a, It seems that this section may be as added by L. 1918, eh. 472, and applied to proceedings to increase the aimd. by L. 1919, eh. 466, and L. 19^0, num,ber. of directors to change the ch. 595. ■ principal place of business, to classify • ■ 10. Maitter of ' North Shore Staten the , stock and to extend the corporate Island Ferry Co., 73 Barb, 556; existence. 4 State Dept. Rep. 513. Townsend v. Wiinburn, 107 Misc. 443, 13. Hallett v. Metropolitan Mes- 177 N. Y. Supp. 757. . Sanger Co., 69 App. Div. 358, 263, 74 11. Townsend v. Winburn, 107 Misc. N. Y. Supp. C39. 443, 177 ISf. Y. Supp: 757. 14. Bept. of Atty. Gen. .Feb. 2, 191.0. 12. General Corporation Law, § 43. STOOKHOLDEBS' IVIEETINGS. 267 given by newspaper publication, may not be waived by the consent, pf stockholders and directors.^^ ; , 234. Inspectors of election. The inspectors of election of; every stock corporation shall : be. appointed iu the manner prescribed in the by-laws, but the inspectors of the first election of directors and of all previous meetings of the stockholders shall be appointed by the board of directors named in the certificate of incorporation. No director or ofScer of a moneyed Corporation shall be eligible to election or appointment as inspector. Each inspector shall be entitled to a reasonable ctjimpeiisation for his services, to be paid by the corporation, and if any inspector shall refuse to serve, or neglect to attend at the election, or his office become vacant, the meet- ing may appoint an inspector in his place unless the by-laws othervdse provide. The inspectors appointed to act at any meeting of the stockholders -shall, before entering upon the discharge of their duties, be sworn to faithfully execute the duties of inspector at such meeting with strict impartiality, and according to the best of their ability, and the oath so taken shall be subscribed by them, and immediately filed in the office of the clerk of the county in which such election or meeting shall be held, with a certificate of the result of the vote taken thereat." 16 While the statute has not expressly required the appoint- ment of more than one inspector, the manner in which it has been framed, in the use of the word " inspectors," discloses the intention of the legislature to have been that one will not be sufficient." T^^lere by the charter of a corporation direct- ors only are prohibited from serving as inspectors of the election, other ofl&cers of the company are not excluded.^* The omission bf the inspectors appointed to preside at an election of directors ta be sworn in the form prescribed by statute is no ground for setting aside the election upon a summary ap- plication.^' Likewise the provision requiring the oath of the inspectors of etection at a stockholders' meeting: to be filed in the office of the clerk of the county in which the election is held is directory only, and a failure to comply therewith does not invalidate the^ election.2^ So, also; an election of directors is not invalid because the oath actully administered was not sub- 16. kept, of Atty.:Genl. (1W3), p. 17. Matter of Lightall Mfg. Co., 47 31. r .■!,'! ^ i . :• Hun 358, 13 St.. Rep. 381. / 16. Stock Corporation taw, § 31- 18. Matter of the Chenango County In an emergency or where the stat- Mutual Ins. Co.,. 19 Wend. 635. ute- fails, in its provisions, the incor- 19. Matter of Mohawk & Hudson B- porators may provide for the appoint- Co., ,19 Wend, 135. ment of inspectors of election. Mat- 20. Union National Bank v. Scott, ter of Wheeler, 3 Abb. Pr. N. S. 361. 53 App. Div. 65, 66 N. Y. Supp. 145. 268 COBPORATIONS. scribed.^ Inspectors of an election of directors are not bound to close the polls at thfe end of an hour, altbough by the resolution of the board from which they derive their author- ity, the election is limited to one hour; they may exercise a reasonable discretion in the matter,^ arid where no time is liriiited within which the poll of an election must be held, it niay be adjourned frorii day to day in the discretion of the inspectors.^ Inspectors of a corporate election may be candi- dates at such election.* 235. Cumulative voting. ' ' The eertiifioate of iueoipofatioii of any stock corporation may provide that at all elections of directors of such corporation, each stockholder shall be entitled to as many votes as' shall equal the number of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them as he may see fit, which right, when exercised, shall be termed cumulative voting. The stockholders of a corporation heretofore formed, who, by the provisions of laws existing on April thirtieth, eighteen hundred and ninety-one, were entitled to the exercise of such right, may hereafter exercise such^ right according to the, provision of iihis section. "-6 r'. ,;; ■ilrrl '.■' Section twenty-four of the General Corporation Law is not iineotfsistent with section twenty-three. It relates to :1jhe method of voting only, and does not give the stockholder . a greater numb&r of votes. The stockholder may use his total of each vote per share for one or more candidates, but he ; is still limited as specified' in -section twenty- three and the- by- laws as to the number of votes east. The use of, the words ■' cumulatively or otherwise, as may be provided by the said laws of the Sta^te of New York," in ^ a certificate of incorpo- ration can have no other meaning than an intention to take advantage of the privilege given by the statute to stockhold- ers authorizing that manner of voting. No further action by the corporation to. that end is. necessary. The use of theword f cumulatively ''< in relati-dn" to voting is generally known. While the stockholders, as such, can have no direct power of management, the capital stock owned iby-them is property. It represents an investment upon which they are entitled to divi- 1. Matter' of Wheeler, ' 2 Abb.' Pr. N. Mutual Ins. Co., 1* "Wend. 635. S. 361. ■ ' " ' '■■ ' 4: Ex' part* 'Willcocks et al., 7 Gdw. a. Matter of Mohawk & Hudson R. 403. ' Co., 19 Wend. 133. ' 5. General Corporation Law,' §' 34. 3. Matter 6f the Ohenahgo G&uiity ' stockholders' mbbtings. 269 dends, provided they are earned, and whether they can be earned or not depends upon the mana,gement. The right to vote for directors, therefore, is the right to protect property from loss and make it effective in earning dividends. The intent of the law conferring the right to vote cumulatively was undoubtedly to give the minority stockholders an oppor- tunity to secure representation upon the board of directors.^ Where stockholders of several corporations agree tO' form a new company which shall issue its stock for that of the old companies and the agreement provides for cumulative Voting and a, certain number of directors which shall make that cumu- lative voting effective, the new company by accepting title to the stOiCJk of the old companies does not take and ratify the agreem,ent of the stockholders ,^nd, ,become bound thereby ; and so the, corporation and its stockholders will not be re- strained at the suit of a minority stockholder, from reducing the number, of its directors, so as to render cumulative voting ineffective^. , . ;. 236. Challenge to voters. *' Every member of a corporation offering to vote at any election or. meeting of the corporation, shall, if required by an inspector of election or other offleer pre- siding at such election or meeting, or by any other xriember present^ take and subscribe the following oath: 'I do solemnly swear that in voting' at this election Ii have not, either directly, indirectly or impliedly received any promise or any sum of money or any thing of value to influence the giving of my vote or votes at this, meeting or as a consideration therefor. ' Any person offiering to vote as proxy ^or any other person shall present his proxy and, if so required, take ajid subspribeiih,e. following oath: 'I do solemnly swear that I have not, either di- rectly, indirectly or impliedly, given any promise or,anj^' sum of money or a,ny thing of value to induce the giving of a proxy to me to vote at this election, or reenved any proinise or any sum of nioney or aiiy thing of value ■ to influence the OTViflg of my vote at this meeting, or as a consideration therefor.' The in- spectors or persons presiding at the election may administer ' such oath, and all such oaths and proxies shall be filed in the oface of the corporation." 8 237. Criminal liability for misconduct at corporate election. "Any person who: ' 1. Being entitled to vote at any meeting of the stockholders or bondholders or both of a stock corporation, gells his vote, or who issues a proxy to vote to any person for any sum of money or thing of value, except as expressly authorized by law; or, 6. Matter of Jamaica Consumers 137 App. Div. 671, 132 N;* Y. Supp. Ice Co., 190 App. Div. 739, 180 N. Y. 425. • Supp. 384. ' ^- General Corporation Law, § 27. 7. Bond v. Atlantic Terra Cotta Co., .. - 270 COBPOBATIONS. 2. Acts as an inspector of election at any such meeting and violates an oath taken by him in pursuance of law as such inspector, or violates the provisions of an oath required by law to be taken by him as such inspector, or is guilty of any dishonest or corrupt conduct as such inspector, Is guilty of a misdemeanor. ' ' 9 Proxies and Voting Trusts. 238. In general. "Every member of a corporation, except a religious corporation, entitled to vote at any meeting thereof may so vote by proxy. ' ' 10 A proxy is an authority, by one having the right to do a cer- tain thing, granted to another to do it for him.^^ The right of voting by proxy is not a general right, and the party who claims it must show a special authority for that purpose.^ The custom has become common upon the part of corporations to mail proxies to their respective stockholders often accom- panied by a brief circular of directions, and such custom when accompanied by no unreasonable expenditure is not without merit in so far as it encourages voting by stockholders through making it convenient and ready at iand.^^ This state, having declared by statute its general policy as to proxies in relation to domestic corporations, will not enforce an agree- nient relating to a proxy of a foreign corporation to be voted, on in this state, in violation of its general policy thus de- clared." A person who is not a stockholder may call a meet- ing together, when he holds a proxy, and is Requested by the president to call the meeting to order, and act for him, and such callis recognized by the stockholders present.^^ ' It is provided by statute,^^ that no member shall issue a proxy. to vote to any' person for any sum, of money or anything of value. Under this provision a transfer of stock which, although abso- lute upon its face, is designed only to confer upon the trans- 9. Penal Law, § 668. • citizen. Matter of Barker, 6 Wend. 10. General Qorporation Law. § 26, .509. , ,; ,; :r . •;. pt. 13. Lawyers' Ad. Co. v, C. R, L. &, Forms: Proxy, Form Noa. 16,, 97. R. Co., 187 N. Y, 395, 399, 80 ,N.. E. 11. Manson s^. Curtis,, 323 N.Y. 313, . 799. 119 N. E. 559. 14. Sullivan v. Parkes. 69 App. Div. 12. Philips \. Wickham, 1 Paige 590, 321. 330, 74 N. Y. Supp. 787. 598; People v. Twaddell, 18 Hun 427. 15. People v. Albany and Susque- An alien stockholder cannot vote, by hanna ,R. Co,, 55 Barb. 344, 1 Lans. proxy, where, by the terms of the"a«t 308, raodfd, 5 Lans, 25, modfd, 57 N, of incorporation, the- right so to voti' Y. 161. ; ;, is given to each stockholder being a 16. General Corporation Law."! §23. stockholders' meetings. 271, feree the power to vote upon the stock for a period of three years, amoiints to a proxy given for a consideration and is void, and such a transaction may be attacked as illegal by the stockholders, each of whom is presumed to have an interest in having only legal votes cast." 239. Who may act as proxy. "No officer, clerk, teller or bookkeeper of a corporation formed under or subject to the banking law shall act as proxy for any stockholder at any meeting of any such corporation. " 18 The prohibition against the service of an officer of a corpo- ration subject to the Banking Law as proxy for a stockholder, forbids directors as such from acting in that capacity .^^ A proxy need not be a stockholder.^" 240. Execution, validity, duration and revocation of proxy. ''Every proxy must be executed in writing by the member himself, or by his duly authorized attorney. No proxy hereafter made shall be valid after the ex- piration of eleven months from the date of its execution unless the member exe- cuting it shall have specified therein the length of time it is to continue in force, which shall be for some limited period. Every proxy shall be revocable at the pleasure of th^ person executing it; but a corporatioii having no capital stock may prescribe in its by-laws the persons who may act- as proxies for members, and the leiigth of time for which proxies may be executed^' ' l No particular form of proxy is specified by statute except that it is required to be in w'riting.^ In an election for direct- 17. Matter of Glen Salt Ck)., 17 App. 6S7. • ■ • : :■ ,. Div..234, 45 N..Y. Supp. 568, affd. 153 2. Lord t. Equitable Life Assurance NY. 688, 48 N. El'llO*'- ' " '/''•' ' 'Society, '57 Misc. 417, 436, lO'S N. Y. 18. General • Corporation Law,' §^36, Supp. 67, aflfd. 136 App;.Div. 957P 110 pi. • ' - ;, . ,f i: N. Y,' Supp. 1135, revd. , on other, 19."Rept.. of Atty. Genl. (191-a). Vol.!. grounds, 194_N.. Y._ 212, 87, N, E.'i^.B. 3, p. 385. Proxies which refer to the election 20. Matter of Lighthall Mfg. Co., 47 as "a new election of directors by the lfun= 258, 13 St. S.ep; 381. stockholders" are sufficient, although 1. General Corporation Law, § 36, they merely state the year and moni;h pt;" ■ ■' ■-'■■■'•'■' '"' "■ ■ ■ ' of the elecstion,- .the .day .no^i-- having Forms: Proxy, Forni Nos. 16, 97. beeeii-, determined. Matter of Town- Holdiiig stock ■' under -joint agree- shend, 18 N. Y. Supp. 905. 46 >St Eep. ment. — ^Where stock is held nnder^ a- 135.: , , joint "agreement for a pel-iod of years. Presumption; asi to authority of it seems that this 'section does not proxy to fill in his name left blank by- apply to' an agreement' whereby one the maker obtains wli.ere.the maker of the parties is authorized to vote on does not. challenge; the.power. ,,,Whitp the stock during such period. 'Hey v. v.* New' York- State Agricultural So- Dolphin, 93 Hiln 330. 36 N. Y. Supp. eiety, 45, Husii .>S0, 10 St.. Eep. ,594,,, 272 OOBPOEATIONS. ors, the inspectors of the eleetion have no power to try and determine the genuineness of the proxies offered to be voted upon. If they are apparently the acts of the stockholders, and regular upon their face, that ends the matter so far as the inspectors are concerned. Nor have the inspectors the power to require a stockholder voting in person or by proxy, to make affidavit that the stock is not hypothecated.^ As a proxy is revocable at pleasure under the statute, parties can- not by agreement create an irrevocable proxy.* So a stock- holder who has given another a proxy to vote upon his stock, even for a valuable consideration may revoke the proxy where it is about to be'used for a fraudulent purpose.^ 241. "Voting trust agreement. "A stockholder may, by agreement in wiiting, transfer his stock to any person or persons for the purpose of vesting in him or them the right to vote thereon' for a time not exceeding five years upon terms and conditions stated, pursuant to which such person or persons shall act; every other stockholder, upon his re- quest therefor, may, by a like agreenjent in writing, also transfer his stock to the same person or persons and thereupon;may participate in the terms, conditions and privileges of such agreement; the certificates of stock so transferred shall be surrendered and canceled and certificates therefor issued to such transferee or transferees in which it shall appear that they are issued pursuant to such agree- ment and in the entry of such transferee or transferees as owners of such stock in the proper books of said corporation that fact shall also be noted and thereupon he or they may vote upon the stock so transferred during the time in such agreement specified; a duplicate of every such agreement shall be filed in the office of the corporation where its principal business is transacted and be open to the inspection of any stockholder, daily, during business hours. ' ' 6 A voting trust agreement accumulates in the hands of a person or persons shares of several owners, in trust for the purpose of voting them, in order, through the selection and election of directors, to control the corporate business and affairs.'' 3. Matter of Cecil, 36 Hi^. Pr. 477. held valid. Hey v. Dolphin, 92 Hun 4. Matter of Germicide Co., 65 Hun 330, 36 N. Y. Supp. 637. 606, 30 N. Y. Supp. 495. Agreement between stockholders re- 5. Reed v. Bank of Newburgh, 6 stricting sale of their stock. Browti Paige 337. v. Britton, 41 App. Div. 57, 58 N. Y. 6. General Corporation Law, § 35. Supp. 363. 7. Manson v. Curtis, 333 N. Y. 313, Provision of voting trust agreement 119 N. E. 559. for forfeiture of stock deposited upon Prior to the amendment of 1901, an- default, construed. West v. Guaranty thorizing voting trust agreements, an Trust Go.,, 163 App. Div. 301, 147 N. agreement between stockholders to Y. Supp. 431. hold their stock for ten years wa« Revocation of a voting trust agree- stockholders' meetings. 273 Poivers of Supreme Court Respecting Elections. 242. In general. "The supreme court shall, upon the application of any person or corporation aggrieved by or complaining of any election of any eorporatiou or any proceeding, act or matter touching the same, upon notice thereof to the a,dverse party, or to those- to be affected thereby/ forthwith and in a summary way hear the affidavits, proofs and allegations Of the parties, or otherwise iriquire. into the matters or causes of complaint, and es^ta-bUsh. the election or. order a new election, or make such ordef and give such relief as right and justice may require." 8 The provision granting summary jurisdiction to the Su- preme Court in matters of corporate elections has been up- held as constitutional.^ A testamentary trustee holding two shares of stock who receives due notice of the meeting for the election of directors and deliberately refrains from attend- ing the meeting, is estopped frOm subsequently attacking the validity of the election under section 32 of the G-eneral Corpo- ration Law.^'' That the corporation is a necessary party to proceedings under this section is obvious from the fact that it is peculiarly the party against which an order should run commanding it to hold a hew election. Of course the directors are proper parties, but the corporation is an essential party .^^ No appeal to the Appellate Division lies from an interlocutory order of the court, in a proceeding to review the validity of a corporate election of directors under this section, which ap- points a ref ereie to take the testimony of witnesses and report the same to the court with his opinion.^^ 243. Construction of statute. This section is not limited in its application to stock cor- porations but applies to all kinds of corporations.^^ It: was ment. Knickerbocker Investment Co. petent to conduct the business the V. Voorhees, 100 App. Div. 414, 91 N. court will sustain the election and dis- Y. Supp. 816. rniss the petition. 8. General Corporation , Law, § 33. 11. Ma-tter of Pioneer Paper Co., 36 9. Matter of Newcomb, 18 N. Y. How. Pr. 103; Matter qf Schoharie Supp. 16, 43 St. Rep. 443. Va,lley B. Co., IZ Abb. Pr. (;N. S.) 102; 10. Matter of Keogh, Inc., 193 A^pp. Matter of Keogh, Inc., 193 App. Div. Div. 624, 183 N. Y. Supp. 408, holding 634, 183 N. Y. Supp. 408. that since under said section the court 12. Matter of Silaski, 175 App. Div. will see that "right and justice" is 199, 161 N. Y. Supp. 513. done, and tinder the circumstances of 13. Matter of Empire State Supreme the ease as the election resulted in, giv- Lodge, ^53 Misc. 344, 108 N. Y. Supp. ing the management to the son of the. 465,,affd. 118 App. Div. 616, 1Q3 N. Y. testator who was the only person com- Supp. 465. 18 2T4 COBPOBATIONS. clearly enacted in order that courts migkt have power to pro- ceed in a summary manner to test the title of officers of cor- porations without recourse to the more cumbersome proceed- ing under a writ of quo warranto. The Supreme Court now has the power to inquire into any corporate election of direct- ors or officers, whether the same is made by the ♦stockholders or by trustees or directors to fill vacancies.^^ While the court has ample power under this section to determine any ques- tion relating to the election, even such as is merely incidental thereto when necessaTily involved in the controversy, the pro- ceeding is not an action, and is inappropriate for determining equitable claims or questions not necessarily involved in de- ciding the primary question.^^ The section is simply a re- enactment of the provisions of the Eeyised Statutes, and the relief intended by the section, was to establish an election al- ready had, or to set aside that election and order a new one, and the procieeding authorized is summary and not by man- damus. There is nothing in the section which authorizes the court to compel the inspectors of; election to count votes which they have heretofore refused to count, although they may have, acted: erroneously, , The only, relief which can be af- forded, where the . inspectors, have acted im.properly, is to order; a neW; electiionin case justice requires such action.^^ 14. Matter of Eingler fe Co., 304 N. Irig'tlie following: "For Secretary, J. Y. 30, 40,'97 N. Ei 593.^ i ' ^ Pangburn, Jr." (in ; print), "Oscar 15. Matter of XJtiea Fire Alarm; Tpl. Tboril", ,(,ii^. writing). It was held, Co.,, 115 App. Div. SSI, 101 N. Y. that the two ballots were- defective Supp. 109; Matter of Clarke, Inc., and co.uld no| be ,couated for either Nos. 1, ,8, 186 App. Div. S16, 174 N. candidate; that as the president, of. the Y.'Supp. 314. '' •-'''■ ■-: • -"■ ' corporation, with the acquiescence of 16. People' ex vel. Piitzel v. Simon- the voting members, had 'directed them son, 61 Hun 338, 16 N. Y. Supp. 118. to write the name of Oscar Thorn Where votes, reje'cted by inspectors iip6n ' the ' ballot before miking their at an election ' of directors, if received, choice, the evident intention was that would have elected a certain ticket, the ballot, as prepared, should show are adjudged to have ' been errorftously the names of both' candidates, and rejected, the only remedy is to set then that th«' voter should erase one aside the election; the coUrt have hot name, and that, therefore, a' ballot the povr&r to declare the ticket" sue- upon which the names of both candi - cessful, for which 'tbe votes would dates appeared afforded no infbrma- have been cast, had they been re- tion as to the preference of tihe' voter. ceived. Matter of Long Island Rail- People ex rel. Thorn v. Pangburn, 3 road Co;, 19 Wend;'37. '■ App. ■ Div. 456, -38 N. Y.'Supp. 317. Ballots In writing and in print.— Corporations organized iinder the The question as to who was electtsd Insurance Law. — Aggrieved polieyliiold- turned upon two ballots, each contain- (>r-i ifseeking' to Set asidean election STOCKHOLDEKS ' MEETING^, 275 The Supreme Court has no jurisdiction to entertain a suit in equity brought by a stockholder of a corporation in his own behalf and that of all other stockholders to determine the respective rights to the office of director as between rival claimants not parties to the action. Nor can it enjoin a de facto director, holding under color of an election, from exer cising the functions of the office." 244. Application of statute. Where, in the election of corporate officers, no particular mode of proceeding is prescribed by law, if the wishes of the corporators have been fairly expressed and the election was by a proceeding under said section are not required ■ to give notice to all policyholders of the company. Notice to the corporation itself and the direc; tors, the . legality of whose election is challenged, .is sufficient. Policyholders are entitled to contest the validity of such election in a proceeding under seijtion 32 of the General Corporation Law, and, action by the Attorney- General; under s^frf^ioii; 1948 of the Code of Civil. Procedure (Civil Practice, Act, § 1208], is not necessary. When the election atta'cked is wjiolly illegal and without authority the policyh6Mers seeking to set it aside need not show that, a different result will be .had in the event of a legal election. Matter of Empire State Supreme Lodge, 118 App. biv! 616,' 103, N. Y. 'S'upp: 1134. Election in fraternal benefit associa- tion; failure to send representatives to meeting.— Where the constitution of a fraternal benefit association bonsist- ing of subordinate councils, grand councils,' and a supreme coiincil, pro- vides that each grand council is en- titled to send two ■ representatives to the meetings of the supreme council, and that subordinaAe councils shall have no representation in the supreme councili, niembers of a subordinate council are precluded fropi quesjiion- ing the validity of an election of of- ficers at a meeting of the supreme council, in a proceeding under section 32 of the General Corporation Law, where they acquiesced in the pro- visions of the constitution excluding them by failing to send representa- tives to the meeting ^and by not mak- ing a demand for representation. Matter of Supreme Council, Catholic R. & B.. Assn., 142 App. Div. 307, 127 N.. Y. Supp. 143. Annulment of election of trustee in dispensary' in the city of New York.^ — The Supreme Court la given power to annul, upon a motion, the election of a trustee of an incorporated dispensary of the city of New York who, by'tne terms of the act of incorporation, ' was ineligible because he was not, at the time of his election, an actual resident of the city; and it is not necessary that the attorney-general should, bring an actiou,' under section 1948 of the Code of Civil Procedure (Civil Practice Act, § 1208), providing ' that he may maintain an action against one who usurps, intrudfes into, or unlaw- fully holds or exercises within the state of New York, an office in a domestic corporation. Matter of Northern Dis- pensa,ry, 26 Misc. 147, 56 N. Y. Supp. 784. ■ ' ' 17. Moir V. Provident Savings' 'Life Assuralnce Society, 127 App. Div. 591, 112 N. Y. Supp. 57. ■ ' ' 276 COBPOEATIOH'S. conducted in good faith, i^ will not be set aside on account of any informality in the manner of conducting the same.-^^ But surprise and fraud upon the part of electors is a ground for avoiding an election, and all acts done by portion of the in- corporators, which bear the appearance of trick, secrecy, or fraud, will be held invalid.^^ Where an election of directors has been procured by temporarily enjoining a rjeorganization committee, holding sixty per cent of the stock, from voting, and this injunction is subsequently set aside upon the: merits, the result of the election represents only the wishes of a minority of the stockholders and the election must be set aside.^" But where officers were unanimously elected by the only persons entitled to vote, the election will not be set aside because ballots were cast by persons not entitled to vote.^ An election of directors will not be set aside on the ground that the inspectors were not sworn in the form prescribed by the statute.^ Although a person may have an equitable claim upon stock standing in the name of another, which in a proper action might entitle him to a transfer thereof, such right will not be determined in a proceeding to inquire into the validity of a corporate election.^ And likewise in such a proceeding the court cannot review the regularity of the election of a chairman.* The court may, however, go behind the entries in the transfer book of the corporation, and determine whether a transfer appearing thereon was a sale or only a pledge of the shares, and whether the pledgor or pledgee was entitled 18. Philips T. Wiekham, 1 Paige 590. 3. Matter of TJtioa Fire Alarm Tele- Jurisdiction to determine as to the graph Co., 115 App. Div. 8^1, 101 N. rights of the parties to vote certain y. Supp. 109. shares of stock. Matter of Glen Salt 4^ Validity of election of chairman. Co., 17 App. Div. 234, 45 N. Y. Supp. _^t ^ meeting of the stockholders of a 508, affd. 153 N. Y. 688, 48 N. E. 1104. corporation to elect trustees, the person 19. People V. Albany and Susque- fi„t „o^i„ati„g ^ chairman is entitled hanna. B. Co., 55 Barb. 344 1 Lans. ^^ ^^^^^^^ ^^^ .^ ^^^^^^ such chairman, without regard to the question whether 308, modfd. 5 Lans. 35, modfdf 57 N. '— -.r ii J! m 3 0.1 ■««•■ on h® is elected by a majority of stock- 20. Matter of Townsend 24 Misc. 80, j j -j '■. o-^v-o. 53 N. Y. Supp. 289. ' ^''^'^*" ""^ ^^'"'■^^ '^°^'^^- I* *^ OP- 1. Matter of Chenango County Mu- P°«™^ P^'^^y ^° """^ acquiesce in the tual Ins. Co., 19 Wend. 635 ; Matter of Pa^'ty ^''^^ ^°'^^^ ^"^^ declared elected, Supreme Council, Catholic R. & B. t)it organize another meeting, instead Assn., 143 App. Div. 307, 127 N. Y. of offering to vote at first meeting, Supp. 143. t'l^y waive all objections to the iirst 2. Matter of Mohawk & Hudson B. election. Matter of Pioneer Paper Co., Co., 19 Wend. 135. 36 How. Pr. 105. STOCKHOtDEBS' MEETINGS. 277 to vote thereon.^ But in a proceeding to test the validity of an election of ofScers in a fraternal benefit association, the court has no power to determiiie the validity of amendments to the constitution.^ If on an application to review an election of directors of the corpbration, at which the petitioners were not allowed to vote on stock alleged to have been forfeited, it is determined that the attempted forfeiture was invalid, the court should order a new election rather than declare the candidates of the petitioners elected. It is also proper for the court to provide that all persons who are stockholders when the new election is held shall be aUowed to vote thereat and to restrain the issuance of new stock or bonds pending the election.'' In an action to have an election of trustees of a domestic corporation declared invalid and for injunctive relief, the court may inquire into the legality of the election and grant such relief as the special exigencies require, but its judgment cannot, nor will it be permitted, to have the effect of ousting a de facto officer.^ 245. Proceedings to test validity of election. The statute does not intend to authorize a stockholder to institute a proceeding of this nature if he was not a stock- holder at the time of the alleged election of directors. The provisions of the statute were only intended for the benefit of a person aggrieved by or complaining of an election or oP a proceeding, act or matter relating to the same. A stock- holder cannot be aggrieved by an election in which neither he nor his assignor had a right to participate. It must be shown that he or his assignor was either deprived of that right or opposed an action taken or refrained from exercising the right on the assumption that the proceeding would be con ducted legally.^ But the fact that another party is joined, 5. Strong v. Smith, 15 Hun 222. session from the exercise of its fuiic- 6. Matter of ^preme Council, Oath- tions at the suit of a rival claimant.'' olie E. & B. Asaoeiafioil, 143 App. Div. 9. Matter of Scheel, 134 App. Div. 307, 127 N. Y. Supp. 143. 443, 119 N. Y. Supp. 295 ; Matter of 7. Matter of N. Y. & Westchester A^pplication of Syracuse, C. & N. Y. E. Town Site Co., 145 App. Div. 623, 130 Co., 91 N. Y. 1,-holding that where an K. Y. Supp. 414. applicatioa': was made for a new ilec- 8. Ciancimino v. Man, 1 'Misc. 121, tion, by one who was not a stockholder 30 N. Y. Supp. 702. The court said: at the time of the electibn complained '■' A court of equity has no inherent of, but who subsequently received a power to try' the disputed title to corpo- certificate of stock from one who took I'ate office, and to enjoi'ri one in pos- part therein, the petitioner did not or- 278 COBPOEATIONS. without authority, as petitioner with a stockholder does not affect the right of the latter to hav& his petition heard." A denial of an application for the order because of insuffioieni^y of proof to show that certain proxies were valid, is not a bar to a subsequent application, especially where one of the pres- ent applicants was not a party to the former proceeding.^'^ In proceedings to set aside a,n: election of trustees of a corpora- tion, the corporation must be a party, and is entitled to notice of the proceeding.^^ And generally notice must be given to the adverse party or to those to be affected thereby .^^ On the hearing of an application to set aside an election, the court may receive proof by affidavit or oral proof, in its discretion, or both.^* An order to show cause in proceedings instituted under section 32 of the General Corporation Law may be granted by a justice of the Supreme Court out of court. Such an order may be made returnable at a Special Term held with a Trial Term. The proceeding is not " a contested motion '" within the meaning of the Eules of Civil Practice (Bule 63. subd. 4), prohibiting the noticing of contested motions or the bringing of them to a hearing at a Special Term held at the same time and place with a Trial Term.^^ An order made upon notice to the borrower, in a proceeding instituted by the lender under section 32 of the General Corporation Law, ad- judging that the lender, having the legal title to the stock, might lawfully be elected to the office of director of the cor- poration, is not res adjudicata upon the question of the actual ownership of the stoek.i^ cupy a position authoriziiig the inter- elected, or ' to have the election set position of thfe court in his behalf ; that ' aside and a new election ordered. Mat- even if it be true, that an illegal elec- ter of Plofleer Paper Co:, 36 How. Pr. tion must be complained of and set Hi. :: : . ,• aside, in order to enable the court to , 10, Jilatter of Argus Co., et al., 138 compel an election, when the officers of N. Y. 557, 34 N. E. 388! the corpoTation omit to eall# meeting 11. Matter of Tovroshend, 18 N, Y. ofstoolsholderB to elect a new board of Supp. 905, 46 ^t. Eep. 135. directors, the complaint may only be 12. Matter of Pioneer Paper Co., 36 entertained when made by some ag- How. Pr. 108. grieved party who is not . himself^ the . ; 13; General. Corporation Law, § 32. author ot the wrong eoBiplained of. 14. Matter of Pioneer Paper Co., 36 A manufacturing corporation has How. Pr. 104. the right, under the statute (1 R. S. 15. Matter of ■ Argus Co. et al.. 138 603, marg., § 5), to make application N, Y. S'57, 34 N. E. 388, to the court, and to be heard, for the 16. Farmer v. Parmer & Son Type purpose of establishing an election of Povinding' Co.j 83 App. Div. 218, 83 N. its trustees, who have been declared Y. Supp. 338. STOCKJIOLDEES' MEETINGS. 279 246. Restraining interference with officer in possession. A court of equity laa^ no power to try a disputed title to office of trustees of a corporation ; y6t, where one set of trus- tees claims to be de facto in office and have possession of the books and assets of the corporation, and a rival board, claini- ing to be trustees de jure, is seeking to obtain possession and control thereof, equity will interfere to prevent an unseemly struggle between them, and, upon a proper case being made, will restrain the claimants out of possession from interfering with the possession and control of the others until the ques- tion of title to the office can be passed on in the manner pro- vided by law." But where the court has decided that certain persons are the lawful directors of a corporation, the court will, on their application, issue a peremptory mandamus com- pelling a third person, who is shown to have, and who claims a right to continue in, the possession of the corporate books and papers, to surrender them to the lawful directors, al- though the latter are not shown to have made a legal demand f or them,^^ 17. Model Building & Loan Asaoci- 18. Matter of Journal Publishing ation V.' Patterson, 13 Misc. 400, 34 N. Club, 30 Misc. 326, 63 N. Y. Supp. 465. Y. Supp. 241. 280 OOEPOEATIONS. CHAPTEE XVI. Stockholdebs' Liability. 247. Stockholders owning majority or all of stock. 248. Contributiois between stockholders. 249. Liability of stockholder of full liability corporations. 250. Liability where stock not fully paid. 351. Nature of liability. ; 252. Stock issued for property or services. ,. 'v. 253. Liability pf stoclkholders to laborers, servants or employees. ... . 254. Who are laborers, servants and employees^ 255i Non-liab)ility of persons holdirig stock as pledgor or representative. 256. Debts included. \ ■ - : ._>■ . '::':/.,: ; ,• ,' 247. Stockholders owning majority or all of stock. It is well established ttat the ownership of a majority of the stock of a corporatioh, while it gives a certain control of the corporation, does not give that control of corporate trans- actions which makes the holder of the stock responsible for the latter.^' But while the courts of law strictly observe the fiction of corporate entity, there has been for years a grow- ing indisposition to permit corporate entity to be employed either as an instrumentality or as a cloak for fraud or for successful evasion of the law. And it has been held that a suit in equity may be maintained against the individual owner of practically all the stock of a corporation to compel him to pay an unsatisfied judgment obtained against the corporation, where it appears that the corporation was a mere title holder of the defendant's property for his fraudulent purposes; that he used the entire income from the corporate property as his private property ; that he held himself out to the plaintiff as identical with the corporation and assured the plaintiff that his private property st(^d behind it and thereby induced the plaintiff to extend a bond and mortgage and to reduce rent 19. Buffalo Loan, T. & S. D. Co. v. N. Y. 559, 80 N. E. 1120. Medina Gas Co., 162 N. Y. 67, 56 N. Right of one who as trustee and E. 505 ; Tilley v. Coykendall, 173 N. Y. proxy of a majority of the stockhold- 587, 65 N. E. 574; Werner v. Hearst, ers votes that stock be issued to him- 177 N. Y. 63, 69 N. E. 221; Stone v. self— property of the corporation ac- Cleveland C. C. and St. Louis Ey. Co., quired by such means by him will be 203 N. Y. 352, 357, 95 N. E. 816; Senior adjudged to belong .to it. United Gold V. New York City By. Co., Ill App. & Platinum Minos Co. v. Smith, 44 Div. 39, 97 N. Y. Supp. 645, affd. 187 Misc. 567, 90 N. Y. Supp. 199. STOCKHOLDEKS ' LIABILITY. 281 payable by the corporation upon his personal guaranty of payment, and where it further appeared that the plaintiff did not give credit to the corporation but to the defendant only, and that the latter did not repudiate his obligation but acquiesced in the plaintiff's reliance upon it; that he filed no annual reports of the corporation, etc., and fraudulently caused to be transferred to himself the properties of the cor- poration in order to make it judgment proof, which transfers he concealed from the plaintiff. Upholding the right of action under the circumstances outlined does not involve any de- parture from the well-settled rule that the mere fact that an individual owns practically all the shares of stock of a corpo- ration does not subject him to any personal liability at law for the debts of the corporation. It simply involves recog- nition of the principle that liability may be incurred, enf orci- ble in equity, founded upon estoppel and upon the right of a court of equity to refuse to permit a mere corporate entity, found to be a shjam, to be used as an instrument for fraud.^ 248. Contributions between stockholders. Where a single stockholder has been held liable for a debt of the corporation, he may maintain an action for contri- bution.^. The right of a stockholder in a corporation to compel contribution from his fellow-stockholders towards a payment made by him upon a note given by the corporation, to secure the payment oif which the stockholders agreed to pay the amount of their respective stock subscriptions to the payee of the note at its maturity, is not dependent upon proof of the 20. Quard v. Ratkowsky, 183 App. manufacturing corporation created un- Div. 438, 170 N. Y. Supp. 813, affd. der the act of 1848, against the de- 334 N. T. 634, 131 N. E. ®87. fedant, who was also a stockholder 1. Aspinwall y. Saeehi, 57 N. Y. 331. thereof, to recoyer a proportion of ccr- But see Kiehardson y. Abenroth,, 43 tain judgments- recovered against Barb. 163, 165, holding that an action plaintiff, under section 18 of chapter will not lie by one stockholder against 40 of 1848, by laborers employed, by a fellow stockholder of a Boiporation, the company, which judgments he had to enforce a personal liability for a subsequently paid. It was held, that debt of the compaiy. To the extent he could not maintain an action at law of the personal liability created by the against a single stockholder, but must statute, the corporators are partners, bring a suit in equity against them all. and one partner can hot sue a oopart- It seems that the stockholders were, ner for a debt due from all. as to the debts in question, to be con- This was an action at faiw brought sidered as partners. Clark v. Myers j 11 by the plaintiff, a stockholder of a Hun 608. 282 COEPOBATIONS. insolvency of the corporation, and the corporation' is not a necessary party to such an action.^ Where all the stockhold- ers of a corporation execute and deliver to a creditor thereof, their joint and sevieral promissory note for money loaned to, and used by, the corporation, as between themselves they are co-sureties for the company. One of their number, paying the note when it became due, may call upon his co-sureties for equal contributions as makers of the note; and their liability is not to be measured by their relative amounts of stock in such corporation.^ ^ , 249. liability of stookholder of full liability corporations. "If the corporation is formed as or becomes a full liability corporation all 'the stockholders of the corporation shall be severally individually liable to its credi- tors for, all its debts and liabilities, and may be joined as 4efendant,s in any action against it; No execution shall issue against any stockholder, individually nntil execution has been issued against^ the corporation and returned unsatisfied, and all the stockholders shall contribute a proportionate share, according to the number of shares of stock owned '6y each, of the aniount paid by any stock- holder on a judgment recovered against him individually for a debt of the corporation, and he may recover from the other stockholders in the corporation in ; a joint- or several action tlie proper portion , due by them and each of, them, of the amount paid by him on any such judgment. "4 The $tatut,e of Limitations contained in section 59 of the Stock Corporation Law is not confined to actions brought under section 56 to enforce the liability of stockholders in corporations where the, stock has not been fully paid for, but is a general provision relating to the liability of stockholders in all stock corporations and applies to an action brought under section 6 of the Business Corporations Law to enforce the liability of a stockholder in a full liability business corpo- ration.^ An action against the corporation is not a pre- requisite to the commencement of an action against a stock- holder thereof under section 6 of the Business Corporations Law; but, if the action against the stockholder is brought prior to the commencement of an action against the corpo- ration, the creditor's right to issue execution upon a judg- ment obtained in the action against the stockholder is sus- 2. Hart v. Sickles, 45 Misc. 174, 91 5. Adams v. Wallafle, 82 :App. Biv^ N. Y. Supjp. 897. 117, 81 N. Y- Supp. «48 ; Adams v. 3: Coburn V. Wheelock) 34 N. Y. 440. Slingerlandj- 87 App. Div. 312, 84 N. 4. Business' Corporations Law, § 6, Y. Supp. 323; Sanford v. Bhoads,113 pt. Api). Div. 782, 9<) N. Y. Supp. -407. STOCKHOLDERS ' LIABILITY. 283 pended until an execution upon a judgment against the corpo- ration has been returned unsatisfied.*^ The liability is con- tractual and survives the death of the stockholders and con- tinues against his personal representatives.'' Stockholders are not relieved from individual liability by defects in the organization of the corporation.^ 250. Liability where stock not fully paid. "Every holder of capital stock not fully paid, in any stock corporation, shall 'he personally liable to its creditors, to an amount equal to the ampunt 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 liabilities imposed by this section shall be in lieu of the liability imposed upon stockholders of any existing corpora- tion, under any general or special law, excepting laws relating to moneyed corpo- rations, and corporations and associations for banking purposes, on account of any indebtedness hereafter contracted or any stock hereafter issued; but nothing in this section contained shall create or increase any liability of stockholders of any existing corporation under any general or special lavy. "9 6. Walton v. Coe, 110 X. Y. 109, 17 N. E. 676; Adams v. Wallace, 82 App. Div. 117, 81 Tliged to pay it upon suit brought by the corporation, or aiiy of its creditors, after having paid it, they may set up such payment as a defence against any further, liability. Tall- madge v. FishkiH Iron Company, 4 Barb. 383. One stockliolder cannot bring an ac- tion under the statute to : enforce the liability of another stockholder. Klueg V. Bosch. 28 N. Y.. Supp. 159i 31 Abb N. C. 27. The stockholder is liable for interest upon an amount equal to his liability, from the commencement of a suit against him, to ' enforce his individual responsibility. Burr v. Wilcox, 33 N. Y. 551. In an action brought under section 10 of tlie Manufacturing Act of 1848 (Cliap. 40), as continued by section 54 of the Stock I Corporation Law of 1893 (Chap. 688), .against a stockholder of a corporation whose stock h^d not been l>aid for in money or property as re- quired by the statute, to recover for legal services rendered to the corpora- tion by the plaintiff's assignors, 4;he fact that one of the plaintiff's assign- ors is a stockholder of the corporation rloes not preclude a recovery, where it_ appears that the employnlent and services of the plaintiff's assignors were joint ahd not several. Montgom- ery V. Brush Electric 111. Co., 48 App. IMv. 12, 62 N. Y. iSupp. 606, affd. 168 X. t. 657. 61 N. B. 1131. 10. Stock Corporation Law, § 60, pt. 11. Stock Corporation Law, § 63,' pt. 12. li-isJl Paper Corp. v. White, 9"! Misc. 361, 154 N. Y' Supp. 778. 286 i.GORPOBATIONS. limited to the original incorporators, but applies as well to those becoming stockholders after the incorpdration.^^ One who receives stock issued without consideration, so that it is not fully paid within the provisions of the statute, is liable to the, judgment creditors of the corporation." The judgment creditors of a corporation are only entitled to recover against subscribers to the capital stock to the extent of the amount unpaid thereon, and although two or more defendants may be liablfe, only one satisfaction may be had as to the same stock or that issued in place thereof/^ 251. Nature of liability. The liability imposed tipon a stockholder for the debts of the corporation has been variously described. Sometimes it has been .said that it .results from a preservation of the liability of individuals which othi^i-wise Avould have been merged and lost through the process of incorporation. Sorhetiines it is queried whether the liability is that of a sure- ty or a principal debtor. Sometimes it has been written that the liability is of a statutory character and at other times of a contractual character assumed by an individual when he be- came a stockholder under the laws governing the' subject of stockholding. Biit whatever the technical hatiire of the lia- bility may be, there can be no question . that in its practical aspects and consequences itjs of a secondary and exceptipntii character which is developed only by the unusual contingent'y that the corporation has become insolvent and unable to pay its debts. Under such' circumstances it should be governed by fair rules and should hot be extended or inipo^ed in violation of thQ plain, dictates of ordinary justice.'^ Such liability of 13.. Briggs et al.,,y,,,Wal.dron, 83 "N. licher, 8 App.' Div, 581, "-ioN. Y. Supp. 14. Stevens v. Episoopal Glmrch: Hia- Liability under this section is in con- tory Co,. 1.4Q App. Djv, 570, IM N. tract, aiid not a penalty, and can lie Y. Supp. 573. . : , , enforced, by an action sounding in con- ,15. Stevens v., ]i!,piscopal Oliurch His- tract against a stockliolder found in toiy Co., 140 App. Div. 570, 125 Jf. Y. anpther state. Flash v. Conn, 109 U. Supp. 573.. , ,S. '37il, ■ , 16. Assets^ Realization . Co. v. Hb-jir- The personal liability of stoclchcld- ard, ail N. Y. 430, 105 N. E. 680. ers created by the charter of a cotpot- The liability <>f a stockholder for the ation, for the corporate debts, is not debts of the corporation, under the in the nature of a penalty or forfei- Stock CoTjKJration ;Law,. is a legal lia- ture, and does not exist solely aa ^ bility. Bagley & Sewall Co. r. Ehr- liability imposed by statute. ft is STOCKHOLDERS LIABILITY. 287 stckekholders : survives their death and may .(be' tiohfiinied against their personal; representatives.^^' A right of action against a, stockholder for the debtsof a corporation does not exist at common law, and a statute which imposes upon the si;ockholder personal liability for the; corporate debts, as it is in derogation of the common law, must be strictly construed, and cannot be extended beyond its literal terms.^^ 352. Stock issued for property or services. 'The directors of a corporation are to be the judges both as to the necessity for, arid the value of the property transferred in payment for stock; good faith and the exercise of a proper discretion and honest judgment is all that is required.'-' And therefofie stock issued in good faith in payment fof propei-ty which siibs'equently dimiihished in value caiinot be' said to liave been not fully paid so as 'to' render the holdfer liable under th^ statute.^" But where the amount of stock agreed to be paid far by property transferred to th6 corporation greatly ex- ceeded the actual value of the Jjrdpierty, 'the stock has never not enforced simply as a statutory ob- ligation, tut is regarded as having been voluntarily assumed by the act of beeomdng a stockholder. Marshall V. Shernian, 84 Hun 186, 33 N. Y. Supp. 193, revd. on other grounds, 148 rN.'Y. 9, 42 N. E. 419.. ■■ •• ' The statutory obligatibn- which a stockbolder assumes uiider the Manu- faoturirig Act of 1848, becojn«s- a part of the ■ contracts made by the com- pany with its creditors until the cor- poration is so fari organized; and com- pleted that its stock is subscribed for and paid in, at whioh time the statute relieves the stockholder from further liability: Uirtil that time his relation is deemed contractual. ' The liability of the stockholders of a corporation to its creditors under this' statutory pro- vision is, therefore, a contractual re- lation, not between the corporation and its stockholders, but between the creditors and the istockholders. It is a personal right vested; in the cred- itor, not; a rigW which vested' in the corporation, and, therefore, not a i-ight ^that either the corporation or :its as- signee can enforce. This liability dJies not exist in favor of the corporation, nor for the benefit of all its creditors, but only in favor of s"uch creditors as are within the prescribed condition, and is to be enforced by them in their own right and for their own apecial benefit. • Earnsworth v. Wood, 91 N. Y. 308; Close, V. Patter^, 155 N. Y. 145, 150, 49 N. E. 686; Thompson v. Kflight, . 74 , Apj).,. ,-Pix, 316-, 77.. N. : Y. Supp., 59:9;: jSoutlii^oi^^ji: v. JVEorgan, J,43 App. Div. 648,' 6^53,' 138 N.Y. Supp. 196, revd. on other grounds, 205 N. Y. 293, 98 N, .je;,, 490. ; 17. Chase , v. , Lord, ,77 N. Y. 1; .Cochran V, Wiechera, ,119 N. Y. 399, 4|1?3, 23, N. E. 8(>3, 18. Chase V. Lord, 77 N. Y,; 1;. Barnes v- Wheaton, 80 Hun.jS, 29 N. -Y. Supp.,, 830. 19. Schenck et al. : v. Andrews, 57 n: y.;i33i 20. Alpha -Portland Oeiflent Oo. v. Sohralwieser, 215 Fed. 982. 288 OOEPOBATIONS. been "fully paid" witMn the meaning of the statute.^ But it is not enough to proVe that the property was pur iehased at an overvaluation through a mere mistake or error of judgment on the part of the trustees; it must be shown that the pur- chase was in bad faith and to evade the statute. All that is necessary, however, to establish legal fraud, wftich -will take the stock so issued out of the protection of the statute is to prove that the stock exceeded in amount the value of the property in exchange for which it was issued and that the directors so issued it deliberately and with knowledge of the real value of the property; no other fraudulent intent need be alleged or proved.^ Where a corporation purchased with its capita,l stock the property, business and good will of a firm, the value of such good; will should be taken into con- sideration in determining whether the property of the firm was transferred to the corporation at an excessive valuation." Whether the property purchased was worth the nominal value of the stock or believed by the trustees to have been of that value, or whether the transaction was a sham by which the trustees sought to evade the statute, are questions of fact for the jury.* A purchaser of stock in a corporation, when the stock has not been fully paid because of the overvaluation of 1. Flour CSty National Bank y. s-bare of the "water." White Corbin Shire, 88 App. Div. 401, 84 N. Y. Supp. .& Co. v. Jones, 155 N. Y.i 475, 50 N. 810, offd. 179 N. y. 587, 72 N. E. 1141. E. 289. 2. Douglass V. Ireland, 73 N. Y. lOO; Subsequent assessment to complete jSTatiohai Tube Works Oo. v. drilfiUan, payment. — ^An assessment on the 124 N. Y. 303, ae N. E. 538; Thurber stockholders of the corporation to an V. Thompson, ai Hun 473; Rowell v. amount equal to the overvaluation of Lambert, 66 Hun 4, 30 N. Y. Supp. iiropeity which had been taken in pay- 822. ment for stock, although made after In an action to charge a stockholder the expiration of the two years with- for debts of the cotporatibn on the in which the payment for the stock ground that tlie capital stock was not was required under section 10 of, ichap- in fact paid up because the iipminal ter 40 of the Laws of 1848, will cure payment thereof was made in prop- the defect caused by such overvalua- eity intentionally overvalued, it is tion as to .all creditors whose: claims prejudicial error after a witness has thereafter accrue. White Oorbin & testified that the property was over- Co. y. Jones, 167 N. Y. 158, 60 N. E, valued and that he gave some shares 432. of his stock to induce another person 3. White Oorbin Co. v. Jones, 79 to invest in the stock at par, to per- App.. Div. 373, 79 N. Y. Supp. 583. mit him, over the defendant's objec- 4. Powers v. Knapp, 85 Hun 38, 41, tion, to explain that he did' this be- Sa N. Y. Supp. 633, affd. 158 N. Y. 733. cause the .purchaser: insisted that : the 53 Jf. E. 1131; Lake Superior Ironi Oo. stock was watered and wanted Ma v. J)T&xe\. WS.Y. 87. i ,,,1 STOOKHOLDEKS ' LIABILITY. 289 property whicli had been taken in payment therefor, is liable to creditors of the company, although he bought the stock without knowing of the overvaluation.^ 263. Liability of stockholders to laborers, servants or employees. "The stockholders of every stock corporation shall jointly and severally be personally liable ior all debts due and owiiig to any of its laborers, servants or employees other than contractors, for services performed by them for such corporation. Before such laboiei', servant or employee shall charge such stock- holder for such ■ sef vices, he shall give him iiotice in writing, within thirty days after- the termination of such service, that he intends to hold him liable, and shall commence an action therefor within thirty days, after the return of an ej^eeution unsatisfied against the corporation upon a judgment recovered against it for services. "6 The statute is a continuation of previous legislation, whjeh had for its object the protection of t^ipse who earned their living by manual labor, and. not by professional services, axid who were supposed to be the least able to protect themselves. To such persons, and to all who become einployed in subordi- note and humble capacities and to whom the hardship would be great, if their wages or salaries were not ptomptly paid, the legisMive policy is to afford the protection of a recourse to the stockholders of a corporation, upon the latter 's default/ An assignee of a laborer may maintain an action against a stockholder under this statute.* A plaintiff who has recovered a judgment against a corporation for personal services ren- dered by himself and his assignor, and has exhausted his remedy by execution against the corporation may maintain an action against a stockholder for such services and for the costs in the former action. But a stockholder cannot be charged with costs incurred in the'defense of an action prose- cuted against the corporation ipy damages upon causes of action other than that embraced in the statute making him liable.^ It seems that a plaintiff may in an aetiou under this section compromise with and release one or more of the de- fendants, without affecting his right to recover the balance of his claim from the others." 6. White Corbin & Co. v. Jones,' 167 8. Pilclier v. Brayton, 17 Hun 439; K Y. 158, 60 N. B. 482. Krauser v. Kflckel, 17 Hun 463. ' 6. Stock Corporation Law, § 57. 9. Card v. Groiesbick, 204 N. Y. 7. Bristor V. Smith, 158 ST. Y. 157, 301, 97 N. E. 728. ' • 159, 53 N. E. 42. 10. Herries v. Piatt, 31 Hun 13S. " 1[) 290 G&RPOEATIQXS. 254. Who are laborers, serva.nts and employees. When the general word ."employees" was added after' the words " laborers " and'" servants," it could not have been intended, from the collocation of words and for the want of reason in the thing, to include persons performing services to the corporation of a higher dignity, such as its legal ad- viser." A person employed by a manufacturing corporation as its civil engineer and traveling agent, at a fixed salary, is a servant of the corporation.^? But a consulting engineer, performing services as such, is not within a. statute making stockholders individually liable for debts due and owing to the " laborers and opeiratives. "^^ One employed by a min- ing corporation, having its principal place of business at New York City, to act as superintendent of its works at a distant place, with power to hire and pay workmen, and to make con- tracts for supplies, oi'es, etc., when and as directed by the company, is not a " laborer, or servant or operative."" So also, one employed by a mining corporation, as agfent,- to take charge of its mines in another country, with full power to contirol its property and manage its financial affairs in that country, in all respects as the company itself could do, is not a servant within the meaning of the statutcj^^ Likewise the secretary of. a corporation is not a laborer, servant, or ap- prentice :0f the : corporation.^^ But a person employed by a stone company to act as foreman, .take part in the manual laborjequired to, manufacture stones, k^ep the time of the men , 11. Bristol- V. Smith, 158 N. Y. 157, litigation ' relating ito the railway, its 160, '33 l i ■ ■ I r: ; -^ iv-r „ ^ „„;, ■ 13. Jiricsson y.. Brown, 38 Barb- 69 App. Div. 338, 74 i?^. Y. Supp. 639. An drdef -aippbiiiting a receiver of a' •' '"'•'■ ' railroad company directed him, among 1*.. E^^user, v. Kuclsel,, 17 Hun , 463. other things,; to pay debts /'owing to 16- Hill v, Spejieer, . 61 N. Y., ^7,4. the laborers and employes" of the An assistant to, an agent appointed company "for labor and services actu- to superintend the aflfairs of a corpor- ally done in connection with that ation in , other e9untries i^. not ."a company's railways.;' It was held, laborer or servant'' witli.in the mean: that it included a ,claini of, counsel Jfor ing of ihe 9ta,tute. Dean \. .De Wolf, professional services , rendered by him IQ Hun 186, ajld.. 82 N. Y. 626. on employment of -the company in 16. Coffin v. Reynolds, 37 N. Y. 640. stockholders'- liability. 291 solicit orders, collect bills, and do whatever is required by the secretary of the company, is a laborer or servant." The word '' employee " as used in the statute, includes a bookkeeper employed at a weekly salary who, in addition to the usual duties of such position, attended to the banking business of the corporation and answered inquiries in the absence of of- ficers. It seems, that such employee is within the terms of the statute although he receives an annual salary:^^ But one em- ployed at a yearly salary as a bookkeeper and general man- ager is not a laborer, servant or apprentice.^' A superintend- ent, attorney^ or agent selling on a commission is not pre- ferred by the statute.^ ' ■ 265. Non-liability of persons holding stock as pledgor or representative. "No person holding stock in any corporation- aS' coHateral sedulity, or. as executor, administrator, guardian or ti^ustee, unless he ghall have voluntarily in- vested the. trust; fjiudsi in such stock, shall be personally subjeet.tp liability as-, a stoekholdei: ; but, the person, pledging such stooi shall be considered the holder thereof and shall be liable as stockholder, and the estates and fiinds in the hands of such executor, administrator, guardian oy trustee shall be liable in the like manner and to the saiile extent ks the testator or intestate, or the ivard nv per- son interested in such trust fund, would have been, if he had been living and competent to act and .held the same stock iit his own name, unless it appears that such executor, administrator, guardian or trustee voluntarily invested the trust funds in such stocks,, in which case he shall be personally liable as a stockholder. ' ' l 256. Debts included. The liability of the stockholders of a corporation under the statute is not limited to the commercial debts of the corpo- 17. Short v. Medberry, 39 Hun 39. -'''A 'petsb'li employed to assist the 18. Farnum v. Harrison, 167 App. general manager of a corporation in Div. 704, 153 N. Y. Supp. 835. keeping its books and to clean the Bookkeepers.— Stockholders are lia- ^jgce and show-room of the corpora- ble for services of a bookkeeper em- ^.^^ ^^^ ^^ ^^^j^^ j^ ^^^^.^^^ together, ployed on a salary by the corporation , . j ^ • ■ '^ : , .... , ,. i taking apart and shipping wire and who at all times was subordinate . , , - -, . , ., J. 1 T7 „ wicket fence and weaving machines, to and under its control. Farnum v. . s ■ Harrison, 83 Misc. 434, 145 N. Y. '' ^° employee within the meaning of Supp 36 clmpter 376 of the Laws of 1885. A bookkeeper is a "servant" within Brown v. A. B. 0. Fence Co., 53 Hun L. 1848, ch. 40, § 8, making stock- 151, 5 N. Y. Supp. 95. holder? liable personally for wages, 20. People v. Remlngtop & Sons, 45 etc. Chapman v. Cihumar, 54 Hun 636, Hun 32«, 10 St. Rep. 310, affd. 109 N. 7 N. Y. Supp. 230. y. 631, 16 N. E. 680. 19. Wakefield v. Fargo, 90 N. Y. 1. Stock Corporation Law, § 58. 213. 292 COKPOBATIONS. ration, but includes a debt incurred by the corporation for iprofessional services rendered to it by an attorney.'. And when a corporation assumes the contract of a vendee pf lands and agrees to pay the consideration to the vendor, it assumes the debt and the vendor becomes a creditor within the pur- view of this statute.^ It seems, that the statute does not per- mit the creditor to hold a stockholder for a corporate liability which sounds in tort but that it applies only to ordinary debts, voluntarily contracted by the corporation and becoming due at some given time."* A sum payable upon a. contingency is not a debt " contracted " and does not bepome a debt, for which the stockholder is liable under the statute, until the con- tingency has happened.^ A stockholder of a manufacturing corporation has been held liable for installments under a con- tract of the corporation, made before he became stockholder but falling due thereafter." The liability of a stockholder for the debts of the corporation to the extent of the amount unpaid on the stock held by him cannot be renewed or ex- tended by any renewal or extension of the indebtedness which the creditor may make with the corporation.' 2. Hallet v. M&tropolitap Messenger^ SI X. "fe. 1164. Co., 69 App. Div. 258, 74 N. Y. Supp. 4. Doyle v. Kimball, 23 Misc. 431, 639. 53 N. y. Supp. 19'5. A judgment for costs against a cor- 5. Bottlers Seal Co. v. Rainey, 225 poration is a "debt" with L. 1848, cli. K Y. 369, 122 N. E. 200. 54, § 12, rendering directors personally 6. McMaster v. Davidson. 39 Hun liable for dabta of » corporation. An- 543. drewa v. Murray, 9 Abb. Pr. 8. 7. Parrott v. Colby, 6 Hun .J5, affd. 3. Ford V. C9iase, 118 App. Div. 605, 71 N. Y. 597. 103 N. Y. Supp. 30, affd. 1»9 N. Y. 604, BNFOKCEMENX OF STOCKHOLDEES ' LIABILITY. 293 CHAPTEE XVII. Enfobcemenx of Stockholders' Ll\bility. 257i Form of action. 258. Who may sue. 259. Conditions piecedeut generally. 260. Judgment against corporation, and return of execution unsatisfied. 261. When judgment against corporation and return of execution excused. 262. Debts of corporation payable within two years. 263. Persona liable. 264.' Defenses ; Set off. ' ! 265. Misnomer not available in action against stockholder. 266. Limitation of action against corporation and stockholder. 267. Parties. 268. Pleading: Service of summons by publication. 269. Judgment against corporation as evidence. , 270. Proof of being stockholder. 257. Form of action. Obviously the only way in which stockholders' liability can be enforced is by a suit in equity. The stockholder is liable for all the debts of a certain class, but only to the extent of the amount unpaid on his stock. And under the statute, as amended by L. 1901, ch. 354, a creditor of a corporation can- not maintain an action at law for his own exclusive benefit to enforce the liability thereby imposed upon the stockholders; but his remedy is to bring a suit in equity on behalf of him- self and all other creditors to enforce such liability.* 8. Lang v. Lutz, 83 App. Div. 534. ent corporation have brought seijar- sa N. Y. Siipp. 319, afifd. 180 jST. Y. ate a Vary, 79 Hun 103, a9 N. Y. Supp. 636, the end that the rights of all t'be cred- affd. 152 N. Y. 131, 46 TS. E. 312. iters and the liabilities of all the stock- Separate suits by creditors may be holders may be, adjudged in; one action. enjoined.— ^Farnsworth v. Wood, 91 N. Bagley &, Sew-all Coi v. Ehrlieheri; S Y. 308, 314. App. Div.. 581, 40 N. Y. Supp. 93a. Where many creditors of an insolv- One who is a stockholder in a corpor- 294 COKPORATIONS. And when the insolvency of the eorporation has been judi- cially declared, and all its assets are in the custody of the law for equal distribution among creditors, an action in equity, brought in behalf of all the creditors, against the stockholders, to enforce their liability, in which the receiver is joined as defendant, is a just and reasonable method of ascertaining and having finally determined the respective liabilities of the stockholders.^ A suit by one creditor in his own behalf and that of all others similarly situated to enforce debts against stockholders will not be discontinued upon application of plaintiff where it will bar the rights of other creditors -• — the statute of limitations having run." Prior to the amendment, a creditor could maintain an action at law to enforce the statu- tory liability for his individual benefit.^^ ation, the stockholders in which have become personally liable for the cor- porate de'bts, and who is also a judg- ment creditor of the corporation to an amount exceeding his liabilityias stock- holder, ihay: maintain an action against tlie corporation, its otlier stockholders, and its other cjeditors^ - to ascertain the rights and liabilities of the parties, and to, set off his liability agaliist his judgment, and to restrain other litiga- tion among the parties and payments by the stiockholders on.the.ir individual liability meanwhile. , ,.:.,,, ., The complaint in such an action should show that the plaintiffs ■ were stockholders during all the time when the demands of the different creditors accrued. The times when the different stockholders acquired their stock, and the time when the demands of the cred- itors who are made defendants s^crued, should' be stated, or sufficient to show, that all the defendants who are stock- hblders, are liable to contribute to> the payineiit of the demands of some of the creditors, and that some of the stockholders are liable to Contribiite to all the demands of all the creditors. It muat also show the grounds ion which- the stockholders are individually liable for the corporate debts, Geery V. New York and L. S. S. Co., 13 Abb. Pr. 368. ■ 9. Hirshfeld v. Bopp et al., 145 N. Y. 84, 85, 39 N. E.'Sir ' ^'- - '' ' ' Enforcement of liability, of stock- . holders by sequestration; action. — ^Such liability may be enforced in a seques- , tratibri action, brouight in pursuance of seotioii 1784 et sfeq. (now GeneralCor- poration Law, § ioO') ■ of thfe' Code of • iCivil Procedure, by a judgment cred- itor, .of : the: corporation, whose judg- ment is baaed upon ;an , Indebtedness, a portion of vphioh WS'S incurred after the subscriber had assigned his con- tract, and the plaintiff will not.be re- quired to, seek his remedy in an action, under section 54; of, the Stock Corpora,- tion Tja\!S',{Ohap. ^^88, Xaws, of 18S3),. BeaJs v. Buffalo Cojnstruction Co., .49, . App. Div. 589, 63 N. Y. Supp. 635. , 10. Hif'shfeld v...:gopp, 5 App. iliiy. S02, 39 N. Y. .Supp.-24. ..'' 11. Weeks v. Love, 50 N. Y. 6'68; Lang V. Lutz, 83 App. Div. 53^,,;.&2 N; Y.,Supp. 319, affid. 180 N. Y. 354, 73 N. E. S4. Action by single creditgr against single stockholder in foreign corpora- tion. — ^An action, at, rlavis, bya.gingle creditor of an insolvent Maryland cor- poration against a single stoekhol,d«r, ENFORCEMENT OF STOCKHOLDERS' LIABILITY. 295 258. Who may sue. The right to enforce the liability of stockholders under the statute is vested in the creditors and not in the corporation, and does not pass to a trustee in bankruptcy of the corpo- ration,^^ or an assignee for the benefit of ereditors.^^ The statute does not apply where the creditor was at the time covered by the action a director of the corporation and he cannot maintain an action to enforce the liability." 259. Conditions precedent generally. "No action shall.be brought against a stoelfholder for any debt. of the corpo- ration until judgment therefor has been recovered against the corporation, and an execution thereon has been returned unsatisfied in whole or in part, and the amount due on such execution shall' Tae the amount recoverable, with costs against the stockholder. No stockholder shall be personally liable for any debt of the corpoiratipn not payable within two years from the time it is contracted, nor to enforce the latter 's statutory lia- bility for double the amount of stock at its par value held by him in such corporation, is not maintainable either under the liaws Of Maryland, or under the laws of New York. Knickerboeker Trust Co. V. iBelin, 185 N. Y. 54; 77 N. E. 87.7. IZ. Kathbone :V. Ay.er, No.j?i, -84 App. Div. 186, 82 N. Y. Supp. 235 ; Breck v. Brewster, 153 App. Div. 800, 138 N. Y. Supp. 821. The corporation itself is given no claim or right of auction against stock-, holders for the amount unpaid on stock held by them. — Certain stockholders, viz.', those who were actually stockhold- ers when a debt of the corporation was contracted, are made personally re- sponsible to certain creditors, viz., those who are creditors on debts payable within two years after they were con- tracted, to an amount unpaid on their stock. Hence no right of action pslsses to a trustee in bankruptcy of the corpo- ration in behalf of its general creditors. In re Jassoy Co. (C. C. A.j' 2d Gir.), 178 Fed.' 515. 13. An assignee for the benefit of creditors of a corporation which issued, as fuU paid, a quantity of its corporate stock and received therefor less than the par value thereof, in ^violation of the Stojck Corporation Law, cannot maintain an action against the person who purchased such stock to recover the difference between the par value of the stoct and the amount which he pa;d-the corporation therefore. Thompson v. Kriight, 74 App. Div. 316, 77 N.T. Supp. 599. The assignee of a creditor and holder i)f- the notes of- a corporation, organizgd, under the , Business Corpora- tion Law, .whose capital stodi has never been fully paid, arid which has been dis- solved', after the appointment of a re- ceiver of its property, is entitled, under the provisions of the Stock Corporation Law, to maintain an action against a stockholder, who has paid nothing "for his stock, in order to recover of him a debt of the corporation not exceeding the par value of his stock ; and it is un- necessary for the plaintiff to jbin,in his action, other creditors, the corpora- tion, its receiver,' or other stockholders! Thonipson v. Meoltii, 21 Misc. 700; 49 N. Y. Supp. 422. ; 14. McDowall v. Sheehan, 139 N. Y. 200, 29 N. E. 899, 296 CORPOBATIONS. unless an action for its collection shall be brought against the corporation within two years after the debt becomes due; and no action shall be brought against a stockholder after he shall have ceased to be a stockholder, for any debt of the corporation, unless brought within two years from the time he shall have ceased to be a, stockholder. " 15 This section provides, in. effect, that no action shall be brought against a stockholder unless judgment. has been re- covered against the corporation and execution returned un- satisfied in whole or in part: that the stockholders shall not be personally liable for any debt of the corporation not pay- able within two years from the time it was contracted, nor unless the action for its. collection shall be brought against the corporation within two years after the debt became due. This provision is a limitation of time within which an action can be brought and can only be taken advantage of by ijlea in defense.^^ The provisions of this section apply to an action by creditors to enforce the liability of stockholders under the Banking Law, but they are not applicable where the action is brought by the Superintendent of Banks." And therefore, under section 19 of the Banking L9,w, the superintendent of banks may if necessary to pay the debts and, liabilities of a trust company, enforce the liability imposed upon, the stocks holders thereof by section 196 of the Banking Law, without compliance with the provisions of the Stock Corporation Law.^^ 260. Judgment against corporation and return of execution unsatisfied. The provision of section 59 of the Stock Corporation Law that " No action shall be brouglit against a stockholder^ for any debt of the, corporation until judgment therefor has been recovered against the corporation, and an execution thereon has been returned unsatisfied in whole or in part, ' ' constitutes 15. stock Corporation Law, <| 59. Contra .^Oases decided prior to 16. Groeber v. Ehrgott, 18S App. amendment of Banking Law by L. 1908, Div. 377, 168 N. Y. Supp. 38; : eh. 143. Hirshfeld v. Bopp et al., 14.5 17. Hosier Safe Co. v.. Guardian N. Y. 84, 39 N. E. 817; Hirshfeld v. Trust Co., 308 N. Y. 534, 529, 101 N. Kursheedt, 81 Hun 555, 30 N. Y. Supp. E. 786; Richards t. Schwab, 101 Misc. 1023, affd. 145 N. Y. 84, 39 N. E. 817; 128, 135, 167 N. Y. Supp. 535.. GauBe v. Boldt; 49 Misc. 340, 99 N. Y. 18. Van TOyl v. SehWmann, 208 N, Supp. 442, affd. 115 App, Div. ; 897, Y. 53, 101 N. E. 779; Cheney v. Schar- 100 N. Y. Supp, 1117, affd. 188 Ni Y. mann, 145 App. Div. 456, 129 ,N, Y. .546, 80 N. E. 566. ,,,, - Supp. 993. ; ENFORCEMENT OF STOCKHOLDERS' LIABILITY. 297 a condition precedent to the maintenance of the action." The object of the statute is to protect stockholders from an action by the creditors of the corporation to recover the balance un- paid upon' their claims, until they have been liquidated by judgment and so much thereof collected from the corporation as can be realized by execution,^" and also that it may be established as a valid claim against the party primarily liable and who knows the facts and is in a position to interpose a defense if there be one.^ The statute requires a judgment de- termining the amount of the plaintiff's claim, and the stock- holder, when he is called upon to pay, cannot be required to ascertain the amount from estimates and figures made by an- other as to the various items included by the jury in its ver- dict.^ Recovery of a judgment and the issuance of an execu- tion in another state is not a compliance with the condition.^ Ijikewise the plaintiff, in order to be entitled to a recovery, against the stockholder, must show the issuance and return unsatisfied of executions upon the judgments which were the foundation of the suit, and the issuance and return unsatisfied of the execiitions on the prior judgments is not sufficient.* There is no requirement in the statute that a judgment must be recovered in a court of record or made a judgment of a 19. Hauehy v. Draper, 89 N. Y. 334 ; against the corporation, and an execu- NationalBank v. Dillingham, 147 N. Y. tion returned unsatisfied in whole or in 603, 43 •N. E. 338; Birmingham Na- part. The clause of that section which tional Baiik v. Mosser, 1* Hun 605 ; re'^uirgg the return a^ an execution un- Berwind-WMte Coal Mining Co.. v. ^{^^^ ^^^1^^^ onl/'to stockholders Ewart, 90 Hun 60, 35 N. Y. Supp. 573; ^^^^ ^^^^ ^^^^^^^ ^^ ^ ^^^^_ ^^^ ^^ Citizen* Bank of Buffalo v. Weinberg, p,„„„, ^^^ ^, stockholders of %he 36 Misc. 518, S7 N. Y. ,Supp. 495. company. Shellington v. Howland, 67 Section 24 of the act of 1848, re- ^ ■' quiring, as a condition precedent to the personar liability of a stockholder, .„, -kt -.t .,.» ..o„ „„ »t t^ „ ^ ^ ' .^ . . ., Agnew, 194 N. Y. 165, 168, 66 N. E. the commencement of a suit against the ^T-ia corporation, for the recovery of a debt, i 1- J -i-x. V !j„™ 1- Eoebling Sons Co. v. Federal Stor- was not complied with by commencing ° .: , .-, ^ / ' 4. „*:4.v.„ age B. C. Co., 185 App. Div. 430, 173 a suit for the recovery of a part of the = ' ^^ : - ' . debt. Shellington v. Howland, 67 Barb. ^- ^- ^"^PP- ^^'''• 14 affd 53 N Y 371 *■ ^^^^ ^" '^''osl'eck, 304 N. Y. 301, In order to render a stockholder in 308, 97 N. E. 738. a manufacttiring corporation person- 3. Eocky Mountain National Bank v. ally Uable for the debts of the corpo- Bliss, 89 N. Y. 338; Dean v. M;a<^^ 19 ration undel- sec. 34 of the act of 1848 Hun 391. (chap. 40), it was not necessary for a 4. Terry v. Rothschild, 83 Hun 486, creditor to show a judgment recovered 31 N. Y. 8upp> 1119. Barb. 14, affd. 53 N. Y. 371. 20. T'irestone Tire & Eubber Co. 29-8 COEPOBATIOifS. court of record and that an execution should be issued out of such courti^ 261. When judgment against corporation and return of execution ; excused. When the recovery of judgment and return of execution unsatisfied are rendered impossible, cdnlplianee with those requirements is not required within the meaning of the statute.^ Accordingly the recovery of judgment :, and the return of an execution is not necessary where rendered impossible by the Bankruptcy Act and the action of the courts thereunder.'' Where in an action brought to recover against stockholders for debts ' of a corporation to an amount equal to the amount unpaid on their stock it appears that the claim was proved against the corporation in bankruptcy proceedings and that the plaintiff received a dividend thereon^ the stockholders are protected by lawful proceedings in a court of paramount jurisdiction in the premises as fully as they could have been by full compliance with our state law, and the failure to obtain a judgment and return of execution unsatisfied, as required by section 59 of the Stock Corporation Law, is excused' by the discharge of the corporation in bankruptcy.^ p]ven if the plaintiffs are prevented by bankruptcy proeeedings from recovering judg- ments on their claims, they are not precluded from establish- ing their claims in the Bankruptcy Court where they would have been subjected to the scrutiny of the bankrupts and all 5. Execution need not be out of. a chapter 40 of the Laws of 1848, can- court of record, — It is sufficient in prder not be excusecl except when the per- to bring an action against a stockholder formance of the coiiditibnis imjiosSible. that, judgment has been recovered ^^rst United Glass Co.' 'v. Vaty," 158 N. Y. in a city court having jurisdiction of -1^21 46 "N. E. 313. '' the corporation and of the cause 0^ ao- '^^ Shellingtori v. Howland, 53 N. Y. tion and that execution was i^ed by such court and returned wholly unsat- isfied. Padres' v. Swarzenbaeh, 134 App. Div. 811, 119 N. Y. Supp. 589. k Firestone Tire '& Rubber Co. v. ^ t^^^stee in bankruptcy is in the Agnew, 194 N. Y. 165, 169,'86 N. E. position of a judgment creditor hold- 1116. ■ '■' ™o ''■" execution duly returned unaatis- Failure to proceed to judgment and fled within the meaning of seetion 59 execution against a corporation, before of the Stock Corporation Law. Breck bringing an action against a f stock- v. Brew&ter. 150 App. Div. 203, ' 134 holder, as required by section 34 of N. Y. Supp. 695!. : 371. . 8. Firestone Tire & Rubber Co. v. Agnew,. 194 N. Y. 165, .86 N. E. 1116. ENFORCEMENT OF STOCKHOLDERS'' LIABILITY. 299 other creditors who might have contested the allowance thereof. And, therefore, the intervention of bankruptcy of the corporation does not excuse the failure to have the claims established against the corporation.^ The recovery of a judg- ment against the corporation and the return of an execution unsatisfied is rendered" unnecessary by a judgment of disso- lution restraining creditors from instituting or prosecuting actions against the corporation.^" So when a complaint in a 9. Eoeblings Sons Go. v. Federal Storage B. C. Co., 185 App. Div. 430, 173 N. Y. Supp. 397. Where a complaint in an action, to enforce the personal liability of stock- holders under section 56 of the Stock Corporation Law, alleges that within two years after the debts became due the corporatioii was duly adjudged a bankrupt; that a receiver was ap- pointed and an injunction order issued restraining creditors, including the plaintiffs, from prosecuting their claims ; that the claims of the plaintiffs were "duly filed" with the referee; that the asets were insufficient to pay any part of them, but it did not appear that they would receive nothing on their claims until the case was closed, and it is not alleged that the- bankrupt" has been discharged, or that , they proved ; their claims before the referee . or ^hai they were allowed, ^n^, if; appears that the injunction order was not in force when the action' was commenced,' and that the*e was nothing t6 prevent the plaintiffs froin establishing their claiiha by judgment against the corporation and issuing execution as'^requirfed by section 59 of the Stock Corporation Law, there is a failure to allege facts excusing compliance' with the require- ments of' saiid section rendering ' the eomplaint demurrable. 10. Hii%hfeld v. Bopp et al., 145 N. Y. si, 85, 39 N.E'; 817;' Lang V. Lutz, 180 N. Y. 254, 73 N. E. 24; Roebling's Sons Co. V. Federal Storage B. C. Co., 185 App. Div. 430, 173 N. Y. Supp. 297; Thompson V. Nieolai, 21 Misc. 700, 49 N. Y. Supp. 423. The existence of a judgment of se- questration against a domestic cor- poration, enjoining creditors of the corporation from bringing actions against it, rendered in an action brought for that purpose under section 1784 of the Code of Civil Procedure (now General Corporation Law, § 100), and granted by a court having jurisdic- tion of the action and of the parties, during the year given to a creditor by ijhe Manufacturing Corporations Act of 1848 in which to bring an action against the corporation as a condition precedent to maintaining an action to enforce the personal liability of a stock- holder for debts of the corporation un- der section IS of that act, excuses a creditor from compliance with such con- dition precedent. When, in. such an; action to enforce a stockholder's liability, the existenSe of such a judgment of sequestration is re- lied upon by the plaintiff as an excuse for' his failure to bring a prior action against the corporation, such judgment is Hot open to collateral attack and re- jection on the ground that the pre- cedent judgment against the corpora- tion, relied' on in the action of seques- tration as evidence of the right to main- tain that action,' was a void judjgment. Hunting v. Blun, 69 Hun 562, 23 N. Y. Sup^. 965, affd. 143 N. Y. 511, 38 N. E. 716. Appointment of receiver. — ^It seems, that if the appointment of the receiver 300 COBPORATIONS. creditor's action alleges the insolvency of the corporation, its dissolution, the conversion of its assets into money and the in- adequacy of the same to pay the debts, it is not necessary for the creditor to exhaust his legal remedy against the i?orpo- ration.^^ But an order of the court restraining creditors tif a, corporation from commencing or prosecuting a,ny action against it, made as a mere preliminary and precautionary order in a suit by a stockholder against the corporation for an order appointing a receiver of its property, is not sufficient to : excuse a creditor, who has made no effort to procure a modification of the order, from proceeding to judgment and execution against the corporation before bringing an action to enforce the liability of a' stockholder.^^ . A: judgment of a lower court in a:n action by a judgment creditor to sequestrate property of a corporation and for appointment of a receiver, granting the relief sought and forbidding creditors , from suing the corporation, execution having been returned un- satisfied, excuses the failure in an action to enforce the lia- bility of a stockholder of an insolvent corporation to procure a judgment , against the corporation execute, although, such judgment may have been void for want of jurisdiction.." 262. Debts of corporation payable within two years. An action does not lie under this statute in favor of all the creditors of the corporation but only in favor of that; class who have a debt payable within two years from the time when it wascontraeted.^^ The purpose of thei provision of section 59 of the Stock Corporation Law that "No stockholder shall be personally liable for any debt of the corporation not pay- able within two years from the time it is contracted," is to prevent the extension qf credit to a corporation for a longer period than two years, and should not be so construed as to has, ipso facto, , disgOilved, the corpora- 103 N. Y. Supp., 30,,,affld. ,1S9 N. Y. tion and it will not thereafter be 504, .81 N. E. 1164. , , , , capable of being sued, the oonditipn 12. TJnited Glass Co. v. Vary, 152 N> precedent having thereby become im- Y. 121, 46 N. E. 312. . . possible: of perforraan.ee, is no longer, in 13. Hunting v. Blun, 143 N. Y. 511, force and ai; creditor's right of actioii. is 38 N. E. 716. perfect, without an attempt first to re- 14- Citizens ' Bank of. BuiCalo v. cover of the corporation. Kincaid:,v. Weinberg, .26 Misc. 518,. 57 N. Y. 8upp. Dwinelle, 59 N. Y. 548. ■ 4«5. 11. Ford v. Chase, 118 App. J?iv. 605, ENFORCEMENT OF STOCKHOLDERS' LIABILITY. 301 include the time a debt was running preceding the date when the corporation assumed it.^^ 263. Persons liable. The holder of stock; and not the original subscriber is ex- pressly naade personally liable to creditors to an amount equal to the sum unpaid on the stock held by him for debts con- tracted while such stock is held by him.^'' To relieve a former stockholder from the liability to creditors imposed by the statute, it must appear not only that the stock has been trans- ferred to another on the books of the corporation, but also that such transfer was made in pursuance of an actual bona fide sale, without any secret understanding or trust in favor of the transferror. And so where several stockholders, ap- parently acting in concert, joined in transferring their stock on the books of the corporation to a person, of no pecuniary responsibility, who was in the employment of one of them, at a time when the corporation was, to their knowledge, finan- cially embarrassed, there was no such actual bona fide sale 15. When in 1903 a corporation as- sumed the obligations of a vendee under a contract to sell lands made in 1902, the consideration to he paid in 1904, the liability of the corporation for the, debt: matures within the statutory period, for the agreement assuming the debt is an independent agreement creat- ing a new obligation. Ford v. Chase, 118 App. Div. 605, 103 N. Y. Supp. 30, affd. 189 N. Y. 504, 81 N. E. 1164. The stockholders of a building asso- ciation incorporated in March, 1891, are not liable for a debt incurred for the purchase of land, upon credit, in September, 1891, where the land was • purchased for the benefit of stockhold- ers and subdivided into lots and ap- portioned among them at an agreed valuation, the purchase price not being payable imtil ten years aftei. Leigh- ton V. Leighton Lea Association, 63 Misc. 73, 114 N. Y. Supp. 918. 16. Breek V. Brewster, 150 App. Div. 202, 134 :N. Y, Supp. 697. The owners of stock of a corporation organized under the General Manu- facturing Act (Chap. 40, hsbwa of 1848), divest themselves of the liabili- ties incident to their relation to the corporation when they have actually and in good faith transferred their stock in the manner provided by law. Tucker v. Oilman, 121 N. Y. 189, 24 N. E. 302. Under section 25 of the act of 1848, a completed transfer of the stock, en- tered on the books of. the corporation, is essential, in order to exonerate the original stockholder from his liability for the debts of the corporation. The corporation being absolutely required, by that section, to keep a book which shall show who the existing stock- holders are, is no answer to a creditor objecting that an alleged transfer was not registered, to say. that the company had no such book, at the time. Shell- ington V. Howland, 67 Barb. 14, affd. 53 N. Y. 371. 302 COEPOBATIOKS. of the stock established, as to relieve the transferrors from their statutory liability to the creditors of the corporation." 264. Defenses; set off. In an action to enfoi'ce the individual liability of a stock- holder for unpaid stock, as authorized by the statute, it is no defense that he subscribed for sixty-three shares as shown by his certificate on the understanding that all but five of them were to be transferred to other parties later. And after a business corporation has incuri-ed an honest debt, a subscriber to the certificate of incorporation, duly filed, can- not, in an action to enforce the individual liability of a stock- holder be permitted to say that he should not be held liable because he did not pay ten per cent down on all shares of stock issued to him ; that he was under no obligation to pay until all the capital stock had been subscribed, or that the debts covered by the complaint were not valid debts of the corporation and not enforceable.^^ A defense, that the corpora- tion had property subject to levy and sale under the ex- ecution when it Avas returned unsatisfied, and, that the re- turn was made by the sheriff acting in collusion with the plain- tiff, can only be sustained by .establishing both propositions.'^* An action by the creditor of a corporation against a holder of stock not fully paid is not barred by a dissolution of the cor- poration and the appointment of a receiver of its assets.^ In an action by a creditor of a corporation to enforce the lia- bility of stockholders the latter may set off claims held by them against the corporation.^ But, a stockholder cannot buy 17. Veiller v. Brown, 18 Hun 571. by showing that he had already paid. la: Irish Paper Corporation T. White, on account of the debts of the eorpo- 91 Misc. 361, 154 N. Y. Supp. 778. ratioii, a sutti equal to the amount of CorpoTation not legally incorporated, liis stock. Garrison v. Howe, 17 N. Y. ^-In an action by a creditor against a 458. stockholder to enforce his persoftil' lia- 19, Berwiiid-Wliite Coal Mining Co. bility for debts of the Corporation, de- \. Wads-worth, 37 App. Div. 550, 50 N. fendant cannot show that the corpora- Y. Supp. 501. tion was not legally incoi-porated. 20. LyeJl Avcime Lumber Co. v. Eaton V. Aspinwall,'3 Abb." Pr. 417, 13 Lighthousfe, 137 App. Dh-. 432, 131 N. How. Pr. 1R4, affd.^ 19 N. Y. 119. Y. Supp. 803. The stockholder of a maiiufacturing 1. Christensen v. Colby, 43 Hun 362; corporation organized under the gen- afld. 110 N. Y. 6fi0, 18 N. E, 480; eral act (oh. 40, of 1848) may defeat EichardS'T. Kinsley, 14 Daly 334; 12 an action brought to enforce his'indi- St. Rep. 135. 128, 14 St. Rep. 701, vidua! liability for its debts incurred Set off of nioiiey Waned to' corpora- before the capital stock was paid up, tion, — AVTiere a stockholder who was ENFORCEMENT OF STOCKHOLDERS' LIABILITY. 303. up outstanding debts of the corporation so as to escape lia- bility upon unpaid stock. He can only set-off the amount actually paid for such debts.^ 265, Misnomer not available in action against stockholder. ' ' Wkere an action, authorized by a law of the state, is brought against one or more persons, as stockholders of a corporation, an objection to any of the pro- ceedings can not be ta,ken, by a person properly made a defendant in the action on the ground that the plaintiff has joined with him, as a defendant in the ac- tion, a person, whose name appears on the stock-books of the corporation, as a stockholder thereof, by the name so appearing ; but who is misnamed, or dead, or is not liable for any cause. In such a ease, the court may, at any time before flnal judgment, upon motion of either party, amend the pleadings and other papers, without prejudice to the previous proceedings, by substituting the true name of the person intended, or by striking out the name of the person who is dead, or not liable, and, in a proper ease, inserting the name of his representa- tive or successor. "3 266. Limitation of action against corporation and stockholder. The statute provides that no stockholder shall be person- ally liable for any debt of the corporation unless an action for 4ts collection shall be brought against the corporation within tii^o years after the debt becomes due, and that no ac- tion shall be broughtagainst a stockholder after he shall have ceased to be a stockholder, for any debt of tlie corporation, unless brought wdthin two years from the time he shall cease also president of a manufa,cturing cor- ference ithat the money was applied, to pora,tijon adyaneed to it money to pay the pajTnent of the obligations of the its -yyorkmenj^^nd paid out the same to corporation in the usual course of busi- them, it was held-, that he thereby be- ^ggg j^ ^u action therefore, by a oredi- came^a cjeditor,^ and this was a defense ^^^ ^^. ^^^^ Corporitidn against" a stock- to an action by another creditor of the ,^^jg^^_ ^^ ^^^^^^^ ^^^ ^.^^.^^^ .^^^^^^ '=°'-.P°J:«;«°.^.^gP",«t ,':^ "^.'*°5'*°^f ': by tfee general manufacturing act (§ 10, and that this was so;" even if defendant •' ^ & ^s . had been iiampelled to pay the claims m ch. 40, Laws_ of 1848) upon a stock- discharge of the liability imposed *y holder who l^as not paid ^or his stock, said act (§ 18), upon stockholders to evidence qta loan, by defendant to the pay laborers, and assuming that this corpora-tioii to an amount. equal to his liability was in addition to that to pay stock constitutes a defense. The.f^ct, creditors. Mathez v. Neidig, 73 N. Y. that security was taken, fpr the loan i? 100 101 ., ,< immaterial. Agate.y. .Sands,, 73; N^. Y. It seems that a loan of money to a 630. , . manufacturing corporation by one of 2. Bulkley y- ,Whitcomb, 121 N. Y. its stockholders, in the absence of evi- 107, 24 N. E. 1?.., dence to the contrary, j&stifies an in- 3. General Corporation Law, § 309. 304 COBPOEATldNS. to be a stockholder.* The time within which an action' must be begun for the recovery of a debt owing by a corporation so as to lay a foundation for a recovery against a stockholder, begins to run on the day when the debt first became due, and not at the maturity of a note given to secure it.® The pro- visions of section 59 of the Stock Corporation Law, limiting the time within which to bring an action against a stockholder for a debt of the corporation, does not apply to an action brought by a receiver to enforce statutory liability of stock- holder of a foreign corporation.® Said provision applies to full liability corporations, but the limitation only begins to run when the debt becomes due.'' "Whenever a stockholder shall be divested of his interest in or control over the affairs of the corporation, by actual dissolution thereof by formal judgment, or by a surrender of its corporate rights, privi- leges and franchises, the time begins to run, and at the end of two years therpfrom^ the , stockholder^ is no longer liable for any debt of the corporatiou.* And hence an action brought by the receiver of an insolvent corporation, to Enforce the constitutional and statutory liability of the stockholders for the debts of the corporation, must be brought within two years from the time defendants ceased to be stockholders, i. e., from the making of the decree for the dissolution of the 4. Stock Corporation Law, § 59. 129' N. Y. 517, 29 N. E. 838. Action against director or stock- Laborer suing for wages payable holder of money corporatlon.^The fol- monthly can recover oiily so much aa lowing actions must be commenced became due within two years prior to within three years after the cause of ac- the time of bringing the action. Short tion has accrued: * ' * ^. Medberry, 29 Hun 39. 4. An action against a director or o -a u ■ n, „„„ -r-r „ - , ,. 6. Bernheimer v. Converse, 206 U. S. stockholder of a moneyed corporation, • 1- 516. or banking association, to recover a penalty or forfeiture imposed, .or to 7. When such full liability corpora- enforce a liability created by the com- tio"! assumes leases of ten and twenty mon law or by statute. The cause of ye*"' duration on which the annual action is not deemed to have accrued rent is payable quarterly in advance, until the discovery by the plaintiff of the stockholders are personally li- the facts under which the penalty or able for all rent payable within two forfeiture attached or the liability was years of the time the action to recover created. Civil Practice Act, § 49. the same is brought. Sanford v. 5. Jagger Iron Co. v. Walker, 76 N. Ehoads,- 113 App. Div. 782, 99 N. Y. Y. 521; Hardman v. Sage, 134 N. Y. Supp. 407. 25, 26 N. E. 354; Griffith v. Green, 13 8. Hollingshead V. Woodward, 107 N. N. Y. Supp. 470, 37 St. Bep. 705, affd. Y. »6, 13 N. E. fi21. ENFORCEMENT OF STOCKHOLDERS' LIABILITY. 305 corporation.' But the failure to bring siiit against stockhold- ers within two years as required by section 59 is excused when all actions have been enjoined on the appointment of a- re- ceiver.^" 267. Parties. Jt has been held that the liability imposed by section 56 of the Stock Corporation Law is several and therefore it is not necessary to bring the action against all the stockholders." But a creditor of a corporation suing in equity on behalf of all creditors of the corporation to enforce the liability of stockholders for unpaid subscriptions to the capital stock must join as defendants all stockholders who are liable under the statute as well as the personal representatives of those who have died, so that they may be compelled to contribute pro rata and air creditors may share in the fund recovered.^^ The judgnient demanded not affecting thie property of the corporation but tliat of the stockholders only, a receiver is not a necessary party to the action," though Under ' certain circuinstances he may be a proper party. Subscribers who never paid the ten per cent essential to make thfem stock- holders are not necessary parties. Neither is it necessary to join subscribers whose subscriptions have been declared forfeited by resolution of the board of directors," or the owner of stock not fully paid who is insolvent, bankrupt or without the jurisdiction.^' If a plaintiff comes into court believing that he has made all stockholders who are liable parties defendant he may, on discovering a defect, of parties, obtain leave to bring them in by a supplemental summons and complaint.^® 9. Citizens' Bank of Buffalo T. Wein- E. 1135; Groeber >-. Ehrgott, 182 App. berg; 26 Misc. '518, 57 N. Y. Supp. 495; Div; 377, 169 N. Y. Supp. 32. Smith V. Quale, 86 Misc. 259, 148 N. Y. 13. Lang v. Lutz, 180 N. Y. 254, 73 Supp 448. N. E. 24. 10. Ford V. Chase, 118 App. Div. 605, u. Ford v. Chase, 118 App. Div. 605, 103 N. Y. Supp. 30, affd. 189 N. Y. 103 N. Y. Slipp. 30, affd. 189 N. Y. 504, 504, 81 N. E. 1164. 81 N. E. 1164. 11. Boebling's Sons Co. v. Federal 15. Warth v. Moore Blind Stitcher. Storage B. C. Co., 185 App. Div. 430, ^c. Co., 146 App. Div. 2«, 130 N. Y. 173 N. Y. Supp. 297. Supp. 748, affd. 207 N. Y. 673, 100 N. 12. Warth V. Moore Blind Stitcher, E. 1135, s.c. 204 N. Y. 629, 97 N. E. etc. Co., 146 App. Div. 28, 130 N. Y. 51118. Supp. 748, affd. 207 N. Y. 673, 100 N.^l 1$. Warth v. Moore Blind Stitcher. 20 306 CORPORATIONS. 268. Pleading: service of summons by publication. In an action to charge stockholders with liability for the debts of the corporation, the complaint must allege that the defendants were stockholders at the time the debt was con- tracted.^'' And it will be motionable where the allegation as to the defendant's indebtedness upon the stock relates to the time when the indebtedness of the corporation to the plaintiff was contracted, and not to the time when the plaintiff recov- ered judgment against the corporation upon such indebted- ness. It is motionable also where it fails to allege that the corporation was a stock, and not a moneyed, corporation, which corporation is excepted from the operation of the statute.^^ Where the complaint alleges that at the time the debt in question was created the defendant was a stockholder of the corporation and contains other sufficient allegations, it need not allege that the defendant ceased to be a stockholder, if such was the fact, nor that the action was brought within two years thereafter, as these latter allegations are matters of defense." The fa,ilure of the complaint to, show the recov- ery of a judgment against the corporation and the return of an execution unsatisfied is immaterial, where it contains an allegation that a judgment of dissolution had been rendered which restrained' creditors from instituting or prosecuting actions against ' it.^" But an omission pf thei cqmplaint to allege this 'fact is hot excused by an allegation that, by the connivance of the stockholders, a preliminary restraining order, appointing a receiver, has been granted in proceedings taken for the voluntary dissolution of the (iorporation, and the plaintiff 'will hot be permitted to allege by si supplehjeiltal complaint that, since the commencement of the action, a final order dissolving the corporation has been gra,nted, as such an allegation sets up a new and different cause of action, which cannot be allowed to aid*the defective complaint.^ The com- plaint must show that .thci debt, payment of which is sought etc. Co., 146 App. Div. 3.8, 130 N. Y. 249, 44 N. Y. Supp. 708; Citizens' Supp. 748, aiTd. ?0'7 N. Y., 673, 100 N. Bank of Buffalo v. Weinberg, 36 Misc. E.,H35. , ./ 51,8„,57 N, Y. Supp. 495. . ,; ,^ 17. Young V. New York and L. ,S. S. 20. Lang v. Lutz, 180 N. Y. 25,4, 73 Co., 15 Abb. Pr. 69. , , N. E. 34. 18. Dyer v. ]>rueker, 108 App. Div. 1. United States Glass Co. v. Leyett, 338, 95 K Y. Supp. 749. 34 Misq, 439, 53. N. Y, /Supp. 6«8. ; 19. , Gastner V. Duryea, 16 App. Div. ENFORCEMENT OF STOCKHOLDERS' LIABILITY. 307 to be enforced, was to have been paid within the time required by the statute,^ that action for its collection was brought with- in two years from the time it became due,^ and it should allege the original debt and may not rely on the allegation of a judg- ment obtained against the corporation.* The personal lia- bility imposed upon stockholders by section 56 of the Stock Corporation Law is several, and hence a complaint in an ac- tion under said section is not motionable upon th€ ground of a defect of parties defendant, in that all stocktiolders are not joined.^ A complaint excusing the joinder of parties whose subscriptions are forfeited need not allege the details essen- tial to the declaration of forfeiture by the directors pursuant to section 54 of the Stock Corporation Law, such facts being merely evidential.^ ' ' An order directing the service of a summons upon a defendant, by publication, may be made in either; of the following cases ; • * * 8. Where the action is against the stockholders of a corporation or joint- stock company and is authorized by law of the state and the defendant is a stockholder thereof. The order must be founded upon a verified complaint showing a sufficient cause of action agailist the defendant to be served or upon a verified oomplaint to recover a sum of money only and proof by affidavit that a warrant of attach- ment granted in the action, has been levied upon property of the defendant within the state, and proof by afffdavit of the additional facts required by this section ; and also, where the application is made upon the ground that the de- fendant is a foreign corporation or not a resident of the state, or in a case specifeed in subdivision fifth, - sixth, or eighth, that the plaintifE, with due diligence, has been or will be unable to make personal service of the summons. ' ' T 269. Judgment against corporation as evidence. Proof of a judgment against the corporation is neither con- clusive nor pi'ima facie evidence of the .existence of a debt 2. Deaii v. Mace, 19 Hun 391; n04, 81 X. E. 1164. Groeber v. Ehrgott, 182 App, Div. 377-. An objection that other subscribers 169 N. Y. Supp. 33. who have not paid should have been 3. -Groeber V. Ehrgott,' 182 App. Div. made partiejs, is not available on appeal 377. 169 N. Y. Supp. 33. where the objection wa.s not raised by 4. Oroeber v. Ehrgott, 182 App. Div. answer, and where ithere were no flnd- 377. 169 N. Y. Supp. 32. ings °^ requests to find in reference 5,'Roeblmg's Sons Co. v. Federal thereto, . or exceptions raising the Storage B. C. Co., '185 App. Div. iM, point. .Phoeni? Warehousing Co. v. 173 N. Y. Supp." 297.' - " ' Badger,. 67 N. Y. 394. , ,, 6. Ford v. -Chase,^ 118 App. Div. 605, 7. Civil Practice Act, f 333. pt., as 103 N. Y. Supp. 30, affd, 189 N. Y. amd. by L. 1931. ch. 199. 308 COBPOEATIONS. against the corporation,^ and is only evidence as proving tlie performance of the condition precedent.^ And so it is incum- bent upon the plaintiff to prove, by competent and satis- factory evidence, the validity of his claim,^* and that a valid debt was contracted before the stock was paid for, either in cash, or in property honestly regarded as a fair equivalent to cash.^i The provision of section 59 of the Stock Corporation Law, that " the amount due on such execution shall be the amount recoverable, with costs against the stockholder," means that the amount due on the execution thus required to be issued shall be a limitation of liability and not proof of an indebtedness for which the stockholder is liable.^^' 270. Proof of being stockholder. Before a stockholder can be charged with the debts of a cor- poration, it must appear that he was such stockholder at the time the debt was created,^^ since a stockholder is not liable under the statute for a debt created prior to his becoming a stockholder." The fact that he was a stockholder is suffi- 8. Belmont v. Ck)leman, 31 N. Y. 96; McMahon v. Macy, 51 N. Y. 155; Bonaffe & Boisgerald v. Fowler, 7 Paige 576; Strong v. Wheaton,,38 Barb. 616; Esmond v. BuUard, 16 Hun 65, affd. 79 N. Y. 404; Stephens y. Fox, 17 Hun 435, aflfd. 83 N. Y. 313; Lawyer v. Rosebrook, 48 Hun 453, 1 N. Y. Supp. 594; Truesdell v. Ohumar, 75 Hun 416, 27 N. Y. Supp. 87. A judgment against a corporation is evidence in favor of the plaintiff in a Bubsequerit action by which the plain- tiflF seeks to follow the assets of the corporation; but it is not admissible in an action against the directors *based upon an original liability to the plain- tiff and not upon their possession of corporate funds. Schenck Chemical Co. V. Industrial Advertising & Dis- tributing Co., 66 Misc. 597, 121 N. Y. Supp. 638. As, under section 64 of the Stock Corporation Law (Laws of 1892, ch. 688), a stockholder of a stock corpora- tion w'as liable for a debt only "until the whole amount of its capital stock ibsue(i and outstanding at the time such debt was incurred shall have been fully paid," the plaintiff had to show, in an action predicated upon an alleged improper issue of stock to the defend- ant and others, tliat the issue was out- standing when the plaintiff's claim was incurred, whether such date was re- garded as the time when the alleged negligent aet was committed, or as the time when the claim was put in judg- ment against the corporation by the creditor. Doyle v. Kimball, 2.3 Misc. 431, 52 N. Y. Supp. 195. 9. Kincaid v. Dwinelle, 59 N. Y. 548. 10. Wheeler \. Miller, 24 Hun 541, affd. 90 N. Y. 353. H. National Tube Works Co. v. Gil- flllan, 12(4 N. Y. 302, 26 N. B, 538. 18. Assets Realization Co. v. How- ard, aUN. Y. 430, 105 N. E. 680. 13. Tucker v. Oilman, 121 N. Y. 189,, 24 N. E. 302; Close v. Brady, 4 Misc. 474. 476, 24 N. Y. Supp. 567, affd. 144 N. Y. 648, 39 N. E, 493. 14. Phillips V. ' Therasson, 11 Hun Ul. ENFORCEMENT OF STOCKHOLDERS' LIABILITY. 309 ciently shown by proving that he was one of the trustees named in, and that he signed the certificate of incorporation ; that he subscribed for fifty shares of the stock, and subse- quently acted as secretary of the company, even though it is not shown that he in fact actually received his certificate of stock.^^ And where the name of an individual appears on the stock book of a corporation as a stockholder, this is pre- sumptive evidence that he is such, and in an action against him as a stockholder, the burden of proving that he is not a stockholder is thrown upon him.^^ The fact that a defendant signed a proxy, a consent to an increase of capital, and a waiver of notice of a special meeting in which he described himself as a stockholder of record is not conclusive evidence that he is a " holder of capital stock ' ' within the meaning of section 56 of the Stock Corporation Law;^'' One, to whom stock has been apportioned in a corporation, is a stockholder, although no certificate has been issued, and the apportion- ment was made for him, to an agent, who subscribed at his request.^* 15. Wheeler v. Miller, 24 Hun 541, affd. 90 N. Y. 353. Proof of being stockholder. — ^By the acceptance of property under an agree- ment to give therefor various interests an its capital stock, a corporation confers upon the parties entitled there- to ownership of the interests or shares of capital stock provided, although no scrip representing such interests or shares was issued. Flour City Na- tional Bank v. Shire, 88 App. Div. 4)01, 405, 84 N. Y. Supp. 810. affd. 179 N. Y. 587, 73 N. E. 1141. The holder of stock not fully paid is liable to credito'rs of the corporation, wliere he signed the preliminary sub- scription paper, providing for the or- ganization of the corporation, although he did not sign the certificate itself, and although: the certifieate gives wider powers to the corpora/tion than those originally contemplated, if he was the owner of lands which the cor- poration acquired, made loans to it in order that it might improve the prop- erty and held himself out as a stock- holder. Lyell Ave. Lumber Co, v. Lighthouse, 137 App. Div. 43«, 121 N. Y. Supp. 80a.. A stockholder may be held liable for debts of the corporation although his stock has not been transferred on the books of the corporation. Worrall v. Judson, '5 Barb. SIO. Chapter 40 of 1848 requires that the trustees of the corporations created thereunder shall be stockholders, of the company ; defendant had signed and acknowledged the articles of as- sociation of a corporation created thereunder, and was- named a trufffiee therein. It was held in an action brought by a laborer under section 18 of sajd act to charge him individually with the payment for services rendered . to the company, that he could not deny that be was, at the time of signing the articles, a stockholder thereof. Herries V. Wesley, 13 Hiin 493. 16.' Hoa:gland v. Bell, 36 Barb. 57. 17. Breck V. Brewster, 150 App. Bjv. 203, 134 N. Y. Supp. 697. 18. Burr v. Wilcox, 22 N. Y. 551. 310 CGRPOKATIOSrS. CHAPTEE XVIII. DiBECTOES. In General. • 271. Qualifications. 272. De facto directors. 373. CShange in number of directors. 374. Filing transcript of proceedings. Election. 375. In general. 376. By-laws regulating elections. 277. Neglect of directors to adopt by-laws for election of directors. 278. Notice of election. 379. Failure to felect directors on day designated. 280. Special meeting for election of directors. 281. Mode of conducting special meeting. 383. Qualification of voters and canvass of votes at special election. Suspension, Removal and Resignation. 283. Suspension or removal generally. 284. Resignation of directors. 285; Vacancies'. Powers. 286. In general. 287. Separate and individual authority of directors. 288^ Powers of executive committee of board of directors. Procedure of Board. 389^ In general. ' 290. Quoi'uin of directors and power of majority. , 391, Notice of meetings. In General. 271. Qualifications. "The term 'directors,' when used in relation, to corporations, shaft include trustees or other persons, by'whatever name known, duly appointed or. desig- nated to manage the affairs of the corporation." 19 : Until the year 1901, tile statutes of this state relating to the affairs of ordinary business corporations provided that the directors or trustees should be stockholders to the extent at least of one share. The legislative policy underlying this pro- vision of the statutes was; to commit the management of cor- 19. General Corporation Law, § 3, subd. 6. ^ ; ' DIRECTORS. 311 porations to those only who ha^e a personal pecuniary inter- est in the conduct of their business.^" The statute now pro- vides that, each director shall be a stockholder unless other- wise provided in the certificaite, or in a by-law adopted by a stockholders' meeting.^ Policyholders of an insurance corpo- ration may be elected directors, whether or not they are stock- holdei-s.^ But, notwithstanding the statute, the directors named in the certificate of incorporatio'il may act as such although not stockholders.^ They become directors by virtue of the direct command of the statute, not through an election by g'toek- holders, and are clothed with all the powers of the corpora- tion and authorized to make any contract in its behalf that it is capable of making.^ Where the by-laws of a corporation require a director to be the holder or owner of at least one share of its stock the election of a stockholder as director is in- valid where his stock was transferred to him prior to election for the sole purpose of qualifying him as director, and after election assigned back to the true owner in blank.^ Likewise title to the office of director cannot be predicated upon an alleged purchase of stock by anotlier persoii in, the interest of or as the represerifative of the claimant to ofee,* As by virtue of the statute a person not a stockholder may be a.director if a provision to that effect is made by the corporation charter or by-laws, it will be presunied that a person elected director and president continues to hold' office in the absence of proof that hp has resigned pi" that his successor has been elec1;ed, even 20. Matter of Ringler & Co., 204 1918, ch. 267. 'N.'Y. 30, 97 N E. 593. ''' 2; Stock Corporation Law, §'25, pt., Aihendinent of 1901 to section 25 of- as ainended in- other partieiilafs by L. Stock Corporation L?iw superseded. 1918 eh. 267i ' ■ ■ ' Chemical National Bank v. Colwell, 132 g Davidson v. Westchester Gas- N. y. 250, 30 N.:;E. 644, and- Sinclair l^ i,t co., 99 N. Y. 558, 2 N. E. 892; V. Fuller, 158 N. Y. 607, 53 ;N. E. 510, ^^^.^^ .^: ^^^^^^, ^ ^^ ^^ ^^^^ holding that a director vacates hi^- of- ^ ^ ^^ ^ ^ 269rMcDowall fice ipsojactqon his cea-sing, to be a '^ „, ,' ,„„ „ „ ■' i„ Aq ^r' tp Q„e who holds the legal title to T- Sh.ehan, 129 ,>T. Y., 200, 29 N. E. stdck, but! has no beneficial, interest ^99. . therein, is ineligible mde^ former sec- ,■ i 4. IJ^amiltou, Trust Co. v. Qle^es, tion 20 of the Stock Corporation Law, 163 N. Y. 423, 57 N. E. 614. to election as a director. Matter of 5, Matter of Ringler & Co., - 204 Elias, 17 Misc. 7lg, 40 N. Y; Supp. N. Y. 30, 97 N. E, :59?.. gi() , , :' .. 6. Matter of Hassam Paving Co., 1. Stock CoTporation Law, § S-S, pt., 152 App. Div. 610, 137 N, Y. Supp. as amended in other particulars by L. 453. 312 COBPORATIOlfS. though he has parted with all his stockJ At least one di- rector of a corporation shall be a resident of this state.^ So a person, not a citizen of the United^ States, is eligible to act as a director in a corporation providing at. least, one director of said company is a citizen of this state.^ Where a society, whose by-laws . contain no provision making citizenship a qualifica,tion for election to the office. of trustee, adopts a reso- lution fixing such a qualificatioij and thereafter elects to the oflSce of triistee persons who are not citizens, the election of such persons is valid, as the society may revoke the reso- lution in question at any time and does so revoke it when it elects aliens to the position of trustee.^" Ma,rried women are eligible as directors/^ but iijfaidts.are not qualified to act.^^ 272. De facto directors. He who enters. upon, an office, and, exerpises its functions is responsible for his acts therein to , the same e.:^;ient as thpugh he of right occupied the position. So where a person, though not qualified, has been elected a director, has accepted the posi- tion and has managed its business and affairs, assuming all the duties and ejnplum^nts thereof,, he becomes a diroctor de facto." Directors elected prior to tlie, filing of a certificate of increase iii their nuniber become, de fa-qto directors^^* While a director after parting with his stock ceases to be de jure a di- rector, where it is not provided by the certificate of incoi^po- ration or by-laws that he need not be a stockholder, yet so long as he is permitted to sit as a director and act as such, he is still an officer de facto, and his acts are valid so far as third persons have an interest in them.^^ Where a director resigns and is re-elected to office after a decision ousting him has been rendered but before the order embodying the same has been 7. Buffalo Electro-Plating Co. v. Supp. 852, affd. 135 N. Y. 280, 32 Day, 151 App. Div. 237, 135 N. Y. N. E.' 122. Supp. 1054. . IS. Donnelly v. Pancoalstj 15 App. 8. Generar Corporation Law, § 34, jjiv. a23, 44 N. Y. Supp. 104: .Hamil- pt, as amended in other particulars, by {„„ -fruat Co. v. Cleines, 17 App! Div. L. 1917, ch. 538. ' : . ' f f 152, 45 N. Y. Supp, 141, affd. 163 N.Y. 423, 57 N. E, 614. ., , 9. Report of Atty. Genl., Jan. 17, 1912. 10. Matter of Sorrentino v. Cilfetti, "• ^^"^"^ ''■ Matthews, 161 App. 75 App. Div. 507, 78 N. Y. Supp. 322. ^jv. 107, 146 N. Y. Supp. ,424, 11. Domestic Relations Law, § 51. 15. Wile & Brickiier Co. v. Roches- 18. Matter of Globe Mutual Benefit ter & K. F. L. Co., 4 Misc. >570, 573,. Association, 63 Hun, 263, 265, 17 N. Y. 25 N. Y. Siipp: 794. DIEECTOBS. 313 signed, he is a de facto director and entitled to act as such. De facto directors and officers of a corporation have authority to conduct its ordinary business and preserve its property .^^ And the right of de facto directors of a corporation to act' as directors, cannot be questioned collaterally in an action to try the title of their appointment to office." While an election which chooses four directors instead of three^ as provided for in a certificate of incorporation, is undoubtedly irregular and voidable and can be set aside by any person in interest who was aggrieved, still iii a small corporation many acts are done informally and irregularly, and the existence of the cor- poration continues -— it transacts business, it enters into con- tracts, makes profits, incurs obligations, and as to the public at least, the acts of tho^^e assuming to.be officers even without valid title, are binding upon the corppration.^^ The doctrine in respect to officers de facto only applies to and in favor of third persons, and to protect innocent parties whp trust to the apparent title to an office. There can be no such thing as an officer de facto, as against the people, in an action by them to try title to the office." 273. Change in number of directors. "The number of direetors of any stoolc corporation may be increased or re- duced, but not below tlie minimum number prescribed by law, when the stock.-; holders owning a majority of the stock o£ the corporation shall so determine, at a meeting to be held on two weeks' ^otice in writing to each stockholder of record. Siich notice shall be served personally or by mail, directed to eacll stock- holder at his last known post-office address. Proof of the servide of such notice shall be filed in the office of the corporation at or before the time of stich- meet- ing. The proceedings of such meeting shall ■ be ent«'ed in the minutes of the corfwration and a transcript thereof verified by the president and secretary of the meeting shaH bb filed in the offices where the original certificates of incor- poration were filed. Such increase or reduction may also be effected by unani- mous consent without a mieeting, in which case there shall be filed in the- offices herein specified the unanimous consent of the stockholders in writing, sigiied by them, or tlieir duly authorized proxies, but no such consent shall be valid unless there is annexed thereto am affidavit of the custodian of the stock book of such corpoj-ation stating that thfi persons -who have signed such coiisent, either in person or by proxy, are the holders of record of the entire capital stock of Said 16. Ehret v. .Ringler Co., 144 App. 157. ; Div. 48,0,, J29 N. Y. Supp. 551. 19. People v. Albany and Susque- 17. People ex rel. McConville y. hanna R. Co., 55 Bai'b. 344, 1 Lang. Hills, 1 Lans. 202. . .' : ■/ 308, modfd. 5 tans. 25, mdafd. 57 18. Mitchell. V. . Foilest dity Printing K Y. 161. Co., 107 Misc. 709, 176 N. Y., Supp. 314 CORPORATIONS. corporation issued and outstanding. If a corporation formed under or subject to the banking law, the consent of the superintendent of banks, and if an in- surance, ^corporation, the ;Cons0nt of the superintendent of , insurance, i shall be first obtained to such increase or reduction of the number pf. directors. This section shall apply to any stock corporation whether organized under a general or special law, and the number of directors may be increased as hereby pro- vided notwithstanding the maximum number of directors now prescribed by law. If the number of directors be ihcreased, the additional directors authorized by such increase shall be elected by the votes of a majority of the directors in office at the time of the increase. If the original or an amended . certificate of incorporation of the corporation shall provide that the:directovs shall be. divided into two or more classes, wljobe terms of office shall respectively expire at different times, the additional directors shall be divided among such classes as nearly as practicable in proportion to the respective numbei*^ of directors con- stituting each class prior: to such increase." 20 ; The authority to increase or decrease the number of di- rectors of a corporation is by' the statute vested not in the corporation to be exercised by its board of directors, but ex!- clusively in the stockhblders, and while it may be competent in some cases for stockholders to bind themselves by an agree- ment not to increase or decrease the number of directors, it seems that such an agreement would not be binding on subse- quent owners of the stock, who purchased the same in good faith and without notice of the agreement.^ Directors elected prior to the filing of a certificate of increase in their number become de facto directors.^ The legality of a change in the number of directors can only be raised in a direct proceeding by one whose interests are affected,' Whenever a domestic insurance corporation seeks to increase or reduce the number of its directors, it is immaterial whether the consent of the Superintendent of Insurance to such increase or reduction is 20. Stock Corporation Law, § S/p, sufficient number of directors have ex- as amd. by L. 1909, ch, 421. , pired, . Matter ot Manoca Temple As- Efiect of proceeding reducing num- sooiation, ligS App^ Div. 796 113 N. Y. bet of directoija.— Although some of Supp. 172. , the directors of a corporation, were , jorms: Consent of stockholders to merely de facto officers by reason of .^^^^^^ ^^ reduction of directors. Form the fact that they were not members . ,. , , , ,' ■ , , , ■ 1 t. No. '51. Affidavit of custodian of stock of a benevolent order as required by . , , ■ ■ .. . , ■ ' "i- „ „ „,„ ' book that persons signing consent are the certificate of incorporation, a pro- '^ ,„ xx -„ ,. , ^1 i 1 u ij . J „■_, holders of record. Form No. 49. ceeding by the stockholders reducing ' the number of directors does not oper- !• Bond v. Atlantic Terra Cotta Co., ate to vacate the ! office of those par- 137 App. Div. 671, 122 N. Y. Supp. 425. ticular directors as distinguished from 2- I^ewis v. Matthews, 161 App. Div. others having membership m the.. 107, 146 N. Y. Supp, 424. ^ order but the reduction only becomes 3. Wailace v, Walshi, 125 N. Y. 26, effective when the terms of office of a 25 'tJ. E. 1076. DIRECTORS. 315 obtained prior to or after the meeting and action of the stock- holders held^ for such purpose. The requirement of the statute is satisfied so long ais the consent of the Superintend- ent of Insurance is obtained, and the increase or reduction is not effective until such consent is given.* A provision in the certificate of incorporation of a corporation organized under the Business Corporations Law, that " The number of its di- rectors is to be four (4) ; said directors shall not be required to be stockholders of said corporation, and said number shall not be changed, except by the unanimous consent of all the stockholders of said corporation," is a valid and binding limi- tation on the power of the corporation and its. members, authorized by section 10 of the General Corporation Law, and not in conflict with section 26 of the Stock Corporation Law. Where the majority of the stockholders of such corporation, notwithstanding the foregoing provisions of its certificate of incorporation, adoptfedvagaiiist the protest of the minority, a resolution increasing the number of the- directorsof the cor- poration to five, such action was invalid, as prohibited: by the certificate of incorporation, and an injimction, asked by the minority stockholders, was properly granted to restrain such increase in the number of directors.^i But the provision of the Stock Corporation Lawythat the number of directors in such corporations may be increased or diminished iwithin the limits allowed by law when the stockholders owning a majority of the stock shall so determine, is inconsistent with a by-law re- quiring the vote of those holdiiig a lar^fer percentage of stock tp^ effect such change and such by-law is null and yoid.^ 274. Filing transcript of prpceeiings. It is essential to the legal increase or reduction of the num- ber of directors of a stock corporation, that a transcript of the minutes of the stockholders' meeting at which the change was determined upon shall have been filed in the offices where the original certificates of incorporation were filed.'' Amd'a resolution to increase or reduce the iiumber of dii*eptors of a 4. Rept. of Aitf. Genl/Feb. 6, 1914. Co., 109 App. Div. 49/ 95 N. Y. Supp. 5. Ripin V. u; S, Woven Label Co., 663, affd. 183 N. Y. 578, 76 N. E. 1098. 205 N. Y. 442,' 98 N. B. 855. See also 7. Matter of I>olgevill^ ' El. L: & P. Matter of Boulevard Theatre & Realty Co., 160 N. Y. 500, '501, 55 N.' E. 287. ■ Co.;, 19i5 App!' Div; '618, 186 N. y. 'Supp.' Forms: Transcript of Pfoeeeding^; 430^ ' "- ■ ■ Form No: ''61.' i . ,: i 6. Katz V. H. & H. Manufacturing 316 COEPOBATIONS. stock corporatipn does not take, effect until the, date of the filing in the proper offices of the transcript of the proceedings of t]ie meeting at which the resolution was adopted; the siinple adoption of me resolution is insufficient to increase or reduce the number of directors ; nor does a subsequent filing- relate back so as to give effect to a resolution not operative of itselfA, " ' . .' Election. 275. In general. "The directors of every .stock corporation sliall be chosen at the time and place fixed by the by-laws of the corporation by a plurality of the Yotes at such election. * * * At least one-fourth in number of the directors of every stock corporation shall be elected annually. " 9 The mere election of a person as a director of a corporation, where he neither accepts the position nor acts as such, is not sufficient to establish the fact that he is a director.^'! And be- fore he can be held liable as a director he must accept the office either expressly or impliedly.^^ But one who has acted as director, although not legally elected, cannot repudiate his character as such.^? The fact that newly elected directors have subsequently acted illegally, does not reinstate their predecessors in office.^^ An election of directors is not illegal because only a minority of the stock of the corporation was voted, since the stockholders attending or represented make a quorum."' Where a candidate at a corporate election, re- 8. Matter , Qf, .\Vestchester Trust Co., Supp. 145; see also ante, par. 372. 186 N. Y. 215, 78 N. E. 875. , IS.Beardsley y, .lohiison, ' 1 N. Y. 9. Stock 'Corporation Law, § 25, pt., gupp; gos, \6 St. Rep. 773, affd. 121 as amended in other particulars by L. j^ y. 224 24 N. E 380 1918, ch. 267; and see, generally, ufAshcroft v. Hammond, 132 ^App: Stockholders' meetings, ante, chap. XV. ^j^ 3 ^g j^ ^ g 3^ ^^^^ ^,, 10. United Growers Co. v. Eisner, ,, . , ,^., ^x ,. 22 App; Div.- 1, 47 N. Y. Supp. 906. °*^^ ^'°''''^'' ^^^ ^- ^- ''^■' ^^'- ^- ^^■ 11. Cameron v. Seamafl, 69 N. Y. ■'^^'^• 398 ^ p Presumption as to number of votes 12. Easterly v. Barber, 65 N, X- 252, cast.— In an election, for directors of a A person elected a director of a corporatipn, wherp there is no proof corporation, who accepts the office and that there were not enough votes east thereafter exercises the duties pertain- to elpct, and . the directors elected re- ing .theretoj cannot avail himself of ceive^dall the votes cast, there is no irregularities in bis, election as a de- presumption that the vptes casit were fense to an action, brought to charge not. sufficient to jOlect. Beardsley v. him, as a director of the corporation, Johnson,.! N. Y. Supp. 608, 16 St. with liability. Union National Bank Rep. 773, affd. 121 N. Y. 224, 24 ]S". E. V. Scott, 53 App. Div. 65, 66 N. Y. 380, DIEECtORS. 317 ceives a majority of the legal votes cast, the receipt of illegal votes in his favor does not defeat his election.^^ But the right to office cannot be established by recognition, if the election was invalid.^^ A stockholder is entitled to a writ of man- damus to compel an election of directors." And he may con- test the validity of the election of a board of directors in a direct proceeding to set aside the election,^^ but the validity of the election cannot be attacked collaterally.^^ It is not illegal or against public policy for two or more stockholders owning the majority of the shares of stock of a corporation to unite upon a course of corporate policy or action or upon the officers whom they will elect. An ordinary agreement, among a minority in number, but a inajority in shares, for the pur- pose of obtaining control of the corporatioh hy the election of particular persons as directors is not illegal. . Agreements upon a sufficient consideration between them, of' such intend- ment and effect, are valid and binding, if they do not contra- vehe any express charter or statutory provision or contem- plate any fraud, oppression or wrohg against other stock- holders or other illegal object.^* An agreement by a proposed directoi* in consideration of his election to so conduct the af- fairs of the corpora.tion as to increase the value of its shares is against public policy and void.^ Where stockholders sue to secure a judgment declaring an election of directors void 15. Matter of Argus Co. et. al., 138 atbck' that at all elections of directors X. Y. 557, 34 N. E. 388; see also ante three persons to be named by; one di par. a4a et seq. rector . ajid : two persons to be named 16. People ex rel. NichoU v. N. Y. by two other directors should be duly Infant Asylum, 122 N. Y. 190, 25 elected; that such majority directors N. E. 241. should.be continued in office, with a 17. People ex i rel. Miller v. Cum- . , ; . ,■.., J ' .' ' „ ' , . i.. tcup ,,' ,, „ , ^, right of substitution lu ease of their mines, 73 N. Y. 433; People ex rel. " ■.-, : , ^ /• ,^ ^ ,_ ,,r ,t .lu TT -ioi 11 ihi, death or rjesignation; that, whereas Walker v. Albany Hospital, 11 Abb. : , o . ; v _ „ o 4 ' theretofore but one of them had been '^is! Lewis v. Matthews, 16.1 . Apji. paid, and he a salary ' of $2,500, one of Div. i07, 11'5, 346 N. Y.'Suppy424. "'^f™ ^^^ to have the right to ap- 19. Mitchell V. Forest City Printing PO'nt » successor.. It was held, on a Co., 107 Misc. 709, 176 N. Y. Supp. demurrer to a complaint setting forth ,-»' . i the foregoing facts, that euch agree- 20. Manson V. 'Curtis, 223-N: y. 3i3, ment ■ constituted an unlawful com- 119 K" F 559 bination and an abuse of trust. Snow Power "of majority to control mem- '"■■ Chur.'h. 1.3 App. Div. 108, 42 N. Y. b€tship.-A ■mdi'drity of the directors Supp. 1072. of a corporation, holding 'a majority "1 KoUntze v. Flannagan, 64 Hun, of its stock, agreed to so vote such 635, 19 N. Y. Supp, 33. 318 COBPORATIpNS. upon the. ground that the president of the corporation by the purchase of stock held the majority of sha,re,s and was, enabled to coptrol the election, the action is rep.resentatn'e, in its char- acter, and there can be no relief without. proof of wrong done to the corporation or a menace to cominit such wrong." 276. By-laws regulating elections. "No by-law adopted by the board of directors regulating the election of direc- tors oi: officers' shall . be valid unless publiahetl' f or sit least once anveek for two successive weeks in a. newspaper in the county Avliere th6 election is to be held. and at least thirty days before such election." 3 , A by-law providing .that a, majority of the stock, present in person, or by proxy, at any meeting, of the stockholders, shall constitute a;quorum is inapplicable to an election of director.-;, since the power tp; enact by-laws, conferred by subdivision 5 of section 11 of . the .General Corporation Law, as to, what shall be a quorum is. expressly limited to cases not otherwise provided for by law, and as section 25 of the Stock Corpora- tion Law provides that ," the, direc'tors pf every stock corpo- ration shall be choseii.from the, stockh,olders,at,the^time,a;p,d place fixed by the by-laws of the:; corporation, by a plurality qf the votes of the stockholders voting, a,t , such electioii, '.' , any number, of. stockholders, however small their holding, , pro- vided they, hold a plurfility of the stock voted, may elect .di- rectors.* Even such by-laws as may be adopted by the board of directors under section 34 of'the General Corporation Law, regulating the election of directors "Or officers, are not valid unless published at least once a week for two successive weeks in a newspaper in the county whej^:e,,the election is to be held and at ■ least thirty dayS before such election as required by subdivision 5 of section 31 of the -General Corporation Law. An election of directors, held pursuant to by-laws thus adopted and hot published as required by subd. 5 of section 11 of the Genera,! Corporation Law, is invalid ;, and the directors are not legally elected, nor entitled, to administer the affairs of the company.^ ,, , , >,:. , ; ■ 'iij' ''' ' '■ . ■'''' 2. Duse.nbprry v. Sagamore Develop- 539: see also Reiss v. Levy, 175 App. ment Co., 164 .\pp. Biv. 573y.l50.N., Y. .^iv. ,fl38,~)..61 N. Y. Supp, 1048. ,„| . Supp. 229. 5. Matter of Empire .State Supreme 3. General Corporation Law, § 11, Lodge, ,53 ,MiM. 344, 103 N. y. Supp. subd. 5. ,.- ,465, affd., 1,18. .^pp.I)iv. 616, 103 N. Y. 4. jVIatter of , Kapid Transit Ijerry Suj^p. 11?4. ,,,;;. ■ Co.. 15 App. Div. 530, 44 N. Y. Supp. ., i;iIEBCTOES. ,319 277. JTeg;lect of directors tp adopt by-iaws for election of directors. "■\Ylieii iihe, diiTeet,ors^of any corporation for the .first; year of its corporate existence .shall hold over and continue to be directors after the first year, be- cause of tljeir neglect or refusal to adopt the by-laws required' to enable tlie stockholders to hold the annual election for 'directors] all their acts and pro- Beedings Avhile so holding over,, done for and in the name of the corporation, designed to charge upon it any liability or obligation: for the services of any such director, or any office)!, or attorney, or counsel appointed by them, and every such liability or obligation shall be held to be fraudulent and void." 6 278. Notice of election. . ., .„ ,,,,;.. ,.;; - = . "Notice of the time and place of holding any election of directors shall be either published at least once in each week for two successive weeks immediately preceding such election, in, a nevvspaper published in the county where such elec- tion is to be held, or delivered personally or mailed, not less than ten nor more than twenty days before the election, to each person who appears on the books of the corporation as a stockholder; if mailed, it shall be directed to a stock- holder at' his address as it appgara on such books. The by-laws' may require siich notice to be 'published and also mailed or delivered as above provided. In the' case of a domestic stock life' 'insurance corporation; no suchi election shall be valid unless, a copy of such notice shall, have bee;i filed in the' office of the superintendent of,insjir|£|,^ce. at least ten days before, the day. of, such election, in adi^tion to .the publicfitipn service -fhereof, or, both, required , above." 7 Jin tte absence of a by-law, the notice pi'esci'ited by the st3.tute is sufficient.^ A' by-law '^^oviding for the transaction of 'tjiisiriess at an adjc^nrned meeting of stockholders without further noticp thereof isyalid, and directors may be legally '6. 'Stock Corporation 'Law, §' 37. New York Electrical 'Workers' Union Wherfe ditectors : have' failed to fix v. Sullivan, 122 App. Div. :764„ 107 date for eteetidn of directors annually . N. Y. Supp. .88p. .-..., , ; , , - _ , .as required by.s^atutp, the ,,eleptioiv, ;..., 8, Matter tpf,. Jones Co,^ 67, Hun 36^^ should be held on the same day as the 22 N. Y. Supp. 318. fi^rst eleqtjon was held, if thai;, Tyas a Le^igth .of notice.— Where the char- Jegal day. yandenburgh; v. Broadway ter of an' incorporated company 'de- Railway Co., 29 Hun 348. ,.^ Clares that the election of directors 7.,Sto,ck Corpojration .Law,,§j,a5,,pt.. shall ^be conducted in the manner pre- as amd!"by;L. 1918,,.ch. 267..' " . scribed ; i^L ^he 'by-laws of the co'mpany, A stpckh.older. of a. corporation is and tKe by-laws fix a time and place presumed to know of its meetings. f^ t^^.e election of directors; and re- Hall V. City of. Syracuse, 7.1 Hun 465, ^t^uire notice 'of ' tlie same to be given, 24 N.. y., Supp. .MQ. '■.] ,, but 'omit to ipefiify the' length of ■When the :l)y-l9ws of a domestic notice, and the mode of giving it- membership corporation do not require notice .must be given for the time and notice, of. the election ,qf. o.fficers;^;, an in the' manner prescribed by the gen- .eleci,io», .held,' 'at, the, regul^fl time. and eral statute' law, relating to corpora- place set by the, by-laws, is not invalid tions. Matter of Long Island Rail- by reason of a failure to give notice. road Cov 19 Wend. 37. 320 COKPOEATIONS. elected at an adjourned annual meeting of which due notice was given.' And where the reqiiiremeint as to the publication of notice is disregarded in an election of directors but notice is served on all stockholders personally or by mail and the meeting is in every other respect legal, a waiver signed by each stockholder approving the vote taken, pursuant to sec- tion 42 of the General Corporation Law, will render such election valid:" 279. Failure to elect directors on day designated. •'If the directors shall not be elected on the day designated in the by-laws, or by law, the cprporation S'hall not for that reason be dissolved; but every director shall continue to hold his office and discharge his duties until his successor has been elected." 11 At common law, a director holding over after the end of his term became an officer de facto and as such he could do acts binding the corporation. Under the present statute directors holding over and acting become directors de jure until their successors are elected.^^ This statutory provision is in con- formity with the rule that provisions in statutes and by-laws requiring the election of directors to be had on a specified day are regarded as directoi'y, and the election, if not held on the regular day, may be held at a later day, and the directors then chosen, if there be no other irregularity or infirmity in their title, will be directors de jure.^^ It seems that the provisions of this section as to the, holding over of directors are not con- fined to corporations organized under or controlled by the General Corporation Law, but apply to corporations organ- ized under prior acts." Directors holding over are subject to 9. In re Hammond, 139 Fed. 898. of .lanuary, 1897. St. George Vine- 10. Kept, of Atty. Genl., Feb. 2, yard Co. v. Fritz, 48 App. Div. 233, 62 1910. N. Y. Supp. 775. 11. General Corporation La \M> § 28. 13. "Beardsley ct al. v. Johnson et 12. Van Amburgh v. Baker, 81 al.. 121 N. Y. 324, 2:38, 24 N. E. 380. K. Y. 46. !'*• Applies to corporation orgariized Where a coi:poratjon, whose by-laws under Act 6f 1848, ch. 40. Tyseii v. provided that its directors should hold Fritz, 44 App. Div. 562, 60 N. Y. Supp. office for a year or until their succes- 923; Contra, Bank of Metropolis v. sors Tjvere elected, held its last election Faber, 38 App. Div. 159, 56 N. Y. for directors, ia 1892, the directors Supp. 542. tlien .elected will, by virtue of the by- When a co-operative insurance asso- la,w8 and of the statutes relating to ciation, originally incorporated under such corporation, be presumed to have chapter 175 of the La*rs of 1883, rein- fieen acting as directors in the month corporates under section 206 of the DIBECTOES. 321 all the liabilities imposed by law upon directors regularly and annually chosen,^^ but it must be established that such di- rectors have held over and continued to act.^^ 280. Special meeting for election of directors. "If the election has not been held on the day so; deslgnatedj the directors sdia-lf forthwith call a meeting of the members of the corporation for the purpose of electing directors, of which meeting notice shall be given in the same manner as of the annual meeting for the election of directors. "If such meeting shall not be so called within one month, or, if held, shall result in a failure to elect directors, any member of the corporation may call a meeting for the purpose of electing directors by publishing a notice of the time and place of holding such meeting at least once in each week for two successive Aveek& immediately preceding the election, in a newspaper published in the county where the election is to be held and in such other manner as may be prescribed in the by-laws for the publication of notice of the annual meeting, and by serving upon each member, either personally or by mail, directed to hiin at his last known post-office address, a copy of such notice at least two weeks before the meeting." 17 If a Corporation has no by-law regulating elections of trus- tees or directors a valid election of directors may be had, by force of this section, on the call of any member of the corpo- ration, published and noticed as prescribed.^^ When after a failure to vote for directors of a corporation at the regular annual meeting, a special meeting is called for that purpose, the notice required by section 25 of the Stock Corporation Law must be given, together with such other notice as is pre- scribed by the by-laws. Hence when the fey-laws require in Oeneral Insurance Law, its corporate N. Y. 471, 474. entity is not changed; but it merely 17. General Corporation Law, § 29. becomes entitled to the benefits and 18. Matter of Jones Co., 67 Hun 360, privileges of the latter act. Hence, by 22 N". Y. Supp. 318. virtue oif the provisions of section 28 Where a corporation duly organized of the Greneral Corporation Law, when and existing had for several years an election of directors is wholly void, failed to elect trustees, and there is no the former board elected under the or- provision authorizing those formerly iginal act of incorporation holds office elected to hold over until their succes- until successors are duly elected. Mat- sors are chosen, or requiring- the trus- ter of Empire .State Supreme: Lodge, tees,.qr other officers to preside at or 118 App. Div. 616, 103 N. Y. . Supp. dp any act, in relation, to the election, 1124. ft is within, "the power of the corpora- is. Reed V. Keese, 60 N. Y. 616; see tors themselves, without any new' leg- also ante, par. 273. islative aid, voluntarily' to meet at 16. Van Amburgh v. Baker, 81 the time designated in the constitution N. Y.' 46, 48; Philadelphia & Reading and elefet a new bo^rd of trustees. Coal and Iron Co. v. Hotchkiss, 82 People v. Twaddell, 18 Hun 427. 21 322 CORPORATIONS. addition tothe statutory notice a written notice mailed thirty days ibeforertlie meeting, a notice of only twelve days is in- sufficient and entitles a stockholder who has not appeared or waived his rights to an order vacating the election, and it is no answer to say that the vote on the stock owned by such stockholder would not have changed the result *of the election for he has a right to be present to advocate the election of his candidates. No waiver of such irregularity by an absent stockholder «an be predicated on the fact that his attorneys were present at the meeting.^^ 281. Mode of conducting special meeting. "Such meeting shall be held at the oflBce of the corporation, or it it has none, at the place in this state . wheire , its principal business has been transacted, or if access to such, office, or pla<;e is, denied or cannot be had, at some other place in the city, village, or town where, such office or place is or was located.. "At such meeting the members attending shall constitute a quorum. They may elect inspectors of election and directors and adopt by-laws providing for future annual meetings and election of directors, if the corporation has no such by-laws, and transact any other business which maj' be transacted at an annua] meeting of the members of the corporation." 20 282. ftualification of voters and canvass of votes at special election. "In the absence' at such meeting of the booW of the corporation showing who are members thereof, each- person, before voting, shall present his sworn state- ment setting forth that lie is a member of the dorporation ; and 'if a stock cor- poration, the numhejr of shaijeBi of stock owned by him and standing in his name on, the books of the corporation, and, if knpwn to him, the; whole number of shares of stock oi the corporation outstanding. On filing such statement, he may vote' as a meniber of the corporation; and if a stock corporation, he may vote on the shares of stock appearing in such statement to , be owned by him and standing in his name on the books of the corporation. The inspectors shall return and file such statements, witli a certificate of the result of the election, verified' -by them, in' the office of the clerk of, the county in which such election is held, and the persons so- elected sljaH be the directors of the corporation."! Suspension, Removal and Resignation. 283. Suspension or removal generally. A director of a corporation does not stand in the same re- lation to the corporate body which a private agent holds toward his principal, arid, heiice, cannot be removed or sus- pended from office until the end of, his term, at least without cause, in the absence of a statute or a provision , in .the 19. Matter of Keller, 116 App. Div. 20. General Corporation Law, § 30. 58, 101 N. Y. Supp. 133. 1. General Corporation Law, § ?1. DIRECTORS. 323 charter.- Suspension or removal of the directors of a corpo- ration can only be had in an action broiight by the Attorney- General pursuant to sections 90* 91 and 307 of the General Corporation Law. Section 307 provides that : "A trustee, director, or other officer of a corporation shall not be suspended or removed from office, by a court or judge, otherwise than' by the final judg- ment, of a competent court, in an action brought by the: attorney-general, as prescribed in section ninety of this chapter." 3 But a court of equity at the suit of a stockholder may en- join threatened acts of mismanagement or waste, or appoint a receiver of the corporate property until a new election of directorsj if it satisfactorily appear that the directors are act- ing fraudulently or in bad faith or in their own interests con- trary to the interests of the corporation, and that the relief is necessary to, protect stockholders in the interim. However, the appointment of a receiver for such purpose, as dis- tinguished from the receiver of a corporation itself in a pro- ceeding, for dissolution, is justified only in an extreme case satisfactorily established,* Section 307 of the General Cor- poration Xaw providing for an action in ithe name of the at- torney- genei'al : to suspend or remove a- director is not ex- clusive of . such ■: reasonable, and lawful charter provision. re- lating thereto as may be included in the articles of incorpo- ration.^ The law does not prescribe the moral qualifications of directors, and the court will not interfere to suspend them on, charges iOf> personal immorality.^ Quo warranto and not mandamus is the remedy of a director who claims to have been illegally removed and whose place has been filled by the election of another.'' 384. Resignation of directors. ' , A director of a corporation may resign and relieve himsejf 2. People ex rel; Mariice" v. Powell, attachment. People v: ' Ballou, 12 201 N. Y. 194; 202, 94 N. B. 634. Wend. 277. 3. General Corporation Law, § 307. 5- People ex rel. Manice v. Powell, 4. Welcke v. Trageser, No. 1, 131 ^01 N. Y. 194, 202, ?4.N. E,:634. -" App. Div. 731, 116 N. Y. Supp. 166. ^^- ^J-^^'^lJ^^f*- l^^"^""^ ^o.,^ 7 ^. , .. ' i ■ ,. I. ...i ^^^- I^v N. S. 156, 38 How. Pr. 193. The directors against whom a jtiag- » t> ■ ■, , ,, ^ ;,. ' ^ '7. People ex rel. McLaughlin v. ment of ouster has been made, are m- p^,;^^ C?ommissionera; i74 N. Y 4S0 dividually responsible for the costs of 67 K E. 78; 'People e.x rel. Manice 'v. the proceedings, although they had ho Powell, 201 N. 'Y._ 194, .94 N". E. 634; direct agency' in the' defence of thfe^ Hartt v. Harvey, 13 Abb. Pr. 332, 21 writ, and payment may be enforced by How. Pr. 382. , 324 CORPORATIONS. from liabilities thereafter incurred, though the resignation be not acted upon by the board of trustees or entered in the books of the corporation.* While the general proposition is undoubtedly true, that the acceptance of a resignation is ordi- narily not essential to its effectiveness,^ it does not follow that the ofReers of an incorporated organization can divest them- selves of all authority over its property and all obligation to care for that property simply by resigning in a body in order to make out a case for judicial action under the provisions of section 306 of the General Corporation Law." It has been held that a director of a corporation who sold out his stock and ceased thereafter to take any part in the management of its affairs, or in the meetings of its directors, was not bound to see that a successor was elected in his place or to tender a formal resignation, and that he was not responsible for the acts of those in its management at the time of its dissolution some five years after he thus severed his connection, although no successors to the directors then in office were ever elected.^^ But under the statute as it now reads the mere failure to elect a director does not relieve him from his responsibilities. And even though a director sells all his stock, he is not thereby re- lieved from his office where the certificate of incorporation does not require him to be a stockholder.^' 285. Vacancies. "Vacancies in the board of directors ahall be filled in the manner prescribed in the by-laws." 13 8. Chandler v. Hoag, 2 Hun 013, affd. imminent; that tlie remaining prop- on opinion below, 63 N. Y. 824. erty will be wasted, leaving the bulk 9. Xoble V. lEiuler, 20 App. Div. 548, of its creditors unpaid, may lawfully -t7 N. Y. Supp. 302; Yorkville Bank v. resign for . the purpose of securing a Zeltner Brewing Co., 80 App. Div. 578, fair and equal distribution of the 581, 80 N. Y. Supp. 839; Wilson v. corporate property among its creditors, Brentwood Hotel Co., 16 Misc. 48, . 37 and such resignation becomes effective >. Y. Supp. 655. ,0 vacate the respective offices without 10. Zeltner v. Zeltner Brewing Co., affirmative act of the corpora- 79 App. Div. 136, 80 N. Y. Supp. 338, . f affd. 174 X. Y. 247, 66 N. E. 810 But '""Z' ^, c, -i, T. ■ J. 1 o> TT '■'■■ hturges v. Vanderbilt, 73. N. Y. see Smith v. Danzig et al., 64 How. ^ ' Pr. 330, 3 Civ. Proc. 137, holding that. ^^*- the directors of a corporation, when ^^- (General Corporation Law, § 28. they find tliat the corporation is in- 13. Stock Corporation Law, § 25, solvent; that its afi^airs ar.e growing pt., as amended in other pai'ticulars by Avorse every day; that the danger is L. 1918, ch. 267. DIBECTOBS. 325 The fact that a trustee did not attend the iheetings of the trustees for a period of about three months immediately fol- lowing his election, does not constitute, as matter of law, such a longrcontinued jieglect of duty as amounts to an abandon- ment of his .office as trustee, nor does, it justify his associates in declaring Ms office as trustee vacant,-^* One director cannot constitute a " quorum "or hold a " meeting," A " major- ity " meaus a majority of the whole number of directors and a quorum . remains the same even though there may be vacancies, and hence a vacancy cannot be filled by the only re- maining director.^^ Powers of Directors. 286. In general. It is provided by statute that the officers of every corpo- ration shall be managed by its board of directors.^'' The indi- vidual directors making up the board are not mere employees, but a part of an elected body of officers constituting the ex- ecutive agents of the corporation. They are the exclusive executive representatives of the corporation and are charged with the administration of its internal affairs and the man- agement and use of its assets. In corporate bodies, the powers of the board of directors are, in a very important sense, original and undelegated. The stockholders do not confer, nor can they revoke those powers.. They are deriva- tive only in the sense of being received from the state in the act of incorporation. The directors convened as a board are the primary possessors of all the powers which the charter confers, and like private principals they may delegate 'to agents of their own appointment the performance of any acts which they themselves can perform. The recognition of this principle is absolutely necessary in the affairs of every corpo- ration whose powers are vested in a board of directors. All powers directly conferred by statute, or impliedly granted, of necessity, must be exercised by the directors wl|o,"are con- stituted by the law as the a,gency for the, doing of corporate acts. In the management of the affairs of the corporation, they are dependent solely upon their own knowledge of its 14. Halpin v. Mutual Brewing Co., 20 as amd. by Ii. 1917, ch. 538. As to App. Div. 583, 47 liT. 't. Supp. 412. representation of corporation by its 15. Mitchell v. Forest City Printing officers and agents, see post, chap. Co., 107 Misc. 709, 176 N. Y. Supp. 157. SXH. 16. General Corporation Law, § 34, 326 CORPORATIONS. business and their own judgment as to what its interests re- quire," and the consent of or ratification by its stockholders is not necessary to the validity of a corporate act unless ex- pressly required by statute or the by-laws of the corpora- tion. Contracts, therefore,' which the corporation may legiti- mately make, the manner of the making of which is not di- rected otherwise, may be made by its board of directors with- out the consent or ratification of stockholders; and, in the absence of fraud or collusion on the part of the directors, they are binding on the corporation.^^ In determining whether the directors of a corporation have the power to make a con- tract, it is proper to consider the general object for which the corporation was created, as well as the general character and nature of its business.^^ A contract to pay a dU'ector a cer- tain sum for inducing his corporation to award a. contract for improving its lands, even though made with the knowledge of his codirectors, is illegal and void as against public policy.^" The directors of a corporation, as such, and without special authority for that purpose, have no .power to make a sale of any portion of its property which is essential for, the trans- action of its customary business.^ 17. Ma,nson v. Curtis, 223 JT. Y. 313, Limitations upon powers of direc- 119 N. E. 559. As to the rights, ' tors. — ^See post,' chapter XIX. duties and liabilities of officers and di- 19. Caldwell v. Mutual Reserve Fund reBtors, see post, chapter XIX. Life Association, 53 App. Div. 245, 250, 18. Beveridge v-. New York E. R. Co., 65 N. Y. Supp. 826. 112 N. Y. 1, 19 N. E. 489. An agreement made with a practical A contract made by the directors of hotel man by the directors of a corpo- a corporation pertaining to its ordinary ration organized to erect a hotel, giv- business relations cannot be revoked, by ing him a monthly salary for services any action of its stockholders. Gene- while the hotel is being built, and the see Valley & W. R. Go. v. Retsof Min. management thereof for ten years on Co., 15 Misc. 187, 36 N- Y. Supp. 896. completion, is not a, breach- of faith by When authority to sell i^ given by the directors, "and althpugh at the same stockholders to directors. — Where a meeting wheii such contract was au- deed of land is given to a city by a, tliorized the manager was elected to corporation, the city is justified in as- the board of directors he may be enti- suming 'that the president of the corpo- tied to recover for salary subsequently ration and its board of directors are earned. ; Brooklyn Heights Realty Co. authorized to act for it in agreeing v. Kurtz, 115 App. Div. 74, 100 N. Y. upon the value of the premises and in Supp. 723. making a conveyance thereof to carry 20. Landes v. Hart, 131 App. Div. 6, out the agreement. Hall v. City of 115 N. ,Y, Supp. 337. Syracuse, 71 Hun 495, 24 N. Y. Supp. 1. Abbot v. American Hard Rubber 959. ; Co., 33 Barb. 578, 21 How. Pr. 193. DIKECTORS. 327 "The directors of a stock corporation may appoint from their number a presi- dent, and may. appoint a secretary, treasurer, and other officers, agents and em- ployees, who shall respectively have such powers and perform such duties in the management of the property and affairs of the corporation, subject to the control of the directors, as may be prescribed by them or in the by-laws. The directors may require any such officer, agent or employee to give security for the faithful performance of his duties, and may remove him at pleasurci The policyholders of an insurance corporation shall be eligible to election or appoint- ment as its officers." 2 287. Separate and individual authority of directors. Tlie directors of a corporation havo do separate or indi- vidual authority to bind the, corporation, and tljd.,s although the niajority of the whole number, actin.g singly ynd not col- lectively as a board, should assent to the pai'ticular trans- action.^ So the fact that a director and owner of most of the capital stock of a corporation makes a personal promise to pay a bonus to an employee for services rendered in addition to a weekly salary does not make such promise that of the corpo- ration itself so'as to justify a judginent against it for a breach of the promise, there being no proof of any corporate action in the premises or any authority, actual or implied, to bind the corporation by such promise, or proof that the corpora- tion accepted the services with corporate knowledge of the promise.* Conversations with individual directors at times and places when they are not acting in their official capacity are not binding upon the corporation, and parol evidence 2. stock Corporation Law, § 30. debt of the corporation, without au- 3. People's Bank V. St. Anthony's R. thority from the board of directors. C. Church, 109 N. Y. 51'2, 522, 17 N. E. An ' assignment so made is not merely 408; Columbia Bank v. Gospel Taber- voidable, but absolutely void. Hoyt v. nacle Church, 127 N. Y. 361, 368, 28 Thompson, 5 N. Y. 320. N. E. 29; Filon v. Miller Brewing Co., .^^^^.^ ^ committee of three direc- 60 Hun 582, 15 N: Y. Supp. 57; Mcll- ^^^^ j^^^ discretionary power for the roth V. Waterbury & Sons Co., 193 j j v t !„„„., „* App. Div. 491, 184 N. Y. Supp. 886; «-'="*^°" ^""^ ^'^'"''^ f '^ ''^' f Gerard- v. Empire Square Realty Co., <^°'Vot^^' P'^"?^'^*^' «^g^^'"« ^""^ '^^^- 195 App. Div. 244, 187 N. Y. Supp. 306. i°g by two members is sufficient when Where the management of the af- third member assents. It seems that fairs of a corporation is entrusted by corporate seal bemg properly affixed no its charter to a board of directors, the signature was necessary. Union Bridge president and cashier, unless specially Co. v. Troy and Lansingburgh R. R. authorized by the charter, have no Co., 7 Lans. 240. i ■ power to assign the choses in action of ' 4. McHrath v. Waterbury & Sons the corporation to its creditor as se- Co., 193 App. Div. 491, 184 N. Y. Supp. curity for the payment of a precedent 886. 328 COBPQBATIONS. thereof is insufficient to establish a contract.^ But where the directors of a corporation jowning all the capital stock are members of the same family and are so at variance that di- rectors' and stockholders' meetings are not held, their action, concurred in by all, although separately and^not as a body, binds the corporation.^ 288. Powers of executive committee of board of directors. All acts within -the powers of a corporation may be per- formed by agents of its own selection.'' It is only discretion- ary powers respecting the affairs of a corporation that a board of directors or a board of managers thereof is prohibited from delegating to a sub-obmmittee or to an agent. Such a board may vest the performance of merely ministerial duties in a committee of their own members or in an individual. So the board of directors of a business corporation have power to appoint an executive committee of their own number to trans- act the business of their corporation during .the interval be- tween meetings of the board of directors.' Although the char- ter of a corporation declares that its powers "shall be exer- cised by a board of directors, ' ' consisting of a specified num- 5. Gardiner v. Bronx National Bank, 158 App. Div. 288, 142 N. Y. Supp. 713, affd. 216 N. Y. 683, 110 N. E. 1041. 6. Gerard v. Empire Square Realty Co., 1'95 App. Div. 244, 187 N. Y. Supp. 306. 7. Barnes v. Ontario Bank, 19 N. Y. 152; Oleott v. Tioga E. Co., 27 N. Y. 646, 557. 8. First National Bank v. Commer- cial Travelers' Home Association, 108 App. Div. 78, 95 N. Y. Supp. 454, affd. 185 N. Y. 575, 78 N. E. 1103.* Powers of executive committee. — Ryder v. Bushwiek R. Co., 134 N. Y. 83, 31 N. E. 251 ; Mills v. United States Printdng Co., 99 App. Div. 605, 616, 91 N. Y. Supp. 185; Matter of Empire State Supreme Lodge, 118 App. Div. 616, 103 N, Y. Supp. 1124; Ganse v. Commonwealth Trust Co., 124 App. Div. 438, 444, 108 N. Y. Supp. 1080, affd. 196 N. Y. 134, 89 N. E. 476. Powers of an executive committee, of a board of trustees of a corporation to authorize one of its members to in- dorse negotiable paper belonging to the corporation — such authority is not in- valid, although coupled with an unlaw- ful direction as to the disposition of the proceeds. Sheridan Eleo. Light Co. V. Chatham Nat. Bank, 52 Hun 575, 5 N, Y. Supp. 529, affd. 127 N. Y. 517, 28 N. lE. 467. The board of trustees of a manufac- turing corporation may appoint an ex- ecutive committee of its members, and invest, it with power to transact the business of the company during the in- terval between the meetings of its board of trustees. Such committee may delegate to one of its number power to do merely ministerial acts, such as the indorsing of checks payable to the corporation and receiving the money thereon. Sheridan Elec. Light Co. V. Chatham Nat. Bank, 127 N. Y. 517, 28 N. E. 467. DIKECTOES. 329 ber, yet the board may delegate its authority to agents, or to a quorum composed of less than a majority of the number.^ The executive committee of the board of directors which, under a by-law, has authority to exercise any powers of the board when the board is not in session, has no power to execute, inctmedi- ately prior to a meeting of the board, a contract appointing a sole selling agent of the output for a term of years ; the call- ing of a meeting suspended the powers of the committee' to act in governmental matters, and the directors having subse- quently considered and rej&cteid such contract, an action for damages for the breach thereof is not maintainable, the ijlain- tiff being chargeable with notice of the lack of authority of the committee.^" A majority will be deemed necessary to con- stitute a quorum of the executive committee of a corporation, in the absence of evidence to the contrary .^^ Procedure by Board of Directors^ 289. In general. If the meetings of the board of directors are to be held only within the state the certificate of incorporation must so pro- vide.^^ It is not absolutely essential to the validity of a cor- porate act that the trustees of a corporation should proceed according to any particular form. If all are present, or have received due notice of the proposed meeting, action taken by them, intended to be a corporate aci;, although informally ex- pressed, is as valid as if it had been surrounded by all the formalities usual and, it may be said, desirable, in such cases. The law looks to the substance rather than to the form of things.^^ And where a corporation consists of a small num- ber of persons it may transact ordinary business without the formality of resolutions; it may be transacted by conver- sation, without formal votes.^* Hence it is not necessary for every person who has dealings with a corporation to show a 9. Hoyt V. Thompson's Executor, 19 Misc. 577, 584, 33 N. Y.-Supp. 1098. N. Y. 207. 14. Hall v. Herter Brothers, 83 Hun 10. Commercial W. & C. Co. v. 19, 31' N. Y. Supp. 692. Northam^pton P. C. Co., 190 N". Y. 1, 82 Liability of corporation for informal N. E. 730. acts. — ^Where all the stock and bonds 11. Marshall v. Industrial Federation of a corporation are owned by a of America, 84 N. Y. Supp. 866. mother and her son, who constitute a 12. Business Corporations Law, | 2, majority of the board of directors, the as amended in other particulars by L. remaining- member of such board being 1909, ch. 484. a mere employee, and the son ■conducts 13. Whitehead v. O'SuUivan, 12 the business without the formality of 330 CORPORATIONS. resolution of the board of directors for everything which is done in and about the corporate business when it is attempted to bind the corporation by the action of its officials.^^ And though the by-laws of a corporation require the service of a notice of a directors ' meeting on each director, the failure to do so is an irregularity which may be waived.by the corpora- tion.^^ A trustee or director of a corporation cannot vote by proxy at a meeting of trustees or directors." The omission of a secretary of a corporation to sign the minutes taken by him at a particular meeting and entered in the orjginal minute book, does not render such minutes incompetent upon the trial of an issue as to whether the corporation passed a cer- tain resolution at that meeting.^* So also a resolution passed at a special meeting of the board of directors of a corpora- tion, although its by-laws make no provision for a special meeting, held without objection and not in violation of any by- law, at a proper place, upon notice to all the persons elected as directors, and who have accepted the office, and where all such persons are present, is valid, and its authenticity is suffi- ciently established when it is found recorded in the minutes of the corporation with the signature of the secretary duly affixed thereto, although the minutes may, not be in his hand- writing.^^ Oral testimony is not admissible to, contradict the plain terrns of a resolution by a board of directors.^". A share- holder in a corporation is not chargeable .with constructive no^tice of resolutions adopted by the board of directors, or by proyisions in the by-laws regulating the mode in which its business shall be: transacted with its customers.^ 290. ftiiorum of directors and power of majority. "The affairs of every corporation shall be managed by its board of directors, holding,- directors' meetings or evidelic- St. Rep. 574. ing. any act. of the corporation by writ- 17. Craig Medicine Co. v. Merchants' ten minutes, a third party may charge Bank, 59 Hun 561, U N. Y. Supp. 16. the corporation upon an obligation in- ^g Woodhaven Bank v. Brooklyn curred by the son within the general jjjj,^ Improvement Co., 69 App. Div. scope of the business. Groh's Sons v. .._ _. „ a- c ,««« Groh, 80App.Div.:85, SON. y. Supp. ''t,.\\n"''^n .- 438, revd. on other grounds, 177 N. Y. ^^- ^""'^'^ ^'""^''^ ^°- ^- ^''''^'' ^2 8, 68 N; E. 992. ^PP- °^^- ^' '^'^ ^- "^- ^"PP- ^^■ 15. Hall V. Herter Bros., 90 Hun 280, ^°- Dusenberry v. Sagamore -Devel- 283, 35 N. Y. Supp. 769, affd. 157 N. Y. opment Co., 164 App. Diy. 573, 150 69t4, 51 N. S. 1091. 'N. Y. Supp. 229. 16. Chambers v. Sterling Automobile 1. Pearsall v. W. V. T. Co., 124 N. Y. Mfg. Co., Inc., 163 N. Y. Supp. 574, 197 256, 266, 26 N. E. 534. DIRECTORS. 331 at least one of whom shall be a citizen of the United States and a resident of this state. Unless otherwise provided a majority of the board of directors of a corporation at a meeting duly assembled sihall be necessary to constitute a quorum for the transaction of business and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. The members of a corporation may in by-laws fix the number of directors necessary to constitute a quorum at a number less than a majority of the board, but at least equal to one-third of its number. Subject to the by-laws, if any, adopted by members of a corporation, the directors may make necessary by-laws- of the corporation." 2 2. General Corporation Law, § 34, as amd. by L. 1917, eh. 538. Liability of business corporation for expense of publishing notices of special meeting of stockholders and call for proxies to be voted thereat, under at- tempted authorization of majority of directors. — Where it appears, in an ac- tion brought against a corporation by an advertising company to recover for services and expenses in procuring the publication of four notices relating to a special meeting of the stockholders and to the obtaining of proxies to be voted upon questions in dispute be- tween the president and the majority of the board of directors, that the first publication, giving notice of the special meeting and asking for proxies to be voted thereat, was authorized by a ma- jority of the directors at a meeting thereof, at which the secretary was di- rected to call the stockholders' meeting and that such authorization was within the scope of the powers and duties of the board of directors, the expense of that publication is a legitimate chaifge against the corporation for which the plaintiff may recover; but where it ap- pears that the other three notices were not authorized by any lawful resolu- tion or other action of the board of directors at any meeting thereof, but were merely signed by the majority of the directors, and that such notices were merely appeals for proxies to be used by one faction in its contest with the other for the control of the corpora- tion, or a statement by such faction of its side of the controversy, it must be held that the publication of such notices was not, and could not have been, lawfully authorized by the board of directors; and that such notices bore, upon their face, sufficient notice to the plaintiff that they were of a character beyond the limit of anything which could be published in behalf of, or at the expense of, the corporation, so that the plaintiff cannot recover for the publication of such notices. The theory that this was an executed con- tract of which the corporation had re- ceived the benefit and for the expense of which it should pay is not sustained by the facts. Lawyers' Ad. Co. v. C. R. L. & E. Co., 187 N. Y. 395, 80 N. E. 199. Control of board. — It does not follow that a director controls the conduct of the board of directors, even though such board was elected t;hrbugh his con- trolling ' vote. Bowne v. Smith, 44 Misc. 575, 90 N. Y. Supp. 204. A corporation duly organized under the Membership Corporations Law with by-laws governing the number of members necessary to constitute a quorum which are inconsistent, cannot invoke the common-law rule that the number of members present and voting at any regular meeting constitute a quorum aiid a majority is sufficient to elect. Such corporation is governed by section 8 of the Membership Corpora- tions Law. N. Y. Electrical Workers' Union v. Sullivan, 122 App. Div. 764* 107 N. Y. Supp. 886. At common law "such of the share- holders as actually assemble at a prop- 332 COEPOKATIONS. "Whenever, under the provisions of any of the corporate laws, a "corporation is authorized to take any action by the agreement or action of its directors, managers or trustees, such agreement or action may be taken by such directors, regularly convened as a board, and acting by a majority of a quorum, except when otherwise expressly required by law or the by-laws of the corporation and any such agreement shall be executed in behalf of the corporation by such officers as :shall be designated by the board of directors, managers or trustee*." 3 A by-law of a private corporation, requiring the unanimous vote of its directorate to a sale of its business as a going con- cern, or to a sale of any machinery or stock on hand in bulk, or otherwise than in the usual course of business, does not violate the provisions of this statute, that unless otherwise provided the action of a majority of a board of directors at a lawful meeting shall be the act of the board.* The general business of the corporation including, as incident thereto, the power of pledging or assigning assets of the corporation for the purpose of securing a debt, is embraced in the author- ity delegated by a by-law declaring that five directors shall be a quorum for the transaction of " ordinary business."^ 291. Notice of meetings. "At any meeting at which every member of the board of directors shall be present, though held without notice, any business may be transacted which might have been transacted if the meeting had been duly called. Except when otherwise required by law or the by-laws of the corporation, special meetings of the members of the corporation may be called in the same manner as the annual meeting thereof." C A meeting is not duly assembled unless each director shall have notice of the meeting, or shall duly waive such notice.' erly convened meeting constitute a that iive directors, or a majority of quorum for the transaction of busi- them, at such an adjourned meeting ness, and a majority of that quorum may exercise the ordinary corporate have authority to represent the cor- powers although the absentees have no poration." Matter of Rapid- Transit other notice of the meeting than that Fferry Co., 15 App. Div. 530, 532, 44 with which they are chargeable from N. Y. Supp. 539. the by-law. Smith v. Law, 21 N. Y. 3. General Corporation IJaw, § 43, pt. 296. The by-laws of a corporation having 4. Levin v. Mayer, 86 Misc. 116, 149 nine directors, established certain days N. Y. Supp. 112. for regular meetings, and provided that 5. Hoyt v. Thompson's Executor, 19 when at such a meeting less than a, N. Y. 207. quorum but three or more directors 6. General Corporation Law, § 43, pt. should be present, they should have 7. Republican Ai't Printery, Inc., v. power to adjourn to any time prior to David, 173 App. Div. 726, 159 N. Y. the next regular meeting. It was held, Supp. 1010. DIEECTOBS< 333 Where notice is required to be given to a director of a meet- ing of a board of "wMcli be is a member, and no provision is made as to the manner of service, it must be personal, as re- quired at common, law.^ General noti<;e!of meeting of direct- ors called to determine matters pertaining to the ordinary business affairs of the corporation, is sufficient.^ 8. People ex rel. Stephens v. (xreen- 9. Matter of Argus Co., 138 N. Y. wood Lake Assn., 18 N. Y. Supp. 491, 557, 34 N. E. 388. 44 St. Rep. 914. 334 COEPOEATIONS. CHAPTER XIX. Eights, Duties and Liabilities op Dikectoes and Officers. In General. 292. Fiduciary relation of direotors and officers to corporation. 293. Validity of contracts between corporations having common directors. 294. Financial statement to stockliolders. 295. Motive of stockholder in demanding statement. 296. Demand for and sufficiency of statement. Compeiisation. 297. In general. 298. Services outside regular duties. 299. Power of directors to fix salaries. 300. Recovery back of salaries illegally voted to officers and directors. 3'01. General employees and agents. Directors and Officers as Creditors. 302. Loans and advances by directors to corporation. 303. Purchase and enforcement by direotors of obligations of corporations. Corporate Management. 304. Duties and liabilities generally. 305. Nature and extent of liability. 306. Errors of judgment. 307. Ultra vires acts. 308. Presumption of knowledge of corporate conditions. 309. Directors as trustees in case of dissolution. Dealmgs with Corporation. 310. In general. 311. Validity of contracts openly made. 312. Acquiring corporate property. Misrepresentation of Financial Condition. 313. Liability for false statements inducing purchase of stock. 314. Essential elements of cause of action; measure of damages. Offi,cial Misconduct. 315. Enforcement of liability generally. 316. Who may bring action generally. 317. When attorney-general must bring action. 318. Action by attorney-general to remove trustees, directors or other officers. 319. Action by creditor against directors. 320. Action by director or officer against co-director or officer. 321. Liability of directors to account in equity for official misconduct generally. KIGHTS, DUTIES AND LIABILITIES OF DIEECTORS, ETC. 335 333. Equity jurisdiction conferred by statute. 323. Effect of statute. 324. Joinder of causes of action: Receiver. 325. Bringing in creditors to prove claims. 336. Injunction staying action by creditors. 327. Injunction suspending business or restraiining officers from acting. 328. Abatement of action. 339. Compelling officer and agents to testify. 330. Proof of misconduct. 331. Judgment. 333. Criminal liability for official misconduct. 333. Presumption of knowledge of corporate condition in criminal prosecution. In General. 292. Fiduciary relation of directors and oiiicers to corporation. A corporation has power to appoint snch officers and agents as its business shall require, and to fix their compensation.^" While the ordinary rules of law relating to an agent are appli- cable in considering the acts of a board of directors in behalf of a corporation when dealing with third persons, the- indi- vidual directors making up the board are not mere employees, but a part of an elected body of officers constituting the ex- ecutive agents of the corporation. They hold such office charged ;with thfr duty to act for the corporation according to their best judgirient, and in. so doing they cannot be controlled in the reasonable exercise and performance of such duty. As a general rule the stockholders cannot act in relation to the ordinary business of the corporation, nor can they control the directors in the exercise of the judgTuent vested in them by virtue of their office.^^ The corporation is the .owner of the property, but the directors in the performance of. their duty, possess it and act in every vay as if they owned it. They are trustees clothed with the power of controlling the property and managing the affairs of a corporation without let or hin- drance.^^ The relation existing between a corporation and its directors, so far as the directors' dealings with the corporate property are concerned, is fiduciary in its character, and, while not strictly that of a trustee and cestui que trust, it par- takes of that nature. It is only in their dealings as agents of 10. General Cofporatiop Law, § II. 12; People ex rel. Manice !V. Powell, 11. People ex rel. Manice v.^ Powell, 201 N. Y. 194, 94 N. E. 634; Conti- 201 N. Y. 194, 20O,i94 X. E. 634; Man- nental Securities Co. v. Belmont, 206 son V. Curtis, 223 X. Y. 313,= 119 N. B. N". Y. 7, 16 99 N. E. 138; Manson v. 559 Curtis, 223 N. Y. 313, 119 N. E. 559. 336 COEPOBATIONS. the corporation with third persons that the relation between the corporation and the directors is that of principal and agent.^^ The peculiar relation that they bear to the corpora- tion and the owners of its stock grows ont of the inability of the corporation to act except through such majiaging officers and agents.^* The exercise of the power and discretion of di- rectors owning all the capital stock of a corporation may be controlled by valid agreement between themselves, where the interests of creditors are not affected.^^ But clearly the law does not permit the stockholders to create a sterilized board of directors. And therefore an agreement is invalid that pro- vides that through the period of one year after the making of the agreement one of the stockholders should manage the cor- porate business and shape and control the corporate policy of the corporation of which the parties were stockholders and officers ; that the president of the corporation should be only a nominal head and be inattentive to and non-interfering with the business or the policy of the corporation, where the condi- tions which the parties wished to meet and their intent also necessitated and contemplated the selecting of directors who should remain passive or mechanical to the wiU and word of the plaintiff/^ In every action where the interest of the cor- poration is involved, particularly where the same is in conflict with the individual interest of the directors, they act as trus- tees and are strictly accountable to the creditors or stockhold- ers of the corporation for their action. The relation of an offi- cer of a corporation to it is such that he must at all times act in good faith and unselfishly toward the corporation.^'' So the president, manager and director of a comparatively small business corporation, who owns about seventy per cent of its stock, and upon whose business judgment and integrity the minority stockholders, only three in humber, are absolutely 13. Bloom V. National Sav. %, Loan son v. Curtis, 223 N. Y. 313, 119 N. E. Co., 1'52 N. Y. 114, 46 N". E. 166; Peo- 559. pie ex rel. Manice v. Powell, 201 N. Y. 15. Kossel v. Empire Tinware Co., 194, 94 N. E. 634; ■Continental Securi- 178 App. Div. 17«, 164 N. Y. Supp. ties Co. V. Belmont, 206 N. Y. 7, 9© 1033. N^. B. 138; Mabon v. Miller, 81 App. 16. Manaon v. Curtis, 223 N. Y. 313, Div. 10, 80 N. Y. Supp. 979; Murray v. 119 N. E. 559. Smith, 166 App. Div. 528, 152 N. Y. 17. Billingfl v. Shaw, 209 N. Y. 265, Supp. 102; Krechier v. Burgueger, 174 103 N. E. 142; Kossel v. Empire Tin- App. Div. 48, 160 N. Y. Supp. 256. ware Co., 178 App. Div: 176, 164 N. Y. 14. People ex rel. Manice v. Powell, Supp. 1033. 201 N^. Y. 194, 201, 94 N. E. 634; Man- BIGHTS, DUTIES AND LIABILITIES OF DIRBOTOBS, ETC. 337 dependent, owes a duty to disclose to them the exact terms and conditions of a sale of all the stock which he is negotiating and also facts affecting its value.^^ Although the relation of managing officers of a corporation to stockholders is not strictly, that of trustee and cestui que trust, it is in a sense fiduciary, and their superior position imposes upon them a .duty to an indiviidual stockholder not to take advantage of the opportunity offered by their position to wrong him by any affirmative act desired to injure. Thus, they may not in- tentionally abuse their power by actually or apparently de- pressing, the value of stock for the purpose of acquiring it from a stockholder at an midervaluation, and, having so in- jured a stockholder, it is immaterial that they may also have wronged the corporation.^^ But an officer and director of a corporation is its servant or agent and responsible to it alone, and thus he is under no liability to stockholders for mere non- feasance.^" 293. Validity of contracts between corporations having common directors. Executory contracts entered into by corporations having common directors are voidable at the instance of either cor- poration, and the court Will not inquire into the question whether or not it is beneficial to the corporation seeking to avoid it.^ But a contract between two corporations is not vitiated by the fact that some of the officers were directors in both corporations, in the absence of fraud or bad faith on their part.^ Where one is a director of two corporations he holds the relation of trustee to both, and when a contract in- volving important interests of both for a long time in the future is being negotiated, such trustee is free to stand aloof, 18. McManua v. Durant, 168 App. Von Au v. Magenheimer, 126 App. Div. Div. 643, 154 N. y. Supp. 580. 257, 110 N. Y. Supp. 629, afiFd. 196 19. Am individual stockholder who n. Y. 510, 89 N. iB. 1114. has been induced to sell his stock to 20. Orvis v. Lorraine Co., 183 App. the managing officers of a corporation j^^ j^ ^^^ jj Y. gupp. 264. for an inadequate consideration by i. Burden v. Burden, 159 N. Y. 287, means of false representations as to ^^ ^ ^ ^ Continental Ins. Co. the condition of the company and the ,07 xr v oqk i JT J- -J J -J. „ 1,1 ^a^ 1.0= V. N. Y. & H. K. K. Co., 187 N. Y. 225, amount of dividends it dould pay has an aetion on the case for damages, even 79 N. E. 1026. though the fraud may have wronged 2. Genesee Valley & W. R. Co. v. the corporation and would support an Retsof Min. Co., 15 Misc. 187, 36 N. V. action on its behalf by stockholder. Supp. 896. 22 338 COEPOEATIONS. while the other directors of both corporations act, if all is fair and equitable. He cannot, however, rid himself of the duty to warn and denounce if there is improvidence or oppression, either apparent on the surface, or lurking beneath the surface, but visible to him by reason of his superior knowledge of facts and conditions involved. Accordingly where a harsh and un- fair contract, resulting in great profit to one corporation at • the expense of the other, is brought about by the dominating, or at least potent and persuasive influence of a director of both corporations, who was the president and chief stock- holder of the corporation which secured the advantage, and only nominally a stockholder of the other, having no interest therein, such contract is voidable and should be annulled, not- withstanding the dual director refused to vote, and Wias ex- cused from voting, at the director's meeting of the corpora- tion suffering the loss, which accepted and ratified the unfair contracts.^ The right to avoid a contract made by common directors is in the corporation, not in minority stockholders.'' So a stockholder cannot enjoin the execution of a contract made by his corporation with another corporation, within the corporate powers and free from fraud, on the sole ground that the promoters of the contract were directors in both, cor- porations,^ neither can such a contract be disaffirmed by a minority of the stockholders pf either corporation.^. 294. Financial statement to stockholders. ''Stockholders owning five per centum of the capital stock of' any eoi;poration other than a moneyed corporation, not exceeding one liundred thousand dpUara, or three per centum where it exceeds one hundred thousand dollars, may make a written request to the treasurer or chief fiscal oificer thereof, for a statement of its aflfairs,. under oath, emhracing a particular account of all its assets and liabilities, and the treasurer shall make such statement and deliver it to the person presenting the request within thirty days thereafter, and keep on file for twelve months therea,fter a copy of such statement, which shall at all times during business hours be exhibitfd to any stockholder demanding an examina- tion thereof; but the treasurer or such chief fiscal oflfioer shall not be r€squired to deliver more than one such statement in any one year. The supreme court, or any justice thereof, may upon application, for good cause shown, extend the 3. Gflobe Woolen Co. v. Utica Gas. & affd. 169 N. Y. 287, 54 N'. E. 17. Electric Co., 224 N. Y. 483, 121 N. E. 5. Burden v. Burden, 159 N". Y. 287, 378. 288, 54 N. E. 17-; Wallace v. Long 4. Continental Insurance Co. v. New Island Railroad Co., 12 Hun 460. York & H. R. R. Co., 187 N. Y. 225, 6. Hart v. Ogdensburg & L. C. R. Co., 238, 79 jSr. B. 1026; Burden v. Burden, 89 Hun 31«, 35 N. Y. Supp. 566. 8 App. Div. 160, 40 N. Y. Supp. 499; RIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 339 time for making and delivering such certificate. For every neglect or refusal of the treasurer or other chief fiscal oflScer thereof to comply with the provisions of this section he shall forfeit and pay to the person making such request the sum of fifty dollars, and the further sum of ten dollars for every twenty-four hours thereafter until such statement shall be furnished." 7 While the statute is highly penal in its character, there is no reason why the language thereof should not be given its ordinary meaning and force. It applies to stockholders who are directors as well as to those who are not directors,^ and th(3ugh they may have daily access to the books of the corpo- ration.^ The stock book of a^ corporation which contains the names of the stockholders and in which all transfers of stock are required to be entered is ordinarily, at least, the treas- urer 's guide and authority in furnishing statemeuts pursuant to the statute and a stockholder of a corporation other than a moneyed one who wishes to enforce the penalty prescribed by the statute for failure to comply therewith must see to it that he is a stockholder of record at the time he makes a demand upon its treasurer or chief fiscal officer for a statement of the affairs of the corporatibn.^" Hence a stockholder of a, corpo- ration who is a pledgee of the stock^, must see to it that he is a stockholder of record at the time he makes his de niand." A treasurer of a corporation cannot, by resign- ing, escape the penalty prescribed for not furnishing a stock- holder with a financial 'statement of the corporation.^^ An order directing an examination of the. books of account of a corporation will not be granted by_ the court at the insta,nce of. a stockholder of such corporation, unless it appears that tiie. stockholder is the owner of the. ainount of the capital stock 7.' Stock • Corporation Laiv, § 69. corporation for a statement of its af- 8. Townsend v. Davis, 153' App. Div. fairs the day follovring the surrender 599 138 N. Y. Supp. 758. of the stock and before, so far as ap- 9. Klingenschmidt v. Martocci, 108 peared, the transfer of the stock had Misc. 626, 178 N. Y. Supp. 673. , been made: upon the stock book, will 10. Tighe V. Lavery, 98 ,Misp. 245, not. support ^° actipn fpr the penalty 162 N. Y. Supp. 1005. , prescribed, especially wh^re it d,oes not 11. Pledgee of stock.— Where pledg- " appear that the treasurer had any ees of stock, having authority in "case knowledge of the surrender of the of default to sell the same at public pledged stock when the demand was or private sale, delivered the stock to made. Pray v. Todd, 71 App. Div. 391, the secretary of the corporation with 75 N. Y. Supp. 947. instructidhs ' to issue new stock in 12.' Osbol'n v. Gilliams, 33 Misc. 312, their names, a demand made by the 68 N. Y. Supp. 470, aflfd. 65 App. Div. pledgees upon the treasurer of the 614, 74 N. Y. Supp. 623. 340 CORPOEATIONS. of the corporation specified in the statute, and has made a written request to the treasurer of the corporation for a state- ment of its affairs, under oath, embracing a particular ac- count of all its assets and liabilities, and the treasurer, within thirty days after the receipt of such written request, has not delivered the same to him.^^ In an action to recover the pen- alty it is incumbent on the plaintiff to show not merely that the corporation is one embraced within the statute; that he holds sufficient of its capital stock to give him a Standing to maintain the action ; that the defendant is its treasurer and that due demand has been made and refused, but that there has been a violation of the statute. Such violation is not shown by alleging a demand and failure to comply therewith. A complaint in such an action which fails to allege that the defendant has not delivered a financial statement to the plain- tiff, or to some other stockholder, during the fiscal year within which the demand was made, is motionable.^* In order to naaintain an action to recover the prescribed penalty the, plaintiff must prove that the defendant was the ',' treasurer or chief fiscal officer " of a corporation other tha,n a moneyed corporation at the time he made his demand, for a statement of its assets and liabilities.^^ 295. Motive of stockholder in demanding statement. It will be noted that the treasurer is given no discretion as to whether he shall furnish the statement or not. The language of the statute is unmistakably mandatory. The statute apparently contemplates an absolute right on the part of a stockholder owning more than five per cent of the capi- tal stock to such statement, and contemplates a stockholder's right to recover the statutory penalty in the event the treas- urer fails to furnish it. * Where the right is conferred by statute in absolute terms, the purpose or motive of the stock- holder is not material in an action to recover the statutory penalty. A clear legal right given by statute to the stock- holder cannot be defeated by showing an improper motive. If the rule were otherwise the stockholder would be driven from 13. People ex rel. Clason v. Nassau Div. 655, 136 N. Y. Supp. 200. Ferry Co., 86 Hun 128, 33 N. Y. Supp. 15. Tighe v. Lavevy, 98 Misc. 245, 244. ., 162 X. Y. Supp. 1005. 14. Troughton v. Grace, 151 App. EIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 341 a definite, positive right given him by the statute to a realm of speculation, indefiniteness and uncertainty .^^ 296. Demand for and sni&ciency of statement. The statute as it was framed prior to the revision of the year 1890 (Laws of 1862, chap. 472, § 1) provided simply for a written request to the treasurer of tlie corporation, stating that the stockholder desired " a statement of the affairs of such company. ' ' It then was made the duty of the treasurer " to make a statement of the affairs of said company, under oath, embracing a particular account of all its assets and lia- bilities. ' ' The amendment of this phraseology in the present statute accomplished a very material change in that the re- quest itself must be " for a statement of its (the corpora- tion's) affairs under oath, embracing a particular account of all its assets and liabilities. ' ' In other words, the stockholder must now request the form of account to which the statute has reference, whereas under the earlier statute the treasurer was bound to assurne that a request; for a statement of account meant this statutory account. There is of course an im- portant distinction between a statement of the affairs of a corporation and " a particular account of all its assets and liabilities." The former could be satisfied by a summary, while the latter caUs for particulars of the items entering into the summary statement. As the statute now stands the pre- scribed form of request is evidently intended to give the treas- urer some reasonable form of notice that the stockholder is seeking to obtain information pursuant to legal right, as dis- tinguished from a possible act of business courtesy. When so notified the treasurer is put to the necessity of satisfying himself that the applicant is a stockholder qualified to the ex- tent which the statute requires, and he must then proceed to prepare and furnish the account or incur the statutory pen- alty." A demand by a stockholder for a statement of the 16. Henry v. Babcock' & Wilcox Co., So held under L. 1862, ch. 472, § 1, 196 N. Y. 303, 89 N. E. 943; Klingen- amending L. 1854, ch. 201, § 1, from Schmidt v. Martoeci, 108 Misc. 636, 178 which the present statute was derived. N. Y. Supp. 673. French v. McMillan, 43 Hun 188, 4 St. 17. Troughton v. Grace, 84 Misc. 577, R®P- 357. 147 N. Y. Supp. 993. Where a stockholder in a letter to Detailed statement by treasurer of the treasurer of his corporation did not assets and liabilities of corporation is ask for a "particular account of all the sufficient and need not include thie busi- corporation's assets and liabilities," but ness transactions of the corporation. while asking for certain other inferma- 342 CORPORATIONS. affairs of the corporation is sufficient,^ although it does not call for a sworn statement. The failure to require a sworn statement is, at most, a waiver By the stockholder of the veri- fication which he is authorized to demand.^^ But the furnish- ing to a stockholder by the treasurer of a stock corporation of an unverified " statement of its affairs," after a demand for a statement under oath, and the refusal of the treasurer to furnish any other statement, although the defect was pointed out to him, subjects him to the statutory penalty of $50 for a failure to furnish a legal statement and to the fur- ther penalty of $10 for every day's neglect, in furnishing a legal statement, up to the time when an action for the penalty is begun and, this, however long the stockholder may delay in bringing his action.^^ A statement in a demand to the effect that the demandant is a stockholder of the corporation owning more than five per cent of the capital stock is negatived by a declaration, at the end of the demand, that he holds a num- bered certificate for a certain number of shares standing in the name of another, and such a demand is insufficient as it is not apparent whether he is the pledgee or absolute owner of the stock.^** If a stockholder after making a demand upon the treasurer of his corporation for a financial statement of its affairs, and before the time to make such statement expires informs the treasurer that he will be contented with a finan- cial statement covering a shorter period of time and such statement is furnished, unverified, by the treasurer before the time limit expires and the same is accepted by the stockholder without objection to the lack of verification, the latter defect is waived- and the stockholder cannot hold the treasurer for the penalty prescribed by the statute, and furthermore, as under the statute the treasurer can not be required to deliver more than one financial statement to a stockholder in any one year, a subsequent demand by the stockholder for a further verified- statement accoi^ing to the terms of his original de- mand and the treasurer's failure to comply therewith does not subject the latter to the penalty of the statute.^ tion upon subjects not within the stat- 18. McCrea v. Bedell, 9 Misc. 372. 29 ute at all requested a "statement" of N. Y. Supp. 705. the assets and liabilities of the corpo- 19. St. John v. Eberlin, 23 Misc." 585, ration, the treasurer in an action 51 N. Y. Supp. 998. against him to recoter a penalty is en- 20. Tighe v. Lavery, 98 Misc. 245, titled to a dismissal of the complaint. 1'62 N. Y. Supp. 1005. Troughton v. Grace, 84 Miac. 577, 147 1. Sutton v. MaoBride, 176 App. Div. N. y. Supp. 993. 362, 162 N. Y. Supp. 1023. EIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 843 297. In general. Compensation. As a general rule, the directors and officers of corporations, sncli as president, vice-president, secretary, treasurer, etc., presumptively serve without compensation and are entitled to no remuneration for performing the usual and ordinary duties appertaining to the office in the absence of some ex- press provision therefor by statute, charter or by-laws or by an agreement to that effect, and unless such provision or agreement was made or entered into before the services were rendered.^ Hence, where a stockholder of a corpora- tion becomes an officer thereof, assumes the duties of the office and performs them without any agreement or provision for compensation, the presumption in view of his relation and interest, may properly arise that he intends to perform the services gratuitously.^ 2. Mather v. Eureka Mower Co., 118 N. Y. 629, 23 N. E. 993; Gaul f. Kiel & Arthe Co., 199 N. Y. 472, 476, 92 N. E. 1069; Fox v. Arctic Placer Mining & Milling Co., 229 N. Y. 124, 128 N. E. 154; Lewis v. Matthews, 161 App. Div. 107, 146 N. Y. Supp. 424; Palmer v. Scheftel, 183 App. Div. 77, 170 N. Y. Supp. 588; Fox v. Arctic Placer Mining & Milling Co., 185 App. Div. 761, 173 N. Y. Supp. 708. 3. Mather v. Eureka Mower Co., 118 N. Y. 629, 23 N. E. 993; Starbuok v. Housatonic E, Co., 83 Hun 534, 32 N. Y. Supp. 87, affd. 152 N. Y. 251, 46 N. E. 504. Statements in the prospectus of the promoter that the officers of a pro- posed corporation are to receive no salary do not preclude the hoard of di- rectors of the corporation subsequently created from paying salaries to its officers. Metzger v. Knox, 77 Misc. 371. Validity of agreement by directors to give officer percentage of profits for extra compensation. — >The plaintiff sues to recover a percentage of the net profits of the defendant's business for a period of about thTee years as extra compensation for his services as its president, pursuant to an alleged oral agreement made with the executive committee of the board of directors, claimed to have been authorized by the board and ratified by the sharehold- ers. It appears that a resolution of the board of directors authorizing the xecutive committee to award the presi- dent a participation in net profits as compensation for services in addition to regular salary was ratified by the stockholders, as were also two pay- ments of the percentage of the net profits claimed to have been agreed upon. The executive, committee did not by formal vote agree to pay the plain- tiff an extra compensation of five per cent of the net profits, but since an agreement may be inferred from tacit approval, it , was held, that a jury could have found from facts proven that; the executive committee approyed of a proposal theretofore made and brought to its attention to pay the plaintiff five per cent of the net profits to induce him to remain in the defend- ants' employ, and tho-t upon the ap- proval of the resolution by the board of directors, the minds of the parties, the plaintiff and the executive commit- tee, met upon the proposition, and on that understanding the plaintiff con- 344 COBPORATIONS. The salary allowed to an officer of a corporation is presumed to be for services to be performed by Mm as such. Where, therefore, with the assent and co-operation of such officer, all the property, business and franchises of the corporation are sold, so that he has no further duty to perform, there is no basis in law or equity for a claim, upon his part, that the salary continues, and the contract, as to salary, will be deemed to be canceled, although the corporation itself is not dissolved.* It is not unlawful for the sole stockholders of a tinued in. the service of the defendant. Young V. United States Mortgage & Trust Co., 214 N. Y. 279, 108 N. E. 418. Where the sole incorporators of a corporation agreed that stock should be issued to them as compensation for the performance of the usual and ordinary duties as officers of the corporation, and themselves approved of the issue as "fully paid and non-assessable," be- fore the performance of any services, and there was no statute, charter or by-lavr authorizing them to be paid for serving as directors or officers, the agreement was invalid under section 55 of the Stock Corporation Law, and said incorporators may be held liable for the amount unpaid upon their sub- scriptions. Palmer v. Scheftel, 183 App. Div. 77, 170 N. Y. Supp. 588. It would be against public policy to allow officers of a corporation to take a bonus for doing what it was their duty to do for the benefit of their ces- tuis que trust. Robinson v. Jewitt, 14 St. Rep. 223, 228, aifd. 116 N. Y. 40, 22 N. E. 224. ^ An agreement by a majority stock- holder to secure corporate offices and a salary to a party contracting with him is against public policy and void. Fen- nessy v. Ross, 5 App. Div. 342, 39 N. Y. Supp, 323. Where a contract for the incorpora- tion of a mercantile business in sub- stance provided that the parties to the contract should be the four directors, that each of them should hold a speci- fied office and receive a certain annual salary, with a further agreement that if the directors should subsequently vote to reduce or increase the salary of any party, or if any party should be defeated for re-election to the di- rectorate and he should not vote in iavor of such resolution, he should Yiave the right to have his stock pur- chased for cash by the parties voting in favor of either of such resolutions, the contract for the repurchase was valid and binding only so long as the parties thereto were the only stock- holders of the corporation. Hence when one of the parties died and his stock was distributed to his next of kin so that they became interested in the cor- poration, the agreement not to reduce the salary of one of the original in- corporators without purchasing his in- terest beeaine illegal and void if sucii action of th« directors was not for the true interests of the corporation, as dtherwi&e the rights of the new mem- bers would be impaired. It fo'lows that where after the rights of new stockholders had accrued one of the or- iginal incorporators became ill and un- able to attend to business as he was required to do under the contract, the subsequent action by the remaining di- rectors annulling his salary did not give him a right of action to enforce his option to compel the purchase of his stock. Odell v. Wells, 183 App. Div. 242, 171 N. Y. Supp. 345. 4. Long Island Ferry Co. v. Terbell, 48 N. Y. 427. RIGHTS, DUTIES ANDLIABILITIES OF DIRECTORS, ETC., 345 corporation, who are also its directors, to take from its earn- ings a reasonable amount for their services, aside from their failure to pay in and retain unimpaired the capital stock. Even when excessive salaries have been voted to themselves by the directors, but in good faith and without intent to de- fraud creditors, they may be allowed to retain such part there- of as will reasonably compensate them for their services for the performance of which others might have been employed." 298. Services outside regular duties. When a director or officer is employed to perform services for the benefit of the corporation which are not within that line, there is not the same reason for denying him the right to be compensated. So far from there being any objection to the employment by a board of directors of one of their num- ber, as their agent to do something in the interest and for the benefit of the corporation whi«h, collectively, it would be im- possible, or inconvenient, for them to do, it may often happen, from the nature of the business to be done, or in the situation of affairs, that it is, essentially, preferable and advantageous to do so.^ Accordingly the rule is that an officer or director of a corporation who renders services thereto out- 5. Shaw V. Ansaldi. Co., Inc., 178 N. Y. Supp. 718, affd. 165 N. Y. 179, 58 App. Div. 589, 165 N. Y. Supp. 872. N. E. 895. Action to restrain payment of ex- A director and vice-president of a cessive salaries. Smallwood v. Smith, trust and life insurance company, who 197 App. Div. 533, 189 N. Y. Supp. 427. renders services outside of his duties 6. Bagley v. Carthage, W. & S. H. as vice-president in the management of R. Co., 1&5 N. Y. 179, 182, 58 N. E. the real estate owned by the corpora- g95_ tion, pursuant to a, resolution passed Compensation for services outside of- by the board of directors of the oorpo- ficial duties. — ^A railroad corporation ration, is not entitled to compensation which, while not actively operating its therefor, in the absence of an express road because of leases made thereof, agreement on the part of the corpora- still maintains its organization, may, tion, particularly where it appears that by its board of directors, lawfully the services were rendered without any a,gree, by conversations and statements expectation on the part of either the at meetings of the board and by ac- vice-president or the corporation that quiescence therein, although no writ- payment was to be made therefor, ten resolution to that effect is adopted. Stout v. Security Trust & Life Ins. to compensate its president for services Co., 82 App. Div. 129, 81 N. Y. Supp. rendered on behalf of -the corporation, 708. when such services are found by a jury Verbal agreement by directors to to have been outside of his official allow treasurer a certain salary held duties as its president and as one of binding on the corporation. Outterson its directors. Bagley v. OarthagiBJ W. v. Fonda Lake Paper Co., 20 N. Y. & S. H. E. Co., 25 App. Div, 475, 49 Supp. 980, 49 St. Rep. 556. 346 CORPOBATIONS. side of his official duties upon an employment by the di- rectors and a promise of compensation, is entitled to receive the value of such services and the expenses incurred during their rendition, although he is not entitled by the by-laws to any salary for his official services, and there^ is no express resolution of the board of directors containing an agreement to employ and to compensate him.'' A promise to pay for extra services may be proven in the same manner as any other fact may be established, that is, an agreement may be inferred from other evidence; from a course of practice or where the services are outside the usual duties of one holding the office. Such an agreement may be evidenced by proof or circumstances which tend to show that the services were rendered with the expectation and agreement on both sides that they would be compensated for.* 299. Power of directors to fix salaries. The rules of law relating to the liability of a corporation to pay its officers for services rendered by them as such, or otherwise, for its benefit, are clearly stated in' the reported decisions in this state. The rule now seems to be that di- rectors may appoint and fix the compensation of the minister- ial officers of the corporation, but in the absence of some pro- vision of statute, by-law or charter, the directors have no authority to vote salaries to each other as mere incidents of their office, nor for services already performed under a stipu- lated salary.^ The rule originally was that a director could 7. Bagley v. Cartilage, W. & S. H. 9. Godley v. Crandall & Godley Co., E. Co., 1&5 N. Y. 179, 58 N. B. 21-2 N. Y. 121,. 105 N. E, 818; Kreitner 895; Gaul v. Kiel & Arthe Co., 199 v. Burgmeyer, 174 App. Div. .48, 160 N. Y. 472, 476, ,93 N. E. 1069; N. Y. Supp. 256; Palmar v. Scheftel, Mather v. Eureka Mower Co., 44 Hun 183 App. Div. 77, .170 N. Y. Supp. 588; 333, 7 St. Eep. 593, affd. 118 K Y. 629, Tilton v. Gau3, 90 Misc. 84, 152 N. Y. 23 N. E. 993; Gill v. New Yflrk Cab Supp. 981, affd. 168 App. Div. 910, 152 Co., 48 Hun 524, 1 N. Y. Supp. 202; N. Y. Supp. 1146; Miteheli v. Forest Barril v. Calendar Water-Proofing Co., City Printing Co., 107 Misc. 709, 176 50 Hun 257, 2 N. Y. Supp. 758; Jack- N. Y. Supp. 157. son v. N. Y. C. R. Co., 2 T. & C. 653, An agreement between the officers of affd. 58 N. Y. 623; Sargent v. Sargent a corporation, and while they are act- Granite Co., 3 Misc. 325, 23 N. Y. Supp. ing aa such, th^t each shall have a sal- 886, revd. on other grounds, 6 Misc. ary for a term of years, and that the 384, 26 N. Y. Supp. 737. profits shall be distributed in a certain 8. Fox V. Arctic Placer Mining & wa,y, irrespective' of the stock held by Milling, Co., 229 N. Y. 124, 128 N. E. them, would be void as against public 154. policy. Such agreement would, at RIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 347 not preside or be present in a meeting or legally vote on the question of his own compensation as an officer or employee of the corporation. The strict rule has become somewhat modi- fied, and the salary voted in such a manner is not necessarily void or illegal, but may be voidable, at the instance of the cor- poration, its directors;, stockholders or creditors.^" Accord- ingly where a member of a board of directors of a corporation who is also secretary of the board, presents to such board a bill for extra compensation as secretary, he is disqualified to act as director upon the auditing of the bill, and if he must be included to constitute a quorum of the board, the board so most, be an attempt upon the part of the officers to use the corporation for their special benefit and not for the benefit of the stockholders. Abbott v. Harbeson Textile Co., 162 App. Div. 405, 409, 147 N. Y. Supp.. 1031. 10. Kelsey v. Sargent, ,40 Hun 150; Copeland v. Juhnson . .Manufa,cturing Co., 47 Hun 235, 14 St. ' Rep. 245; Fitchett V. Murphy, 46 App. Div. 181, 61 N. Y. Supp. 182; Murray v. Smith, 166 App. Biv. 528; 152N. Y. ^upp. 102; Keans , v.; New York &. College Point Ferry Co., 17 Misc. 272, 40 N. Y. Supp. 366, affd. 19 Misc. 19, 42 N. Y. Supp. 771; Fitchett v. Murphy, 26 Misc. 544, 56 -N. Y. Supp. 332, reVd. on other grounds, '46 App. Div. 181, 61 N. Y. Supp. 182; Haas v. Universal Phono- graph & Record Co., 75 Misc. 119, 132 N. Y. Supp. 767; Mitchell v. Forest City Printing Co., 107 Misc. 709, 176 N. Y. Supp. 157; Ashley v. Kinnan, 2 N. Y. Supp. 574, 18 St. Eep. 791; Mar- shall v. Industrial Federation of Amer- ica, 84 N. Y. Supp. 866. A resolution -fixing the salaries of the president and treasurer of a corpora- tion whose by-laws made no provision for the pft.yment of salaries, passed- at a ' directors' meeting held by two di- rectors constituting a majority' of the board who had re-elected themselves president and treasurer, respectively, is invalid and; without regard to its fairness, is voidable either at the in- stance of a stockholder or of a court of, equity. .Miller v.. Crown Perfumery Co., 57 Mifc. 383, 109 N. Y. Supp. 760, paod|d, 125 App, Div. 881,, 110 N. Y. Supp. 806. Directors cannot vote themselves a bonus for floating loan. — Where direct- ors have;, upon a statemeiit to stock- holders showing the solvency of a corporation, obtained their consent ' to the issue of bonds to procure an al- leged necessary loan'; the conduct of the directors in subsequently voting to one of their number a very large bonus, which is to be shared by other di- rectors and which was given under a subsequent claim that it was neces- sarily paid to float the loan, as the corporation was practically insolvent, is unconscionable, and a disbursement of the bonus may properly be enjoined in:ordei! to thwart such an attempt by trustee's, for . stockholders to enrich themselves at the cost of their trust. Com. Nat. Bank of Cleve. v. .Syracuse R. T. R. Co., 25 Misc. 36, 54 N. Y. Supp. 429. Contract between two stockholders, directors and executive officers of a manufacturing corporation by which one of them, also its manager, was to have one-half of the profits of a con- tract to be made, between such corpo- raliioni and another company,, held en- forceable. Giveen v. Gans, 91 App. Div. 37, 86 N. Y. Supp. 450, affd. 181 N. Y. 538, 73 N. E. 1124. 348 coEPOEATiosrs. constituted is not qualified to act upon such bill so as to bind the corporation.^^ But if an officer or director to whom a salary is voted does not vote on that resolution and his pres- ence is not necessary to constitute a quorum, the action of the board is legal.^^ Though it has been held that even the mere presence of a director or officer of a corporation at a meeting of the board of directors vitiates the action of such board in respect to all matters which relate to his individual interest, unless such action be subsequently ratified by the stockhold- ers.^^ But where officers continue to draw their salaries fixed by the board of directors without authority, without any new resolution, it would seem that the holding of stockholders' meetings after the act of the directors in voting salaries, at which meetings the business affairs of the company would naturally be up for discussion, would furnish such a knowl- edge to the corporation itself and to its shareholders of the facts that an assent and acquiescence may be implied, and make their action, in the absence of fraud or collusion, bind- ing upon the corporation and persons subsequently becoming interested therein." 300. Recovery back of salaries illegally voted to officers and directors. There is no ground for the recovery back of a salary voted to an officer of a corporation in the absence of proof of fraud, or that the salary was excessive for the services rendered.^^ But a corporation is entitled to recover salary paid to its officers or directors under invalid resolutions.^^ Eestitution 11. Butts v. Wood, 37 N. Y. 317. and a minority stockholder in a repre- 12. McNab v; McNab & Harlin Mfg. sentative action is entitled to a decree Co., 62 Hun 18, 16 N. Y. Supp. 448, requiring the directors to return to the affd. 133 N. Y. 687, 31 N. E. 627. treasury all sums received by them in 13. Anderton v. Aronson, 3 How. Pr. excess of reasonable compensation for N. S. 216. services rendered. Tilton v. G-aus, 90 14. Mitchell v. Forest City Prfdting Misc. 84, 152 N. Y. Supp. 981, affd. 168 Co., 107 Misc. 709, 176 N. Y. Supp. 157. App. Div.. 910, 15a N. Y. Supp. 1146; 15. Hirsch v. Jones, 115 App. Div. Smallwood v. Smith, 197 App. Div. 53.3, 156, 100 N. Y. Supp. 687. 189 N. Y. Supp. 4^7. Power of court to enquire as to tea- 16. Atlanta Hill Gold Mining and sonableness of salary. — A by-law of a Milling Co. v. Andrews, 120 N. Y. 58, business corporation providing that the 23 N. E. 987. salary or compensation of its oflScers Restitution by directors of salaries may be fixed by the board of directors received..r-Where the directors of a does not deprive the court of its equit- corporation having a capital of $30,000, able jilrisdiction to inquire as to the by resolution increase the collective reasonableness of the salaries voted, salaries paid to, officers from $6,750 to RIGHTS, DUTIES AKD LIABILITIES OF DIRECTOES, ETC. 349 will be decreed, although each salary was voted upon sepa- rately and no director personally voted on the resolution to increase his own salary as oflficer." Under the well-settled principle of equity jurisprudence it is competent for the court to require an accounting for salaries paid to the officers of a corporation in excess of a fair and reasonable value for the services performed. In an action by minority stockholders to compel the repayment of such excessive salaries the indi- vidual defendants may be required to account for the salaries received by them.^** Accordingly moneys paid to officers of a corporation as salaries, without the authority of a resolution or by-law or proof of any other agreement, may be recovered in an action by a stockholder on behalf of himself and others similarly situated, although the stockholders of the corpora- tion have attempted to ratify and confirm the payment of such salaries.^^ Likewise where directors of a corporation have excluded a minority stockholder from all participation in its affairs and have voted to themselves as officers excessive salaries and additional compensation so as to eat up all the profits of the business, the minority stockholder in a repre- sentative action is entitled to a decree requiring the directors to return to the treasury all sums received by them in excess of reasonable compensation for the services they rendered.^" So also a minority stockholder may maintain a representative action to recover salaries voted by the directors to themselves as mere incidents of their office or for services already per- .$24,000, so as to practically use up the justified in voting themselves increased entire earnings of the corporation, the salaries which were, in fact, grossly court, at the suit of a minority stock- excessive under the circumstances, and holder, will compel the directors to that they should be compelled to ac- makc restitution. Davids v. Davids, count therefor. Atwater v. Elkhorn 135 App. Div. 206, 120 N. Y. Supp. Valley Coal-Land Co., 184 App. Div. 350. 253, 171 N. Y. Supp. 552. In an action by the minority stock- 17. Davids v. Davids, 135 App; Div. holders of a foreign corporation to 206, 120 N. Y. Supp. 350. compel certain officers of the company 18. Miller v. Crown Perfumery Co., to account for moneys received as 125 App. Div. 881, 110 N. Y. Supp. 806; salaries which are alleged to have been Atwater v. Elkhorn Valley Coal-Land both illegal and excessive. It appeared Co;, 184 App. Div. 253, 171 N. Y. Supp. , that the corpoi-ation, which owned coal 552. mines, had leased the same for long 19. Lewis v. Matthews, 161 App. terms and the' only business aetua;lly Div. 107, 146 N. Y. Supp. 424. carried on was the collection of the 20. Carr v. Kimball, 153 App. Div. rentals, it was held that the def-end- 825, 139 N. Y. Supp. 253, affd. 215 a;nts, majority stockholders, were not N. Y. 634, 109 N. 15. 1068. 350 CORPOKATIGNS. formed under a stipulated salary^ And an officer of a corpo- ration may be compelled to account to its trustee in bank- ruptcy for salary received without rendering services tbere- f or.^ But a director who is not an officer, and who himself drew no salary, should not personally be required to repay in- to the treasury of the corporation excessive sums voted to other directors, although he participated in the vote. Nor can directors be held liable for an increased salary paid to a treas- urer of the corporation who was not a director but a mere employee, for in voting such salary they were not fiduciaries dealing with themselves.^ As directors of a corporation who vote themselves salaries are in the position of trustees dealing with themselves to their own advantage, it is presumed that they acted in their own interest to the prejudice of the corpo- ration, kind the burden is upon them to overcome the pre- sumption.* In an action between the officers of a corporation and the corporation the officers are bound to show that the di- rectors had assented to their right to compensation or had authorized the payment in some form.^ In a suit by a stock- 1. Godley v; Crandall & Godley Co., 212 N. Y. 121, 105 X. E. 818; Butts v. Wood, 38 Barb. 181,, aflfd. .37 N. Y.,317; Carr.v, Kimball, 153,App. Div-. 825, 139 N. Y. Supp! ■253,'affd.;215' N. Y. 634, 109 jST. E.'1068; Tiltdn v. Gaua, 90 Misc. 84, -162 N. Y. Supp.' 981, -aflfd. 168 App. Div. 910, 152 N. Y. Supp. 1146. Where, -in an action by a stock- holder, both in his individual and rep- resentative capacity, against the presi- dent and salesman of the corporation who are the majority stockholders ; and directors, it appears that the defend- .ants, both under contract to receive stated salaries, -have, as members 'of the board of directors, voted large in- creases in salary over the objection -of the third director; that sucll increases have' not ' been ratified by the stock- . holders, and that there has been no in- crease or modification in the duties of the • defendants, they, may be compelled to account for such increases in salaries received by- them, and the defendants in ■ such an action are not entitled to the application of the quantum metuit rule. Kveitiier v. Burgmeyer, 174 App. Div. 48, 160 N. ;Y. Supp. 256. : 2. Wijliams v, McClave, 168 App. Div. 192, 154 N. Y. Supp. 38. . ' _, 3. Carr v. Kimhall, iSi" App'.' Div. 825, 139 N. Y. Supp. 253,' affd. ' 215 ■N. Y. 634, 109 N. E. i068. A by-law of a corporation, fixing the salary of its president, may be ac- quiesced, in by the parties, by, the terms- of which the president accepted a, lower salary in consideration of being continued in oflSceand employ- ment; the modification being- made necessary by the necessities of the corporation. Bowler v. American Box Strap. Oo,j 22 Misc. 335, 49 N. Y. Supp. 153. 4. Davids v. Davids, 135 App, Div. 206, 120 N. Y. Supp. 350. 5. Gaul V. Kiel & Arthe Co., 199 N. Y. 472,. 477, '92 N. E. 1069;, Farm- ers' L. & T:; Co. V. Housatonic R. Co., 152 N. Y. 251,1 46 N. E. 504, holding that a resolution on the . books; . of a corporation fixing :the salary of. its president at "$5,000 a year," , under RIGHTS, DUTIES AND LIABILITIES OF DIKECTORS, ETC. 351 holder to restrain tlae payment of exorbitant salaries toof^ ficers, a demand that the corporation sue is prerequisite.** 301. General employees and agents. The rule that directors or trustees 'cannot recover for ser- vices rendered for the corporation upon an implied promise, is an application of the general rule applicable to' trustees. But there seems to be no reason of policy or justice which should prevent a person appointed as secretary, who is neither a director nor stockholder, from receiving a reason- able compensation for his services, although no rate of com- pensation was agreed upon and there was no express agree- ment that compensation should be made.'' And where per- whieh a former president regularly drew his salary for fifteen years with- out further resolution and which has never been changed' or' modified, may, in connection with the acquiescence of the directors and the conduct of the parties, make a case for the jury, as to the right of a president of'thei corpo- ration to such salary when . he has served for more than two and a half years before drawing any salary. 6. Fitchett v. llnrphy, 46 App. Diy 181, 61 N. y. Supp. 182> Injunction. — Spoliation of a corpora- tion by an excessive increase of sala- ries, made to induce a stockholder to sell his stock will be enjoined in a suit against the officers. Ziegler v. Hoag- land,'53 Hun 3&5, 5 N. Y. Supp. 305. 7. Smith V. Long Island R. Co., 102 N. Y. IfiiO, 194; 6 X. E. 397. Garnishment of employees' wages. " 1. Whers a- judgment has been re- covered and where an execution issued upon said judgment has been returned wholly or' partly unsatisfied, and where any wages, debts, earnings, sal- ary, income from ■trust funds or profits are due and owing to the judgment debtor or shall thereafter become due and owing to him, to the amount of twelve dollars or more per week, the judgment creditor may apply to the court in which said judgment was re- covered or the court having jurisdic- tion of the same without notice to the judgment debtor,, and upon satisfactory proof of such facts by affidavits or otherwise the , courty if _ a court not of record, a judge or justice thereof, must issue, or if a court of record a judge or, justice, must grant an order direct-, ing tha;fc an executipn issue against the- wages, debts,, earnings, salary, income from trust funds or profits of said judgment debtor, and on presentation of such execution hy the officer to whom delivered for collection to the person or persons from .whom suc^i wages, debts, earnings,, salary, incom,e from trust funds or profits are due and owing or may thereafter become due and owing to the judgm,ent debtor, said execution shall become a lien and a continuing levy upon the wages, earn- ings, debts, ~ salary, income from trust funds or profits, due or to become due to said, judgment, debtor toi the amount specified therein which , shall not exceed ten per centum .thereof, and said levy shall be a continuing levy until said execution and the expenses thereof are fully satisfied and paicj or until modi- fied as hereinafter provided, but only «ne execution; sigainst the wages, debts, earnings, salary, • income from tirust funds., or,, profits of; i s^jd judgment debtor shall be satisfied at one time, 352 COKPOEATIONS. sons, either officers in fact or agents, assume to act in behalf of a corporation, and employ a person to perform a service for the corporation, and such service is performed with the knowledge of the directors and principal officers of the corpo- ration, and such corporation receives the benefit of such ser- vice without objection, the corporation is liable under an im- plied assumpsit for the value of such services.^ Likewise and -where more than One execution has been issued or shall be issued, pursuant to the provisions of this section against the same judgment debtor, they shall be satisfied in the order of priority in which such executions are presented to the person or persons from whom such wages, debts, earnings, salary, income from trust funds or profits are due and owing. 2. It sliall be the duty of any per- son or corporation, municipal or other- wise, to whom said execution shall be presented, and who shall at such time be indebted to the judgment debtor named in such execution, or who shall become indebted to such judgment debtor in the future, and while said execution shall remain a lien upon said indebtedness, to pay over to the officer presenting the same such amount of such indebtedness as such execution shall prescribe until said execution shall be wholly satisfied, and such pay- ment shall be a bar to any action therefor by any such judgment debtor. 3. If such person or corporation, municipal or otherwise, to whom said execution shall be presented, shall fail or refuse to pay over to said officer presenting said execution the percent- age of said indebtedness, he or it shall be liable to an action therefor by the judgment creditor named in such execu- tion, and the amount so recovered by such judgment creditor shall be applied towards the payment of said execution. 4. Either party may apply at any time to the court from which such ex- ecution shall issue, or to any judge or justice issuing the same, or to the county judge of the county, and in any county where there is no covuity judge, to any justice of the city court, upon such notice to the other party as such court, judge, or justice shall direct, for a modification of said execution, and upon such hearing the said court, judge or justice may make such modifi- cation of said execution as shall be deemed just, and such execution as so modified shall continue in full force and effect until fully paid and satisfied or until further modified as herein pro- vided. 5. This section, so far as it relates to wages and salary due and owing or to become due and owing to the judg- ment debtor, shall not apply to judg- ments recovered more than ten years prior to September first, nineteen hun- dred and eight, nor to judgments here- tofore or hereafter recovered upon such judgments, and any execution hereto- fore issued upon such judgments pur- suant to an order heretofore granted under this section shall, when this act takes effect, cease to be a lien and con- tinuing levy upon wages and salary thereafter to become due and owing to the judgment debtor." Civil Praiotice Act, § 684, pt. 8. Prindle v. Washington Life Ins. Co., 73 Hun 448, 26 N. Y. Supp. 474, affd. 149 N. Y. 614, 44 N. E. 1124. An agreement made by a promoter of a corporation about to be formed, with a person who was to enter its employ, that his salary should con- tinue while he was absent on a Euro- pean trip, is so ratified as to become binding on the corporation, where the promoter, who afterwards became its president, failed to give notice of any BIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 353 where a person was employed as an attorney, by persons assuming to act as a committee for and on behalf "of certain corporations, and services were rendered and received by such corporations, without any knowledge on the part of such attorney of certain resolutions adopted by the corporations limiting the power of the committee which had engaged him, his right of recovery will be held to rest upon the joint and not the several undertaking of such corporations.^ A corpo- ration has a right to pay employees for services by a per- centage upon business obtained, including a percentage on the renewals of such business, even after the term of service has expired.^" Directors and Officers as Creditors. 302. Loans and advances by directors to corporation. The director of a corporation is not exactly in the position of a trustee having the title to property held in trust for an- disavowel of the agreement to the employee, and the latter commenced work for the corporation, several weeks after it was incorporated; upon his re- turn from the trip. Mesinger v. Mesin- ger Bicycle Saddle Co., 44 App. Div. 26, 60 N. y. Supp. 431. 9. Prindle v. Washington Life Ins. Co., 73 Hun 448, 26 N. Y. Supp. 474, affd. 149 N. Y. 614, 44 N. E. 1124. 10. Rollins V. Co -Operative Building Bank, 98 App. Div. 606, 617, 90 N. Y. Supp. 631, affd. 184 N. Y. 525, 76 N. E. 1107. In an action brought by a salesman Hi a coiporation to recover commis- sions due under a contract whereby he was to receive, in addition to a fixed salary, a percentage upon the profits of the business during the year, it is «rror for. the court to charge that the jury should compute the percentage upon an amount which included the salary paid to the president and to the secretary and treasurer of. the com- pany, where it appears that such sal- aries were paid to such officers for services actually rendered in large part outside their official duties as corporate officers, under a contract niade with them bv the corporation, and there, is 23 no claim that such salaries were not earned or that there was any fraud or bad faith in charging them against the proceeds of the business for the year. Such salaries ars expenditures to be taken from the proceeds of the busi- ness before the profits can be ascer- tained. Gaul V. Kiel & Arthe Co., 1»9 ISr. Y. 472, 92 N. E. 1069. After a coiporation had agreed in writing with one of its employees upon a compensation to be paid for his ser- vices, in addition to a fixed sa,lary, of "three per cent (3%) upon such salary for every one per cent (1%) in excess of ten per cent (10%) which shall be paid as dividends to the stockholders," the corporation doubled its corporate stock and immediately thereafter de- clared a 100 per cent dividend and soon thereafter a 30 per cent dividend. It was held that, in the absence of evi- dence in the language of the contract as to the intent of the parties in mak- ing it, a question was presented for the consideration of the jury as to whether the employeei's compensation could be affected by such increase Of capital. Bradburn v. Solvay Process Co., 18 App. Div., 542, 46 X. Y. Supp. 161. 354 coRPOEA'rioNS. other. He has no title to the property of the oorporation ; the title is in the company itself. It is true he is in a position where he must manage the affairs of the corporation for its good. But he' is not absolutely excluded from the right of dealing with it, He can loan money to it and become its credit- or, and he can receive by the act of the corporation security for his debt. If he has a mortgage security he may foreclose the mortgage, and it follows, almost of necessity, that if h.e can foreclose he may protect himself by bidding at the sale. Of course, if he takes any undue advantage, another ques- tion arises. But when his acts 'are fair and open they are not invalid.^'^ While the law looks with disfavor upon contracts made between a director or officer of a corporation and the corporation, because' it cannot accurately measure the in- fluence of a trustee with his associates, a pledge by a corpo- ration as collateral for a loan actually made by an officer or director thereof. to the corporation, is not void by reason of the relation of the parties. If the, pledge would be valid if made to an outsider, it' is none the less valid because made to a firm of which a director of a corporation is a member .^^ So also, a transaction whereby directors, in good faith and in the belief that their corporation is solvent, make a loan to it and accept an assignment of securities from it as collateral, pur- suant to a plan to relieve it of its financial difficulties, is not contrary to public policy, and is valid, although: the corpoj'a- tion is, in fact, insolvent at the time the- loan is made. -That the director of a corporation is chargeable in law with a knowledge of its actual condition may be true ; but in adjudg- ing the consequences to follow upon a dealing with the com- pany, in good faith, for its supposed benefit, and without per- sdnal advantage taken, the fact of his actual ignorance should have a detefinining importa:nce.' In short, the honesty of the intention and the absence of any attempt to oppress, or to overreach, or to gain«some undue advantage, should weigh in favor of such a transaction had by a director with his com- pany, in its interest and where he simply sought, to secure himself against resulting loss.^^ Where moneys are advanced to a corporation by one of its officers, it is not wrongful for the person making such advances to withdraw from the cor- poration, when its treasury will permit,, enough money to re- 11. Preston v.- Loughran, 58 Hun N. Y. Supp. 1045. 2]0, 214, 12 N. Y. Supp. 313. 13. Converse v. Sharpe, 161 N. Y. 12. Kinsman v. Fisk, 83 Hun 494, 31 571, 56 N. E. 69. RIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 355 imburse himself, and such a transaction does not expose the officer to ah action for misconduct.^^ And so where a corpo- ration obtains title to land by the use of money advanced to it by its directors, it may repay them in bonds secured by a mortgage upon such lands, which constitute a lien prior to a judgment obtained in a cause of action which arose before the execution of such bonds. The directors also have a claim prior to that of the judgment creditor upon the assets of the corporation for moneys advanced to pay taxes upon such land and interest upon the miderlying mortgages.''^ 303. Purchase and enforcement by directors of obligations of cor- porations, Although a director purchases obligations of his corpora- tion at less than their face, he may enforce them for the full amount against the corporation. Even if such a purchase be voidable at the election of the corporation that election must be made promptly upon sufficient knowledge of the facts.^^ Butj where a corporation is either already insolvent, of is on the verge of insolvency, its trustees cannot allow one of its officers to acquire a preferential lien on the corporate assets by permitting him to obtain oblig-ations of the corporation upon which he can readily procure judgment." Where a di- 14. stokes V. Stokes, 91 Hun 605, 36 16. Seymour v. Spring Forrest C. N. Y. Supp. 350. \: Association, 144 X. Y. 333, 39 N. E. Where the selling agents of a coal 365. mining company make advances to it ,- Director may own bonds of his necessary to the conduct of its busi- corporation an4 enforce pay.ment ness, the president of' a successor com- thereof. ' Harpending v. Munson, 91 paiiy, which, on a foreclosure of the K". Y. 650. property; took it and the assets Over 17. A delinquent trustee is, however, and continued the same relations with entitled to credit for moneys which he the agents,! has power to bjnd his. com- :has contributed to the funds of the cor- pan-y to pay the agents , their advances poration and for his. payment of its to the old company^ there being some obligations. Where such a trustee has evidence that, from other sources than indorsed, and applied the proceeds of, its', president, knowledge- of the as- certain fictitious' notes signed by irre- sumption of the debt had been brought sponsible persons (not representing any home to the successor company. Cur- real indebtedness to the corporation, tis V. Nataljie Anthracite Coal Co., 39 but procured by him to be discounted Misc. 586, 80 N. Y. Supp. 603, affd. 89 to its credit by a bank) to the pay- App. Div. 61, 85 M. Y. Supp. 413, affd. ment of other notes upon which tlie 181 N. Y. 543 73 N. E. 1122. corporation was liable, the corporation 15. Curran v. Oppenheimer, 164 App. is not damaged by the transaction and Div. 746, 150 N. Y. Supp. 369. the trustee should not be charged with 356 CORPORATIONS. rector of a corporation purchases witli his own funds a judg- ment, which has been recovered against it, for less than the amount due thereon, and thereafter assigns the same to a third person, the assignee may enforce the judgment against the company for the full amount upon it, he^is not limited to the collection of the amount paid therefor fiy his assignor.^^ The president, directors and paid officers of a corporation cannot, in the performance of the official duties which they owe exclusively to the corporation, dispose of the company's property and distribute the proceeds thereof according to the provisions of an agreement kept secret from the other di- rectors and stockholders, and thus realize a profit to any of themselves out of such proceeds. Such directors and officers sustain a fiduciary relation to the corporation and its stock- holders and have no right to take to their own use claims on notes and open accounts against the company, which claims came into their hands while they were winding up its affairs, they having given no consideration therefor except their of- ficial services in selling the company's property and paying the company's debts. Directors, who so ac{, ignore their duty and act for their individual interests, hence they obtain no beneficial interest or equitable right in the property so ob- tained, and must account therefor for the benefit of the stock- holders.^® Corporate Manageinemt. 304. Duties and liabilities generally. All powers directly conferred by statute, or impliedly granted, of necessity must be exercised by the directors of a corporation who are constituted by the law as the agency for the doing of corporate acts. In the management of the affairs of the corporation they are dependent solely upon their own knowledge of its business and their own judgment as to what its interests require. They hold such office charged with the duty to act for the corporation according to their best judg- ment, and in so doing they cannot be controlled in the reason- able exercise and performance of such duty.^" The directors of a corporation are bound to use the same degree of care and the amount of such notes. Halpin v. Hotel Co., 32 Hun 377. ^rutiial Bre-«'ins Co.. 20 App. Div. 583. 19. Billings v. Shaw, 209 N. Y. 26.5, 47 N. Y. Supp. 412. 103 N. E, 142. 18. Inglehavt \. Thousand Tslanrt 20. Manson v. Curtis, 223 X. Y. 313. RIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. oOl vigilance in the performance of their duties as a reasonably prudent and careful man would use in the conduct of his busi- ness.^ They are, however, neither insurers nor sureties for the fidelity of the officers of the company, and are liable only for losses of, its funds attributable to their negligence.^ But, if through gross negligence and inattention to the duties of their trust, they suffer the corporate funds to be lost or wasted, they are liable for the loss so sustained.^ And so where the directors are advised of the misconduct of the officers of the corporation, and unduly permit them to remain in office without taking any action for their removal, they subject themselves to the imputation of negligence, and become liable for the consequences of the subsequent peculations of the officers to the prejudice of the corporation.* The law is well settled that when defalcations by their agents could have been detected aud prevented by the exercise of ordinary care and vigilance on the part of the directors they are personally liable for loss sustained by reason of their negligence.^ So also if the directors of a company, no matter whether through inattention or otherwise, suffer its subordinate officers to pur- sue a particular line of conduct for a considerable period, without objection, they are as much bound to those who are 1. Hun V. Gary, 82 N. Y. 65, 70; If the directors pay over the funds General Eubber Co. v. Benedict, 215 in their hands or in the treasiuy to an N. Y. 18, 109 N. E. 96; Childs v. individual upon a pretended claim, White, 158 App. Div. 1, 142 N. Y. which they know, or must be pre- Supp. 732; Tri-BuUion Smelting & De- sumed to know, is wholly unfounded velopment Co. v. Corlias, 186 App. Div. in law, it is a breach of trust on their 613, 174 N. Y. Sup. 830. part. Butts v. Wood, 38 Barb. 181, Directors may waive Statute of Limi- affd. 37 N. Y. 317. tations. Kelly Asphalt Block Co. y. Complaint in action -by stockholders Brooklyn Alcatraz Asphalt Co., 190 against directors to compel them to ac- App. ]>i-v. 750, 180 N. Y. Supp. 805. count for losses alleged to have been 2. Bloom V. National U. B. Savings sustained through their negligence. Co., 81 Hun 120, 30 N. Y. Supp. 700, Holmes v. Saint Joseph Lead Co., 168 affd. 152 N. Y. 114, 46 N. E. 166. App. Div. 685, 154 N. Y. Sxipp. 51;7, 3. Brinkerhofl v. Bostwick et «!., 88 affd, 217 N. Y, 618, 111 N. E. 1088; N. Y. 52; General Rubber Co. v. Bene- S. C, 168 App. Div. 688, 154 N. .Y. diet, 215 N. Y. 18, 109 N. E. 96. Supp. -513, affd. 217 N. Y. 619, 111 Investing in worthless stock. — Di M'. E. 1088. rectors of corporation will be liable for 4. Bloom, v. National U. B. Savings investing funds of the corporation in Co., 81 Hun 120, 30 N. Y. Supp.. 700, worthless stock of another corporation. affd. 152 N. Y. 114, 46 N. E. 166. Bowers v. Male, 111 App. Div. 209, 97 5. Tri-Bullion Smelting & Develop- N. Y. Supp. 722, affd. 186 N. Y. 28, 78 ment Co. v. Corliss, 186 App. Div. 613, n! E. 577. 174 N. Y. Supp. 830. 358 CORPORATIONS. not aware of any want of authority, as if the requisite power had been directly conferred.'' It is a violation of duty under subdivision 2 of section 90 of the General Corporation Law, on the part of the directors of a corporation to divest it of all its property without affording a reasonable opportunity to its creditors to present and enforce their claims before the transfer should become effective and such action renders- the directors liable for the amount of a claim established against the corporation as having accrued before the transfer. The motives which induce the omission are immaterial. Tt mat- ters not that they may have supposed that they were not re- quired to do any more than they did for the protection of creditors. Their omission to make adequate provision for the protection of creditors is proof of dereliction, and good faith constitutes no defense.'' Likewise directors of a corpo- ration who fail to administer its affairs honestly and with reasonable prudence, not through excusable neglect, but by actual misfeasance in appropriating corporate funds to their own use, are personally liable to a receiver of the corporation for the damages which their misconduct has occasioned to the corporation.* It is the duty of the directors of a corporation to pay its debts and to apply the corporate property to this end, although it should exhaust it, and thus disable the cor- poration from carrying on its business.^ But it is :iiot a part of their duty as such to advance their personal money to re- lieve the corporation from financial embarrassment.^" 305. Nature and extent of liability. Each director of a corporation is liable only for his own acts or omissions. One director is not liable for the acts or omissions of another unless he participated therein to the in- jury of the corporation, or had some knowledge by which in 6. Beers v. Phoenix Gla^ Co., 14 -"tablish flie personal ' liabilitty of the Barb. 358. defendants. Bovvers v. Male, 186 N. Y. 7. Darcy v. Brooklyn & N. Y. Ferry 28, 78 N. E. 577. Co., 196 N. Y-. 96, 89 N. 'E. 461. 9. g^eidon Hat Blocking Co. v. Eich- 8. The facts examined in an action ^^^^^ ^^ Blocking Co., 56 How Pr by the receiver of an insolvent credit ^^^ ^^^ ^^ - ^3^^ ^^^ ^^ ^ ^, insurance company agamst its direc- . tors personally to recover sums alleged to have been wasted by the defendants l"- R"tgers Female College v. Tall- in the purchase of the worthless stock man, 2 Misc.. 561, 24 N. Y. Supp. 771, of another corporation under the con- afTd. 82 Hun 20, .SI N. Y. Supp. 159, trol of said company, .ind held to es- affd. 146 N. Y. 386, 42 N. B. 543. EIGHTS, DUTIES AND LIABILITIES OF DIEECTOES, ETC. 359 the exercise of reasonable care lie could have prevented the loss, or unless he connived at it or failed to perform his duty of exercising the authority he possessed to prevent loss which coTild in the exercise of reasonable care and skill have been foreseen and guarded against.-^-"^ A director on no theory can be held liable for acts done before he became connected with the corporation.^^ The liability of directors of a corporation on the ground of negligence extends only to the damages sus- tained by the corporation as the natural and proximate re- sult of their acts or omissions, and they cannot be held liable in an action by stockholders for that which represents no element of damage to the corporation, and which could not have been recovered by the corporation had the action been brought in that form.^^ An anticipated statutory liability as members of a corporation, that has not matured in any judg- ment, and may never mature, cannot be included in the damages recoverable from directors of a corporation for negligence.^* 306. Errors of judgment. Directors are not liable for mere errors of judgment where they act without corrupt intent and in good faith and are fairly competent to discharge the duties of the position, un- less the acts be unlawful or ultra vires^^^ and so the courts 11. Nasji: V. Hall, 90 Hun 354, .35 15. People v. ^Equitable Life Assurr N. Y. Supp. 940; People v. Equitable anee- Society, 124 App. Div. 714, 109 Life Assurance Society, l24 App. Div. K. Y. Supp. 453; Cass v. Realty Se- •714, 109 N. Y. SupJ). 433; Godley v. curities Co., 148 App. Div. 96, 132 Godley & Crandall Co., 181 A^p.'Div. N. Y., Supp. 1074, affd. 206 N. Y. 649, 75, 168 N. Y. Supp. 251. 99 N. fE.llOS; Holmes v. Saint Joseph 12. Holmes v. Crane, 191 App. Div. Lead Co., 168 App. Div. 688, 154 IST. Y. 820, 182 N. Y. Supp. 270. Supp. 513, aflfd. 217 N. Y. 619, ail 13. Bloom V. National U. B. Savings N. E. 1088; Holmes v. Crane, 191 App. & LoUn Co., IS'2 N.' Y. 114, 46 N. E. Div. 820, 182 N. Y.'Supp. 270. '■ "'■■'" 166. The directors of a corporation as in- 14. The damages which can be re- dividuals owe no direct duty to an covered from directors of a corporation owner of its bonds, the contract, of the in an action against the'm by share- bondholder being with the corporation holders for negligence in its manage- itself. Hence, such Ijondholder cannot inent cannot include disbursements maintain an action against the di- from its treasury to defray the ex- rectors personally for disposing of the penses of its new business not yet es- proceeds of the sale of the corporate tablished. Bloom v. Xational U. B. property under a prior mortgage with- Sav. & Loan Co., 152 X. Y. 114, 46 out first exhausting his remedies N. E. 166. against, the corporation. Cass v. Realty 360 CORPOBATIONS. will not interfere unless the corporate powers have been illegally or unconscientiously executed, or unless it be made to appear that the acts complained of were fraudulent or collusive and destriietive of the rights of the stockholders.-''' Therefore the minority directors or stockholders of a corpo- ration cannot come into court upon allegatfons of a want of judgment or lack of efficiency on the part of the majority and change the course of administration. Corporate elections furnish the only remedy for internal dissensions, as the ma- jority must rule so long as it keeps within the powers con- ferred by the charter." The mere fact that a corporation has lost money does not subject the directors to individual lia- bility therefor.^* 307. Ultra vires acts. A corporation may foster its legitimate business by all usual and appropriate means, but may not, under the pre- tense of doing this, engage in transactions entirely ultra vires, and when its directors and officers engage in such trans- actions and thus cause damage to the corporation, they may be jointly and severally held liable for such damage, and when an action is brought against a subordinate officer to enforce such liability, he cannot establish an absolute defense by showing that his transactions were assented to, or even di- rected by the directors. Where, however, the officers engage in an ultra vires business for the benefit of the corporation, and it receives the actual benefit thereof, and the business is so car- ried on with the acquiescence of the stockholders that it ac- tually, although illegally, becomes the business of the corpo- ration, it cannot maintain an action against such officers for any damages it has suffered in such business. So, also, an action by a corporation against its officers to recover damages caused by their mere error of judgment in a business actually Securities Co., 14S App. Div. 96, 132 or unless it is made to appear that the N. Y. Supp. 1074, affd. 206 N. Y. 649, acts complained of are fraudulent or 99 N". E. 1105. collusive and destructive of the rights IG. Leslie v. Lorillard et al., 110 ^f ^^^ stockholder. Hennessy v. Muhle- N. Y. 519, 18 N. E. 363. ^^„_ .^ ^pp ^^ ,^,^ 58 j, Y. Supp. A court of equity will not, at the instance of a stockholder of a corpora- tion, interfere hy injunction with the ^''^ Schwab v. Potter Co., 194 N. Y. acts of directors of a corporation un- *0®' ®^ ^- ^' S'"- less the corporate powers have been il- 18. Schmid v. l^euberger, 174 App. legally or unconstitutionally exercised, Div. 670, 160 N. Y. Supp. 701. RIGHTS, DUTIES AND LIABILITIES 01" DIEECTOKS, ETC. 361 carried on bjr it, althougii ultra vires, is not maintainable.^' As a director is only liable to a corporation or its stock- holders for Ms own acts or omissions and to render Mm liable for ultra vires acts of the corporation it must be shown and found that he voted therefpr, participated therein, connived thereat, or negligently ofliitted to perform his duty.^" 308, Presumption of knowledge of corporate conditions. A director when dealing with his own corporation is chargeable not only with such, knowledge of its affairs as he actually possesses, but also with such as he would have had if he had properly discharged his duties as director.^ He is chargeable with knowledge as to matters which are open to observation and legitimately subject to his inspection and control.^ Hence the director of a warehouse company, being charged with the duty of reasonable inspection of its books and reasonable supervision of the conduct of its officers, are, as to a purchaser for value of one of the company's negotiable 19. Holmes et al. v. Willard, 125 X. Y. 75, 25 N. E. 1083; Holmes v. Crowe, 191 App. Div. 820, 182 N. Y. Supp. 270. The secretary and treasurer of a corporation has no implied power to execute a contract which is, on its face, ultra vires, and a person claiming un- der such a contract must prove that the secretary and treasurer had special authority to execute it. Broadway Theatre Co. v Dessau Co., 45 App. Div. 475, 61 N. Y. Supp." 335. Liability for unauthorized acts.;— It seems tha,t directors and officers of a corporation are its agents, and iare li: able for their unauthorized transac- tions to their principal the same as the agent of an individual. Holmes et al. V. Willard, 125 N. Y. 75, 25 N. E. 1083. 20. Holmes v. Crane, 191 App. Div. 820, 182 N. Y. Supp. 270. 1. Logan V. Fidelity-Phenix Insur- ance Co., 161 App. Div. 404, 146 N. Y. Supp. 678, holding that where the president of an insurance company, in order to conceal his own defalcation and misappropriation of the company's funds, borrows certain securities from one of the directors, telling him that the company needs them in order to procure a loan to cover premiums on certain reinsurance, and it appears that the director was a member both of the executive committee and of the ac- counts committee, that his duties as a member of the latter, if properly per- formed, would have caused him every six months to have examined the as- sets and securities of the company, and that if he had done so he would have discovered not only the falsity of the president's statement, but also the fact of his defalcation, the director is chargeable with such knowledge, and cannot recover the value of the securi- ties from the corporation in an action for conversion. TJnder the circum- stances the loan was not one to the corporation but, an individual loan to its president. 2. Huntington y. Attrill et al., 118 N. Y. 365, 367, 23 N. E. 544; Milliken V. Frisbie, Coon & Co., 89 Misc. 579, 153 N. Y. Supp. 751. 362 COEPORATIOKS. warehouse certificates^ chargeable with knowledge of what- ever the entries in the books of the company, made in the ordinary course, of its business, would have disclosed on in- spection.^ But the mere fact that a party is a trustee of a corporation does not make him chargeable with actual knowl- edge of its business transactions and of the dhtries made en its books, so as to render the books of the corporation per se evidence against hifn.^ Likewise the fact of being a director and stockholder is not per se sufficient to hold a party liable for the frauds and misrepresentations of the active managers of a corporation. Some knowledge of and participation in the act claimed to be fraudulent must be brought home to the per- son charged.^ 309. Directors as trustees in case of dissolution. "Upon the dissolution of any corporation, its directors, unless other persons shall be appointed by the legislature, or by some court of competent jurisdiction, shall be the trustees of its creditors, stockholders or memlDers, and shall have full power to settle its affairs, collect and pay outstanding debts, and divide among the persons entitled thereto the money and other property remaining after payment of debts and necessary expenses. Such trustees shall have au- thority to sue for and recover the debts and property of the corporation, by their name as such trustees, and shall jointly and severally be personally liable to its creditors, stockholders or members, to the extent of its property and effects that shall come into their hands'." C The provisions of the statute apply to both real and per- sonal property.' Where permanent receivers are appointed and become trustees of the property for the benefit of the 3. Hanover Bank v. American Dock 6. General Corporation Law, § 35. & Trust Co., 148 N. Y., 613, 613,' 43 As to voluntary dissolution, see post, N. B. 72. chapter XXVI. 'As to involuntary dis- 4. Rudd V. Robinson, 126 N. Y. 113, solution, .see post, chapter XXVII. 26 N. E. 1046; Powell v. Conover, 75 collection of claims due previous to Hun 11, 26 N. Y. Supp. 1028 appointment of receiver.-Where tho 5. Arthur v. Griswold et al, 55 . ^ , . ^ , , N. Y. 400, holding that the facts that ^"Pe"ntendent of banks refuses to re- the name of a person was published as "«^ ^^^ ^^<=^'^^^ «* ■ ^ l«=i" association a trustee of a corporation and that a and an action to dissolve the same ha.s certificate of stock was issued to him, been begun, the association may collect . are not sufficient to authorize a ver- claims due it previous to the appoint- dict against him for a. fraud perpe- ment of a receiver. Kept, of Atty. trated by other trustees and agents of Genl., Mar. 22, 1910. the corporation. See also post, pars. 7. Heath v. Barmore 50 N. Y. 302, 313, 314. 305. EIGHTS, DUTIES AND LIABILITIES OF DIEECTOBS, ETC. 363 creditors of the corporation and of its stockholders by virtue of section 221 of the General Corporation Law, it seems that this section does ijot apply.. When a corporation becomes in- solvent or it becomes apparent to th& directors thereof that it will be unable to continue business, so that suspension is imminent or inevitable, the corporate assets^ become a trust fund for equal distribution among the creditors, and the di- rectors must hold the assets for that purpose, and have no right to appropriate the same in payment of their individual claimSj^and they may not transfer the same in disregard of the rights of their cestuis que trustent no matter how honest their motive.^ It has been held that directors of a defunct corpora- tion, who distribute all of its assets among themselves without a formal dissolution proceeding and notice to creditors of the corporation, are not liable to such creditor on the ground that they have wrongfully and unlawfully distributed the assets of the corporation, where it does not appear that the creditor would have been entitled to the payment of his claim if the corporation had been regularly dissolved, and there is no proof of fraud or bad faith.^" But it has been held, that di- rectors of a dissolved corporation are jointly and severally liable to a. judgment creditor for distributing the assets of such dissolved corporation to its other creditors without mak- ing provision for the debt represented by the judg^nent.^^ The word " creditors '' includes all those to whom the corpora-- tion was under any enforceable obligation at the time of its dis- solution, as weir as those to whom it was indebted.^^ The pro- visions of this section do not apply to a foreign corporation for which a liquidator has been appointed, in a foreign sta^te.-^'^^ The statute expressly limits the liability; of directors to the property and effects of the corporation that shall come into their hands.^* 8. Joseph V. Raff, 82 App, Div. 47, Div. 54, 117 N. Y. Supp'; 817. 81 N. Y. Supp. 546, affd. 176 N. Y. 611, 12. Marstaller v. Mills et a!., 143 68 N. E. 1118. N. Y. 398, 38 K E. 370. 9. Darey v. Brooklyn & New York ^^ Wamsley v. Horton & Co., 12 Supp. 514, affd. 196 N. Y. 99, 89 N. E. ^^^ ^ ^ ^^^^ ^^ ^ ^ ^^^^ 461. 10. Curran v. Oppenheimer, 164 App. !*• Marstaller v. Mills, 143 N. Y. Div. 746, 150 N. Y. Supp, 369. 398, 38 N. E. 370; Hoffman v. Van Nos- 11. Tapley Co. v. Keller, 133 App. trand, 42 Barb. 1 74, 28 How. Pr. 115. 364 COEPOBATIONS. Dealing with Corporation. 310. In general. The diriector of a corporation occupies a fiduciary position, and so is -within the rule disenabling one intrusted with powers to be exercised for the benefit of others, from dealing in his own behalf in respect to matters involving the trust.^^ "While contracts between directors and the corporation to which they sustain a fiduciary relation are always the subject of strict scrutiny, and the director will not be allowed to profit at the expense of the corporation, and such contracts may be treated as voidable, it cannot be said that, regardless of the terms and conditions of the particular contract, it is illegal and void.^^ Especially is this true where the corporation is represented by a majority of the board of directors, exclusive of the party interested." The most that can be said of con- tracts of that kind is that they are voidable at the election of those, who are affected by them,^* irrespective of whether the agreement be fair to the coiporation.^^ However, the attempt by directors in control of a corporation to contract for siach corporation with themselves individually, to their benefit, and to the detriment of the corporation, is presumptively fraudu- 15. Duncomb et al. v. N Y. H. & N. Diy. 301, 304, 37 N. Y. Supp. 742, affd. R. Co. et al., 84 N. Y. 190; Jacobson v. 157 N. Y. 710, 53 N. E. 1132, holding Brooklyn Lumber Co., 184 N. Y. 152, that general rule was not applicable to 161-, 162, 76 N. E. 1075. facts of case. Marbury v. Stone, 17 16. Nathan v. WhitehiU, 67 Hun 398, App. Div: 352, 45 N. Y. Supp. 184, affd. 22 N. Y. Supp^ (53; Vonnoh, y. 67th jg^ j^ ^ g^ ^^ ^ Street Atelier Building, 5o Miso. 222, ^ ,„ ' . ,„,,„.'„ 223, 105 N. Y. Supp. ^55. "■ ^'^^"'"' ^*' ^'"'- '^'' ^^ ^- ^- ^^P?' Agreement by president and ditector ^27, affd. 159 N, Y. 540, 53 N. E. 1125. with corporation held void as against ^*- ^"^^ & Co. v. Goss, 147 App, Div. public poUcy. Munson v. Syracuse G. 698, 132 N. Y. Supp. 76, affd. 207 N. Y. and C. R. Co., 29 Hun 76. 742, 101 N. E. 1099. Agreement of director to engage in The inability of the president of a similar business with others ♦hen not corporation, because of his fiduciary re- prohibited. — It seems that a director lation, to enforce against the company of a corporation may engage in a busi- a contract by which it assumed, with ness similar to that carried on by the some changes, the obligations of a con- corporation, either in his own behalf or tract of a third person to purchase for another corporation of which he is property from him as an individual, a director. New York Automobile Co. after he has accepted, by a novation, a V. Franklin, 49 Misc. S, 14, 97 N. Y. substitution of the corporation in lieu Supp. 781. of the original purchaser, will not en- 17. Veeder v. Horstmann, 85 App. title him to hold the latter liable on Div. 154, 159, 83 N. Y. Supp. 99. the original agreement. Munson v. 18. Steinway v. Steinway, 2 App. Magee, 161 N. Y. 182, 55 N. E. 916. RIGHTS, DUTIES AND LIABILITIES OF DIEECTOBS, ETC. 365 lent ^nd in bad f aith.^* When a trustee or the officer or di- rector of a corporation deals with himself as an individual, or in the character of trustee, director or oSicer of another cor- poration, with respect to the funds, securities or property of the corporation, the transaction is at least open to question by the corporatibn, or, in a proper case, by the stockholders, and the trustee is bound to explain the transaction and show that the same was fair and that no undue advantage has been taken by him of his position for his own advantage or the advan- tage of some other corporation in which he has an interest.-' Neither the good faith, honesty nor legality of the acts of of- ficers of a corporation can be determined by ascertaining whether the iharket value of the capital stock of the corpora- tion has increased or diminished during the time when the acts were performed.^ The disqualification of a director in a corporation to vote for a resolution which provides for the assumption of a contract of another director to purchase property' from the former as an individual, though it may make the resolution voidable at the election of the corpora- tion, will not make it invalid as to these directors so as to give either of them a right of action against the other .^ A corpo- 20. Krechner V. Burgmcyer, 174 App. Div. 48, 160 3Sr. Y. Supp. 256. 1. Presumption against validity of transactions by officers and directors >srith corporation. — When it appears that the trustee or officer has violated the moral obligation to refrain from placing himself in relations which ordi- narily produce a conflict between self- interest and integrity, there is in equity » presumption against the transaction, which he is required to ex- plain. Sage V. Culver, 147 N. Y. 241,- 247, 41 N. E. 513. A director of a corporation seeking to recover on a contract of employ- ment for five years made for the corporation by his co-directors, which contract has been repudiated by the corporation after part performance by him, cannot recover for time not served without showing the fairness and pro- priety of the contract. Merrill v. United Box Board & Paper Co., 143 App. Div. 833, 128 N. Y. Supp. 959. Contract by directors for own benefit voidable. — Barr v. New York, L. E. & W. R. Co., 125 N. Y. 263, 26 N- E. 145. The action of a trustee of a corpora- tion in making a contract with the corporation is not void. — The corpora- tion may set it aside, returning what it has received upon the eontra,ct, but unless it sees fit to repudiate the trans- action it is valid, and until repudiated it is valid as to third parties who ac- quire rights under it. Wile & Briekner Co. V. Rochester & Kettle Falls Land Co., 4 Misc. 570, 572, 25 N. Y. Supp. 794. A director purchasing or selling stock of the corporation is not acting in a fiduciary character and the rules gov- erning transactions between a trustee and cestui que trust do not necessarily apply. Stark v. Soiile, 9 St. Rep. 555. 2. Jacobson v. Brooklyn Lumber Co., 184 N. Y. 152, 76 N. E. 1075. 3. Munson v. Magee, 161 N. Y. 182, 55 N. E. 916. '^"O COBPOKATIONS. ration, in order to defeat a contract entered into by its di- rectors on its behalf, in which one or more of them had a pri- vate interest, is not bound to show that the influence of the director or directors having the private interest determined the action of the board.^ And so where an illegal contract is entered into between a corporation and one of its trustees, who, as such trustee, was moving and active in inducing the action of the corporation, the latter cannot claim that he was not in pari delicto, with the former; he is, of the two, the more culpable, and the degree of culpability is not affected by the fact that the contract on the part of the corporation was ultra vires.^ The remedy of a corporation that has been in- duced to purchase property from its directors or officers is to rescind the sale and to recover back the consideration.^ The right of the corporation, or those claiming through it, to avoid any such dealings does not depend upon the question whether the director was acting fraudulently or in good faith. But an act of a director, claimed to be in hostility to the rule stated, in the absence of bad faith on his part, cannot be avoided without a restoration to him of what the corporation received.'^ The minority stockholders of a corporation whose directors have dealt with the corporation for their own benefit to the detri- ment of the corporation, may, in a representative action, com- .pel the return to the treasury of money improperly taken.^ If. the individual directors have illegally and wrongfully occa- sioned a loss to the corporation it is neither a defense nor a mitigating circumstance that despite such illegal and wrong- ful acts the corporation is still solvent, or that the stock has increased in value during the time ^hen the alleged illegal and wrongful acts have been committed.^ 4. MuDSon et al. v. S., G. & C. R. ration no defense. — In an action Co. et al., 103 N. Y. 58, 8 N. E. 355. brought by minority stockholders of a, 5. Knowlton v. Congres^ & Empire corporation to recover for the corpo- Spring Co., 57 N. Y.518. ration' from the president and vice- 6. Insurance Press v. Montauk Wire president and treasurer thereof Co., 103 App. Div. 472, 478, 93 N. Y, amount received by such officers by Supp. 134. reason of increases in their salaries al- 7. Duncomb et al. v. ^ew York H. leged to have been improperly author- & ,N. E. Co. et al., 84 N. Y. 190. ized by the' board of directors, and to 8. Carr v. Kimball, 153 App. Div. cancel alleged improper resolutions of 8-25, 139 jST. Y. Supp. 253. said board purporting to authorize such 9. Action of board of directors void- officers to credit themselves with cer- able where majority of board are per- fain amounts for deferred salaries, ad- sonally interested; prosperity of corpo- missions in the pleadings and findings EIGHTS, DUTIES AND LIABILITIES OF DIEECTOES, ETC. 367 311. Validity of contracts openly made. The illegality of a profit made by a director arises almost wholly by reason of some undisclosed and secret bias on his part against the interest of the corporation of which he is a director. Therefore if a profit is made in a transaction that is honest in itself, and is open and aboveboard, and the trans- action is consummated after an honest statement of the facts to the board of directors at a meeting, and to the stockholders at a stockholders' meeting, there is no reason for criticism or for charging such director with any profits that he may make.^" And the general rule that a director, trustee or an executive officer of a corporation is without power to bind it or its shareholders by a contract authorized by or entered in- to with himself and for his individual benefit, does not apply if the contract between a director and his corporation is in all respects just as between the parties, and all of the sharehold- ers and directors or trustees are competent to assent, and with full knowledge of the terms of the contract, do assent and direct that it be made^ Under these circumstances it is bind- ing on the corporation and cannot be avoided by its share- holders or by persons who subsequently become its creditors." of fact to the effect that the said offi- could not mal^e an agreement with eers had since the organization of the themselves acting on the one part in- corporation been the owners of a ma- di^idually and for their own benefit, jority of the stock; that at the time .^^^ ^^ tj,g g^^^j. p^^j. ^^ ^j^gj^ fiduciary of and previous, to the alleged improper capacity; and if, through their acts, a actions by the board of directors, they j^^^ ^^^ ^^^^ wrongfully occasioned to were members thereof and constituted , , ,. . ., the corporation, it is neither a defense a maiority of the membership of said .-■,.■ ^- ■ ^ .. ^ j ■' , , . ,.„ , . nor a mitigating circumstance that de- board, the . plaintiffs having no repre- .,,,..„,, sentation therein; that the increases 'P'^^ ^^^'' ^"^S^^ ^^*« ^^^ corporation in the salaries of said officers were is sWl solvent or that its stock has in- voted by themselves, but that such in- c^^ased in value. -Tacobsen v. Srook- creases were legitimate arid commen- 'y^ Lumber Co., 184 N. Y. 152, 76 surate with the increase in business ^- ^- 1075. and resulting profits, they having de- 10- Billings v. Shaw, 209 X. Y. 265, voted all of their time to the business, 103 N. E. 142. extended it and placed, the corporation 11. Welch v. I. & T. N. Bank et al, on a sounds basis, and that through 122 N. Y. 177, 189, 25 X. E. 269. ' their efforts , the ..stock held by the The rule that a director of a corpo- plaintiffs had increased in value, do not ration cannot make a profit out of it justify the conclusion of. law that the does not apply to an agreement openly complaint should be , i dismissed ; since made, to the knowledge of the body of the relation of said officers to: the the stockholders. GoldsTiear v. Barron, corporation was fiduciary and. they 42 Misc. 198, 85 X. Y. Supp. 3&5. 368 COEPOEATIONS. But it is only where the promoter informs every subscriber, or the director informs every fellow director and stockholder, that he is personally interested in and of the amount of profit he expects to make on a sale to the corporation, that the pro- moter or director will be permitted to retain or make a profit on such sale ; and the burden is upon him to show that he took no advantage of his fellow subscribers or stockholders.^^ The stockholders of a corporation with full knowledge of all facts may ratify a contract made for the corporation by its officer with himself, and in such case the corporation is estopped from claiming that the act was invahd.^^ 312. Acquiring corporate property. The fiduciary relation which exists between an officer of a corporation and the corporation prohibits such officer from 12. Colton Improvement Co. v. Rieh- ter, 26 Misc. 26, 55 N. Y. Supp. 486, holding that where only a part of the directors or stockholders have notice or knovpledge of a sale of real estate, made by a promoter and director to the corporation, the Litter cannot re- tain an individual profit hut must ac- count therefor to the corporation in an action brought against him by it. Power of directors and ofBcers to fix their own salaries.- — While the tendency of late decisions is to allow a trustee or director to contract with his corpo- ration, provided that, while acting in his own interest, he does not also act as trustee or director, yet this rule does not apply where one a,ctually pre- sides oyer a body and superintends a .balloting, by the result of which he profits individually. Be«rs v. New York Life Insurance Co., 66 Hun 75, 76, 20 N. Y. Supp. 788. 13. Ratification by stockholders of wrongful act of president. — Although the president of a corporation owning half the stock and having sole manage- ment had no right to rent his automo- bile to the corporation and reimburse himself out of its assets, there was a ratification of the act where at a meet- ing of all the stockholders on a disclos- ure of the facts they passed a resolu- tion permitting the owner of the other half of the stook to withdraw' a sim- ilar amount from the corporate assets. Goss k Co. V. Goss (No. 2), 147 App. Div. 698, 132 N.' Y. Supp. 76, affd, 207 N. Y. 74'2, 101 N. E. 1099. A corporation engaged in the manu- facture of plaster which had a small capital and which, by reason of- finan- cial difficulty, had determined to incur no further expense and to close down until it should be deemed advisable to resume work, subsequently entered into a contract with its president, by which he agreed to have the work done, to keep the machinery and tools in re- pair and furnish supplies until the next annual meeting, for a specified sum per ton of plaster delivered on the cars, he having been the only bidder for such contract. It appeared that the ex- pense of doing the work had previously been about five cents per ton less than the sum specified in the contract, and that since the contract was let the company has paid a dividend of 10 per cent. It was held, that such con- tract was not an improper one, and would not be set aside. Strobel v. Brownell, 16 Misc. 657, 40 N. Y. Supp. 702. RIGHTS, DUTIES AND LIABILITIES OF DIEECTOES, ETC. 369 voting to himself the property or assets of the corporation, or from taking any part in any matter affecting his personal interests.^* And officers of a corporation, by reason of owner- ship of substantially all of its stock, do not own the corpora- tion itself, and if they convert its money or property to their own use the same liability attaches as if they had appro- priated the money or property of an individual.^® A contract entered into by a corporation by the authority or direction of its trustees, with themselves, and for their benefit, or a trans- fer of its property by the authority of the trustees to them- selves, may be set aside, in case it injures any public interest, or the private interest of any shareholder or creditor, even though the contract or transfer was executed in good faith by the trustees. But this rule is not broad enough to condemn as void on the ground of public policy all contracts and transfers executed by a purely private business corporation, with or to its trustees, in good faith, in case no public or private inter- est is harmed thereby .^^ A director, considering that relation 14. Miller v. Crown Perfumery Co., 57 Misc! 383, 109 N. Y. Supp. 760, modfd. 125 App. Div. 881, 110 N. Y. Supp. 806. 15. Saranac & L. P. R. Co. v. Arnold, 167 N. Y. 36«, 60 K B. 647; Passaic Falls Throwing Co. v. Villeneuve-Pohl Corporation, 169 App. Div. 727, 155 N. Y. Supp. 6«9. Extinguishment of Uability by charg- ing over at par stock issued at fifty- five cents.-^The treasurer of a corpora- tion cannot by charging over at par stock of the corporation issued at fifty- five cents, make the corporation his debtor, and thus extinguish his liability for moneys received as treasurer. East N. Y. & Jamaica R. Co. v. Elmore, 6 Hun 214. 16. Skinner v. Smith et al., 134 N. Y. 240, 242, 31 N. E. 911. Valid transactions with corporation. — No principle of law or of public policy is violated by an agreement by which all the directors and sharehold- ers of a trading corporation, the capital stock of which is represented by a patent which such parties have as- signed in payment therefor, take reas- 24 signments to themselves of such patent from the corporation and give their promissory notes to the corporation in place thereof, where there are no credi- tors of the corporation. Skinner v. Smith, 56 Hun 437, 10 N. Y. Supp. 81. affd. 134 N. Y. 240, 31 N. E. 911. Invalid transaction. — ^An officer of a corporation, who is also the majority stockholder, will not be permitted to put its property up for sale in order to exclude a minority stockholder and buy it in for himself, but equity will charge the property in his hands with a con- structive trust. Drucklieb v. Harris. 84 Misc. 291, 147 N. Y. Supp. 298. A director of a corporation can make no agreement for the appropriation of the property of the corporation of which he is a trustee, authorized by his own vote, that is valid as against the corporation. Where n director has ap- propriated property of his corporation, it is no defense to an action brought to compel him to account for such prop- erty, that he was a creditor of the cor- poration, and voted as one of its di- rectors, for a, transfer of its property to himself, as a creditor, to pay the 370 CORPORATIONS. only, cannot become purchaser of the property of the corpo- ration upon a sale under an execution against it, except sub- ject to its right to disaffirm and to demand a resale. Actual fraud or actual advantage in such case need not be shown. Where, however, the director is also an execution creditor, he has the right to sell under his execution, and having that right he may purchase the property to protect his own right." A director may not, as such, purchase property in which he has an individual interest. The law, in such case, does not stop to inquire whether the transaction was fair or unfair, but,, when the relation is disclosed, sets aside the transaction, or refuses to enforce it at the instance of the cestui que trust.^^ So the director of a railroad corporation, in all matters per- taining to the construction of its road and the acquisition of the roadway, is bound to act as the representative and for the benefit of the company. He cannot acquire for himself prop- erty which it is his duty to acqiiire for the company, and which is necessary for its purposes. In respect to such deal- ings he stands upon the same footing as an ordinary trustee.-^^ Contracts entered into by directors and officers of a corpora- tion for the purpose of trading upon, or attempting to barter away, the interests of the corporation for their private ad- vantage^ are void, as against public policy.^? debt that the corporation owed him, White, 54 Misc, 114, 105 N. Y. Supp. and that at a subsequent meeting of 653. the . directors, he, by his own vote, car- Where one who is the general super - ried, a resolution 'to ratify , such dis- intendent and purchasing agent of a position of the property, Grildersleeye.., .corporation and, part of the time, one V. Lester, 68 Hun 532, 22 N. Y. Supp. of its directors engages in buginesd 1026.- secretly as a partner with another in 17. Hoyle et al. v. Plattsburgh & manufacturing material used by the Montreal R. Co., 54 N.. Y. 314, 13 Am. corporation in its business and the R. 595. , -; - .c(^-partnership does work, for the 18. Munson et al. v. S. G. & C. R. Co. corporation to a Ia,rge amount and et al., 103 N. Y. 5S, 8 N. E; 35^ finally sells out its plant to the corpo- 19. Blake v. Buffalo Creek R. Cp., 56 ration, which gives its notes therefor, N. Y. 485. the corporation, . upon subsequently dis- 20. Fennessy v. Ross, 90-Hun 298, 35 covering the relation of its s.uperin- N. Y.. Supp. 868. -I tendent, .agent and director to the co- An officer of a corporationi -svhp pur- partnership may mainta.in an action chases goods for it, from a firm of ; against the members for an accounting which he is a member, must account to of the profits inade by them. upon the the corporation for the profits of the work of the corporation and the cancel- transaction, where, it' appea.r3 that his . lation of its notes and will be entitled connection with the firm was concealed to an injunction during the pendency of from the corporation. Riokert v., the action restraining the defendants EIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 371 Misrepresentation of Financial Condition. 313. Liability for false statements inducing purchase of stock. The tendency of the courts both in this country and in Eng- land is to hold promoters and directors of companies to a very strict accountability for the accuracy of their representations made with a view to inducing strangers to the enterprise to invest therein.^ So it is held that a director of a corporation who knowingly issues or sanctions the circulation of a pros- pectus containing false statements of material facts, the natural tendency of which is to deceive and to induce the pub- lic to purchase the corporate stock, is liable for the damages sustained by one who, relying upon and induced by the state- ments, makes such a purchase. It is sufficient to sustain the action that the false statements were one, although not the from negotiating or transferring the notes and from destroying the books or other records of the firm's business and restraining the payment to the former superintendent of the plaintiff of any part of the purchase price of the de- fendant's plant. Lozier Motor Co. v. Ball, 53 Misc. 375, 104 N. Y. Supp. 771. 1. Lambert v. Blmendorf, 124 App. ©iv. 758, 109 N. Y. Supp. 574; Van Slochem v. Villard, 154 App. Div. 161, 138 X. Y. Supp. 852, affd, 207 N. Y. 587, 101 N. E. 467 ; Matter of Phillips, 197 App. Div,. 166; Taylor v. Thomas, 5& Misc. 411, 106 N. Y. Supp. 538, revd. on other grounds, 124 App. Div. 53, 108 N. Y. Supp. 454, affd. 195 N. Y. 590, 89 N. E. 1113; Bystrom v. Villard, 175 App. Div. 433, 163 N. Y. Supp. 100, holding that wliere the director and president of a mining coTporation who. issues si,nd signs a proapeBtus for the purpose of indncing the public to buy stock falsely states that the mining- company has in i its ' possession a one- hundred ton stamp mill and machinery which' will be complete and running within a, feW weeks, and will -handle $400,000 worth of ore already delivered at the mill, and that the entire plant will be in complete operation within sixty days, when as a matter of fact no such mill has ever been contracted for, and the company only owns a twenty-ton mill capable of treating seventy-iive tons daily, and only a com- paratively small amount of ore has been delivered, he is liable in damages to a person who has been induced to purchase the stock, which turned out to be worthless, on the faith pf this prospectus and upon the personal as- surance of the defendant that the statements- therein were true. Such liability exists althougli the defendant may have believed the statements to be true when he made them, and al- though he based his -belief upqn. infor- mation furnished to him by others. - Fraud; conduct of trial; evidence. — Considerable liberality in the : exercise of the discretion of the court .in the conduct of the trial, in the method of examination and in the scope of the in- quiry is proper in an action for fraud in the sale of stock of ,a corporation prom,oted by the defendant for , taking over his private. business. Townsend v. Felthouaen, 156 N;. Y. 618, 51 N. E. 279. Bank liable for false representations , by .president, to , purchaser of securities held by it, . Carr y. Nat. Bank and Loan Co., 167 X. Y. 373, 60 N. E. 649. 372 CORPORATIONS. sole inducement to the purchase,^ Each of the directors who participate in the fraud to the detriment of the person pur- chasing the stock is eqiially liable whether he shared in the profits of the transaction or not, and if the corporation re- ceived the profits of the sale, then it is also responsible for the oral declarations made by its officers to irfduce the sale.^ Courts of equity and courts of law have concurrent jurisdic- tion in actions brought against directors of a corporation, by persons who have purchased stock therein in reliance upon fraudulent representations made by the directors, to recover damages for the fraud.* 314. Essential elements of cause of action; measure of damages. To sustain an action for fraud, founded upon represen- tations made by the defendant, it must be made to ap- pear that he believed or had reason to believe, at the time he made them, that the representations were false, or that, without knowledge, he assumed or intended to convey the impression that he had actual knowledge of their truth, and that plaintiff relied upon them to his in- 2. Morgan v. Skiddy, 62 N. Y. 319; see also ante, par. 33. In an action against the directois and ofScers of a corporation to recover damages for inducing plaintiff to pur- chase stoclc by means of false and fraudulent representations, allegations in the complaint as to the fraudulent concealment of facts relating to the purchase of railroad material at prices in excess of the market and true value thereof, by means of which defendants withdrew from the corporation secret profits, and further allegations as to the purchase of properties and securi- ties and branch lines at prices largely in excess of their cost or true value, and that these various purchases were carried into the annual report at their false and fraudulent value, thereby giving the assets an excessive valuation, constitute a sufficient state- ment of false and fraudulent represen- tations, which, if the plaintiff proves were an inducing cause of his purchase, will entitle him to recover. Niles v. Yoakum, 179 App. Div. 75, 166 N. Y. Supp. 94. 3. Churchill v. St. George Develop- ment Co., 174 App. Div. 1, 160 N. Y. Supp. ,357. 4. Squires v. Thompson, 73 App. Div. 552, 76 N. Y. Supp. 734, affd. 172 N. Y. 652, 65 N. E. 1122; Peek v. Gurney (L. R 6 H. L. 377). In the lat- ter case Lord Chelmsford said (p. 390) : " It is a suit instituted to recover damages from the respondents for th« injiiry the appellant has sustained by having been deceived and misled, by their misrepresentations and suppres- sion of facts, to become a shareholder in the proposed company, of which they were the promoters. It is pre- cisely analogous to the common-law ac- tion for deceit. There can be no doubt that equity exercises a concurrent juris- diction in cases of this description, and the same principles applicable to them must prevail both at law and in equity." EIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 373 jury. This rule is applicable to the case of representations made by a director of a corporation, in the form of published statements and reports, as to its financial condition. But knowledge of all the affairs of the company cannot be im- puted to him for the purpose of charging him with fraud.*^ Concisely, the. plaintiff must prove representation, falsity, scienter, deception and injury.'' The rule of scienter is sub- ject to some qualification, for where a party represents a ma- terial fact to be true to his personal knowledge, as distin- guished from belief or opinion, when he does not know whether it is true or not, and it is actually untrue, he is guilty of falsehood, even if he believes it to be true, and if the state- ment is thus made with the intention that it shall be acted upon hy another, who does so act upon it to his injury, the result is actionable fraud.^ A director does not escape lia- bility because the statements contain a hidden equivocal mean- ing which may make them true, if they are false in the sense in which they would be taken by the average person.^ But 6. Wakeroah V. Dalley, 51 N. Y. 27 10 Am. Eep. 551. Misjudgment, however gross, or want of caution, however marked, is not fraud. Intentional fraud, as distin- guished from a mere breach of duty or the omission to use due care, is an essential factor in an action for deceit. Reno V. Bull, 226 N. Y. 546, 124 N. E. 144, holding that in an action brought by the purchaser of capital stock of a corporation to recover for fraud and deceit by its directors in issuing a cir- cular containing false representations, ; it was error for the trial court to charge the jury that it was the duty of the defendants when they, as direct- ors of the corporation, approved of the circular, to know the truth of the facts stated therein and if they did not know whether such facts were true, they were bound to know if they had- a reasonable opportunity to ascertain the same, because there was substi- tuted as the test of defendant's lia- bility, negligence, instead of a purpose to deceive. Statement by president of corpora- tion as to its financial condition in. ducing stockholder to exchange bonds for stock to be issued.— A statement by the president of a corporation that it is in a flourishing condition and able to pay a six per cent dividend on pre- ferred stock about to be issued for the purpose of improving its property and retiring its outstanding bonds, is not a sufficient basis for an action by a stockholder against him, to recover damages for deceit, although she claims to have relied on such statement in ex- changiiig bonds held by her for the preferred stock, which was never deliv- ered, and the corporation after such agreement defaulted for the first time in the payment of interest on its bonds. The statements by the defendant as to the financial condition of the corpo- ration, and the dividends which it could thereafter pay, were merely ex- pressions of opinion. Hatton v. Cook, 166 App. Div. 257, 151 N. Y. Supp. 577. 7. Reno v. Bull, 226 N. Y. 546, 124 N. E. 144. 8. Bystrom v. Villard, 175 App. Div. 433, 163 N. Y. Supp. 100. 9. Bystrom v. Villard, 175 App. Div. 433; 163 N. Y. Supp. 100. 374 COEPOKATIONS. directors, who are also the promoters of a coiporatioii, know- ing that attempts are being made to induce the public to sub- scribe to the stock of the corporation, or to purchase its securities, cannot willfully shut their eyes to the acts of other officers or agents of the company as to methods used to pro- cure money from the public. They cannot authorize the issue of circulars and other appeals to the public to secure sub- scriptions and not be responsible for false and fraudulent statements by which investments in its securities are pro- cured.^" On the other hand, where directors of a corporation delegate their powers to an executive committee consisting of certain of the directors, and the committee issues a prospectus containing false statements, and stock is purchased in reliance thereon, the purchaser cannot hold liable the directors who were not members of the committee, if he does not show that they had knowledge of or participated in preparing the false statement. The bare fact that the defendants were co-di- rectors does not establish an agency between them." Likewise the mere fact that a director allows his name and credit to be used to float the stock of a corporation, which afterwards turns out to be worthless, in the absence of evidence of knowl- edge on his part, or that he has made or sanctioned any false representations, does not constitute actionable fraud.^^ The measure of damages in an action based on deceit inducing the purchase of stock, is not the difference between the value of the stock at the time it was sold to the plaintiff and the value of the stock as it would have been at that time if the representations were true, but the difference between the amount paid for the stock. and the value of the stock which he received with interest from tha*t time." 10. Rives V. Bartlett, 156 App. Biv. it did not appear that any of, them had 552/141 N. Y. Supp. 561, revd. on other ever seen it or knew what it contained, grounds, 215 N. Y. 33, 109 N. E. 8J. Reno v. Bull, 226 N. Y. 546, 124 K. E. 11. Ottmann v. Blangas Co., 171 144. App. Div. 197, 157 N. Y. Snipp. 413. 12. Morgan, v. Skiddy et al;, 62 X. Y. Evidence of statements made by the 319. president of the corporation with refer- 13. Reno v. Bull, 226 N. Y. 546. 124 enee to the stock, there being no proof N. E. 144. that the defendants, directors of the In an action for deceit in inducing corporation, authorized or approved it, the plaintiff to become a shareholder in was erroneously received. A copy of a a company compensation for actual complaint in an action by the corpora- damage only is recoverable in the ab- tion against the president was also im- sence of proof of actual and intentional properly received against defendants as fraud. Lyon v. James, 97 App. Div. EIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 375 Official Misconduct. 315. Enforcement of liability generally. "An action may be maintained aga,inst one or more trustees, directors, man- agers, or other officers of a corporation, to procure a judgment for the following purposes, or so much thereof as the case requires: ' ' 1. Compelling the defendants to account for their official conduct, including any neglect of or failure to perform their duties, in the management and dis- position of the funds and propeTty, committed to their charge. ' ' 2. Compelling them to pay to the corporation, which they represent, or to its creditors, any money, and the value of any property, which they have ac- quired to themselves, or transferred to others, or lost, or wasted, by or through any neglect of or failure to perform or by other violation of their duties. ' ' 3. Suspending a defendant from exercising his office, where it appears that he has abused his trust. ' ' 4. Removing a defendant from his office, upon proof or conviction of mis- conduct, and directing a new election to be held by the body or board duly au- thorized to hold the same, in order to supply the vacancy created by the re- moval; or, where there is no such body or board, or where all the members thereof are removed, directing the removal to be reported to the governor, who may, with the advice and consent of the senate, fill the vacancies. "5. Setting aside an alienation of property, made by one or more trustees, directors, managers or other officers of a corporation, contrary to a proviaion of law, or for a purpose foreign to the lawful business and objects of the corpora- tion, where the alienee knew the purpose of the alienation. "6. Restraining and preventing- such alienation, where it is threatened, or wherie there is good reason to apprehend that it will be made. "7. The court must, upon the application of either party, make an order' directing the trial by a jury of the issue of neglect or failure of defendants to perform their duties; and for that purpose the questions to be tried must be prepared and settled as prescribed in section nine hundred and seventy of the code of civil procedure (Civil Practice Act, § 429). "As to any litigation pending prior to September one, nineteen hundred and seven, the provisions of this section as they existed prior to that- date shall apply." 14 ' 385, 90 N. Y. Supp. 28, aflfd. 181 X. Y. Co., 174 App. Div. 1, 160 N. Y. Supp. 512,'- 73 ?^/E, 1126:' 357. Where, in an action against a land 14. General Corporation Law, § 90. development corporation and its offi- History of legislation in reference to cers and directors for damages sua- supervision of corporations. People v. tained by the purchase of stock in the Ballard, 134 N. Y. 2S9, 32 N. E. 54. defendant, alleged to have been af- Action by stockholder to compel ac- fected by a fraudulent prospectus and counting to trustee of bankrupt corpo- ' statements made by the defendants, the ration, see Meyer v. Page, 112 App. complaint contains all the essential al- Div. 625, 98 N. Y. Supp. 739. legations of an action in fraud, other The participation of an officer ef a allegations as to an attempted rescis- corporation in a swindling scheme does sion may be treated as surplusage. not deprive the corporation of the right Churchill v. St. George Development to attempt to recover by all legal 376' COBPOKATIONS. Article V of the G-eneral Corporation Law (§§ 90-92) does^ not apply to a "religious corporation; or to a muniejpal or other political corporation, created by religious corporation, or to a municipal or other political corporation, created by the constitution, or by or under the laws of this state, or to any corporation which the regents of the university have power to dissolve, except upon the application of the regents, or of the trustees of such a corporation; and in aid of its liquidation under such dissolution." 15 means the moneys out of which it has been- unlawfully and- wrongfully swin- dled. Farrow v. Holland Trust Co., 74 Hun 585, 26 N. Y. Supp. 502. The corporation having been organ- ized, as stated in its certificate of in- corporation, to engage in and carry on the business of importing, buying and selling laces and, generally, to carry on any other business, whether manufac-. turing or otherwise, which might seem to the company capable of being car- ried on in connection therewith, had no right to purchase stocks and cotton on margin, and the individual defendants,, as the only directors and stockholders of the corporation, could not lawfully, as' against creditors, authorize them- selves, or either of them, acting for the corporation, to use its funds in such speculations, without subjecting them- selves to the risk, in the event of loss, of accountability to jxjdgment credit- ors, under sections 90, 91, 91a of the General Corporation Law, for losing or wasting the property of the corpora- tion. The plaintiff in selling laces and nets to the corporation had the right tft ex- pect that its funds would be expended in furtherance of the prosecution of the lace business of the defendant or of some other business of similar char- acter. Hemsley & Co., Ltd., v. Duncan Co., Inc., 98 Misc. 338, 164 N. Y., Supp. 282. In an action by a judgment creditor of a corporation who had sold property of the corporation on which he held a chattel mortgage, the interest on which had not been ■ paid, resulting in a defi- ciency judgment, brought under sec- tions 90 and 91 of the Oeneral Corpo- ration Law to compel the officers and directors to account to a receiver to be appointed on the theory that disburse- ments of money made by the defend- ants to themselves, as salaries, which for that reason were voidable at the instance of the corporation, may be avoided by its creditors on the ground that the capital of the corporation was thereby impaired in violation of sec- tion 38 of the Stock Corporation Law, a judgment cannot be sustained under section 95 of the Stock Corporation Law, although the stock was issued without consideration, for the reason that the liability of each of the de- fendants on that theory would be lim- ited by section 56 of the Stock Corpo- ration Law to the capital stock re- ceived by him. Shaw v. Ansaldi Co., Inc., 178 App. Div. 589, 165 N. Y. Supp. 872. 15. General Corporation Law, § 300. Prior to the amendment made by chapter 157 of the Laws of 1907, di- rectors of a corporation could not be sued under section 90 of the General Corporation Law for a neglect or fail- ure to perform duties, and, hence, n suit brought under said section prior to the amendment is in eqviity for an ac- counting and cannot include damages as such caused by the defendant's neg- lect of duty. People v. Equitable Life Assurance Society, 124 App. Div. 714, 109 N. Y. Supp. 453. RIGHTS, DUTIES AND LIABILITIES OF DIBECTOBS, ETC. 377 An action for waste, authorized by sections 90 and 91 of the General Corporation Law, does not contemplate the dis- tribution of the corporate assets among creditors nor a disso- lution of the corporation,^^ It was not the intention of the legislature in enacting sections 90 and 91 of the General Cor- poration Law to require directors of a corporation to account as in cases of trustees of express trusts and more must be alleged than the mere fact that the defendant was a director." An order settling issues to be tried by a jury in an action against officers for neglect and misconduct, which is alleged to have consisted in wrongfully excluding the plaintiff from participating in the management of the corporation, should not allow the jury to determine the damage to the corporation caused by such acts as it is wholly a matter of speculation.^^ A director of a foreign corporation transacting business and having its principal office in this state may, under sections 90 and 91 of the General Corporation Law, maintain an action against individuals who were formerly directors for an ac- counting and restoration of money belonging to the corpo- ration alleged to have been misappropriated and wasted by them in violation of their duties as such directors: the con- tention, that these provisions of the statute apply to domestic corporations only and restrict the maintenance of such an action to directors thereof, is not only unauthorized by the general language of the statute but is contrary to justice and sound policy and would render impossible any other form of redress in cases of this character.^' Article five of the general Corporation Law does not divest or impair any visitatorial power over a corporation, which is vested by statute in a cor- porate body, or a public officer.^" 316. Who may bring action generally. "An action may be brought, as prescribed in the last section, by the attorney- general in behalf of the people of the state, or, except where the action is brought 16. Halpin v. Mutual Brewing Co., 91 corporation itself. People v. Equitable Hun 220, 36 N. Y. Supp. 151. Life Assurance Society, 124 App. Div. 17. Pleading. — In an action against 714, 109 N. Y. Supp. 453. directorB of a corporation for negli- is. Momand v. Landers, 174 App. gently wasting the property of the pj^ 227, 160 N. Y. Supp. 1053. corporation brought under section 90 ,.,„ -vt ,t ,,,^. « *!,. /^ , ?i i- T iv. 19' Miller v. Quincy, 179 N. Y. 294. of the General Corporation Law, the . . plaintiff must allege the facta consti- ''^ ^- ^- "^- ^« ^ ^"'•^^g" "'"•P"'"^- tuting negligence or misconduct, mis- ^^°^^^ generally, see post, chapter feasance or malfeasance the same as if XXXn. the action had been brought by the 20. General Corporation Law, § 92. 378 COEPORATIONS. for the purpose specified in subdivision third or fourth of that section, by a creditor of the corporation, . or by a trustee, director, manager, or other officer of the corporation, having a general superintendence of its concerns." 1 Sections 90 and 91 of the Grenera! Corporation Law do not confer upon the parties enumerated in the latter section any- new cause of action, except with respect to the removal or suspension of directors, but merely authorize the enforce- ment by the individuals named of causes of action which have accrued to the corporation and which might be enforced by it or its receiver, or by a stockholder in behalf of himself and all other stockholders in the right of the corporation.^ The treasurer of a corporation suing a former treasurer to recover moneys belonging to the corporation and for an accounting, is not a manager or other officer of the corporation, " having a genera! superintendence of its concerns," within the mean- ing of section 91 of the General Corporation Law, and he does not come within the meaning of that section.^ A stockholder who is not a director of a corporation cannot bring an action under sections 90 and 91 of the General Corporation Law to compel directors to return alleged unlawful profits and for an injunction against the payment of their salaries and to obtain their removal from office for an action Under those sections only lies where the plaintiff is a director at the time of the commencement of the action, which fact he should allege specifically, or by an allegation of other facts which by neces- sary inference will show him to be such.^ An action by, credit- ors of a dissolved insolvent corporation against an officer of such corporation upon his unfulfilled promise to pay the debts of the corporation if allowed to purchase its property at a judicial sale for less than its real value cannot be maintained under sections 90 and 91 of the General Corporation Law,^-, 1. General Corporation Law, § 91. tion where it distinctly alleges that the 2. People V. Equitable Life Assurance defendant assured the creditors of the Society, 124 App. Div. 714, 109 N. Y. corporation, and among them the plain- Supp. 453; Higgins v. Applebaum, 186 tiffs, that he would assume and under- App. Div. 682, 174 N. Y. Supp, 807. take the payment of the merchandise 3. Loughlin v. Wocker, 152 App. Div. debts of the corporation; that, he made 466, 137 N. Y. Supp. 257. this representation with intent to in- 4. Rothbart v. Star Wet Wash Laun- -duce.the creditors, . including the plain- dry Co., Inc., 185 App. Div. 807, 174 tiffs, to refrain from making them- N. Y. Supp. 76. selves parties to the dissolution pvo- 5. The complaint in such action may ceedingS: and to refrain frona, organiz- be sustained, however, as stating facts ing or combining for the protection of sufficient to constitute a cause of" ac- their interests, or from bidding upon EIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 379 317. When attorney-general must bring action. Where the attorney-general has good reason to believe that an action can be maintained in behalf of the people of the state against the directors of a corporation for official mis- conduct, he must bring an action accordingly, if, in his opin- ion, the public interests require that an action should be brought.^ The question as to whether the public interests re- quire the bringing of such an action is committed by the statute to the absolute discretion of the attorney-general, and may not be made the subject of inquiry by the court on trial of the action.'' 318. Action by attorney-general to remove trustees, directors or other officers. "A trustee, director, or other ofiScer of a corporation shall not be suspended or removed from pfHce, by a court or judge, otherwise than by the final judg- ment of a competent court, in an action brought by the attorney-general, as prescribed in section ninety of this chapter." 8 ' An action iriay be brought by the attorney-general in the name of the people, without a relator, against a domestic busi- ness corporation and its trustees to remove the latter from their position, for misconduct, and to compel them to account for and pay over to the corporation the value of property be- longing to it transferred by them to others in violation of their duty, whenever he deems that the action can be main- the sale of the property, and that by the corporation which caine into his means of his representations the plain- hands, and which assets were insufH- tiffs and ' other creditors were induced cient to pay the debts 6f the corpora- te forego all efforts to have the prop- tion, such receiver is not a necessary erty of the corporation realize ■ its fair party to an action . either as a plaintiff value when offered at public sale; and or defendant. Lilienthal v. Betz, 185 the other allegations suffice to justify " N Y. 153, 77 N. E. 1002. the inference that the defendant' ac- 6. Oeneral Corporation Law, § 304. quired personal property of the corpo- 7. People v. Ballard et al., 134 N. Y. ration for much less than it was ac- 269, 32 N. E. 54. tually worth. Lilienthal v. Betz, 185 Determination by attorney-general X. Y. 153, 77 X. E. 1002. not final.— Attorney-general is to de- Receiver not necessary party. — termine, in the first instance^ whether Where the receiver in the proceedings public interests require an action to be dissolving an insolvent corporation was brought, but his determination should duly discharged as such receiver by the not be final for all purposes. People Supreme Court prior to the commence- v. Lowe, 117 N. Y. 175, 22 X. E. 1016. ment of the action, having before his 8. General Corporation Law, § 307. discharge exhausted all the assets of See also ante, par. 283. 380 COBPOBATIONS. tained and that the interests of the public will be promoted thereby.' An action by the attorney-general in the name of the people brought pursuant to sections 90 and 91 of the Gen- eral Corporation Law for the removal or suspension of a di- rector must be brought in equity and such aption may be joined with one against the same director or directors for an accounting.^" Section 90 of the G-eneral Corporation Law, authorizing an action by the attorney-general to remove di- rectors and other officers of a corporation for misconduct, should not be so construed as to prevent the removal of di- rectors for their misconduct as officers. One who is at the same time a director and an executive officer of a corporation and is guilty of misconduct in one capacity cannot insist that he is entitled to remain in practical control of the company in the other capacity. The fact that directors were re-elected after misconduct does not protect them from removal, as their ten- ure of office is treated as continuous." The statute providing for an action in the name of the attorney-general to suspend or remove a director is not exclusive of such reasonable and lawful charter provision relating thereto as may be included in the articles of incorporation.^^ 319. Action by creditor against directors. The term "creditor," as used in sections 90 and 91 of the General Corporation Ijaw, means a judgment creditor and not a creditor at large.^^ But where a corporation has been dissolved and a receiver appointed, a creditor may be excused from obtaining a judgment.^* There is the soundest public policy in not permitting a mere general creditor to compel an accounting of the officers of a solvent corporation. The man- agement of a corporation is intrusted to its directors and of- ficers, and they are accountable to it. It might result in in- tolerable abuse if any ^r every holder of a claim against a 9. People V. Ballard et al., 134 N. Y- 201 N. Y. 194, 202, 94 N. E. 634. 269, 32 N. E. 54. 13. Buckley v. Stansfield, 155 App. 10. People V. Equitable Life Assur- Div. 735, 140 N. Y. Supp. 953, aflfd. 214 anc© Society, 124 App. Div. 714, 109 N. Y. 679, 108 N. E. 1090; Paulsen v. N. Y. Supp. 453. Van Steenbergh, 65 How. Pr. 342. 11. People V. Lyon, 119 App. Div. 14. Lilienthal v. Betz, 108 App. Div. 361, 104 N. Y. Supp. 319,^ affd. 189 222, 96 N. Y. Supp. 849, reversed on N. Y. 544, 82 N. E. 1130 other grounds, 185 N. Y. 153, 77 N. E. 12. People ex rel. Manice v. Powell, 1002. EIGHTS, DUTIES AND LIABILITIES OF DIEECTORS, ETC. 381 corporation should be held to be entitled to such an equitable aetion.^^ Aai action brought under section 90 of the General Corporation Law is one for the benefit of the corporation or its creditors ; it is a representative one in form and must be brought in a representative capacity for the benefit of the plaintiff and all other creditors similarly situated, and is maintainable only in equity.^® But a sole creditor of a corpo- ration, holding a judgment, may maintain an individual ac- tion under sections 90 and 91 of the General Corporation Law against directors who have caused the assets of the corpo- ration to be transferred to another corporation without pro- viding for the payment of the plaintiff's claim if the rights of no other creditors are involved. However, where the rights of other creditors are involved, the action must be brought in a representative form for all the creditors. The liability of directors in such an action is several and the plaintiff may proceed against one or more of them without joining all. In such individual action against directors who have transferred the assets of th.e corporation without providing for the pay- ment of the plaintiff's claim, the recovery should be limited to such proportion of the value of the property transferred as the plaintiff's claim in connection with those of other creditors existing at that time bears to the value of the prop- erty transferred." 320. Action by director or officer against co-director or officer. By force of sections 90 and 91 of the General Corporation Law, any one of the directors of a corporation can bring and maintain an action to compel another trustee to account to the corporation, or to its creditors or stockholders, for money or property of the corporation illegally diverted by the de- fendant trustee from the corporate purposes.^* An action to enforce the remedies for the mismanagement of a corporation, provided by the statute, may be maintained by a duly elected trustee and vice-president of the corporation, although he in no manner signified his acceptance of his election to the offices 15. Steele v. Isman, 164 App. Div. 464, 183 N. Y. Supp. 440. 146, 149, 149 N. Y. Supp. 488. . 17. Buckley v. Stansfleld, 155 App. 16 People V. Equitable Life Assur Div. 735, 140 N. Y. Supp. 953, affd. 214 Soc," 124 App. Div. 714, 109 N. Y. N. Y. 679, 108 N. E. 1090. Supp 453; Davis v. Wilson, 150 App. 18. Gildersleeve v. Lester, 68 Hun Div. 704, 135 N. Y. Supp. 825; 532, 22 N. Y. Supp. 1026. Schwartzreich v. Beauman, 112 Misc. 382 CORPORATIONS. inquestioH, acceptance in such cases being usually presumed." A director can maintain an actioa against lais co-directors for mismanagement only by virtue of the fact that he holds office, hence such an action abates where the plaintiff is not reelected to office. The action does not survive merely be- cause the former director continues to be a stockholder nor by Adrtue of section 83 of the Civil Practice Act.^" It is not necessary to state in the title of an action brought by a director that he sues in a reipresentative capacity if the com- plaint alleges that he is a director.^ In an action by a director the corporation is properly made a party defendant to whom the individual defendants will be directed to account and pay overj^ and where a receiver of the corporate property is asked for, the; corporation should be joined as a party defendant.' The; acquiescence of all the stockholders of a corporation in the acts of its directors, in so dealing with its assets as to de- prive future creditors of the corporation of the payment of their just claims, will not avail as a defense to an- action brougjit by an officer of the corporation under section 90 of the. G[eneral Corporation Law.* An action by a director, under section 90 of the Greheral Corporation Law, to cancel a contract made by other directors and' for damages, is not a bar to a representative action by a stockholder for the same purpose.^ ' 'I '- '^r;? . : Y.:' . . - ,- .}'. -r ... .., 19, Halpin v. Miitual Bre-vving Co., Shulman v. Star Suburban Realty Co., izo App. Div. 583, 47 N. Y. Supi). 412. '1:3 App. Div. 759, 99 N. Y. Supp. ;419. 20. flamiTton v. Gibson, 145 App. 2. Higgins v, Applebaum, 183 App- Div. 825, 130 N. Y^^Stipp. 684. Div. -527, ,170 ,N. Y. Supp, 228. 1. Higgins V. Applebaum, ,183 App. , 3. Miller v_. Barlow, 78 App. Div. 331, Div. 527, 170 N. Y. Supp. 228. 79 N. Y. Supp. 964.' Complaint. — When a complaint mere- A trustee of a domestic corporation ly alleges that through a' conspiracy may, where he seeks no receiver,: main - certain of the defendants threaten to tain, without joining the corporation as remove the dirertors of a Corporatiian, a party defendant, an acti.on to pre- ineluding plaintiff, -from oflice -and have vent J)is ; cotrustees from makiiig a called a meeting of .stockholders for thi;eatened unlawful alienation of the that purpose, and that the corporation property of the corporation detrimental has collected moneys" from the sha,re- to it .and its stockholders.. Green v. holders and is paying it out without Compton, .41 Misc. 21, 83 N. Y. Supp. the order and direction of the board of 588. ; directors, and has called a meeting at 4. Halpin v. Mutual Brewing Co., 20 which an assessment is to be levied so App. Div. 583, 47 N. Y. Supp. 412. that $500 can be paid out for a pur- 5. Locwenstein v. Diamond Soda pose unknown to plaintiff as a director. Water M. ,Co., 94 App. Div. 383, 88 etc., it fails to state a cause of action. K. Y. Supp. 313. RIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 383 321. Liability of directors to account in equity for official misconduct generally. While courts of law generally treat the directors as agents, courts of equity treat them as trustees . and hold them to a strict account of any breach of the trust relation. For all practical purposes they are trustees when called upon in equity to account for their official conduct. And so directors of a corporation are charged with the duties of trustees and bound to care for its property and manage its affairs in good faith, and for a violation of that duty resulting in waste of its assets, injury to its property, or unlawful gain to themselves, they are liable to account in equity the same as ordinary trus- tees.^ Equitable jurisdiction extends to all culpable acts and omissions of the directors, by which the pecuniary interests of the corporation are or may be injured. And the corpora- tion has the right to call upon them to account, not only for all the property intrusted to their care, but also for all moneys furtively made by them at its expense. If they are treacher- ous to its interests and appropriate its property, or intention- ally waste its assets, or take money for official action, or " sell out ' ' by resigning and thus giving control to others, they are liable to account in equity to the corporation or its represen- tatives, not only for the rhoney or property in their hands, but also for such as they fraudulently disposed of or wasted, as well as for the damages naturally resulting from their of- ficial misconduct.'' Money received from an outsider by a 6. Bosworth v. Allen, 168 N. Y.. J57, tions of trust and confidence in order 165 61 N. E. 163. ^° secure or promote some selfish in- 7. Bosworth v. Allen, 168 N. Y. 157, terest, enough is then- averred to set a 166 61 N E. 163. court of equity in motion and to re- Equity will entertain an action quire an answer from the defendants against the directors of a corporation in ,;regar,d to the facts. Watkins t. by a creditor on his own behalf and Watkins & Turner Lumber Co., 11 that of all others, notwithstanding the App. Div. 517, 43 N. Y. Supp.. 41. charter gives a creditor an action of Action to recover property lost and debt -against the directors, and th« damages caused through conspiracy of corpdration is not a inecessary party directors and to annul contract made defen'daiit. Bauer v. Piatt, 72 Hun 326, in pursuance thereof.— When ■. the di- 25 N. Y. Supp. 426. rectors and officers of a corporation, Action by a stockholder to compel acting in pursuance of a conspiracy, re- delinquent ofScers of a corporation to signed their positions, and elected in account where it can fairly be gath- their places certa,in persons whom they ered from all the allegations of a com- knew to be irresponsible and untrust- plaint that the officers and directors of worthy, and placed in their possession a corporation have made use of rela- and under their management and eon- 384 COEPOBATIONS. director and president for procuring the outsider and his friends to be elected directors and given the control and man- agement, together with the property and effects of the cor- poration, is money obtained by virtue of his office, for which he must account to the corporation.^ Directors after wasting trol the property, rights and interests of the corporation, in consideration of certain unlawful payments to be made and contracts to be performed for their benefit by such new directors, and the property and assets of the corporation were, in consequence, wasted thereby, and by extravagant and unneeessary expenses paid and improvident con- tracts made by the substituted direct- ors, an action in equity for an account- ing may be maintained against the di- rectors who resigned in consequence of the conspiracy, to discover and fix the value of assets improperly vi'ithheld pursuant to the conspiracy, and of all property lost and damages caused by their wrongful acts, and to compel them jointly and severally to pay the aggregate amount thereof over to the corporation or a receiver thereof, and since it was part of the fraudulent confederation into which they all en- tered and part of the wrong intended and accomplished by them, to also set aside a written contract between one of them and the corporation whereby assets thereof were to be wrongfully diverted to him. Bosworth v. Allen, 168 N. Y. 157, 61 N. E. 163. Action by corporation against one of its trustees for damages for preventing consummation of advantageous con- tract. — In an action by a manufactur- ing corporation against one of its trus- tees, for damages for preventing the consummation by outside parties of » contract made by them with the corpo- ration to furnish certain advantageous inducements for the removal of its works, a non-suit is proper when it ap- pears that the trustee, in advising such parties that material farts in regard to the condition of the corporation had been concealed from them, performed only an obvious duty as a matter ot honest business dealing, and that thc'v was no act of the defendant which could be regarded in law as the proxi- mate cause of the abandonment of the contract, but the abandonment resulted from the report of an expert who ex- amined the condition of the corpora- tion at the suggestion of its president, after the trustee's disclosure. Hale v. Mason, 160 N. Y. 561, 55 N. E. 202. 8. Ineffective excuse for transfer of control. — Nor is it a defense to such action, oi' a justification of the direct- or's conduct that the transfer of the control of the corporation was for the purpose of reimbursing himself and other directors for moneys which they bad invested in the purchase of promis- sory notes issued h\ the corporation, but which were not legally colleotiblo from it. MeClure v. Law, 161 N. V. 78, 55 N. E. 388. Director's own wrong not a defense. — In such case, the claim that the di- rector's acts were illegal and unau thorized does not avail to render his own wrong a defense to an action brought by the receiver of the corpora- tion to recover from the director the money received by him, as money be- longing to the corporation. McCluic V. Law, 161 N. Y. 78, 55 X. E. 388. Money received for transfer of con- trol of corporation not followed into hands of holder of its invalid note. — One who, not beiuf; at the time a di- rector of the corporation or liaving any knowledge of tlie scheme to transfer its control, was paid out of money re- ceived by certain directors of an as- sessment life insuranc(^ company for the transfer of its control and prop- EIGHTS, DUTIES AND LIABILITIES OF DIEECTOKS, ETC. 385 funds of : corporation cannot relieve themselves from liability by a release granted by themselves to a co-director.^ The di- rectors of a corporation, which owns all the shares of stock of another corporation, are not answerable for acts of spoliation and waste by tlie directors of the latter company, although they chose such directors by reason of such ownership of the stock." .. _ ' 322. Equity jurisdiction conferred by statute. "The supreme court shall also have and exercise jurisdiction in equity, at the suit of a corporation, or of a receiver, or trustee in bankruptcy thereof, to compel one or more trustees, directors, managers or otlier officers of the cor- poration to account for injury to or losses of the funds, assets or property of the corporation, caused by or tlirough any neglect or failure of the defendants to perform, or for violation of, their duties. The court must, upon the applica- tion of either party, make an order directing the trial by jury of the issue of negligence, and for that purpose the questions to be tried must be prepared and settled as prescribed in section nine hundred and seventy of the code of civil procedure (now § 429 of the Civil Practice Act)." n The right of action to compel an officer or director of a cor- poration to account for property of the corporation, which it is claimed that he has unlawfully obtained, inheres in the cor- poration, and in the event of a dissolution of the corporation passes to the receiver thereof. The discharge of the receiver does not divest him of the cause of action — certainly not, where the order discharging him does not assume to dispose thereof.^^ A court of equity has jurisdiction to compel a di- rector of a corporation to account for secret protits from its funds made in violation of his trust, even if a part of the re- erty, the amount .of:i note held by as' added by L. 1913, ch. 633. him, executed by the corporation, is 12. Michel v. Betz, 108 App. Div. not liable for a retin-n of the money, 241^ 95 ]Sf. y. Supp.; 844. at the suit of the receiver of the cor- Stockholder may on his own motion poration, where, althougli the note was ^^ ^^^^ ^^^^ defendant to action not a binding oblig3,tio.i of the corpo- ^^,^^^^^ ^^ corporation against its offi- ration, it does not appear that the d'- cers • for mismanagement. Ithaca Gas- fendant, had parted with no value for • ^^^^^^ ^^ ^ Treman, 30 Hun 212. the money paid him. McClurc v. ^^^ stockholders of a bank have no Trask 161 N. Y. 82, 55 N^E^407. ^^ ^^ ^^^^ ^^ ^^ 9. Gilbert v. Fmch, 173 N. Y, 455, ut u • »/. -vT rK TOO t'"" brought by a receiver thereof 00 JN. Jl>. loo. . : . \ 10. O'Connor ^. Long Island- T^ac- "gamst ^ certain of its directors to re- tion Co., 15 M>c, 501, 37 N. Y; Supp. '''>''-er th? damages occasioned by their <)a3 . iiegUgenpe and misconduct. jCimba,!! v. 11. General Coipoiation law,, § 91a, Ives, 30 Hun 568. 25 ' 386 CORPORATIONS. lief to which the plaintiff may be entitled could be had in an action at law. And it is no defense to such a suit that the plain- tiff has an adequate remedy at law. Officers of a corporation when sued in equity should not be allowed to set up as a counterclaim matters wholly unrelated to the cause of action and which would tend to prejudice the plaintiff by unneces- sarily complicating the issues. Such claims unrelated to the action may be asserted by the defendant in an independent action.^^ This section applies to foreign corporations, and authorizes an action against one guilty director without join- ing his co-directors.^* 323. Effect of statute. The effect of section 91a of the General Corporation Law is to do away with the distinction between strict actions for an accounting of property actually received and for wrongful acts, and to authorize a single comprehensive action in equity in which the directors or officers of a corporation may be called to account for all of their acts while in office, whether the said acts consisted of the actual misappropri- ation of funds or mere negligence or neglect of duty, resulting in damage.^^ An action for damages for the misfeasance or nonfeasance of a director or officer of a corporation being an action at law subject to the rules and restrictions governing such actions, could not be joined with a suit for equitable re- lief, prior to the eijactnc^ent of section 91,a of the General Cor- poration Lfaw.^^ 13. Woolson 'Spice Co. v. Columbia App. Div. e2, 38 X. Y. Rupp. 716; Trust Co., 193 App. Div. 661, 184 N. Y. Brown v. Utopia Land Co., 118 App. Supp. 484. Div. 364, 103 N. Y. Supp. 50; Mutual 14. German American Coffee Co. v. Life Iris. Co. v. Gillette, 119 App. Div. Diehl, 86 Misc. 547, 149 N. Y. Supp. 430, 104 N. Y. Supp. 683; People v. 413, affd. 167 App. Div. 928, 152 N. Y. Equitable Life AssUr. Soc, 124 App. Supp. 1.113, revd. on other grounds, 216 Div. 714, 109 N. Y. Supp. 453; Moran N. Y. 57, 109 N. E. 875. * v. Vreeland, 81 Misc. 664, 143 N. Y. 15. German American Coffee Co. v. Supp. 522; German American Coffee Diehl, 86 Misc. 547, 552, 149 N. Y.' Co. v. Diehl, 86 Misc. 547, 551, 149 N. Supp. 413, affd. 167 App. Div. 928, 152 Y. ,Su,pp. 413, affd, 167 App. Div. 9S8, N. , Y. Supp. 1113, revd. on pther 152 N. Y. Supp. 1113, rwd.- on other grounds, 216 N. Y. 57, 109 N. E. 875; grounds, 216 N. Y. 67, 109 N. E. 875. Sherwood v. Holbrook, 98 Misc. 668, Decisions prior to enactment of sec- 163 N. Y. Supp. 326, affd. 178 App. tion 91a of General Corporation Law. — Div. 4'63, 155 N. Y. Supp. 514, Whether the receiver of a corporation, 16. O'Brien v. Fitzgerald, 143 N. Y. whose directors iiave been guilty of of- 377, 38 N. E. 371; Higgins v. Tefft, 4 ficial misconduct, may maintain an ac- RIGHTS, DUTIES AND LIABILITIES 01? DIRECTORS, ETC. 387 324. Joinder of causes of action: receiver. A cause of action against the directors of a corporation brought under section 90 of the General Corporation Law can- not be united with a cause of action against their predecessors or successors in office, unless the acts complained of were done pursuant to a scheme or conspiracy, or there be allegations connecting the acts of one set of directors with those of their tion in equity against the directors for an. accounting or must maintain an ac- tion at law for damages, depends upon whether there is any particular prop- erty of the corporation with which, or the proceeds of which, the directors are chargeable; if there is such property or the proceeds thereof, an action 'iii equity will lie, but if there is not, the remedy is at law. Mabon v. Miller, 81 App. Div. 10, 80 N. Y. Supp. 979. Where an action is to hold persons responsible to the receiver of a corpo- ration for a neglectful and wrongful performance of their duties as direct- ors and to recover the losses sustained by the corporation, the action is one at law, and something more is required to warrant the intervention of a court of equiiy than mere allegations showing that the acts complained of are numer- ous and complicated, that they are dif- ficult of ascertainment without a dis- covery with respect' to thetn, and that a multiplicity of actions would be necessary if all the directors who were in ofEce during the whole or a part of the time within which the acts com- plained of were committed could not be associated as defendants in one ac- tion. Dykman v. Keeney, 154 ?s^. Y. 483, 48 N: E. 894. An action by the receiver of an in- solvent life insurance company to com- pel a trustee to account for assets fraudulently misapplied by him, in- volves a cause of action of which, under the old system, the courts of law and of chancery had concurrent jurisdiction, and not one which was solely cognizable by the Court of Chan- cery. Mason v. Henry, 152 N. Y. 529, 46 N. E, 837. A complaint in an action brought by the receiver of a corporation against the directors thereof to compel the lat- ter to account for their wrongful acts in dissipating, misappropriating and di- verting the property of the corpora- tion, and, as an incident to the ac- counting, to recover the damages re- sulting from their otficial misconduct, states a cause of action in equity. It is not an objection to such a complaint that several acts of misconduct upon the part of the directors are alleged or that all of the directors did not take part in each of said acts and are not equally culpable, when it appears that the several acts were done in further- ance of a common purpose, that they 'constitute a breach of trust and are connected together and relate to the same matter. Maboii v. Miller, 81 App. Div. 10, 80 N. Y. Supp. 979. Suit by corporation; complaint; damages. — Complaint in an action by a corporation against a director to re- cover damages caused by the defend- ant's neglect or disregard of his duties in that he failed to advise the plaintiff that the general manager of another corporation, which jjlaintiff had organ- ized as an aid to its business and prac- tically owned, was misapplying the funds of his principal and using them for the benefit of defendant and his as- sociates in a rival business examined, and held, to state a cause of action. The measure of plaintiff's damage is the diminution in the value of its stock caused by defendant's failure to per- 388 COBPOKATIONS. predecessors or successors.^^ One owning bonds issued by a corporation and received by a junior mortgage on its prop- erty cannot join a cause of action against the corporation to recover the proceeds of a sale of the mortgaged property under. the senior mortgage with an action against the direct- ors of the corporation individually to recover the proceeds of said sale which are alleged to have been wrongfully paid to the general creditors of the corporation in violation of the lien of the junior mortgage.^^ A receiver of the property of a corporation, to be appointed by the court only, may be ap- pointed in an action brought as prescribed in article four of the General Corporation Law.^^ 325. Bringing in creditors to prove claims. In an action against a trustee, director or other officer of a corporation based on official misconduct, the statute pro- vides that: "In sueli an action, the court may, at any stage of the action, before or after final judgment, make an order requiring all the creditors of the corporation to exhibit and prove their claims, and thereby make themselves parties to the action, in such a manner, and in such a, reasonable time, not less than six months from the first publication of notice of the order as the court directs; and that the cieditors, who make default in so doing, shall be precluded from all benefit of the judgment, and from any distribution which may be made thereunder, e.vcept as hereinafter provided. Notice of the order must be given by publication, in such nevi^spapers, and for suoh a length of time, as the court directs. Notwithstanding such order any such creditor who shall exhibit and prove his claim in the manner directed thereby, with proof, by affidavit or other- wise, that he has had no notice or knowledge thereof in time to comply there- with, any time befoi-e an order is made directing a final distribution of the assets of such corporation, shall be entitled to have his claim received, and shall have the same rights and benefits thereon, so far as the assets of sucli form his duty to il. Geimral Rubber ment of the action) falls within the Co. V. Benedict, 164 App. Div. 332, 149 six years' Statute of Limitations. N. Y. Supp. 880, affd. 215 N. Y. 18, 109 Mason v. Henry, 83 Hun 546, 31 N. Y. ^- B. 96. Supp. loes, affd. 152 N. Y. 529, 46 Statute of Limitations.— An action N. E. 837. brought by the receiver of an insolvent 17. People \ . Equitable Life Assur- corporation against one of its trustees ance Society, 124 App. Div. 714, 109 for the recovery of damages for alleged N. Y. Supp. 453. misconduct in ofiice (unless it is found 18. Cass v. Realty Securities Co., 148 by the court that the defendant's mis- App; Div. 96, 132 X. Y. Supp. 1074, conduct was not discovered until aflfd. 206 N. Y. 649, 99 N. E. 1105. within six years before the commence- 19. General Corporation Law, § 30(8. BIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 389 corporation then remaining undistributed may render possible, as if his claim had been exhibited and proved within the time limited by such order." 20 326. Injunction staying action by creditors. In an action broug^ht against tte trustees, directors or other officers of a corporation based on their official misconduct, the statute provides that: "In suoh an action, the court may, in its discretion, on the application of either party, at any stage of the action, before or after final judgment, and with or without security, gi-ant an injunction order, restraining the creditors of the corporation from bringing actions against the defendants, or any of them, for the recovery of a sum of money, or from taking any further proceedings in such actions, theretofore commenced. Such an injunction has the same effect, and. except as otherwise expressly prescribed in this section, is subject to the same provisions of law, as if each creditor, upon whom it is served, was named therein, and was a party to the action in which it is granted." 1 327. Injunction suspending business or restraining oificers from acting. "An injunction order, suspending the general or ordinary business of a -cor- poration, or suspending from office, or restraining from the performance of his dutie.s., a trustee, director, or other officer thereof^ can be granted only by the court, upon notice of the application therefor, to the proper officer of the cor- poration, or to the trustee, director, or other officer enjoined. If such an in- junction order is made, otherwise than as prescribed in this section, it is void." 2 328. Abatement of action. An action brought by a receiver of a corporation against its directors to compel them to account for property and assets of the company alleged to have been diverted and mis- applied by them, does not abate upon the death of one of the directors, and may be continued against his personal repre- sentative.^ It was held that a cause of action arising under 20. General Corporation Law, § 303. less seciu'itjes, . survives his death, the 1. General Corporation Law, § 302. action being within section 120 of the 2. General Corporation Law, § 305. Decedent Estate Law. Seventeenth 3. O'Brien v. Blaut, 17 App. Div. 288, Ward Ba,nk v. Webster, 67 App. Div. 45 N. Y. Siipp. 217; Pierson v. Morgan, ^^S,' 73 N. Y. Supp. 648. 4 N. Y. Supp. 898, 17 Civ. Pl-o. R. 124, ^ ^^^ ^^ ^^^^ ^^^^^ ^^^^^ ^9 23 St. Rep. 382, affd. 121 N. Y. 705, 24 , \.. „ , t a^^^ -.o.r. ivcp. uo , 'of the General Insurance Act of 1849, Action by bank against its presi- ^^''^ ""^^^ ^^^ ^"'^P^'-^frs of. a aent.-An action by a bank against its st<«=k company organized under the act president to recover damages resulting liable jointly and severally for debts of from the acts of the president in un- the company until the whole amount lawfully, imprudently and negligently, of capital issued by the company had without the authority of the bank, been paid in and a certificate thereof loaning moneys of the bank upon un- recorded, survived the death of the de- marketable and comparatively worth- fendant. Chase v. Lord, 77 N. Y. 1. 390 COEPOKATIONS. the Laws of 1848, chap. 40, sec. 23, providing that, if the in- debtedness of any corporation shall exceed the amount of its capital stock, the trustees of such company assenting thereto shall be. personally liable for such excess, survived, and might be brought against the administrator of such trustee.* But it was held that the once common cause of action against the trustees of a corporation for failure to make and file its an- nual report was penal in its nature and did not survive the death either of the creditor or the trustees.^ Where, however, death does not occur till after the recovery of judgment, the cause of action is deemed merged therein and the judgment does not abate while an appeal was pending therefrom." 329. Compelling ofScer and agents to testify. "In an action, brought as prescribed in article fifth, siicth or seventh. (General Corporation Law), a stockholder, officer, alienee, or agent of a corporation, is not excused from answering a question, relating to the management of the corporation, or the transfer or disposition of its property, on the ground' that his answer may expose the corporation to a forfeiture of any of its corporate rights, or will tend to convict him of a criminal offense, or to subject him to a penalty or forfeiture. But his testimony shall not be used, as evidence against him, in a criminal action or special proceeding. ' ' 7 330. Proof of misconduct. The official misconduct which, within the meaning of that phase as used in section 90 of the General Corporation Law, will support an action brought thereunder to charge the di- rectors of a corporation with. that offense, must exceed mis- feasance and amount to actual malfeasance in office. The mere misconception of his rights, and impropriety and un- lawfulness of action, by a director of a corporation afford no ground for convicting him of malfeasance in office, which necessarily involves a corrupt intent.* And where an action is brought by a stockholder or a creditor of a corporation, under section 90 of tke General Corporation Law, to compel 4. McComb v. Kellogg, 1 N. Y. Supp. 62 Hun 543, 18 N. Y. Supp. 923; Com- 206, 16 St. Rep. 16. pare Bonnell v. Griswold, 15 Abb, N. C. 5. Stokes v. Stickney, 96 N. Y. 323; 470. Brackett v. Griswold, 103 N. Y. 425, 6. Blake v. Griswold, 104 N. Y. 613, 9 N. E. 438; Blake \. Griswold, 104 11 N. E. 137; Carr v. Rischer, 119 N. Y. 6J3, 11 N. E. 137; Carr v. N. Y. 117, 23 N. E. 296; Hart v. Waah- Rlscher, 119 N. Y. 117, 23 N. E. 296; burn, 62 Hun 543, 16 N. Y. Supp. 923. Bank of California v. Collins, .5 Hun 7. General Corporation Law, § 301. 209; Boyle v. Thurber, 30 Hun 2j!l, 2 8. Stokes v. Stokes, 23 App. Div. N. Y. Supp. 789; Hart v. Washburn, 552, 48 N. Y. Supp. 722. EIGHTS, DUTIES AND LIABILITIES OF DIRECTORS, ETC. 391 the defendants to account for their official conduct in ihe management and disposition of the fvmds and property of the corporation, the defendants cannot be ordered to account until proof has been made and a determination has been reached that there has been official misconduct upon their part. The fact that the books of the corporation show that a defendant, an officer of the corporation, is indebted to it for moneys received from it to his own use, does not justify the court in such an action in directing such defendant to account. The gist of such an action is not the debt, but the fact of of- ficial misconduct, and unless that is found the court has no power to proceed further in the action and direct an account- ing.^ If the object of an action is to compel the officers of a corporation to account for official misconduct, and not to pro- cure the examination of a long account, a reference cannot be ordered to take and state an account between the defend- ants and the corporation of which they are officers, until there is some proof to sustain the allegations that there has been some official misconduct and a determination to that effect has been reached by the trial judge and is put into the form of an interlocutory judgment directing an accounting.^" 331. Judgment. A judgment, rendered in an action brought under sections 90 and 91 of the General Corporation Law, compelling a trus- tee of a corporation to account for property of the corpora- tion wrongfully appropriated by him, and to pay over the value thereof in money to a receiver of the corporation ap- pointed by the court for that purpose, may be enforced by a proceeding as for a contempt, under subdivision 4 of section 505 of the Civil Practice Act, even if ah execution could have issued thereon.^^ 332. Criminal liability for ofadal misconduct. "A director of a stock corporation, who concurs in any vote or act of the directors of such corporation, or any of them, by which it is intended: "1. To make a dividend, except from the surplus profits arising from the business of the corporation, and in the cases and manner allowed by law; or, "2. To divide, withdraw, or in any manner pay to the stockholders, or any 9. Stokes V. Stokes, 91 Hun 605, 36 11. Gildersleeve v. Lester; 68 Hun N. Y. Supp. 350. 535, 22 N. Y. Supp. 1028, affd. 139 10. Stokes v. Stokes. 87 Hun 152, 33 N. Y. 608, 35 N. E. 203. X. Y. Supp. 1024. 392 COBPOBATIONS. of them, any part of the capital stock of the corporation; or to reduce such capital stock without the consent of the legislature; or, "3. To discount or receive any note or other evidence of debt in payment of an instalment of capital stock actually called in, and required to be. paid, or with intent to provide the means of making such payment; or, "4. To receive or discount any note or other evidence of debt with intent to enable any stockholder to withdraw any part of the money paid in by him on his stock ; or, "5. To apply any portion of the funds of such corporation, except surplus profits, directly or indirectly, to the purchase of shares of its own stock, "Is guilty of a misdemeanor. ' ' An officfer or director of a stock corporation who : ' ' 6. Issues, participates in issuing, or concurs in a vote to issue any increase of its capital stock beyond the amount of the capital stock thereof, duly au- thorized by or in pursuance of law; or, "7. Sells, or agrees to sell, or is directly or indirectly interested in the sale of any share of stock of such corporation, or in any agreement to sell the same, unless at the time of such sale or agreement lie is an actual owner of such share. "Is guilty of a misdemeanor, punishable by imprisonment for not less than six months, or by a fine ncit exceeding five thousand dollars, or by both. ' ' 12 Subdivision 5 of this section does not forbid a corporation from purchasing its own stock, nor does it forbid it from en- tering into a contract to do so. What it does forbid is the consummation of such a contract by making the purchase otherwise than out of surplus." ' ' A director, officer, agent or employee of any corporation or joint-stock asso- ciation who : ' ' 1. Knowingly receives or possesses himself of any of its property otherwise 12. Penal Law, § 664. ' While persons engaged in violatinu- 13. Richards v. Wien«r Co., 145 subdivision 5 of this section, forbid- App. Div. 353, 129 N. Y. Supp. 951, xling banking institutions from using aflfd. 207 N. Y. 59, 100 N. E. 592; see their funds other than surplus profits also Hyman v. New York Urban Real -^ ^^^ purchase of their own capital Estate Co., 79 Misc. 439, 14# N. Y. , , . . , ,. , j- . ■ „ , ' > V stock, or m violating subdivisions 2 and \^' , ■ , 3 of section 065 of the Penal Law, An insurance company can only pay ,. ., , . , , , -. with respect to making false reports, dividends out of surplus and profits; '^ * '■ ' they canaiot lawfully be paid out of ™*y ^^ personally estopped from capital contributed by shareholdeTS for claiming that their transactions in re- the purpose of carrying on the com- 1^*'°" thereto were other than as pany's business and for the protection shown by their records, such estoppel of its creditors. Such dividends are is not effective as against the people in prohibited by the Penal Law and the a criminal prosecution for larceny. Insurance Law. Berryman v. Bankers' People v. Cummins, 153 App. Div. 93, Life. Insurance Co., 117 App. Div. 730, 138 N. Y. Supp. 517, affd. 209 N. Y. 102 N. Y. Supp. 695. 283, 103 N. E. 169. RIGHTS, DUTIES AND LIABILITIES OF DIKECTORS, ETC. 393 than in payment for a juat demand, and with intent to defraud, omits to make or to cause or direct to be made a full and true entry thereof in its books and accounts; or, "2. Makes or concurs in making any false entry, or concurs in omitting to make any material entry in its books or accounts; or, "3. Knowingly (a), concurs in making or publishing any written report, ex- hibit or statement of its affairs or pecuniary condition containing any material statement which is false, or (b), omits or concurs in omitting any statement required by law to be contained therein; or, "4. Having the custody or control of its books, wilfuUy refuses or neglects to make any proper entry in the stock book of such corporation «is required By. law, or to exhibit or allow the same to be inspected, aind extracts to be taken therefrom by any person entitled by law to inspect the same, or take extracts therefrom; or, "5. If a notice of an application for au injunction; affecting the property or business of such joint-stock association or corporation is served upon him, omits to disclose the fact of such service and the time and place of such applica- tion to the other directors, officers and managers thereof; or, "6. Refuses or neglects to make any report or statement lawfully required by a public officer, "Is guilty of a misdemeanor." w 333. Presumption of knowledge of corporate condition in criminal prosecution. "It is no defense to a prosecution for a violation of thg provisions of this article and article twenty-six, that the corporation is a foreign corporation, if it carries on business or keeps an office therefor in this state. The term 'director' as used in this article and article twenty-six (Relating to Banking) includes any of the persons having, by law, the direction or managem€nt of the affairs of a corporation, by whatever name described. A director of a corporation or joint- stock association is deemed to have such a knowledge of the affairs of tha corpo- ration or association as to enable him to determine whether any act, proceeding or omission of its directors is a violation of this article and article twenty-six. If present at a meeting of the directors at which any act, proceeding or omission of such directors in violation of this article and article twenty-Six occurs, he must be deemed to have concurred therein, unless he at the time causes or in writing requires his dissent therefrom to be entered on the minutes of the directors. If absent from such meeting, he must lie deemed, to have concurred in any such violation, if the facts constituting such violation appear on the record or minutes of the proceedings of the board of directors, and he remains a director of the corporation for six months thereafter without causing or in writing requiring his dissent from such violation to- be 'entered on such record 6f minutes. "15 _ ■ 14. Penal Law, §665. reports, either under this section or In Davenport v.. Prentice, 136 App. section Zl of the Banking Law, as iDiv. 451, 458, 110 N. Y. Supp. 1056, amended in 1905. the action rested upon negligence and 15. Penal tiaw, § 667. was not brought for the falsity of the 394 C0BP0RATI02S'S. CHAPTEE XX. Liability op Dibectobs and Opficebs fob Cobpobate Acts and Debts. * 334. Liability of directors where loans made to stockholders. 335. AVroijgful distribution of assets. . 3S6., Liability for. participating in prohibited transfers liy corporation. 33T. Declaration of unauthorized dividends. 338. Unauthorized dividends on stock without nominal or par value. 339. Debts by corporation issuing stock without nominal or par value incurred before capital paid in. 340. False certificates, reports or public notices, 341. Enforcement of liability generally. 342. Action to enforce liability for making false reports. 343. Evidence: Burden of proof: Damages. 344. Criminal responsibility for corporate acts. 334. Liability of directors where loans made to stockholders. "No loan of monsys shall be made by any ■stock corporation, except a moneyed corporation, or by any officer thereof out of its funds to any stockholder therein, nor shall any such corporation or officer discount any note or other evidence of debt, or receive the same in payment of any instalment or any part thereof due or to become, due on any stock in such corporation, or receive or discount any note, or other evidence of debt, to enable any stockholder to withdraw any part of the money paid in by him on his stock. In case of the violation of any pro- vision of this section, the officers or directors making such loan, or assenting thereto, or receiving or discounting such notes or other evidences of debt, shall, jointly and severally, be personally liable to the extent of such loan and interest, for all the debts pf the. corporation contracted before the repayment of the sum loaned, and to the full amount of the notes or other evidences of debt so re- ceived or discoujited, witli interest from the; time such liability. accrued." 16 It is the established law of this state that the capital of a corporation is regarded as a substitute for the personal lia- bility which subsists yS private ownerships and as a fund set apart and pledged for the payment of its debts. While a cor- poration is continuing its business, seeking credit and incur- ring liabilities, or while, after it has ceased to do business, it has outstanding liabilities, its directors or stockholders can- not lawfully and with immunity from personal liability to the corporation reduce the capital, which is the product of its capital stock as certified in its incorporating certificate, by 16. Stock Corporation Law, § 29. LIABILITY OF DIRECTORS AND OFFICERS. 395 appropriating or squandering it or giving it away." The principal object of the statute is to prevent a reduction of the capital under cover of loans to stockholders. It is intended for the protection of creditors.^* In order to create the lia- bility imposed there must have been a loan of money both in law and in fact, that is, an actual loan of money in such a f grm as to create an indebtedness and an absolute liability for its repayment by the borrower.^^ And furthermore, the officer or director sought to be held for an advance made to a stock- holder must have made the loan himself or assented thereto.^" 335. Wrongful distribution of assets. Directors cannot effect a voluntary dissolution of a corpo- ration by selling and transferring all of its property and assets and distributing the proceeds among the stockholders without providing for the payment of creditors, even though the purchaser assumes the payment of the corporate debts.^ Aind if they sell and transfer the assets thereof without com- pliance with the provisions of the General Corporation Law and the Stock Corporation Law, they cannot relieve them- selves from personal liability in a suit by a judgment creditor of the corporation by merely alleging that at the time of the transfer of the assets a fund was placed in trust for the pay- ment of all debts, and, that the plaintiff by failing to present his claim lost his rights. To set aside a fund for the purpose of paying debts, but without paying them, is no defense against a creditor whose judgment has been^made worthless by the 17. In an action by a judgment amount of the loan, with interest. creditor of a domestic corporation for Hemsley & Co., Ltd., v. Duncan Co., an accounting by the individual de- inc., 98 Misc. 338, 164 n! Y. Supp. 282. fendants of their acts as directors of xs. Nellis Co. v. Nellis, 62 Hun 63, the corporation it appeared that other g^^ 16 N. Y. Supp. 545. than plaintiff it had no creditor ex- \^ Billings v. Trask, 30 Hun 314. cept one of, the defendants ^v^o made ^^ j^^^^.^^. ^ g^.^j^^ ^24 N. Y. 40, a claim for balance due on salary, and that he, a stockholder of the coipora- tion, with the knowledge and consent of its board of directors, himself and tlie loans to such treasurer or assented wife borrowed $5,000 of the corpora- to them, and hence no recovery can be tion on his note, no part of which had had therefor against his representa- been paid, it was held that the facts tives. brought the case within section 29 of 1. Flaum v. Kaiser Bros. Co., 66 the Stock Corporation Law, and that Misc. 586, 589, 122 N. Y. Supp. 100, the plaintiff was entitled to recover as affd. 144 App. Div. 897, 129 N. Y. against the individual defendants the Supp. 1122. 120 N. E. 60, holding that there was no evidence that the decedent knew of 396 CORPOEATIONS. sale of all tlie debtor's proiperty, without notice, and the di- vision of the proceeds among the stockholders and directors.^ A corporation while a going concern, incurring debts and lia- bilities, cannot give to a stockholder and director thereof, for the benefit of another stockholder, a part of the capital. Such an act is a violation of the statute and the pHnciples of the common law, and an officer of the corporation who partici- pates in such act and thereby bestows upon himself a substan- tial part of the capital of such corporation is liable in an ac- tion at law by the trustee in bankruptcy for wasting the assets of the corporation.^ 336. Liability for participating in prohibited transfers by corporation. "No corporation which shall have refused to pay any of its notes or other obligations, when due, in lawful money of the United States, nor any of its ofl&cers or directors, shall transfer any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value of the property paid in caslv^ No conveyance, assignment or transfer of any property of any such corporation by it or by any officer, director or stoekliplder thereof, nor any payment made, judgment suffered, lien created or security given by it or by any officer, director or stockholder when the corporation is insolvent or its solvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation, shall be valid, ■except that laborers' wages for ser- vices ^shall be preferred claims and be entitled to . payment before any other creditors out of the corporation assets in excess of valid prior liens or incum- brances. . No corporation formed under or subject to the banking, insurance or railroad law shall make any assignment in contemplation of insolvency. Every person receiving by means of any such prohibited act or deed any property of the corporation shall be bound to account therefor to its creditors or stock- holders or other trustees. No stockholder of any such corporation shall make any transfer or assignment of his stock therein to any person in contemplation of its insolvency. Every transfer or assignment or other act done in violation of the foregoing provisions of this section shall be void. No conveyance, assign- ment or transfer of any property of a corporation formed under or subject to the banking law, exceeding in value one thousand dollars, shall be made by such corporation, or by ally officer %r director thereof, unless authorized by previous resolution of its board of directors, except promissory notes or other evidences of debt issued or received by the officers of the corporation in the transaction of its ordinary business, and except payments in specie or other current money or in bank bills made by such officers. No such conveyance, assignment or transfer shall be void in the hands of a purchaser for » valuable consideration without notice. Every director or officer of a corporation who shall violate or be con- 2. Darey v. Brooklyn & N. Y. Ferry Supp. 975. Co.. 196 N. Y. 99, 89 N. E. 461; Shalek 3. Hazard ,-. Wight, 201 N. Y. 399, V. Jetter, 171 App. Div. 364, 155 N, Y. 94 N. E. 855. LIABILITY OF-DIRBCTOES AND OFFICERS. 397 ceriied in violating any pl-oyisions of tbis section, shall; be personally liable to the creditors aaid stockljolders of the corporation of which he shall be director or an officer to the full extent of any loss ; they may respectively sustain by such violation." 4 The legislature by the Sjection in question extended the doctrine, administered by courts of chancery,, that the assets of a corporation constitute a trust fund for the benefit of its creditors. The liability created by this statute against directors and officers is for the loss sustained by creditors through wrongful acts of directors and officers, by which the funds of the corporation have been depleted, and in- stead' of requiring that the action shall be brought by, or in the right of, the corporation to restore its funds, the legis- lature gave a cause of action to the creditors and stockholders in their own right to recover the dianlages sustained.^ There- fore an injured creditor is not pledged to seek or enforce his remedy through the medium of a creditor's or stockholder's or trustee's suit in equityfor an accounting, but may bring an independent action to recover the damages which he has sus- tained. A suit for an accounting would seem to b.e one to reach the specific property or. its proceeds, while the other is a direct action to recover jud^nent for the damages sustained by reason of the wrongful acts of the directors' or officers.^ Officers who aid and abet an illegal and prohibited use of the assets of the corporation are equally liable with those who procure a part or the whole of the assets as a preferential payment.'' And an officer of a corporation may, without act- ing officially, violate the statute by inducing other officers to 4. , Stock Corporations Law, § 66. Agnelli V. Shatzin, 68 Misc. 329, 123 As to illegal transfers generally, see N. Y. Supp. 797. post, par. 386 et seq. The Municipal Court of the City of 5. Caesar v. Bernard, 136 App. Div. jfew York has jurisdiction of an ac- 724, 727, 141 N. Y. iSupp. 659, affd. 209 ,.-^^ brought by a judgment creditor of N. Y.' 370, 103 N; E. 1122; ^^ insolvent corporation against its di- A complaint in an action by one ^,^^^^^^ ^^^ ^^^.^^ ^ ^^.^^^^^^ ^^ ^^j .^^ claiming to be a creditor of a corpora- T,-i,i. j i, a.- an „r *. , ^, , .,. , i!4.t. „ property, prohibited by section 66 of tlon against the president of the corpo. "^ '^ •" ^ ■> t, ^ ^ i. „ . / t u„ +1, ^Av„n the Stock Corporation Law, Trustees ration, alleging transfers by the corpo- " "^ f ration to the defendant in violation of of Masonic Hall v. Fontana, 99 Misc. this section, but which does not allege 497, 164 N. Y. Sup>. 370. any loss to have been sustained by the 6. Pennsylvailia R. Co. v. Pedrick, plaintiff by reason of the Violation of 222 Fed. 75. the statute, fails to state facts suffi- 7. Pennsylvania R. Co. v. Pedrick, eient to constitute a cause of action. 222 Fed. 75. 398 COBPOKATIONS. transfer assets of the corporation in violation of law either to themselves or to another, especially where he derived a benefit therefrom. It is sufficient to charge such officer with being " concerned '' in the illegal disposition of corporate property where it is shown that he advised, ratified, approved and assented to the illegal transfer, and through its execution received payment of a note of the corporation held by him."* Directors who made the preferential payments can only be held liable to the extent of any loss sustained by the creditors of the corporation by reason thereof,' that is, the sum plain- tiff would have received had the property of the corporation, upon its being wound up, been converted into money and ap- plied to the payment of its debts pro rata.^° The creditors of a corporation may maintain an action under the statute against directors and officers, although their claims were not reduced to judgment at the time of the illegal transfer .^^ In an action against directors and officers under the statute a judgment obtained against the corporation without fraud or collusion is competent evidence against officers and directors who have made prohibited transfers.^^ 337. Declaration of unauthorized dividends. 'The directors of a stock corporation shall not make dividends, except from 8. Caesar v. Bernard, 156 App. Div, full extent of any loss" sustained 724, 737, 141 N. Y. Supp. 669. through the violation of the statute. 9. Sherwood v. Holbro'ok, 98 Misc. if the corporation retains sufficient as- 668, 163 N. Y. Supp. ' 326, affd. 178 g^tg ^g discharge its obligaiicns to App. Div. 462, 165 N. Y. Supp. 514. creditors, the latter sustain no loss. 10. Trustees of Masonic Hall w rp, i i i ^i ^- i • ■■ . „ „ „ The loss IS measured by the amount Fontana, 99 Misc. 497, 164 N. Y. Supp. 4- ^ , , , ,,. ., , . i. . ■ i.1. vifhieh could not be satisfied bv execu- 370, holding that ui ascertaining the •' liabilities of the corporation neither t'°" '" ™n«equence of a violation of rent accruing . after the making of the "'^ ^ta^"'"- Caesar v. Bernard, 156 prohibited transfer, nor the loss suf- -'^PP' Mv. 724 141 N. Y. Supp. 659, fered by the lessor in reletting the affd. 209 N. Y. 570, 103 N. E. 1122. premises at a lower rental, is to be in- 11. Kain v. Larkin, 4 App. Div. '209, eluded, since they do not constitute 38 X. Y. Supp. 546; Ginsberg v. Aulo- plaintiff a creditor who had suffered mobile Coaching Co., 151 App. Div. 627, loss by reason of such transfer. 136 >f. Y. Supp. 354; Caesar w Ber- But this section, prohibiting certain nard, 156 App. Div. 724, 141 N. Y. transfers to officers or stockholders of Supp. 659, affd. 209 N. Y. 570, 103 a corporation, makes the directors and X. E. 1122. officers making the transfers personally 12. Hastings \. Dre.w 76 N. Y. 9; liable to creditors, not for the debts of Caesar v. Bernard, 156 App. Div. 724, the corporation, but so far as is neces- 141 X. Y. Supp. 659,. affd. 209 N. Y. sary to indemnify creditors "to the :>70, 103 X. E.. 1122. LIABILITY OF DIRECTORS AND OFFICERS. 399 the surplus profits arising from the business of such corporation, nor divide, withdraw or in any way pay to the stockholdera or any of them, any part of the capital of such corporation, or reduce its capital stock, except as authorized by law. In case of any violation of the provisions of this section, the directors under whose administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large upon the minutes of such directors at the time, or were not present when the same happened, shall jointly and severally be liable to such corporation and to the creditors thereof to the full amount of any loss sustained by such corporation or its creditors respectively by reason of such withdrawal, division or reduction. But this sec- tion shall not prevent a division and idistribution of the assets of any such cor- poration remaining after the payment of all its debts and liabilities upon the dissolution of such corporation or the expiration of its charter; nor shall it prevent a corporation from accepting shares of its capital stock in complete or partial settlement of a debt owing to the corporation, which by the board of directors shall be deemed to be bad or doubtful." 13 The liability imposed by statute iipon directors of a stock corporation who declare a dividend except from surplus profits, is to be treated as a provision for indemnity against the loss which the corporation or its creditors may sustain from the payment of an illegal or unauthorized dividend.^* And it is therefore confined to the loss sustained by the corpo- ration or its creditors by the wrongful declaration and pay- ment of divideiids.^" A director, who is not present when a;n unauthoriezd dividehd'is declared, is not liable under the statute, even though he is present at a subsequent meeting 13. Stock Corporation Law, § 28. liability is confined to the loss sus- As to dividends generally, see ante, tained by the corporation or its credit- chap. XIII. ors from the declaration and payment 14. Excelsior Petroleum Co. v.Iiacey,' of the dividend. It would be an un- 63 N. Y. 422; Dykman v. Keeney, 16 reasonable eonstruction to hold that if App. Div. 131, 45 N. Y. Supp. 137, directors, acting in good faith and in affd. 160 X. Y. 677, 54 N. B. 1090. the belief that the surplus earnings of 15. Shfiw V. Ansaldi Co., Inc., 178 , the corporation warranted , it, should App. Div. 589, 165 N. Y. Supp. 872. declare a dividend amounting to The amendment made by L. 1901, $10,000, which impaired the capital chapter 354, made a material change only to the extent of $5,000, they in the law, for prior thereto the di- should be compelled to restore the en- rectors were expressly made liable to tire amount of the dividend declared the corporation and to its creditors for I am of opinion that the purpose ot the full amount of "the cai)ital of such the statute would be subserved in such corporation so divided, withdrawn, case by requiring them to restore siiffi- paid out or reduced." It may well be cient of the amoun't of the dividend that under the former statute the.di- declared and paid to make good the rectors- would be liable for the restora- impairment of capital. Shaw v. An- tion ot the full amount of.tbe divi- saldi Co., Inc., 178 App. Div. 589, 165 dends, but by the amendment their ISf. Y. Supp.' 872. 400 COEPOEATIONS. when the minutes of the former meeting are ratifled.^^ But ignorance of director as to the financial standing of the corpo- ration is no defense when he has voted to declare a dividend from the capital instead of from the supposed profits. Whether the director knows the exact conditign of the corpo- ration is unimportant. It is his duty to ascertain whether the earnings authorize the withdrawal of the corporate assets to pay a dividend*^'' A director, sued for unauthorized divi- dends, cannot be credited with the profits which subsequently accrued under a change of management.-^* The rule that, in a creditor's action to recover property fraudulently trans- ferred by the debtor, the latter is a necessary party defend- ant, holds in an action by a judgment creditor of a corpora- tion brought against stockholders to recover sums alleged to have been fraudulently paid as dividends and profits, and if the plaintiff fail to join the corporation as a party defendant the complaint is subject to demurrer.^^ 338. Unauthorized dividends on stock without nominal or par value. "No such corporation shall declare or pay any dividend which shall reduce the amount of its stated capital. In case any such dividend shall be declared,: the directors in whose administration the same shall have, been declared, except those who may have caused their dissent ■ therefrom to be entered upon the minutes of such meetings of directors at the time or who were not present when such action was taken, shall be liable jointly and severally, to such corporation and to the creditors thereof to the full amount of any loss sustained by such corporation or by its creditors respectively by reason of such dividend." 20 339. Debts by corporation issuing stock without nominal or par value incurred before capital paid in. "No corporation authorized to issue shares with no nominal or par value shall begin business until the amount of capital with which it will begin business as stated in the certificate of incorporation shall have been fully paid in, nor shall any such corporation, until the capital with which it will carry on 'business as stated in the certificate of incft-poration shall have been fully paid m, incur any debts in excess of the amount of stated capital paid in at the time such debts are contracted, In case of an increase of the stated capital with which the cor- poration will carry on business, such increase of stated capital shall be deemed 16. Hutchinson v. Curtiss, 45 Misc 19. Lathrop, Shea & Henwood Co. v. 484, 92 N. Y. Supp. 70. Byrne, 115 App. Div. 846, 100 N. Y. 17. Wesp V. Muckle, 136 App. Div Supp. 1041. 24J, 120 N. Y. Supp. 97«, affd. 20i 20. Stock Corporation Law, § 30, N. Y, 527, 94 N. E. 1100. pt., -as added by L. 1912, ch. 351, and 18. Hutchinson v. Curtiss, 45 Misc amd. by L. 1920, ch. 606, and L. 1921, 484, 92 N. Y. Supp. 70. ch. 694. LIABILITY OF DIRECTORS AND OFFICERS. 401 paid in to the extent of the amount of ithe assets which the corporation has in money and property in excess of the former Stated capital. The directors of the corporation assenting to the creation of any debt in violation of this section shall be liable jointly and severally for the debts of such corporation; but no action shall be brought under tihe foregoing provision of this section unless within one year after the debt shall have been incurred the creditor shall have served upon the director written notice of intention to hold him peirsonally liable for sutfh debt. Any director who, because of any such liability under this section, shall pay any debt of the corporation, shall be subrogated to all rights of the creditor in respect thereof against the corporation and its property and also shall be entitled to contribution from all other directors of the cor- poration similarly liable for the same debt and the personal representative of any such director who shall have died before making such contribution." 1 340. False certificates, reports or public notices. " If any certificate or report made or public notice given by the ofBcers or directors of a stock corporation shall be false in any material representation, the officers and directors signing the same shall jointly and severally be per- sonally liable to any person who has become a creditor or stockholder of the corporation upon the faith of any such certificate, report, notice or any ma- terial representation therein to the amount of the debt contracted upon the faith Jherepf if not paid when du^,, or the damage sustained by any purchaser of or subscriber to its stock upon the faith thereof.. ; The liability imposed by this section shall exist in all cases where the contents of any suoh certificate, report or notice or of any material representation therein shall have been com- municated teither directly or indirectly to the person so becoming a creditor or stockholder and he became such creditor or stockihftMer upon the faith thereof. No action can be maintained for a cause of action created by this section, unless brought within two years from the time the certificate, report or public notice shall have been made or given by the officers or directors of such corporation." 2 A report containing the names of two persons as stock- holders, and stating the amount of their stock as actually paid in, where in fact such persons are not stockholders at all, is " false in a material representation,'" hut an error of $2,000 in amount of capital stock paid in, has been held not to make a report " false in a material representation."* The object of making and filing a certificate or report is to. give notice to those dealing with or giving credit to the corporation. If such persons are deceived or may be deceived by the false report a liability attaches for the offense of the officers in making ^nd filing it. If, however, the debt was incurred be- 1. stock Corporation Law, § 30, pt., 3. Brandt v. Godwin, 3 X. Y. Supp. as added by L. 1912, ch. 351, and amd. 807, 24 St. Rep. 305, afifd. 15 Daly 456, by L. 1920, ch. 606,. and L. 1921.,, ch. 8 N. Y. Su^p. 339. 694. 4. tV^alton v. Godwin, 58 Hun 87, 11 2. Stock Corporation La-s^, § 35. N. y. Supp. 391. 26 402 COKPORATIONS. fore the misconduct of the officers then no damage accrued to the creditor by reason of the vicious conduct in making the false report, and as no reliance could have been placed upon it, no liability would inure to such a creditor.^ Where a lia- bility has been contracted before the certificate in question was filed, but renewal notes therefor have been given after the filiag, the liability comes within the statute." 341. Enforcement of liability generally. Where the statute imposes upon a stockholder or director a liability for all the debts of the company, making the di- rector's liability as broad as the liability of the corporation, then each creditor has his remedy against the corporation and the director, and there is no more reason for allowing him to come into equity to enforce it against the director than for allowing him to enforce it in equity against the corporation. Both the director and the corporation are liable for all the debts, and that liability is a common-law liability to be en- forced in an action at law. Where, however, the statute im- poses upon directors and stockholders a liability which is not measured by the debts of the corporation, but is meas- ured either by an arbitrary amount fixed by the statute, by an amount to be ascertained by the par value of the stock- holders ' stock or by the amount of debts in excess of the capi- tal of the corporation, or by any other method not fixed by the amount of indebtedness of the corporation, but limited to an amount less than such indebtedness, then the liability must be enforced in an action in equity, and enforced for the bene- fit of all the creditors, and necessarily enforced as against all the directors that are liable, in one action in which the corpo- ration if in existence, or after it is. dissolved, its representa- tive, the receiver, is a, party .'^ 5. Bagley & Sewall Co. v. Lening, 61 corporation contracted while he ia an App. Div. 26, 30; 70 N. Y. Sup^ 242; officer or stockholder, 'auch liability ex- Huntington v. AttrlU, 42 Hun 459, 4 ■ tends to debts contracted by the corpo- St. Rep. S69, 'affd. 118 N. Y. 365, 23 ration in favor of the officer during N. E. 544; Young v. Godwin, 19 N. Y. that period. Wait v., Ferguson, 14 Supp. 656, 46 St. Rep. 934, follpwi.ng Abb. Pr. 379, Torbett v. Godwin, 17 N. Y. Supp. 46; 6. Ferguson v. Gill, 64 Hun 284, 19 Hatch V. Attrill, e*c., 1 St. Rep. 497, N. Y. Supp. 149. affd. 118 N. Y. 383, 23 N. E. 549. 7. Bauer v. Parker, 82 App. Div. 289, Under a statute that an officer of a 300, 81 N. Y. Supp, 995. corporation making a false certificate The charter of a domestic corpora- shall be liablu for all the debts of the tion provided among other things that LIABILITY OF DIRECTORS AND OFFICERS. 403 342. Action to enforce liability for making false reports. The action conferred by section 35 of the Stock Corpora- tion Law 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.^ The statute is not penal in an international sense so that it cannot be enforced in a foreign state or country,^ nor within the meaning of section 184 of the Civil Practice Act, which provides that an action ' ' to re- cover a penalty or forfeiture imposed by statute " must be tried in the county where the cause of action arose,^" though it has been held that the action is a local one and must be tried in the county where the report was filed and the corporation had its principal place of business.^^ A cause of action under this section and one at common-law based on the same alle- gations supplemented by further allegations of misrepre- sentation and allegations stating the scienter of the defendant may be joined in the same complaint under subdivision 6 of section 258 of the Civil Practice Act.^^ In an action brought pursuant to this statute, the defendant may serve an unveri- fied answer although the complaint is verified, because such act by a director is made a misdemeanor by section 665 of the Penal Law.^^ It is no defense that a defendant signed a false report in good faith, under the advice of counsel, and believed its statements to be true.f* 343. Evidence : Burden of proof : Damages. The books of a corporation may be competent evidence as "every director shall be personally " Tlie action upon this statute is one liable for all debts incurred by the in tort partalcing largely ■ of the char- corpdratloa during his administration acter of an action for damages for to an ambilnt not exceeding $5,000.' fraudulent representations ' knowingly It was held, that a director's liability made upon the sale of property." ' to a creditor. tlxer^-uniier is enforceable 9. ;Huntuigton v. Attrill, 146 U. S. .in, an action at law without joining g^_ other.;creditorsor"diredtors; that the ^o. Hutchinson .r. Young, W App. prior recovery of a judgment agamst ^.^ ^^ ^^ ^ ^^^ ^^^ the company and return of execution ,, „ ' a^j. -ii qi tt 100 . f ■' , , i. 1 11. Taylor v. Attnll, 31 Hun 132. issued thereunder, were not essential to the maintenance of the action State Bank of Rock Valley vv An draws, 2 Mi8C;'394, 21 N. Y. Supp. 948 8. Hutchinson' V. Young, 93 App 12. Hutchinson v. Young, 93 App. Div. 407,. 87: N". y, Supp. -j678, 13. Thompson v. McLaughlin, 138 App. Div. 711, 123 N. Y, Supp. 762. Div. 407 87 N. Y. Supp. 678; Parsons 14. Brandt v. Godwin, 3 N. Y. Supp. V. Johnson, 28 App. Div. 1, 50 N. Y. 807, 24 St. Rep. 305, aflfd. 15 Daly 456, Supp. 780, in which Ward, J., said: 8 N. Y. Supp. 339. 404 COBPOBATIOSrS. to the status of the defendan^t, in an action to enforce the lia- bility imposed by the statute.^^ The burden of proof is on the plaintiff of establishing that the certificate filed was in point of fact false," but it is not necessary to show knowledge on the part of the officer at the time of signing ; proof that the writing is untrue, " in any material representation " is sufficient," for it is the duty of an officer to ascertain the trxith of a report before he signs it and if he neglects that duty the responsibility is his. In an action brought to recover damages from the directors of a stock corporation, alleged to have resulted to the plaintiff from the exchange of real estate owned by him for certain shares of the corporation's stock, made by him in reliance upon an annual report which repre- sented that the assets of the corporation were largely in ex- cess of its debts, whereas, at the time of making such report and at the time of the purchase of the stock by the plaintiff, the stock was practically worthless and the corporation in- solvent, the measure 6f damages is the difference between what would have been the value of the stock had its annual report been true and its actual value.-** 344. Criminal responsibility for corporate acts. The president or manager of a corporation, is not liable for the criminal acts of the corporation committed without his knowledge or privity. Accordingly the president of .an incor- porated publishing compa;ny who had no knowledge that his company intended to publish a certain book, the' merits of which were passed upon at a literary conference of the mem- bers of the corporation, and who was, in fact, absent from the country at the time and who had never read the book and took no part in its sale or offer for sale, cannot be convicted of the crime of unlawfully possessing an obscene book.^^ Like- wise it has been held tha:t the superintendent of a corporation was not liable criminally^for the employment by a foreman of a child under sixteen years of age contrary tp the statute.^". 15. St. George Vineyard Co. v. Fritz, 18. Parsons v. Johnson, 28 App. i)iv. 4R App. Div. 233, 62 N. Y. Supp. 775. 1, 50 N. Y. Supp., 78,0. 16. Ferguson v. Gill, 74 Hun 566, 26 19. People v. Brainard, 192 App. X. Y. Supp. 596. Div. 816, 183 N. Y. .Supp. 452. 17. Huntington v. Attrill et al., 118 20. People v, Ta.ylor, 192 N. Y. 398, y. Y.'36S, 23 X. E. 544. 85 N. E. 759. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 405 CHAPTER XXI. Powers, Duties and Functions of Corporations. In General. 345. General powers. 346. Oonstruetion of provisiona of charter and staitutes. ' 347. Unexpressed and incidental powers of corporations. 348. Power to enter into partnership. 349. Restrictions on commencement of business. 350. Restrictions on commencement of business by corporation issuing stock without nominal or par value. 351. Control by courts of internal management of corporation. 353. Prohibition against exercise of banking powers-. ■ 353. Prohibition against practicing law. 354. Purpose and construction of statute. 355. Application of statute. 356. Prohibition against practicing medicine or dentistry. AnmiaH Report to Secretary of State. 357. Duty to make report. 358. Construction of statute and reports thereunder. 359. Requiadtes of report. 360. Wlien corporation relieved from filing report. Bight to Acquire and Hold Corporate Stock. 361. Purchase by corporation of its own stock. 363. Purchase of stock of other corporations generally. 363. Application of statute. Acquisition and Disposal of Property. 364. In general. 365. Acquisition of additional real property after conveyance. 366. Property rights extending beyond period of existence. 367. Acquisition of property without State. 368. Enlargement of limitations upon amount of property which non-stock cor- porations may hold. Power to Borroiv Money and Mortgage Property. 369. In general. 370. Consent of stockholders as essential to validity of mortgage. 371. Requisites of consent: When consent not required. 373. Who may consent. 373. Filing consent. ; 374. Who may object to validity pf mortgage, ■ , 375. Validity of corporate mortgage. 376. Mortgage covering after-acquired property. 377. RefuHding mcMtgage. 378. Filing of mortgage covering real and personal property. 406 CORPORATIONS. Judicial Prooeedings to Sell, Mortgage, or Lease Real Property. 379. In general. 380. Petition. 381. Hearing on petition. 382. Order to sell, ihortgage or lease. 383. Notice to creditors of insolvent corporation. 384. Service of notices. 385. Practice in cases not specially provided for. Transfers While Insolvent or in- Contemplation of Insolvency. 386. In general. 387. Construotion and object of statute. 388. Assignment by oflSeer of stockholder of claim against corporation. 389. Transfers in contemplation of insolvencj'. 390. Intent to create preference. 391. Knowledge by creditor of insolvency of corporation; collateral security. 3Sa. Corporate mortgages executed in contemplation of insolvency. 393. Validity of judgments against insolvent corporation. 394. Effect of failure to defend against valid claim. 395. Particular transactions not fraudulent or in violation of statute. 396. Assignment for benefit of creditors without preferences. 397. Transfers within four months of bankruptcy. 398. Actions based on illegal transfers. Voluntary Sale of Franchise and Property to Another Corporation. 399. In general. 400. Rights of non-consenting stockholders. 4)01. History and application of statute. 402. Loaning money or credit: Execution of accommodation paper. 403. Liability of corporation on debts and contracts of predecessor. 404. Power to guarantee bonds and other obligations of other corporations. Corporate Bonds. 405. In general. 406. Consideration for bonds. 407. Issue and sale of bonds. 408. Negotiability and enforcement of bonds. 409. Interest coupons. 410. Trust mortgage to secure bAids. In General. 345. General powers. A corporation is a creature of the law, and none of its powers are original. They are precisely what the incorpora- ting act has made them, and can only be exerted in the man- ner in which that act authorizes. In other words the state prescribes the purposes of a corporation and the means of POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 407 executing those purposes.^ And the statute provides that no corporation shall possess or exercise any corporate powers not given by law, or not necessary to the exercise of the powers so given.^ The powers which a corporation may ex- ercise generally are stated in the statutes. The General Cor- poration Law provides that : " Every eorpoi-ation as suoh has power, though not specified in the law under which it is incorporated: 1. To have succession for .the period specified in its certificate of incorporation or by law, and perpetually when no period is specified. 2. To have a common seal, and alter the same at pleasure. 3. To acquire by grant, gift, purchase, devise or bequest, to hold and to dis- pose of such property as the purposes of the corporation shall require, subject to such limitations as may be prescribed by law. 4. To appoint such officers and lagents as its business shall require, and to &x their compenaation, and 5. To make by-laws, not inconsistent with auj- existing law, for the manage- ment of its property, t^e regulation of - its aflfairs, and the transfer of its stock, if it has any, and the calling of meetings of its members. Such by-laws may also fix the amount of stock, which must be represented at meetings of the stockholders' in order to constitute a quorum, unless otherwise provided by law. By-laws duly adopted at a meeting of the members of the corporation shall control the action of its directors.: No by-law adopted by the board of directors regulating the election of directors or officers shall be valid unless published for at least once a week for two successive weeks in a newspapar in the county where the election is, to be held, and at least thirty days before such election. Subdivisions four and five of this esction shall not apply to municipal corpora- tions." 3 The great object of an incorporation is to bestow the char- acter and properties of individuality on a collective and changing body of men. This capacity is always given to such a body.'* The powers granted by statute may be limitied by 1. Waters-Pietee Oil C6mpahy v. inade. Mumford v. American Life In- Texas, 177 U. S! 2.8, 44 L. ed. &57. suranoe & Trust Oo., 4 N. Y. 463. 8. General Corporation Law, § 10. It seems, where the business of a 3. General Coi-poration Law, § 11- private corporation or an individual is The term "business of' a corpora- threatened with competition, a con- tion," when used 'with reference to a tract with the comptitor that he shall non-stock corporation, includes the abandon his enterprise and take em- operations for the condvict of which it ployment at an agreed compensation, is incorporated. General Corporation with such corporation or individual, is Law, § 3, subd. 10. not against public policy. Oakes v. A corporation created in this state Cattaraugus Water Co., 143 N. Y. 430, may make oontrax!ts in another state, 38 N. E. 461. unless prohibited by its charter or the 4. Louisville, C. & C. R. Co. v. Let- laws of the state where the contract is son, 3 How. (U. S.) 497. 408 CORPOBATIONS. the certificate of incorporation, since, the statute provides that: " The certificate of incorporation of any corporation may contain any pro- A-ision for the regulation of the business «nd tie conduct of the affairs of the forpoxatioji, and any limitaiion upon fits powers, or upon the powers of its directors and stockholders, which does not exempt them, frijm the perfcpraance of any obligation or the performance of any duty imposed by law." B A person dealing with a corporation is chargeable with notice of its powers and the purposes for which it is formed, and when dealing with its agents or officers is bound to know the extent of their power and authority,^ and that every cor- poration necessarily carries its charter where it goes, for that is the law of its existence^ Akiy acts done by a corporation, which presupposes the existence of other acts to make them legally operative, are presumptive proofs of the latter.* 346. Construction of provisions of charter and statutes. The charter of a stock corporation is as between the corpo- ration and itS; stockholders and as between the stockholders, an executed contract; it is a continuing grant of corporate power and all applicable provisions of a general law, under which a corporation has been formed not expressly set forth in its certificate or articles of incorporation, are to be read into and taken to be a part of its charter.^ "What a corpora- tion may or may not do within its grant of powers is to be determined by the reasonable intendments of its charter as well as its clear expressions of authority.^* And where the T 5. General Corporation. Law, § 10, 10. Right to use street not named in swbd. a, articles of association.--The use of a 6. Jemison et al. v. Citizens' S. city street, not named in its articles Bank, 132 N. Y. 135, 140, 25 N,. E. of association, by a company organized 2'64. See also post, pars. 413-416. under the Street Surface Railroad Act 7. Jeimison v. lOitizens.'.. Sayings (L. 1884, oh. 252), merely for haul- Bank, 44 Hun 413, 416, aiTd? 133 N. ing ears to and from a oar storehouse, Y. 135, 35 N. E. 264. is impliedly, if not expressly, samc- 8. Bank of U. S. v. Bandridge, 13 tioned by the law when a majority of >yiiiealt. (U. 8.) 64, 79; Pringle v. the abutting owners consent and the AVoolworth, 90 N. Y. 502, 510j Dem- storehouse is located upon the only va- ings V. Supreme Ijodge K. of P., 131 N. cant land avai^lable, which was not Y. 532, 527, 30 N. E. 573. within the restrictions imposed by the 9. Lord V. Equitable Life Assurance resolution whereby the city authorized Society, 47 Misc. 18'7., 94 N. Y. Supp. the company to make necesisary con- 65, affd, 109 App. Div. 253, 96 N. Y. nections in the street named in the ar- Supp. 10. tielos and "in such parts of those ad- POWERS, DUTIES Alv^D FUJifCTIONS OF CORPORATIONS. 409 words used in the charter of a corporation defining its powers have- a common and well understood meaning, and are free from ambiguity and doubt, they maiy not be enlarged so as to embrace other subjects.^^ The authority of a corporation to perform a particular act is always dependent to a very con- siderable extent upon the facts and circumstances existing at the time when it is pr:Oposed to perform the act.^^ Since cor- porations are created by statute and have.no powers except those conferred by statute directly or indirectly, whatever is done by a corporation without authority is done in violation of law.^^ And it is a well established rule of construction of statutes vesting privileges in corporations that the specifi- cation of certain powers opierates as a restraint to such ob jects only and is an implied prohibition of the exercise of other and distinct powers.^* Whenever privileges, granted by the legislature to a corporation, come under review in the courts, they are to be strictly construed against the, corpora- tion; nothing passes but what is granted in clear and explicit terms.^° 347. Unexpressed and incidental powers of corporations. The General Corporation Law permits the exercise of such incidental powers as are necessary to the full enjoyment of powers expressly granted.^'' And the common-law rule is that corporations may exercise such powers as can be fairly im- plied, as well as such as are expressly conferred by the statute creating them." And unless restrained by law, every corpo- ration has the incidental power to make any contract neces- sary to advance the objects for which it was created.^* The unexpressed and iilcidental powers possessed by a corpora- tion are not limited to such as are absolutely or indispen- sably necessary to enable it to exei-cise the poweTs specifically jacent thereto as may be necessary." 83i; Bklyn. Heights R. Co. v. City of Brook- 16. General Ooiporation J^w, § 10. lyn, 152 N. Y. 344, 46]^. E. 509. 17- O'Grady v. New York Mut. Live 11. Riker i-.Leo, 133 N. Y. 519, 30 Stock Ins. Co., 16 App. Div. 567, 569, N'. E. 598. 44 N. Y. Supp. 94'6. 18. Gause v. Commonwealth Trust 18. Legrand v. Jfanfcaf'tan Mercan- Co., 196 iN". Y. 134, 89 N. E. 476., tile Association, 80 N. Y. 638. 13. Schwab v. P^ etc. v. Manhattan Rail- selling pianofortes and musical instru- ^^^.y Co., 143 N. Y. 1, 37 N. E. 494. ments, has succeeded a former part- 3. People v. North River Sugar Re- nership engaged in the same business, fining Co., 131 N. Y. 583, 633, 34 N. K. acquiring with the other assets a large 834. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 411 349. Restrictions on commencement of business. " No such (stock) corporation shall incur any debts until the amount of capital specified in its certificate of incorporation, as the amount of capital with which it will begin business, shall have been paid in in money or property." 4 A corporation prior to the receipt of the amount required as a condition of its creating an indebtedness has no right to purchase real estate, to employ architects, solicitors for stock subscriptions, or to borrow money to pay on an option.^ The procuring of subscriptions to the capital stock of a business corporation, and the enforceraent of the subscriptions, is not a transaction of " business " upon the part of the corporation within the meaning of the statute.'' When, the amount of capi- tal required to be paid in before the corporation shall trans- act business, is actually paid in money or property it may transact business, but a fictitious payment will not -satisfy the requirement of the statute.'^ 350. Restrictions on commencement of business by corporation issuing stock without nominal or par value. "No corporation authorized to issue shares with no nominal or par value shall begin business until the amount of capital with which it will begin ibpainess as stated in the certificate of incorporation shall have. been fully paid in, nor shall any suqh corporation, until the capital with which it will carry on business as stated in the certificate of incorporation shall have been fully paid in, incur any debts in excess of the amount of stated capital paid in at the time such debts are contracted. In case of an increase of the Stated capital with which the corporation will carry on business; such increase of stated capital shall be deemed paid in to the extent of the amount of the assets which the corporation has in money and property in excess of the former, stated capital." 8 351. Control by courts of internal management of corporation. In the absence of fraud or bad faith courts have nothing to do with the internal management of business corporations, 4. Business Corporations Law, § 3. 5. Whalen v. Hudson Hotel Co., 183 Forms: Certificate that money with App. Div. 316, 170 N. Y. Supp. 8,55. which corporation is to begin business 6. United Growers Co.. y. Eisner, 22 has been paid in. App. ; Mv. ; 1, 47 N. Y. Supp. 90)6. Prior to 1853 the manufacturing 7. Whalen v. Hudson Hotel Co., 183 corpotations act of 1848, chapter 40. App. Kv. 316, 170 N. Y. Supp. 855. required the entire capital stock to be 8. Stock Corporation Law, § 30, pt., paid in money and the issue of stock as added by L. 1912, eh. 351, and amd. for property or as unauthorized. by L. 1920, ch. 006, and by L. 19ai. Thurston v. Duffy, 38 Hun 337. ch. 694. 412 CORPORATIONS. provided they keep "within their corporate powers.^ And ordinarily the conrt will not interfere with the control of a corporation by its directors and a majority of its stockhold- ers. It will not interfere, although the directors may have acted unwisely and not for the best interest of the corpora- tion they represent,^" nor, will the courts restflain directors de facto from acting as such, on the sole ground of the alleged invalidity of their title to their offioes.^^ Accordingly a con- tract made by a corporation within the scope of its chartered powers may not be set aside merely because some stockhold- ers believe it to be unwise ; there must be fraud or conduct so manifestly oppressive as to be equivalent thereto.^^ The re- luctance of the courts to interfere with the policy of the ma- jority in interest of a corporation in relation to those matters which have to do solely with its internal management, leads them to' decUhe to set aside action taken, or sought to be ac- complished, thereunder, in the absence of fraud, illfegality or the carrying out of a purpose clearly detrimental to the inter- est of the corporation itself .^^ However the holders of a ma- jority of the shares of stock of a corporation owe to the mi- nority stockholders thereof much the same duty which the di- rectors of a corporation owe to all of the stockholders there- in, and they may not use their power to obtain an advantage for themselves at the expense of the minority, and when that is done equity will interfere to restrain the wrongful acts.^* But to justify the interference of the court with the manage- ment of a corporation on the application of a minority of the stockholders, it must be shown that the action of the govern- ing body complained of has been so clearly against the inter- ests of the minority of the stockholders as to amount to a 9. Flynn v. Brooklyn City R. Co., 158 H. People ex re\. Floyd v, Conklin, N. Y. 493, 507., 53 N. E. 530; Schwab 5 Hun 4f5Z. ,'. Potter Co., 1S4 N. Y. 409, ^4. 87 ig, Holmes v. Saint Joseph Lead Co., N. B. 670; Belmont v. Brie Railway 34 j^j^^ g^g ^^^ j^ y g^^^ ^^^ Company, 53 Barb. 637. ^^^ ^^^3 ^ ^j^ gg ^^^ ^^ y' 10. Hart V. Ogdensburg & L. C. R. Co., 89 Hun 316, 35 N. Y. Supp. 566. A single stockholder has no right in law to set up his judgment against ^'^^S^' ^^^ App. Div. 140, 158 N. Y. the judgment of his asabeiates and Supp. 249. dictate the policy of the corporation 14. Farmera' Loan &; Trust Oo. v. acting within its corporate powers. New York & N. R. Co., 78 Hun 313, Hoa:g V. Edwards, 69 Misc;* 337, 134 38 N. Y. Supp. 933, revd. on other N. Y. Supp. 1035. grounds 150 N. Y. 410, 44 N. E. 1043. Supp. 1117. 13. Matter of Hinds, Noble & El- POWEBS, DUTIES AITD FUNCTIONS OF CORPORATIONS. 413 wanton and fraudulent destruction of the rights of such minority, and that such action is a clear, substantial and fla- grant violation of their rlghts.^^ To justify the inteiference of a court of equity, the majority of the stockholders must have been parties to a fraud which would result in an injury to the corporation or the minority stockholders.^" So where the majority of the stockholders of a corporation are illegally pursuing a course in the name of the corporation which is in violation of the rights of the other stockholders, and which can only be restrained by a court of equity, an action to ob- tain equitable relief may be maintained by an aggrieved stock- holder, or those whose rights are thus affected may join as plaintiffs in the action.^'' The visitatorial supervision inher- ent in the courts, when not regulated by statute, over the affairs of public or private corporations, extends to the inves- tigation of their proceedings for the purpose of keeping them within theii: chartered powers and protecting the rights of members against usurpation of the governing body to their prejudice.^^ ProMbited Potvers. 352. Prohibition against exercise of banking powers. " No corporation, domestic or foreign, other than a corporation formed under or subject to the hanking laws of this state or of the United States, except as permitted by suoh laws, shall by any implication or construction be deemed to possess the power of carrying on the business of discounting bills, notes or other evidences of debt, of receiving deposits, of buying and selling bills of exchange, or of issuing bills, notes or other evidences of debt for circulation as money, or of engaging in 'any other form of banking; nor shall any such cor- poration, except an express company having contracts with railroad companies for the operation of an express service upon the lines of sucih railroad companies, or a transatlantic steamship company, or a telegrapli cojnpany, or a corporation incorporated prior to the year eighteen hundred and fifty, to promote the wel- fare of emigrants, possess the power of receiving money for transmission or of transmitting the same, by draft, traveler's check, money order or otherwise." 19 15. Gamble v. Queens County Water 16. Continental Ins. Co. v. N. Y. & Co. et al., 123 N. Y. 91, 98, 35 N. E. H. R. Co., 103 App. Div. 382, 301, 93 «01; Hart v. Ogdensburg & L. C E. N. Y. Supp. 27, affd. 187 N. Y. 335, 7'.i Co., 89 Hun 316, 35 N. Y. Supp. 56.6; N. E. 1026. Lawrence v. Weber, .&5 Misc. 603, 130 17. Barr et al. v. N. Y., L. E. & W. N. Y. Supp. 389, modfd. 137 App. Div. E. Co. et al., 96 N. Y. 444. 907, 132 N. Y. Supp. 1134; Continen- 18. People ex rel. Johnson v. New tal Securities Co. v. Belmont, 75 Misc. York Produce Exchange, 149 N. Y. 234, 133 N. Y. Supp. 560, affd. 150 401, 409, 44 N. E. 84. App. Div. 398, 134 N. Y, Supp. 635, 19. General Corporation Law, § 22, affd. 206 N. Y. 7, 99 N. E. 138. as amd. by L. 1911, ch. 771. 414 CORPOBATIONS. A business corporation is prohibited by the statute from loaning money to its customers,^" or discounting commercial paper.^ A contract by a business corporation, organized under , the act of 1875, for the manufacture of salt, to receive money in special account upon deposit is ultra vires, and the deposi- tor's right of action for money so received by the corporation accrues at once.^ The provisions of this section, investing transatlantic steamship companies with power and authority to receive money for transmission and to transmit the same by draft, traveler's check, money order or otherwise, extend and apply to the bona fide agents, whether individual or cor- porate, of such company. If, hdwever, it appears that the relationship of principal and agent is merely fictitious, the so-called agents are amenable to the provisions of law pro- hibiting the exercise of such powers.^ But a foreign trans- portation corporation is prohibited, by the statute from issu- ing, buying and selling drafts or bills of exchange or issuing evidences of debt for circulation as money.* A corporation organized for the purpose of increasing the business of retail merchants, which proposes to issue checks, stamps or other evidences of debt, a,nd to ^sell them, to merchants who in turn can place them in a bank to be eventually paid out of a fund which has been set aside by the corporation, thereby violates the provisions of this section.^ So also, a domestic corpora- tion formed by the consolidation of two business corporations which solicits deposits of money to be made with it upon which it pays interest and against which purchases may be charged or which may be withdrawn in bash at any time is a doing a form of banking prohibited by this section." 353, Prohibition against practicing law. The practice of the law is not a lawful business except for 20. Ernst v. Terminal Clearing House Co. v. Helmer, 77 N. Y. 64; Pratt \. Association, 86 Misc. 395, 149 *:. Y. Short, 79 N. Y. 437. Supp. 181, affd. 167 App. Div. 903, 151 2. Chapman v. Lynch, 156 N. Y. 551, N. Y. Supp. 1114. 51 N. E. 375. Certificates of deposit irredeemable 3. Kept, of Atty. Genl. (1911), Vol. within twenty years and bearing in- 2, p. 631. terest, issued ' as loans held to be in 4. Kept, of Atty. Genl. (1911), \o\. violation of the provision of the Ke 2. p. 544. vised Statutes from which this section 5. Opinion . of Atty. Genl., 5 State was derived. New York Life Ins. &, Dept. Rep. 530. Trust Co. V. Beebe, 7 N. Y. 364. 6. Eept. of Atty. Genl. (1912), Vol 1. New York State Loan & Truaf 2, p. 185. POWERS, DUTIES AKD' PUlireTIOlirS OP COKPOEATIONS. 415 members of the bar who have complied with all the conditions required by statute and'the rules of the courts. As these con- ditions cannot be performed by a corporation, it follows that the practice of law is not. a lawful business for a corporation to engage in. As it cannot practice law directly, it cannot in- directly by employing competent lawyers to practice for it, as that would be an evasion which the law will not tolerate,' and any member of the bar who assists a corporation in violating the law in this respect is himself gTiilty of wrong- doing. And it is provided by statute that no corporation shall be organized or created under the provisions of the Business Corporations Law for the purpose or purposes of conducting any branch of the practice of law or of retaining or employ- ing an attomfey or attorneys to furnish legal advice, draw legal papers or perform lega,l services of any kind or descrip- tion, either directly for the person, persons or corporation for whose use such services are rendered, or for the corpora- tion retaining such attorney in compliance with , any contract of employment of the corporation or of the attorney made by the corporation with any other person, persons or corpora- tion.* The Penal Law provides that : " It shall be unlawful fpr any ebrporation or voluntary association to practice or a!pp©ar as an attdrney-at-law for any person other than itself in any coiirt in this state or before- any judicial bodyj or to make it a business to practice as an attorney-at-law,:f or any person other than itself, in any of' said courts or to hold itself olit to the public as being entitled to practice law, or - render or furnish legal services Or advice, or to furnish .attorneys or counsel or to render legal services of any kind in actions or proceedings of ■ any nature or in any other way or manner; or in a'ny other manner to assume to be entitled to practice law or to assume, use or advertise the title of lawyer or attorney, attorney-at- law, or equivalent terms in any language in suoh manner as to convey the im- pression that it is entitled to practice law, or to furnish legal advice, services or counsel, or to advertise that either .^Iqije or together. ."V^ith., or by or tiroiugh any person, whether a duly and regularly admitted attorney-at-law, or not, it has, owns, conducts or maintains a law; office or an .office for the practice of law, or for furnishing legal advice, services or oounselj It shall be unlawful further for any corporation or voluntary association to • solicit .itself or; by or through its .officers, agents or employees, any .iclaim_ or demand fpi; the purpose of bringing an action thereon or of representing as attorney-at-law, or. for furnishing legal 7. Matter of Co-Operative Law Co., 6a5, '9?' K E. 1103;' People v. Titje 198 N; Y.'479, 484, 92 K E. '15; People Guarantee &■ Trust Co., 191 App. Div. V, Title Guaranty ; &i Trusti Co. 3-27' laS, 181 N. Y. Supp. 53. N. Y. 3&6, 135 N. E. 666; Matter of 8. Business Corporations Law, § 2-a, City of New York, 144 App. Div. 107, as added by L. 190«, ch. 484. See also 128 N. y. Supp. 999, affd. 304 N. Y. ante, par. 14. 416 CORPOKATIOSrS. advice, services or counsel to, a person sued or about to be sued in any action or proceeding or against whom an action or proceeding has been or is about to be brought, or who may be affected by any action or proceeding Which has been or may be instituted in any court or before any judicial body, or for the pur- pose of so representing any person in the pursuit of any civil remedy. Any corporation or voluntary association violating the provisions of this section shall be liable to a fine of not more than Ave thousand dollars and every officer, trustee, director, agent, or employee of such corporation or voluntary association who directly or indirectly engages in any of the acts herein prohibited or assists such corporation or voluntary association to do suali prohibited acts is guilty of a misdemeanor. The fact that sucli officer, trustee, director, agent or employee shall be a duly and regularly admitted attorney-at-law shall not be held to permit or allow any such corporation or voluntary association to do the acts prohibited herein nor shall such fact be a defense upon the trial of any of the persons mentioned herein for a violation of the provisions of this section. This section shall not apply to any corporation or voluntary association law- fully engaged in a busniess authorized by the provisions of any existing statute, nor to a corporation or voluntary association lawfully engaged in the examina- tion and insuring of titles to real property, nor ^hall it prohibit a corporation oi- voluntary association from employing an attorney or attorneys to and about its own immediate affairs or in any litigation to which it is or may be a party. nor shall it apply to organizations organized for benevolent or charitable pur- poses, or for the purpose of assisting persons without means in the pursuit of any civil remedy, whose existence, organization or incorporation may be ap- proved by the appellate division of the supreme court of the department in which the principal office of said corporation or voluntary association may be located. Nothing herein contained shall be construed to prevent a corporation from fur- nishing to any person, lawfully engaged in the practice of the law, such informa- tion or such clerical services in and about his professional work, as, except for the provisions of this section, may be lawful, provided that at all times the lawyer receiving such information or such sei-viees shall maintain fuU professional and direct responsibility to his clients for the information and services so received. But no corporation shall be permitted to render any services which cannot law- fully be rendered by a person not admitted to practice law in this state nor to solicit directly or indirectly professional employment for a lawyer. ' ' 9 354. Purpose and construction of statute. The purpose of the legislature in enacting the statute seems obvious. There are (ffertain fundamental requirements and features which attend and surround the practice of law and rendition of truly legal services. These are the possession of sufficient knowledge and skill, the existence of a relationship of trust and confidence upon which the client may. securely rely, and the power of courts to use summary proceeding if necessary to enforce on the part of the attorney observance 9. Penal Law, § aso, as added bj cli. 317, and L. 1916, ch. 354. L. 1909, dh. 483, and amd. by L. 19] ■ POWERS, DUTIES AKD riTHjCTlONS OF CORPORATIONS. 417 of the obligations and duties growing out of this relaticjnship. A corporation could jiot adequately comply with and subject itsplf to these requirements if there were no penal statute. Through the employment of attorneys as its agents it might fairly meet the requirements of knowledge, skill and ordi- nary legal responsibility, b^ut it could not establish a relation- ship of confidence and be subject to summ^,ry control as an individual attorney can.^" The purpose and effect of the statute then are to preserve an ancient and honorable pro- fession of the highest usefulness and standing, one which in- voljVes the highest trust and confidence, from the inroads of a legal entity that could neither qualify for practice nor dis- charge such personal obligations of trust and confidence, and which, either acting as a middleman, so to speak, between client and attorney, might destroy the relation of client and attorney, or, with its aggregated power, might affect the in- dividual independence of the bar.^ The Appellate Division is only authorized t,o approve the right of a corporation to practice law Tyhgn it is organized for benevolent or charitable purposes, or for the purpose of assisting persons without means in the pursuit of any civil remedy. The court will ndt authorize a. business corporation to practice law where it is organized to do a general lg,w and collection business, to make agreements with anjj" employ attorneys and other representa- tives for the transaction of such business, even though it ap- pears that the greater part of its business is the collection of cla,ims without resort to la#.^^ Likewise a corporation organ- ized in 1901 for the pup^ose of practicing law is not' a " cor- poration lawfully engaged in a business authorized by the provisions of any existing statute " or one of the pther cor- porations excepted from the statute forbidding corporations to practice law, and, hence, it is not a corporation whose ' ' ex- istence, organization or incorporation " may be lawfully ap- proved by the Appellate Divisibii Of the Supreme Court of the department in which the principal office of the corpo- ration may be located.^^ ; , , IQ. People V. , Title Guarantee , & 12. Matter of Associated Lawyers' Trust Co., 2.87: N. lY.. 366, laS }f..,K Co., 134 App! Div. ' 350^, 119 K V 666. ■ Supp. 7.7. 11. 'iMatter of Co-operjitive Law Co., 13. .^att^r of Co-Operative Law Co.. 198 N. Y. 479, 9a N. E., 15; Matter of • 1»8 K, Y.' 479, 9,8 N. E, 15. Kelsey, 186 App. Div. 95, 173 N. Y A corporation organized for the pur- Supp. 860.r > ,,, .,, ( pose of examining and guaranteeing 27 418 COBPOBATIOSrS. 355. Application of statute. No convincing reason can be suggested why a corporation shoul(J be punished for perforniing an act which because of simplicity and lack pf confidential character it has not been thought necessary to confide to the exclusiye care of attor- iieys, jbut which may be performed by a layman. Not only common sense, but the wording of the statute itself, dictates this view. And it seems that the best and controUi'ng test by which. to determine whether given acts constitute the practice of. la'v^ or rendition of legal services' is by the. answer to be given to the underlying inquiry whether such acts were ones which, had, been committed to the exclusive charge of attor- neys, or were those which might be performed by a layman. In this inquiry it is not decisive that an act is one which is commonly performed by an attorney. That might' be a mat- ter of habit or convenience. The inquiry is rather whether it is one w;hich might lawfully be performed by a layman. This is to be decided by the nature of the act and not by the iden- tity of the individual who mbst frequently performs it. That sums up the final legislative thought >hd suggests the stand- ard by which if there be inadvertence or doubt elsewhere the character of a given act may be measured." Accordingly a corporation which, on a single occaision without giving any advice leading to and consimunated therein, prepares a bill ,of sale and chattel mortgage by filling out blanks upon and in accordance with the specific direction of a purported cus- tomery is not rendering legal services or holding itself out as entitled.to practice law.^^ Likewise an incorporated title tiiies to real estate, which, in' all Co.-, a27 N. Y. 3e&, 12'5 N. E, 6B6. matters relating to conveyancing aiid Defendant printed and. kept for dis- Bearching titles assumes to discharge tribution a booklet of whjeh iihe coyer the same duties as an individual con: *n4 ^aoh page vpere entitled, "Fees for ;:veya.ncer or attorney, is suljaeot to the the Examination of Titles." There was same responsibilities, and its duty to contained in it the statement, "In al' its employer is governed by the prin- counties, fees for drawing and record- ciples applicable to attorney and client. ing papers and • fees for surveys are in Elmer v. Title Guarantee & Trust Co., addition to the regular charges. Sur- 156 N. Y. lOj 5C N. E. 420. vey dliarges are found on pages 17-28 14. People V. Title Guarantee & and charges for dra-wing and recording Trust Co., 227 N. Y. 366, 135 N. E. papers on pages 29 and 30." On page 666; People v. Title Guarantee & 29, which had the additional heaiding, Trusty Co., 191 Aj>p. Div. 165, 181 N. Y. "Average Charges for Drawing Papers,"" Supp. 52. " was found the item/ "Bill of Sale 15. People V. Title Gua,rantee & Trust (Brooklyn & Queens) $3.00.'' Two de- POWERS, DUTIES. AND FUNCTIONS OF CORPOEATIONS. 419 guarantee and trust company canno-t be convicted! of the crime pf,pr;aotieing law in violation of the statute by reason of the fact that it drew a contract of sale,]d6ed and mortgage of real estate as part of the examination and the insuring of property to be covered by one of its title policies.^** A domestic corpo- ration which performed services before the commissioners of taxes and assessments of the city of New York under an agreement " to reduce the assessed valuation on premises," was not engaged in the practice of law, or in the rendering or furnishing of legal services or advice, so as to preclude a re- covery by the assignees of said corporation for the services rendered." And ,a writ of certiorari tO; review a tax assess- ment should not be dismissed where a taxpayer, acting in good.faitheniployed a. corporation to take the necessary steps to iave an assessment against him corrected, if the taxpayer ratified the employment of and f ormailly retained the attorney . tectiyes viaited the , appellant's, , place of busines^. They explained to one of appellant's employees that one of them was selling a store to the other for a given sum and that he' desired a bill of sale and chattel mortgage • to be drawn. He gave- to the eniplyee in response to his request therefor a list of the merchandise which it was claimed was.iflvolyed. _ This employee then passed the "detectives \,o another employee who took and fiUfed- out in pencil blank forms oi a chattel mort- gage and bill ;9f sale, which do not appear to ha,ve been; prepared, by the appellant, and gave them to a stenog- rapher to be finally filled out. ..This , stenographer returned them to the last, employee wSho Igofeed them, ovei% placed a seal on them, inquired the rate of interest and stated that the; date of execution which was left blank could be fijled in when the papers were ex- ecuted. For thus preparing, these papers fees were charged and paid. The corporation has beesn convicted of a violation of section 380 of the Penal Law prohibiting the practice of, law and rendition of legal services by a- corporation. It was held, that the given acts did not constitute practice of law or. rendition of, legal services and were not such acts as had been committed to the exclusive charge of attorneys hut were those which might be performed by a layman at the time these acts were committed without being subject to criminal punishment, and that in the light- of all of the evi- dence, derived from this booklet the price a,dyertised for drawing bills of sale is to be regarded as applicable to those which might he lawfully pre- pared as an 'incident' to its 'regular business and is not to be regarded a? an advertisement holding out 'the ap- pellant as soliciting and engaged in the business of drawing bills of sale in such manner as would amount to the practice of law. People ' v. Title Guarantee & Trust Co., 327 N. E. 366. 125 N. E. 666. 16. People V. Title Guarantee p. Div, tablish, maintain and operate an insti ^^g ^^^ jj y. Supp. 378. tution in. which persons may _ obtain 4' g^f^ey v. Medical Society, 177 accommodation for rest, physical exer- „„,,». tvt-u-c! o..c , ,. y 1: • • App. Div. «84, 164 N. Y. Supp. 846. cise, bathing, massage and hygieiu.^ i'f „. , ^ \, treatment," advertised to treat' by 5- Hannon v. S.egel-Oooper Go.., Ifir physical exercises, etc., diseases a»d M". Y. 344, 346, 60 N. E. 597. physical eonditions of patients, al- 6. Public Health Law, § 20.3. though neither its president nor any 422 CORPORATIONS. doing business on that day, and that thereafter they con- formed to special provision of the law.'' Annual Report to Secretary of State, 357. Duty to make report. " Every domestic stoik corporation and every foreign stock corporation doing business vrithin this state, except moneyed and railroad corporations, shall an- nually, during the month of January, or, if doing business without the United States, before the first day of May, may make a report, as of the first day of January, which will state: 1. The amount of its capital stock, and the proportion actually issued. 3, The amount of its debts or an amount which they do not exceed. 3. The amount of its assets or an amount which its assets at least equal. 4. The names and addresses of all the directors and officers of the company, and in the case of a foreign corporation, the name also of the pei^on designated in the manner prescribed by the code of civil procedure, as a person upon whom process against the corporation may be served within this state. Sueih report shall be made by the president or a vice-president or the treasurer or a secretary of the corporation and shall be filed in the oflfice of the secretary of state. If such report be not so made and filed, any such officer who shall thereafter neglect or refuse to make and to file such report, within ten days after written request .so to do .'hall h;ive been made by a creditor oi' by a stock- holder of the corjp'oration, shall forfeit to the people the sum of fifty dollars for every day he shall, so neglect or refuse." 8 The amendment of 1901 transferred the duty of filing the annual report from the directors to the officers of the corpo- ration and relieved the former from liability, and a fixed pen- alty was substituted for failure to make and file the report, instead of the payment of all outstanding debts of the cor- poration.^ 358. Construction of statute and reports thereunder. The statute is to be construed strictly and a report tiled in 7. Lewis v. Harlem Dental Co., 189 months' limitation within ■w'hich to App. Div. '3'59, 178 N. Y. Supp. 533; bring suit is not to be construed to Lewis V. Woodbury Dental Parlors Co., mean that the operation of the statute 106 Misc. 78, 175 N. Y. Supp! 2/69. ' was to be suspended only during the 8. Stock Corporation Law, § 34 ■. receivership. A waiver of the Statute 9. Agreement to withhold suit against of Limitations is hot invalid on the' airectois. — ^Section 5 of the amenda- ground that it is against public poliiiy, tory act of 1901 provides that pend- and the parties may lengthen or shorten ing actions should not be affected oi' the period of limitation if th'e contract any right of a creditor or stockholder, be founded upon a good consideration providing action be oominenced thereon and is reasonable. Watertown National within six months after the act took Bank v. Bagley, 134 App. Div. 831. effect. An agreement to waive the aiy 119 N. Y. Supp. 592. POWERS, DUTIES AND FTJJfCTIONS OF COKPOKATIONS. 423 attempted compliance therewith liberally.^" An annual roport of a corporation stating that its assets at least did not exceed a certain sum, is not a compliance with the statute, which pro- vides that the report shall state th^ amount of the assets of the corporation or the amount which its assets at least equal, the statement is too vague.^^ An Arizona corporation doing business within the State of New York, organized for the pur^ pose of ," manufacturing, selling, disposing of and utilizing liquid air/' which endeavors to sell its stock in Europe, and by obtaining patents there to prevent foreigners from manu- facturing its own distinctive product, is not doing business " without the United- States " within the meaning of, the statute requiring every domestic stock corporation and every foreign stock corporation doing business within the State of Now York to file an annual repqrt,^^ 359. Requisites of report. An annual report of a corporation, dated January 30, 1897, when it was signed by the. directors, in which there is no .sugv gestion that it was made as of January 1, of that year, does not substantially comply with the statute.'^^ On the other hand, a report, purporting on its face to be the annuaL report of a doruestic corporation for a certain year, although not in terms speaking as of January 1, of that year, should be deemed a report for that year, sufficient under the statute, where it appears that the directors acted in good faith in mak- ing it and.intended it as a report for the particular year, and 10. Lilientiiai V. Betz, 61 App. Uiv. that tlie' statement was defectivie, as 601, 70 N. Y: Supp. 930, aflFd. 172 N. Y. it could not be determined therefrom 643, &5N.;E. 1118. ' -wJiai proportion of the capital stock 11. Lilienthal. V. Betz, 61 App. Div. had, been -paid jn , in cash, and how muc^i 601; 70 N. Y. Supp. 920, affd. 172 X. Y. had been isaued for property. Glens 643j 65 ,N^ E:,1118; Lilienthal y. Fajls Paper Company v. White, 18 Hiiii Yuenglingi 33 Misc. 619,' 68 k Y. 214. Supp. 897, affd. 61 App: Div. 601, 70 12. 'West v. Grosvenor, 103 App. Div; N; Y. -Supp. 9^0,' affd. 173 X. Y. 643. »6e, 9(2 N. Y. Supp. 439. 65 N. E. 1118. What constitutes "ioing business The statement in. the report, as "to without the TTnited States" within the capital un^er the ^ct of 1848 ,yfa§,, as meaning of the gtatufe. Hoboken Beef follows, viz.: "Amount of capital Co. v. Hand, 104 App. Div. 390, 93 stock, of whic^ all but five shares were N. Y. Supp. 834. '• issued . for the purchase of property 13. Winthrop Press v. Perkins, 47 neceasary for the business of the asso-. Misc! 460, 95 N. Y. .Supp. &31. ' ' elation, and sudi Ave .shares have been. 14. Western Naitipnal Bank v. Paber, paid in full, $15,000." It was lieM. 39 Misc. 467, 63 N. Y. Supp. 83. 424 CORPOEATIONS. there is no proof that, either the capital, assets, or debts, of the corporation had changed between the first day of January, and the date of the report. Where a report is filed with the secretary of state during January, it is not invalidated by the fact that no filing was had in the county clerk's office until February following." The verification of an annual report of a tjorporation, by a person who is both the vice-president and treasurer of the corporation, is not irregular, because the person verifying the same did not mate separate oaths as vice-president and as treasurer.^^ 360. When corporation relieved from filing report. The statutory requirement as to filing a reiport is no longer in force where a corporation has been practically dissolved and abandoned. If the condition of the company is such that the end and object for which it was formed are destroyed, and there is neither ability nor intention on its part at any time to further prosecute its business, it is no longer subject to the statutory requirement, but although a corporation is doing business at a loss, and is consequently in a state of insolvency, it cannot be said that the end and object for which it was formed are destroyed, and it is in such case required to file a report.^® Hence to render inapplicable the provisions of the statute it must appear that the corporation is insolvent, that it has ceased to exist by dissolution or as matter of fact from a tbtal abandonment of its business and its being piit in such a position that it does not intend to and cannot continue or resume operations, under its franchise." Acpordingly after its general assignment, a corporation need not file an annual report in order to escape liability to creditors.'^^ But the mere fact that a stock corporation ceases doing business does not relieve it from the necessity of filing an anmial report. In order to have that effect the abandonment of. the business must be certain and fiifal and such as to place tli,e corporation beyond the possibility of resuming business.^^ In this regard 18. Novelty Manuftucturing Co. v. 19. Stevenson v. Oowan, 84 App Connel, 88 Hun 254, 34 N. Y. Supp. Div. 135, 82 N. Y. Supp. 78. 717. The fact that a cbri^oi'atioW is prac- 16. Brown v. dark, 81 Hun 267, 30 tically dissolved does not relieve its K. Y. Supp. 801. directors from the statutory duty of 17. Horrocks Desk Co. v. Fangel, 71 filing an annual report. Cummings y. App. Div. 313, 75 N. Y. Supp. 967. ' American Gear and Spring Co., 87 Hun 18. Pittsburg Reduction 06. v. De- .59(8, 34 N' Y. Supp. 541. Leon, 29 Misc. 130, 60 N. Y. Supp. 262. POWERS, DUTIES AND PTJNCTIONS OP COEPOEATIONS. 425 the contention that a business coi*poration was not in default by reason of its failure to file an annual report, because it had ceased to exist, by abandoning its business and turning over its property to its creditors, before the time for filing the re- port, is not sustained when it appears that the corporation continued to exercise acts of absolute ownership over certain of its property, and subsequently filed a report of full pay- ment of its capital stock and filed an annual report the n§xt year.^" Right to Acquire and Hold Corporate Stock. 361. Purchase by corporation of its own stock. Although there is no statutory prohibition against the pur- chase by a corporation of its shares of stock, held by its di- rectors, if the transaction is fair and honest, and in the inter- est of the corporation,^ no law of this state can be found which authorizes a corporation to purchase its own capital stock ex- cept in the event of such purchase being made out of surplus earnings, which is simply reducing the nominal capital stock by increasing the value of the actual capital stock in a like amount. In other words, the wliple policy of the law is to maintain unimpaired the capital stock of a business corpora- tion as the fund to which creditors may look for the discharge of their claims, and the law will not presume that the direct- ors, who are charged with the duty of mana^ng the affairs of the corporation, have been guilty of a violation of this duty.^ But a solvent corporation may purchase its own stock with the intention of immediately reissuing it, "^here it is for its best interests to do so. And in the absence of prohibition by statute, a solvent corporation may purchase its own stock, 20. Witherlow v. Slayback, 158 N. Y. obtain domeatic supplies at cost and 649, 53 N. E. 681. the expense of management, paying 1. In re Castle Braid Co., 145 Fed. for the privilege twenty-five dollars, 2M. 333. with thfe^ understanding' that if -they 2. McGill Co. V. - Underwood, 161 should withdraw from t|ie. association App. Div. 30, 3i2, 146 N. Y. Supp. 362, they should receive back that sum, or holding that it is no defense to a suit take the same out in trade. This, be- brought by a domestic corporation, or- cause, first, there is no allegation that ganized to deal in groceries to recover the corporation itself or as a member for goods furnished, to allege in sub- of said co-operaiive association, and stance that th.e defendant with others second, if it were, it would be illegal becanie members of a co-operative as- for it to pay Sack sums contributed sociation through which they were' to as capital. 426 COEPOBATIONS. hold it unextinguisHed aiid reissue the same.^ And it is ex- pressly provided by section 28 of the Stock Corporation Law that a corporation may accept and receive its own stock in payment of debts deemed bad . or doiibtf nl by its directors. The stock so received is not cancelled but returned to the treasury for sale to others. No inference' may be drawn from this provision that a corporation may not purchase its own stock.* But a contract by the company to assign "to a stockholder certain patent rights in a stipulated terri- tory in return for which the stockholder agrees to turn over his stock to the corporation and resign as an oflScer of the company is in violation of the statute, which forbids the di- rectors to withdraw, or in any way pay to the stockholders or any of them any part of the bapital of such corporation, or reduce its capital stock except as authorized by law.^ 362. Purchase of stock of other corporations generally. " Any stock corporation, domestic or foreign, now existing or hereafter or- ganized, except moneyed corpor-ations, may purchase, acquire, hold and dispose of the stocks, bonds and other evidence^, of indebtedness of any corporation, domestic or ioreign, and issue in exchange therefor its stock, bonds or other obligations if authorized so to do by a provision in the certificate of incorpora- tion of such stock corporation, or in any certificate amendatory thereof or supple- mentary thereto, filed in pursuance of law, or if the Sorporation whose stock is so purchased, acquired, held or disposed of, is engaged in a business similar to that of such stock corporation, or engaged in the manufacture, use or sale of the property, or in the construction or operation of works ; necessary or useful jn the , business of such stock corporation, or jn , which or in connection with which the manufactured articles, product or property of auch stock corporation are or may be used, or is a corponition with which such stock corporation is or may be authorized to consolidate. Wlien any such corporation shall be a stock- holder in any other corporation, as herein provided,' its president or other officers shall be eligible to the office of director of such corporation, the same as if they were individually stockholders therein and the corporation holding such stock shall possess and exercise dn respect thereof, all the rights, powers and privi- leges of individual owners or holders of such stock." 6 .-■■■•■. The statute does not permit one corporation to create an- other, endow it with capital from its own assets and take all 3. In re Fishel Oo.,'212 Fed. 357; 4. Moses v. Soule, 63 Misc. 303, llfi City Bank of OolumbHs v. Bruce N. Y. Supp. 410, affd. 136 App. Div. * Fox, J7 N. Y. 507; Joseph v. Raff, 904, 130 N. Y. Supp. 1136. 82 App. Div. 47, 54, 81 N. Y. Supp. 5. Stevens v. Olus Mfg. Co., 72 Misc. 5'4«,affd. 176N.Y. 611,68 N.E. 1118; 508, 130 N. Y. Supp. 22, affd. 146 Moses V. Soule, 63 Misc.. 203, 118 N, Y. App. Div. 951, 131 N. Y. Supp. 1145. Supp. 410, affd. 136 App. Div. 904, 120 6. Stock Corporation Law, § 52.. N. Y. Supp. 1136. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 427 its shares of stock in exchange.' But, there is. no limit to which one stock corporation may purchase and hold the stock of another stock corporation, no limit to the extent to which the corporation as such stockholder may intrude its officers into the directorate of the company whose stock is thus pur- chased, and this is an entirely reasonahle provision of law, foi^ the stockholders are the equitable owners of the corpora- tion, and where one corporation purchases a majority of the stock of another such purchasing corporation wojild naturally be entitled to control the affairs of the corporation in which it had becotne the owner; but such control would have to be consistent with the purp&ses for which the corporation was created.^ While prior to the adoption of section 52 of the Stock Corporation Law in 1892 a corporation could not pur- chase or deal in the stock of other corporations, unless ex- pressly authorized by law so to do, it could take title to such stock in paynierit of a debt owing to it.^ Section 54 of the Public Service Commission Law modifies this section and substantially readouts the rule, as announced prior to its en- actment, that a corporation cannot purchase or deal in the stocks of another corporation unless expressly authorized by law." i \ 7. Schwab v. Potter Co.. 194 N. Y. 1890 which expressly or by fair im- 409, 418, 87 N. E. 670., plication prohibits a railroad corpora- 8. Vernier v. T^&yr York Central &. tion from exercising the power ex- H. R. R. Co., 160 App. Div. 137, 138. pr^ssly conferred by section 40 of 145,1?. Y. Supp. 735, afTd. , 31,7 N„ ^ chapter 088 of the Laws of 1892 ©15, lllN. B. 487. upon every stock corporation, except 9 H. &. G. M. Co. V. H. & W. M. Co , .- <. , " "* moneyed corporations, to purchase et al., 137 N. Y. 352, holding tli?,t,a / . *^ . - , ,, „ stock in other corporations; and the corporation organized under the, Uen , ^. ,i„ ^ , eral Manufacturing Act has' power, P°^«^: g>^«'^ '>y «l^^Pt«^ ^«» '""«* *« wrth the consent of all of .1*8 stock. deemed, under section 33 of chapter holders, to sell its plant to another 687 of the Laws of 1893, to be in addi- corporation and , to retire .f.iom bu si- tion to thai given by section 40 of nesB, taking payment in the stock' of cljapter 688 of .the Laws of 1892, so the othei- 'corporation. "The f^ct Wt fay as it applies to railroad cdrpora- stbck so taken ^was issued to and is tions, as both provisions are applic- beld by an officer of the vendor as able to that cla:sa of Corporations. trustee for it, does not render tli" Oelbprmann v. New York & Northern transaction ultra vires. ^- Co., 77 Hun 333, 39 N. Y. Supp. 10. Burrows v. Interboroiigh : Metro- 945. politan Co., 156 Fed. 389, 39'3.- There Railroad corporation, purchase o' is nothing in any. ; part of the ; provi- stock of other common carriea-. See sions of chapter 565 of the Laws of Public Service Commission Law, § 54. 428 COBPORATIOlirS. 363. Application of statute. The statute declaring that any stock corporation may pur- chase and hold stock in another corporation engaged in a similar business, and that a corporation holding such stock shall possess all the rights and privileges of an indiyidual holder, ratifies a prior acquisition of stock by a corporation while a statute existed declaring such acquisition unlawful.^^ But it has been held that the statute is qualified by section 14 of the Stock Corporation Law, and the acquisition by one corporation of the stock of another, which was unauthorized prior to the enactment of said statute, was not made lawful thereby, where it would result in a combination in violation of that section. ^^ Although the power to purchase stock of other corporations conferred by this section must be exercised so as not to contravene the statutes against monopolies, the consolidation of public lighting companies, even if effected for the purpose of; preventing competition,, does not create a monopoly within the meaning of the statute.'^ The right of 11, Matter of Buffalo, N. Y. & E. R. Co., 37 N. Y. Srupp. 1048, 74 St. Rep. 345. 18. Burrows v. Interborough Metro- politan Co., 156 Fea. 389. See also, ante, par. 89. 13. Matter of Consolidated Gas Co. 134 App. Div. 401, lOS N. Y. Supp. 823. Purchase of stock of rival corpora- tion. — A gas company whose certifi; cate of incorporation, authorizes it to "purchase, acquire, hold and dispose of the stock, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and is^e in ex- change therefor its stock, bonds or other obligations," has power to make a con- tract to purchase the stocks and bonds of a company owning a franchise which, if operated adversely to or in rivalry with the former company, might be ruinous to its bu.siness, and to pay therefor with stock and bonds issued by it. Rafferty v; Buffalo City Gas Co., 37 App. Div, 618, 56 N. Y. Supp. 2.88. An agreement by which an elec- tric illuminaiting company offers the stockholders of an electric light com- pany to purchase their stock in the latter company at 100 per cent, above par,, upon the deposit with a trustee of a majority of tlie holdings, and to pay for the stock in cash or by bon ' of the electric illuminating company to be secured by a second mortgage on its property, and providing for a sub- stantial forfeit if the electric illuini- natiiJg' company fails to perform, is not illegal, as the Stock Corpora,tion Law permits one corporation to pur- chase stock directly from the stock- holders of another. Phelan v. Edison Electric Ilium. Co., a4 Misc. 109, 53 N. Y. Supp. 305. A contract by one corporation to purchase a controlling interest in the stock of another cor- poration coupled with an agreement to pay certain dividends thereon, is valid. WindmuUer v. Standard Distilling Co., 106 App. Div. »46, 94 N. Y. Supp. 58, affd. 186 N. Y. 573, 79 N. E. 1119 See also, ante, par. 89. POWERS, DUTIES AND FUKOTIONS OF COBPOKATIONS. 429 a corporation to purchase stock and bonds of another corpo- ration confers upon the purchaser no authority to employ the stock and bonds for purposes condemned by the principles of equity. So a corporation cannot acquire the majority of the -stock of another corporation, obtain control of its affairs, di- vert the income of its business, refuse business which would have enabled it to pay its interest charges and avoid default, arid then institute a suit in equity to enforce its defaulted obligations againsi such corporation, with the avowed pur- pose of obtaining control of its property at less than its value, to the injury of its minority stockholders." The stockholders of a business, corporation may, in a case where no consider- ations of public policy are involved, authorize a transfer of the property of the corporation to a new corporation arid re- ceive the stock of the new corporation in payriient therefor. If, however, the transfer operates to deprive persons, not par- ties to the agreement* of their property without due process of law, it cannot receive the sanction of the court.-^^ In an action by a stockholder of a manufacturing corporation against the trustees, attacking the holding, by the corpora- tion,, qf tlie stocks of other companies, and seeking the dis- tribution thereof, the burden is on the plaintiff. tq show, that the stocks were illegally held; and in the absence of such proof, it will be assumed that the action of the corporation is Acquisition and Disposal of Property. 364. In general. The right of a corporation to. have, hold and sell property, must be found in the organic law of its creation, either di- rectly or by- necessary; inference. The General Corporation 14. Farmers^ L. & T. Co. v. N. Y.& w.lien it appears that it has mg,de,iife N. R. Co., 150 N. Y. 410, 44 N. E. 1043, of such trust relation to secure or pro- holding that ,. where a majority of , the mote some selfish interest, it is enough stock of a corporation lis owned by an- to set a court of equity in motion and other corporation^ and the. latter as- to require, the rmajority stockholding sumes the control of ihe business -and corporation , to explain such a tran.=-- affairs of the first corpora/tion, thirougl' action. its officers and direotora, it assumes 15. Wilson v. Aeolian Company, Gi the, same trust, relation towards the App. Div., 337, 73 N. Y..Supp. 150, affd. minority stockholders of tlxe controUed 170 N. Y. 618, 63 N. E. 1123. corporation ^ that • a corporation -itself 16. Burden : v. Burden, 159i N. Y. ,287, usually bears to its stockholders; and 54 N. E. 17. ; 430 CORPORATIONS. Law provides that a corporation has power to acquire by grant, gift, purchase, devise or bequest, to hold and to dis- pose of such property as the purposes of the corporation shall require, subject to such limitations, as may be prescribed by law." So a corporation created " for the purpose of raising and smelting lead ore," has power to purchase smelting works with all the appurtenances which are necessary for carrying on the business, and to assume a contract entered into by their vendors, providing means for transporting their ores, when smelted, to market.^^ Where a railroad corpora- tion is authorized by its charter to acquire by purchase such real estate as may be necessary for the construction of its road, it will be presumed that lands deeded to it are acquired for that purpose.^^ And where a corporation is authorized under some circumstances to hold and convey real estate, it 17. General Corporation Law, § 11. When easement not an encumbrance. — The existence of an easement in real property acquired or reserved by A municipal corporation, a railroati corporation or other transportation cor- poration, shall not be deemed an eii- cinnbranoe upon such real property under any law relating to investments in mortgages upon real property by corporations, trustees, executors, ad- ministrators, guardians or other per- .«ons holding trust funds, but the cffcci of such an easement upon the real property which it affects, shall be- taken into consideration in determining the value thereof. General Corporation Law, § 3, subd. 12 as added by L. 1914. ch. 188. A consent by a stockholder in a cor- poration to a sale of real property owned by it, furnishes a good con- sideration for a promise by a party in- terested ill said corporation and anxiou.i to effect such sale, tliat he will pay the stockholder a specified sum for consenting thereto. Lainkin ^. Palmer, 24 App. Div. 255, 48 N. Y. Supp. 427, affd. 164 N. Y. 201, 58 X. E. 123. The only question that survives the approval, by the majority of the stock- holders of a corporation, of the action of its board of directors making a cer- tain lease of its properties is whether such action has been so plainly unfair and oppressive of the minority stock- holders that the court should interfere for their protection. The deterinina- tion of the public service commission by which a lease from one railroad com- pany to another was authorized, over the objection of a minority stockholder of the lessor, is not res adjudicata of its riglits since the public service com- mission was constituted to protect the rights of the public not the rights of stockholders between themselves, said commission having no jurisdiction to conclude the stockholders as to their rights inter se. Westchester Fire Ins. Oo. V. Syracuse, B. & N. Y. It. Co., 97 Misc. 471, 161 N. Y. Supp. 759. 18. Moss V. Averell, 10 N. Y. 449. holding tliat, if in making general pur- chases some articles should be included which were not needed for the busi- ness of the corporation, the contract would not be thereby rendered void, if the purchase altogetTier was made in good faith, for the sole purpose of prosecuting its legitimate business. 19. Yates v. Van De Bogert, 56 N. Y. 526. POWEKS, DUTIES AND FUNCTIONS OF CORPORATIONS. 431 will be presiimed, in, the absence of proof to the coiitrary that real estate conveyed by it, was held and conveyed in pur- suance of its powers.^" A holding of real estate by a corpo- ration, which, even if ultra vires, has not been attacked by the sovereign or by a creditor, cannot be questioned by a stockholder who has assented to the acquisition.^ A corpo- ration which has power to purchase property, can give promissory notes on such purchase, if uot expressly pro- hibited by statute.^ A stockholder of a corporation, upon a sale of the corporate property, by the sheriff upon execution, may become the purchaser thereof for his own benefit ; and if there is no fraud in the sale he is not accountable to any of the other stockholders, althoiigh the property is bid in by him much below its value.^ But it is illegal for stockholders of a corporation appointed as a committee to negotiate a pur- chase of lands for the corporation to induce the purchase without disclosing that they are interested in the profit made by the grantor and they must account for the gains so made.^ Stockholders have an insurable, interest in specific tangible property of the corporation." "Any corpwation formed for the purpose of developing or improving real property, which, lays out for public use roads,, streets, avenues or highways, upon or through its, lands, if unable ,to agree with the owners of any real property required for the purpose of extending, continuing or connecting such roads, streets, avenues or highways, for the purchase thereof, may acquire title thereto by condemnation in the manner prescribed by law ; provided! such coi-po- aO. Farmers' Loan & Trust Co. v . ■ cltiiming that such transfer was made Curtis, 7 N. Y. 466. with the intent to render his stock i. Burden v. Burden, 159 N. Y. 287. worthless, and to deprive him of al" 54 N. E. 17, holding at page 307, that control of the company, brought this a stockholder cannot enjoin the execii- action to restrain the defendant from tion of a contract intra vires unless,, carrying such transfer into effect, and fraud is shown. to secure the appointment of a receiver. ' Ihjunction restraining transfer — The It was held, that a temporary injunc- plaintiff owned, and held as security, tion was properly granted and a re- a large quantity, of the stock of tlir ceiver appointed, Kelly v. Mariposa Mariposa Lani^ and Mining Company, Land and Mining Co., 4 Hun 632. a corporation organized under the laws 2. Moss v, Averell,, 10 N. Y. 449. of this state, to which a large tract S. Mickles v. Rochester City Bank, of land had been conveyed, eonstitut- 11 Paige, IIS, affd. 11 Baige 139. ing the bulk of its property. A ne« 4. Colonizers' Realty Co. v.. Shatz- company was afterward organized in kin. 129 App. Div. 609, 114 N. Y. Sup]). California, to whjcli. it -jyas, pro^iosed 7,1,. .. : : ., to convey all the property of. the 5. Riggs y. Commercial. Mutual Ina. former corporation. The plaintiff. Co„ 125 N. Y. 7, 2i5 N. E. 1058. 432 coRPORATioiirs. ration has the consents' of the owners o¥ not less than one-half of ' all of the land which adjourns or abuts upon, or which will adjoin or abut upon, such roads,, streets, avenues or highways, or their extensions, continuations or con- nections, when; completed ; and such corporation may lay out and establish such roadSj street, avenues or highways, ,. and . the extensions continuations or connections thereof, and. may construct drains oh sewers, and such bridges or culverts as may be necessary to maintain the grades of, or for the extension,' continuation or connection of, the roads, streets, avenues or highways, so laid out;, and may connect such roads, 'streets, avenues or highways, with or across roads, streets, avenues or highways, belonging to aiiy other corporation or person, but may not disturb the established grades thereof. All lands so taken by condemnation shall be deemed to be acquired for a public use. ' ' 5a/ 365. Acquisition of additional real property after conveyance. " When any corporation, except a life insurance corporation^ shall have sold or conveyed aiiy part of its real prpoerty, the supreme court may, notwith- standing any restriction of a general or specisil law, authorize it to purchase and hold from time to time other real property, upon satisf aetdry proof that the value of the property so purchased does not exceed the value of the property so sold- and conveyed within the three years next preceding the application." c 366. Property rights extending beyond period of existence. A corporation, although created but for a limited period, may acquire title in fee' to lands necessary for its use.' 'So the fact that the designated period of the corporate existence of a conipany is fifty years, does not render it incapable of taking an estate greater than one for that number of years.* Likewise a company incorporated for a period of fifty years may acquire rights and franchises which extend beyond that period and transmit them- to its successors' and assigns.^ -A lease executed by a corporation for a longer period than its corporate life is. not invalid, nor will it cease upon the termina- tion of the corporate lif e.^" 367. Acquisition of property without state. " Any dPiWestJc corporation^transaeting .bHsineas or, conducting operatipng, in other states of .the United States of .America, in the District; of Columbia, in any 5a. Business Corporation Law, § 16. Hudson River R. Co., 46 Hun, 612, Derived from L. 1892; ch. 691, § 17, as 616, 13 St. Rep. 15, affd. 1S3 N. Y. added by L. 1900, eh. 518. '; 242, 25 N. E. 330. 6. General Corporation Law, § 13. ?. Matter of Consolidated Gas Co., 7. Nieoll V, New York and Erie E, 5« Misc. 49, 106 N, Y. Supp. 407, affd. Co., 12 N. Y. 121; People v. O'Brien, 124 App. Div; 401, 108 N. Y. Supp. Ill N. Y. 1, 38, 18 K E. 692. 823. ' ' Extension and revival of corporate 10. Tate v. Neary, 52 App. Div. 78, existence.— See, ahte, pars. 36'-40. 65 N. Y. Supp. 40. 8. Miner v. New York Central & POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 433 of the territories, districts, protectorates, dependencies or insular or other pos- sessions or acquisitions thereof, or in any foreign countries, may acquire, hold, and dispose of such property therein, real, persouaJ and mixed, as may be requisite for such corporation in the convenient transaction of its business or conduct of its operations.. Any domestic corporation establishing or maintaining a charitable, philanthropic- or educational institution within this state may also carry on its work and establish or maintain one or more branches of such insti- tution or an additional institution or additional institutions in any other states of the United States of America, in the District of Columbia, in any of the territories, districts, protectorates, dependencies or insular or other possessions or acquisitions thereof, or in any foreign countries, and for either of said pur- poses may take by devise or bequest, hold, purchase, mortgage, sell and convey or otherwise dispose of such real and personal property without this state aV may be requisite therefor. ' But nothing in this- section contained shall be con- strued as exempting from taxation property to any additional amount than is now allowed to sucli corporation under existing laws." U • 368. Enlargement of limitations upon amount of property which non- stock corporations may hold. "If any general or special. law heretofore passed, or any certificate of incor- poration,. siaZl limit the amount of property a corporation other than a stock corporation may take or hold, such corporation may take and hold property of the value of ten million dollars or less, or the yearly income derived from which shall be one million .dpllars or less, notwithstanding any such limitations. In computing the value of such property, no increase in value arising otherwise than from iipproyements made thereon shall be taken into account." 12 Poweir to Botrow Money and Mortgage Property. 369. In general. " In addition to the powers conferred by the general corporation law, every stock corporation shall have the power to borrow money and contract debts , when necessary for the transaction of its business, or for the exercise of its cor- porate riglits, privileges or franchises, or for any other lawful purpose 'ol its incbrporation ; and it may issue and dispose of Its obligations for any amount So borrowed, and it mS.y mortgage its property and iranchises to secure, the pay- inent of such obligations, or of any debt ■eontracted for said purposes. Everj' such mortgage, except purfthase-money iiiortgages and mortgages authorized by contracts' made prior to May first, eighteen hundred and ninety-one, shall be consented to by ■ the holders of not less than two-thirds of'the capital stock of the corporation, or, if the corporation is authorized to issue shares without nominal or par value, then by the holders of two-thirds of the total number of shares issued and outstanding, which consent shall ibe given either in writing or 11: General Corporation Law, § 14. Debts should be deducted in esti- as amd. by L. 19'ao, ch. 408. nlating the value of property which a 12.' General Corporation Law, § 13, ' corporation may hold. Wetmor.e v. as ariid. by L. 1909, ch. 276, and L 'PaTker, 52 N. Y. 450. 1911, ch. 581. 28 434 COKPORATIOSfS. by vote at a special meeting of the stockholders called for that purpose, upon tlie same notice as that required for the annual meetings of the corporation; and a certificate under the seal of the corporation that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as aforesaid, shall be subscribed and acknowledged by the president or a vice- president and by the secretary or an assistant secretary, o| the corporation, and shall be filed and recorded in the office of the clerk or register of tlie county wherein the corporation has its principal place of business. When authorized by like consent, the directors under such regulations as they may adopt, may confer on the holder of any debt or obligation, whether secured or unsecured, evidenced by bonds of the corporation, the right to convert the principal thereof, within such period as may be fixed by the resolution of the directors conferring the right of conversion, into stock of the corporation. 1. If the corporation has a capital stock all of the sliares of which have a nominal or par value and if the capital stock shall not be sufficient to meet tlic conversion when madt, the directors shall from time to time, authorize an in- crease of capital stock sufficient for that purpose by causing to be filed in the office of the secretary of state, and a duplicate thereof in the office of the clerk of the county where the principal place of business of the corporation shall be located, a certificate under the seal of the corporation, subscribed and acknowl- edged by the president and secretary of the corporation setting forth, a. A copy of the resolution of directors authorizing the conversion of such bonds ; b. That the holders of not less than two-thirds of the capital stock of the corporation duly consented to the adoption of such resolution; c. A copy of the resolntioii of the directors of the corporation authorizing the increase of the capital stock of the corporation necessary for the purpose of such conversion ; d. The amount of capital theretofore authorized, the. proportion thereof ac- tually issued and the amount of the increased capital stock. If the corporation he a railroad corporation the certificate shall have indorsed thereon the approval of' the public service commission having jurisdiction thereof. When such certificate hag been filed, the capital stock of such corporation shall be increased to the amount specified in such certificate. a. If the corporation is authorized to issue shares without , nomiiial ov par value, and the number of shares which it is authorized to issue shall not be sufficient to meet the conversion when made, the directors shall, from time to time, authorize an increase of the number of shai-es sufficient for that purpose by causing to be filed in the #ffice of the secretary of state, and a duplicate thereof in the office of the clerk of the county where the principal place of bu.>*i- ness of the corporation sljall be located, a certificate under the seal of jthe. cor- poration, subscribed and acknowledged by the president ajid secretary of the corporation, setting forth, a. A copy of the resolution of the , directors authorizing the conversion of the bonds; b. That the holders of not less than two-thirds of the total nximber of shares issued and outstanding duly consented to the adoption of such resolution; c. A copy of the resolution of the directors authorizing the increjjise ; of the number of shares, and, if necessary, the amount of the stated capital, requisite for the conversion; POWERS, DUTIES AJfD PtTNCTlONS OF CORPORATIONS. 435 - d. The number of shares theretofore authorized and the number actually issued, the -total number of shares which the corporation shall thenceforth be authorized to issue and the amount of capital with which it will thenceforth carry on business, which amount shall bear the same relation to the total num- ber of authorized shares as is required by subdivision two of section nineteen of the stock corporation law. When such certificate has been tiled, the number of shares, or stated capital, or both, of such corporation, shall be increased as specified in such certificate." is The power to borrow money to protect its assets is an inci- dental power of every corporation ; and its choice of a means for the execution of such power presents no question for judi- cial interference, where the means is neither corrupt nor pro- hibited.^* And business corporations, unless restrained by their charters, possess the power to borrow money and issue certificates therefor.^^ A corporation, whether trading or religious, may, at common law, assign its property in trust for the payment of its debts, unless restrained "by its charter, or by some other statute.^^ It is not essential to the validity of a mortgage that it should have been given to secure an antecedent debt, a debt contracted simultaneously with the giving of the security, if legitimate and incurred in the busi- 13. Stock Corporation Law, § 6, a' gage thereon, which was not made b> amd. by L. 1920, ch. 607. the corporation and the payment of Common carrier, railroad or street which it has not assiimed, in order to railroad corporation, approval of issue prevent a threatened foreclosure of thp of stojck, bonds and other forms of in- mortgage, is not in violation of thi debiedness. Sec Public Service Com- section requiring the assent of stock mission Law, §'55. holders to the execution of a mortgage. Gas or electrical corporations, ap Hirsoh v. Twelfth Ward Bank, 66 Misc. provai of issues of stock, bonds and 290. 122 K Y. Supp. 1076. other forms. of indebtedness. See Pub- Corporation may execute a deed in lie Service Commission Law, § 69. escrow of mortgaged -premises as se- Steam corporations, approval of is- curity for payment of the mortgage al sues of stock, bonds and other forms certain stated date. Wolf v. Arminus of indebtedness. See Public Service Copper Mine Co., 6 Misc. 562, 27 N. V. Commission Law, g 82. Supp. 643. Telegraph or telephone corporations. 14. Pow«r to borrow money. — Curtis approval of issues of stock, bonds ami v. Leavitt. 15 N. Y.. 9; Hyde v. Equit- other forms of indebtedness. See Pub- able Life Assurance Society, 61 Misc. lie Service Commission Law, § 101. 518, 527, 116 N. Y. Supp. 319. An assignment by a corporation, the 15. Wells v. Town of Saliua, 119 owner of an equity of redemption itj N. Y. 280, 387, 33 N. E. 870. real property of the rents of such prop- 16. De Ruyter v. St.- Peter's Cliurcl'. erty, to the holder of the third raort 3 N. Y. 338. 436 COEPOKATIONS. ness of the company, is within the authority conferred.^'' A mortgage to secure an overissue of bonds is not void.^^ The maximum limitation^ upon the amount for which a mortgage may be issued was stricken out by L. 1901, oh. 354. This sec- tion does not apply to moneyed corporations," nor to foreign corporations.^" 370. Consent of stockholders as essential to validity of mortgage. The question whether the purpose of the statute is simply to protect the stockholders f r,om careless, improyident or cor- rupt acts of -the officers of a corporation or is. intended to re- quire the consent of> the stockholders as provided in the statute in every case to make legal and effectual a mortgage on corporate property, has been a subject for consideration in this, and other states where similar statutes exist, and the conclusions reached are not uniforin. In this state, however, the answer to. the question was unmistakably given by the Court of Appeals long before the enactment by the legislature of the Sliock Corporation Law of 1890 arid, of course, the a,mendments thereto and revisions and consolidations thereof since that time. Thie.rule then announced, and since followed, is that the Consent of the stockholders to the mortgage, given as prescribed by law, is essential to the validity of every cor- pora,te. mortgage.^ The statiite operates as protection of the stockholders against the improvident or collusive acts of the officers in incumbering the property of the corporation,^ g.nd 17. Lord V. YonkeTs Fuel Gas Co., Provision. lequiring consent of stock- 99 -N. Y. 547, 2 N. E. 909. holders mortgage of property does not A consent to mortgage real and per- apply to foreign corporations owning sonal estate of a corporation under L. property, in this state. In re Heffron 187^, ch. 163, does not include the, cor- Co., 216 Fed, 643. porate rights and franchises which be- 1. Vail v. Hamilton, 85 N. T. 453; came vested In the corpoEation»by vir .Leffert v. Jacknmn, 227 N. Y. 310, 12'5 tne of its organization. Lord v. Yon- . N. ,E. 446. kers Fuel Gas Co., 101 N. Y. .614, 3 2. G. V. B. Mining Co. v. First Na- N. E. 902. tional Bank of Hailey, 95 Fed. 231; 18. New Britain National Bank v. ..Matter ,of Wendler llachine Co., 2 Apip. eaeveland Co., 91 Hun 447, 36 N. Y. Div. 16, :20„ 37 N. Y.' Supp. 444; Black Supp; 387, affd: 158 N. Y. 722, 53 N. E v. Ellis, 129 App., Div. 140, 113 N. Y. 1128. ■ ■ Supp. 558, affd. 19'7 N. Y. 402, 90 19. Stock Corporation Law, § 5. N. B. 958; Market &. Fulton National 20. Ernst. V. Rutherford & B. S. Gas Bank y. Jones,'? Misc! 207,27 N. Y. Co., 38 App. Div. 388, 56 N. Y. :Supp. Supp. 677, afld. 90 Hun 605, 35 N. Y. 403. Supp. 1111. POWERS, DUTIES AND PTJNCTIONS OF CORPOBATIONS. 437 also for the benefit or protection of the corporation itself and its creditors.* The language of the statute is most clear and specific ; manifestly it was made so to accomplish some pur- pose. That purpose is very plainly indicated on the face of the statute ; it substitutes for mere oral expressions of assent, casually given it may be, an orderly permanent record which can be referred to.^ The provision involves an application to the stockholders, aiid, on their part, consideration, judgment, and final determination, and, on the part of the assenting stockholders a written expression of their conclusion.^ 371. Requisites of consent: When consent not required. The form of consent by the stockholders is immaterial if the intention is clear. Any instrument is sufficient, which contains reasonable evidence of the consent of two-thirds of the stockholders, and which contains enough to identify the mortgage to which such consent is intended to be given. And the courts have been liberal in construction of the statute as to details of compliance.® Thus, a written assent has been held good, although it did not itself state the amount of the debt which the mortgage was to be given to secure.'' And a mortgage executed in behalf of the corporation by its presi- dent, with the written iiidorsement thereon of the consent of another stockholder,^ who, together with the president, at the time owned more than two-thirds of the stock, is valid under 3. In re ' Pfoga?essive Wall Paper the court, "makes the instrument, *a Corp., 330 Fed. 171. - of the time it was given, a valid mort- 4. In re Post & Davis Co., 219 Fed. gage." 171. A chattel mortgage, given to secure 5. Rochester Savings Bank v, Averell, a part indebtedness, without any as- »6 N. Y. 475. sent, and -without being voted at a 6. Greenpoint Sugar Go. v. Kings Co. stockholders' meeting, is invalid and Mfg. Co., 7 Hun 44, affd. 69 N. Y. 338. cannot be subsequently ratified. In re 7. Greenpoint Sugar Co. v. Whitin. Post & Davis Co., 219 Fed. 171. 69 N. Y. aas, aas. in Kpqhester Sav- A written consent that the real and ings Bank v. Averell, 96 N. Y. 475, it personal property of the company was held that a mortgage dated Jan- "may be mortgaged" is broad enough uary, 1874, and invalid when origin; to warrant the cancellation of a mort- ally filed because of the absence o" gage on some of its chattels, and the any written assent, was validated by substitution of another mortgage on the signing of ,^nch an assent in No other chattels of the company. Star vember, 1894 ; the mortgage being then Printing Co. v. Andrews, 9 N. Y. Supp. reacknowledged. "Such assent," Bay> 731, 31 St. Rep. 188. 438 COBPORATIONS. this section.^ In the absence of fraud, or of , any objection upon the part of the stockholders, a defect in a consent, to invalidate a mortgage given under it, must be of so substan- tial and radical a character that an intention to consent can- not be inferred from the instrument.^ It has, be^en held also that a court of equity will enforce a mortgage given by a cor- poration without the written assent, where the mortgage is given by the corporation pursuant to a valid agreement made by it to give the mortgage, and in consideration of which agreement and in reliance upon which, the moi'tgagee gave property or other valuable consideration to the corporation,^" such mortgages are of the same type as purchase-money mortgages, which the statute itself expressly excludes from its operation and what the courts have held does not require the consent of stockholders for its validity .■^^ And indeed, courts of equity will not permit a corporation to retain prop- erty, with all the benefits derived from its purchase, and at the same time repudiate its liability for the purchase price thereof or its liability under a mortgage given to secure the purchase price.^^ The statute manifestly applies only to creating a new encumbrance on corporate property, not to keeping alive one existing on property acquired subject to mortgage and under agreement to continue as a valid and subsisting lien." On the 'other hand it has been held that where the owner of a business transferred it to a corpora- tion organized by him, subject to a chattel . mortgage, and within the four months ' period prior to bankruptcy, the mort- gage was renewed without obtaining the consent of two- thirds of the stockholders, as required, the mortgagee became a general creditor of the, estate." 8. G. V. B. Mining Co. v. First Na- v. Equity Gas Light Co., 84 Hun 373, tional Bank of Hailey, 95 Fed. S^ 32 N. Y. iSupp. 385 ; Clement V. Con- 9. Greenpoint Sugar Co. v. WTiitin. gress Hall, 72 Misc: 519, 133 N. Y. 69 N. Y.'32«. Supp. 16. 10. Paulding v. Chrome Steel Co., 94 12, Farmers' L. & T. Co. v. Equity N. Y, 334, 340; Hamilton Trust Co. v. Gas Light Co., 84 Hun 373, 3-3 N. Y. Clemes, 163 N. Y. 423, 57 N. E. 614'; Supp. 385. Black V. Ellis, 129 App. Div. 140, 113 13. Black v. Ellis, 197 X. Y. 403, N. Y. Supp. 55S, affd. 197 N. Y. 402, 90 N. E. 958; Leffert v. JaCkman, 227 90 N. E. 958. N. Y. 310, 13i5 N. E. 446, 11. Black V. Ellis, 197 N, Y. 402, 14. In re Eagle Steam Laundry. 2^ 90 N. E. .958; Farmers' L. & T. Co. Am. B. E. 8'59, 176 Fed. 740. POWERS, DUTIES AND FUNCTIONS OF COBPOEATIONS. $39 372. Who may consent. It is not a valid objection to the validity of the mortgiage that some of the shares represented in the consent had not been paid for in fnll/^ or that a transfer has not been en- tered in the stock book.^^ Where the corporation is itself the oTvner of a portion of its stock, it cannot give consent for the shares so owned by it to make up the requisite two-thirds, nor can the assenting stockholders be deemed to represent a pro- portionate amount of the stock owned by the corporation. But, it sfeems, that the assignee of such stock is a stockholder within the meaning of the statute and is entitled to sign the consent." The pledgor of stock who has transferred it to secure a loan made to him, and has delivered the certificates thereof and transferred the stock on the books to the lender, cannot, while such shares are so pledged, assume to sign, as the owner thereof, the written consent to the execution of a mortgage required by the statute.^^ In determining whether a sufficient number of stockholders of the corporation con- sented to the execution of the mortgage as required by the statute, the amount of the stock actually issued and owned should be regarded as the amount of the capital stock.^^ The provision of, the statute requiring the consent of the stock- ..; . ■ . -■ ■ ■•■(!;. . - ,. 15. Lyceum v. Ellis, 8 N. Y. Siipp. 32 of the statute, that no transfer of 867, 30 St. Rep. 343! stock shall be valid -as against the cor- Stockholders for purpose of coaseut- pdratibn, its stockholders and credi- ing to mortgage. — Persons tvIio have ^tors, until it has heen enlered in a made no payments on their subscrip- stock book required to be kept by tho tiona, but are officers of' theiassooia- corporation, are not to be construed tion, and persons who have made s^h- , in such a manner as to require an staptiaj payments either in cash or original subscriber to the stock to have work, are stockholders for the purpose his holding of stock entered in the of giving their ■ consent, though no cier-' stock book before his consent to the tificateB have been iesiled. McCo'mb issue of the corporate riioi-tgage can be V. Barcelona Apartment Assn., 56 Hun valid. Hamilton Trust Co. v. Olemes. 644, 10 N. Y. Supp. 546, affd. 134 N. Y. 17 App. Div. 153, 45 N. Y. Supp. 141, 59$, 31 N. E. &13. affd. 163 N. Y. 423, 57 N. E. 614. ' 16. Entry of transfer for stock book 17. Vail v. Hamilton et al., 85 N. Y. not necessary to validity ' of consent. 453. —Tie statutory ■ requisite that the 18. Vail v. Hamilton, 30 Hun 355, written consent of the stockholders affd. 85 N. Y. 453. owning a,^ least two-thirds of the capi- 19. Atlantic Trust Co. v. Crystal tal stock must be given and flfed be- Water Co., 73 App. Div. '539, 76 N. Y. fore the mortgage is issued, and the Supp. 647; Swan v. StileS, 94 App. further provision contained in section Viv. il7, 134, 87 N. Y. Supp. 1089. 440 CORPORATIONS. holders owning at least two-thirds of the capital stock, refers to the stock issued, or agreed to be issued, or actually sub- scribed for, and not to the nominal amount to which the capi- tal stock is limited in the certificate of incorporation.^'' 373. Filing consent. ' The provision for filing the consents of stockholders is merely to perpetuate the evidence thereof.^ And so filing in the office of the clerk of the county where the mortgaged prop- erty is situated is not an indispensable condition to the valid- ity of the mortgage; as against a subsequent mortgagee or purchaser, with notice, the mortgage is valid. It seems, that in such case, if the filing of the consent is essential to complete the mortgagee's right; this may be done as of the time the consent was given.^ Accordingly the consents are sufficiently given where they are recorded at the same time . with the mortgage.^ 374. Who may object to validity of mortgage. In order to take advantage of the invalidity of a mortgage, executed without the statutory requirements having been ob- served, it is not necessary that the objection should be raised by a stockholder or creditor, but the defense is available to the corporation itself.* So also a receiver of a manufacturing corporation, appointed upon the application of a creditor, who has recovered a judgment against it and had an execu- tion issued thereon returned unsatisfied, may maintain an action to set aside a mortgage executed Isy the company, on the ground that the written assent of the stockholders owning at least two-thirds of its capital stock had not been first pro- cured.^ And the question can be raised hj a general assignee for the benefit of all the creditor?.^ But a corporation is es- topped, as against its mortgagee, from raising this objection, 80. Greenpoint Sugar Co. v. Kings N. E. 3&9; Everson v. Eddy, 59 Hun Co. Mfg. Co., 7 Hun 44, affd. «9 N. Y. 620, 13 N. Y. Supp. 87«. 3W. 4. London Realty Co. v. Coleman 1. Blaek v. Ellis, laS App. Div. 140, Stable Co., 140 App. Div. 495, 185 N: Y. 113 N. Y. Supp. 558, affd. 197 N. Y. Supp. .410. 403, 90 N. E. 958. 5. Vail v. Hamilton, 30 Hun 35r> 2. Rochester Savings Bank v. Averell affd. 85 N. Y. 453. et al., 9« N. Y. 467. 6. Leffert v. Jackman, 227 N. Y. 310 3. Welch -V. Importers & Traders' 135 N. E. 446. National Bank, 122 N. Y. 177, 190, S.'i POWERS, DUTIES AHD FUNCTIONS OF GOBPOKATIONS. 441 SO long as it hblds the benefit of the property it acquired under the mortgage, and as its judgment creditors must claim under the mortgagor, they, in the absence of fraud, are equally estoppedJ A; stockholder of a corporation cannot be permitted ta set up as a defense to an action to foreclose a mortgage given by the corporation to trustees to secure an issue of bonds, that such mortgage was not properly executed nor authorized, wh^re interest has been regularly paid upon such bonds to his knowledge for many years during which time he was a stockholder of the corporation.^ If the stock- holders elect to treat a mortgage given without consents as valid, a creditor cannot take advantage of the omission of the statutory prerequisite.^ So also a purchaser of property of a corporation at execution sale under judgments against it, who has notice of a prior mortgage on the property, cannot take advantage of an alleged want of consent to the mortgage by the corporators.", And a mortgagor who has sold the mortgaged premises, or one who has accepted a conveyance subject to the mortgage, or who himself executed the mort- gage, may not require proof of the assent by stockholders to the mortgage.^^ 375. Validity of corporate mortgage. "Whenever any mortgage aifeoting property or franchises within this statu heretofore or hereafter executed by authority of the boMd of directors in behalf of any stock corporation, domestic or foreign, of any description, recites or represents in substance or -effect that the execution of such mortgage has been duly consented to, or authorized' "by stockholders, such -recital or representation in any such mortgage, after public record thereof withiii this state; shall be presumptive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by •stocfeholders as required by any provision of, law, After any such mortgage heretofore or hereafter shall have been publicly recorded for more than one year in one or more of the counties of this state Containing tlie mortgaged pi:emises or any part thereof, and ' the cor- pordtion shall httve received value for bonds aClJually issued under and secured by such mortgalge, and interest shall have been paid on any of such bonds accord- . 7. Hamilton Trust Co. v. Clemes, 17 v. Jones, 7 Misc.. 307, 27 N. Y. Supp. App. Diy. 158, 45 N. Y. Supp. 141, afld. 677, affd. 90 Hun 605, 35 ir. Y, Supp. 163 N. Y. 4S3, 57 If. E. 614. See also, 1111. New Britain National Bank v. Cleve- 10. Star Printing Oo. v. Andrews, 9 land Co:, 91 Hun 447, 36 N; Y. Supp. N. Y. Supp. 7'31, 31 St. Rep. 188. 3«7, affd. 158 N. Y. 7»3, 53 N. E. 1188, 11. Beebe v. Richmond Light & Power 8. Warren v. Bigelow Blue Stone .Co.. 3 App. Mv. 334, 38 N. Y. Supp. Co., 74 Hun 304, Z& N. Y. Supp. 649 395. 9. Market & Fulton National Bank 442 COEPOEATIONS. ing to the terms thereof, .such ,, recital or, representation of such mortgage so recorded shall be conclusive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by stockholders as re- quired by any provision of law, and its validity shall not be impaired by reasoH of any defect or insufficiency of consent or authority of stockholders or in filing or recording such consent or authority, and such mortg3.ge shall be valid and binding upon the corporation, and those claiming und:er it, as security for all valid bonds issued or to be issued thereunder, unless such mortgage shall be, adjudged invalid iu an action- begun as hereinafter, in this section, provided. Notwithstanding the foregoing provisipns of this section, the invalidity of any such mortgage heretofore recorded because of insufficiency of consent by stock- holders may be adjudged in any action for such purpose begun before the first day of April, nineteen hundred and two, and the invalidity of any such mort- gage hereafter recorded, because of insufficiency of consent byi stockholders, may be adjudged in any action for such purpose begun, within one year after the . earliest. record of such mortgage in any county ui this state, provided, in either, case that sucti action shall have been so begun by or in behalf of the corporation by direction of the board of directors ' acting' in theiT own discretion, or upon the wl-itten request of the holders <5f not less than One-tliird of the capital stock of the corporation; arid in any such action' so bfegun by or in behalf of thd cor- poration, the recitals or representations of the mortgage shall be presumptive evidence only as first above provided. : Whenever hereafter, in compliance ;with . any, law of this state, the Cjffioers of. any corporatipn shall h^ve made and filed and recorded a certificate that the execution of a mortgage hereafter made by the corporation has been duly consented to by stockholders, such certificate shall be conclusive evidence as to the truth thereof, in favor of any and all persons who in good faith shall receive or purchase, for value, any bond or obligation purporting to be secured by such mortgage; at any time when said certificate shall remain of record and uncanceled.; Nothing in this section contained shall aifect any right or any remedy in respect of any such right of any creditor accrued before this enactment nor shall it dispense with- the necessity of obtain- ing the consent of the public service commission having jurisdiction thereof to any mortgage by a railroad corporation." 12 . 376. Mortgage covering after-acqnired property. While a corporate mortgage may include property to be thereafter acquired, it is, as to. chattels not theij. in existence, merely an executory conjjjract to give a Hen which a court of equity may enforce as between the parties, when the chattels come into existence, or which the mortgagee may make effect- ive by taJjiiig actual possession of the after-acquired prop- erty, but such contract will not be 'enforced wh.ere the rights of the; creditors of the mortgagor ,will be affected thereby, especially where the mortgagee has not filed or refiled its mortgage as a chattel mortgage, where ' required by law, or 12. Stock Corporation Law, § 7,' corporations. Stock Corporation Law, This section does not apply to moneyed § 5.. .. , i POWEBS, DUTIES AlfD fLTNCTIONS OF COBPORATIOKS. 443 doneaiiytMng to reduce to his possession any of the after-ac- qiiirM jptop^rty of the mortgagor.^^^ A mortgage given by a manufacturings corporation upon all its' property, real and personal, to secure its negotiable bonds, with the right of pos- session and enjoyhient in the mortgagor for its own use and benefit -until default, although it contains a clause purport- ing ih- terms to cover after-acquired personal property, is not gdodi^' against a trustee in bankruptcy, as to shifting stock arid martefial on hand when possession was taken by the mort- gagee pursuant to the provisions of the mortgage, a few days before the commencement of bankruptcy proceedings against^ the mortgagor."' Likewise a mortgage by a corporation of all its property, including its plant, made to secure the pay- ment of the principal and interest of its bonds, which in terms purports to include future earnings and products, and pro- vides that until default the mortgagor shall have the use of the earnings in the conduct of its -business, and that upon de- fault the mortgage trustee may go into possession, exercise the corporate. franchises and appropriate t;he earnings to the payment of the mortgage debt, 4pe?i not, as against general, creditors of the Corporation, operate. as a, lien upon earnings until actual entry and possession under it.^*„ But a corporation may executes a mortgage, which if suitably phrased, mil cover after-acquired property, including the, interest of the corpo- 13. Rochester XMstilling Co. v. Rasey. euiity Co. v. Saratoga G. & El. L. Co.. 142 N. ,Y. 570, 37 IJ., E, 633; Mae- 15,9 N. Y. 13>7, 53 N. B. 758. Donn^ll V. Buffalo Loan, Trust &c' Safe Right to earnings of corporation a'' Depdsft-'Co., 193 N. Y; 92, 85 N. B. ' between sequestration and foreclosure 80i. "■■■■''■'■ receivers. — As between a, receiver ap- i4. Zartman v. First National Bank, pointed in a : sequestration action in- 189 .N. Y. 267,; 8a N. E. 137. atituted iby a general jjidgment eredi- 15. Right to earnings of corporation t(jr of the corporation, and a receiver as between creditors and bondholders, appointed at the same time in an ac- — ^As between the general creditors of tion for the foreclosure of siich a moft- the ' cb^poratibii ' afld its bondholders gage purporting to include' future -earn- under such a mortgage purporting to ings and products, the sequestration re- include future earnings arid products, ceiver has the superior tight in deKts tlie right or lien of the bondholders is and accounts due to the cotporatioii properly limited to the earnings of the upon sales by it of products of its corporate business, in the sale of it plant, produced after the giving of the products, after the mortgage trustee mortgage and before the appointment or a receiver in foreclosure hte ac- of 'either receiver. N. Y. Security Co tually taken possession; aiid the earn- v. Saratoga G. &' El. h. Co;,'159 N. Y. ings prior to that time belong in equity 137, 53 N. E. 758. to the general erefjitors. ?f. Y. Se- 444 CORPORATIONS. ration in property purchased by it under a contracij provid- ing that the title thereto shall remain in the vendor until the purchase price thereof has been fully paid.^^ So a mortgage given to complete or operate a railroad may cover after-ac- quired property, whether real or personal." The title ac- quired under foreclosure of a mortgage which covers after- acquired property is sufficient to support an equitable action by the purchaser to impose a trust upon the lands, although the same were not specifeally described in the mortgage.^^ And under a mortgage executed by a corporation to secure bonds and covering lands thereafter to b© acquired by the mortgagor and described in the mortgage, the lien of the mortgage on lands subsequently acquired by the mortgagor is superior to the title acquired by purchasers on the fore- closure of a mechanic's lien on the same lands filed subsequent to the acquisition of the fee by the mortgagor.^^ 377. Refunding mortgage. Where the terms of a mortgage executed to secure refund- ing bonds are not unreasonable the corporation should be held strictly to its engaig^ments. The sense of security of the bond- holders should not be lessened by any laxity of construction.^" When a consolidated mortgage executed for the purpose of refunding prior mortgages and meeting other indebtedness provides that a certain number of the bonds received by the consolidated mortgage shall be used for the retirement of out- standing prior bonds until the same shall be paid and the mortgage securing the same be cancelled, and that the trustee shall hold the first mortgage bonds presented for retirement as a further security for the payment of the consolidated mortgage bonds until all the first mortgsfege bonds are pre- sented or paid, and in either event the prior bonds shall there- upon be cancelled, a holder of bonds secured by the prior mortgage which have been paid and cancelled from a sinking 16; Washington Trust Co. v. Morse 110 App. Div. 32, 96 N. Y. Supp. 899, Iron Works, 106 App. Div. 195, 94 affd. 187 N. Y. 516, 79 N. E. 1113. N. Y. Supp. 495, modfd.; 187 N. J. 307, 19. United States Mortgage & Trust 79 N. E. 1022. Co. V. Eastern Iron Co., 130 App. Div. 17. Piatt V. New York & Sea Beach 679, 10i5 N. Y. Supp. 391, affd. 195 Ry. Co., 9 App. Div. 87, 41 N. Y. N. Y. 589, 89 N. E. 1114. Supp. 4a', aflfd. 153 N.Y. 670, 48 N. j;_ 20. St. Louis and San Francisco K. 1106. Co. v. Guarantor Trust Co., 205 N. Y, 18. New York Water Co. v. Crow. 609, 613, 99 N. E. 163. POWERS, DUTIES AND- FUNCTIONS OF COEPOEATIONS. 445 fund-jx^fwi^ied for therein, is iiot entitled upon tendering the saine'lo reGeive in exchange bonds -secured by the consoli- diited mortgage, but is only entitled to such exchange upon surrendering uhcaneelled bonds.^ 378. Filihg of mortgage xoveriug real and personal property. "-Mortgages creating a lien upon real and personal property, executed by a corporation as security for the payment of bonds issued by such corporation, or by any telegraph, telephone or electric light corporation, and recorded as a mort- gage of real property in each county where such property is located or through which the line of such telegraph, telephone or electric light corporation runs, need not be filed or reflled as chattel mortgages." 2 1. Havana Electric Ry. Co. v. Cen- tral Trust Co., 180 App. Div. 839, 107 N. y. Supp. •680, aflfd. 197 N. Y. 534. 91 N. E. 1114. Refunding moitgage construed. — A corporation owning property mort- gaged to secure the payment of bonds executed a second mortgage styled a "refunding and ipiprovemeht mort- gage," to secure an issue of new bonds of which a certain proportion were to be reserved to be issued to the mort- gagor in exchange for or to take u at maturity, or before maturity, the underlying bonds. The new mortgage provided for two methods of exchange : (i) Whenever the mortgagor tendered to the trustees whether before or after maturity an^ of the Underlying bonds with uhmiitured coupons the trustees were to deliver to the mDrtgagor re- funding bondis of ah equal face value, (a) The inortgagor was entitled to sell-' refunding bonds to provide a means to purchase underlying bonds, in which case the trustees were to deliver the refunding bonds simultaneously with 'the deposit of a cash equivalent for the bonds delivered and out of such cash the trustees were to pay to the inortgagor on the delivery of the un- derlying bonds "so paid or purchased" by the mortgagor a sum equivalent to the face anioulit of the underlyino- bonds "so paid' or purchased." Wlieu- ever all the underlying bonds should have been surrendered in exchange for refunding, bonds, the trustees at the request of the mortgagor were to. can- cel the bonds and cause the mortgage securing the same to be discharged of record. It was held that the mort- gagor on paying underlying bonds at maturity out of its general fund and on canceling the same and depositinj,' them with the trustees was entitled to the delivery of an equivalent valui' in refunding bonds. Charleston Illumi- nating Co. V. Knickerbocker Trust Co., 138 App. Div. 107, 132 N. Y. ; Supp. 994, aftVl. 203 N. Y. 539, »6 N. E. 1113, following Twin State Gas & Elec- tric Co. V. Knickerbocker Trust Co., 135 App. Div. 467, 130 N. Y. Supp. 764. : 2. Lien Law, § 331. Application of section.— Zartman v. First Nat. Bank, 189 ,N. Y., 367, 8^^ N. E. 137; Clement v. Congress Hall. ■73 Misc. 519, 133 N. Y. Supp. 16. A gas and electric light company need not under L. 1891, cli. 171, .file aa a chattel mortgage a mortgage which has been duly recorded. iNew; York Security & Trust Co. v. Saratoga .Gas & Electric Light Co., 88 Hun 569, 34 N. Y. Supp. 890, aflFd. 157 N: Y. 689, 51 N. E. 1093. A mortgage executed by a railroad corporation covering afterracquired property, consisting of real and per- sonal property, need- not be filed as a 446 COEPORATIONS. But mortgages, iiot executed as. security for the payment of bonds, and covering real and personal. property, so far as the personal property is concerned, must be .filed, as provided by statute and treated as a chattel mortgage.^ The term real property, as used in this section, covers anything which is de- fined as real property in the Beal- Property Law>. and, thus, includes chattels real, except a lease for a term not .exceeding- three years.* , , , , Jvdicial Proceedings to Sell, Mortgage, or Lease Real Property. 379. In general. "Whenever any corporation is required by law to make application to the court for leave to mortgage, lease or sell its real estate, the proceeding therefor shall be had pursuant to the provisions of this article (4) ' ' 5 It should be noted that this article, requiring application to the court for leave to naprtgage, lease, br sell corporate real estate, applies only when leave of court so to do is required of the corporation, and, hence, dpes not apply to stock corpo- rations. chattel mortgage, where it has i been duly recorded as a real estate mort- gage. Piatt V. New York &,Sea Beach Ry. Oo., 9 App. Div. 87, .41 N. Y. Supp. 42, affd. 153 N. Y. fi70, 48 N. E. 1106. 3. Fitzgerald v. Atlanta Home Ins. Co., 61 App. Div. 350,. 356, 70 N. Y Supp. 5S2. ■ -: ' •■' i: 4. Westchester Trust Co. v. Hobby Bottling Co., 103 App. Div. 464, 9S N. Y. Supp. 482, affd. 185 N. Y. 577, 78 N. E. 1114, holdingLthat a^mort- gage executed by a cdrpora^ion cover- ing, in addition to personal property, a leasehold interest in real estate for a term of ten years, falls within the provisions of this section. 5. General Corporation. Law, § 70. Cottsolidators' note to article 4. — Code Civil Procedure, §§ 3390-3596, so far as they relate to proceedings for the sale of the real property of a cor- poration, have been consolidated in this ; article, and. the portion relating to the sale of the .real property of a .joint-stock association has been con- solidated in Joint;iStock ^^ssociation Law, § 8 (now General Associations Law.) . Religious corporations; sale, mort- gage and lease of real property.— See Religious Corporation Law, § 12. Membership corporations; purchase, sale, mortgage and Jease of real prop- erty. — See Membership Corporation Law, § 13. Joint-stock association ; proceeding to mortgage, lease or sell real estate. — W^heneyer any joint- stock association is required by law to make applica- tion to the court for leave to mort- gage, lease or sell its real estate, the proceeding therefor shall be had as prescribed for corporations in article four of the General Corporation Law. General Associations Law, § 8. POWEBS, DUTIES AND FUISCOTIONS OE CORPORATIONS. 447 380. Petition. " The proceeding shall he instituted by the presentation to the supremo court of the district or the county court of the county where the rteal property, or some part of it, is situated, by the corporation applicant, of a petition setting forth the following facts:' ' "''' ■■ ■ *'".>:■ " "'r. : ;. .;';- :• ,j ; 1. The name of the corporation and of its directors, trustees or managers, and of its principal officers, and their placjesi of residence. 2. The business of' the corporation or the object or purpose of its incorporation and a reference to the statute under which it ; was incorporated. 3. A description of the real property to be sold, mortgaged or leased, by metes and boimds, with reasonable certainty. ,- ..^ ,, , - , ,,,,_.. , 4. That the interests of the. corporation will be promoted by the sale, mort- gage or lease, of the real property specified, and a concise statement of the reasons therefor. , ■, . . . 5. That such sale, mortgage or lease has been authorized, by a ¥ote of at least two-thirds of the directors, trustees or managers of the corporation at a meeting thereof, duly called and held, and a copy of the resolution granting such authority. 6. The market value' of the' remaining real property of the corporation and the cash value of its personal assets, and the total amount of its debts and liabilities, and how secured, if at all.; 7. The application proposed to be made of the moneys realized from such sale, mortgage or lease. 8. Where the consent of the shareholders, stockholders or members of the cor- poration is required by law to be first obtained, a statement that such consent has been given, and a copy of the consent, or a certified transcript of the record of the meeting at which it was given, shall be annexed to the petition. 9. A demand for leav.e to mortgage, lease or sell the real estate described. The petition shall be verified in the same manner as' a verified pleading in an action in a court of record." 6 381. Hearing on petition. "Upon presentation of tbe -petition, the court may immediately proceed to hear the 'application, or it may, in its discretion, direct that notice of the appli- cation' shallbe given to any person interested therein, as a -member, stockholder, officer or creditor of the corporation or otherwise, in whioh ease the applica-tiou shall be heard at the tiine and place speeifled in such notice, and the court may in any case appoint a refetee to take the proofs amd report the same to the court, with hiB opinion thereon. Any person, whose interests may be affected by the proceeding, may appear upon the hearing and show cause why the appli- cation should not be granted." 7 i , ; 382. Order to sell, mortgage or lease. " Upon the- hearing of the application, if it. shall appear, to the satisfaction of the court, that, the interests of the corporation will be promoted thereby, an order may be granted authorizing it to sell, mortgage or lease the real property 6. General Gorporation Law, §;71. 7. General Corporation Law, §,'72. 448 coKPOKATiosrs. described in the petition, or any part thereof, for such sum, and upon such terms as the court may prescribe, and directing what disposition shall be made of the proceeds of such sale, mortgage or lease." 8 383. Notice to creditors of insolvent corporation. " If the corporation is insolvent, or its property and assets are insufficient to fully liquidate Its debts and liabilities, the application shall not be granted, un- less all the creditors of the corporation have been served with a notice of the time and place at which the application will be heard." 9 384. Service of notices. " Services of notices, provided for in this article, may be made either personally or, in case of absence, by leaving the same at the place of residence of the per- son to be served, with some person of mature age and discretion, at least eight days before the hearing of the application, or by mailing the same, duly enveloped and addressed and postage paid, at least sixteen days before such hearing." 10 385. Practice in cases not specially provided for. " In all applications made under this article, where the mode or manner of conducting any or all of the proceedings thereon is not expressly provided for, the court before whom such application may be pending, shall have the power to make all the necessary orders and give the proper directions to carry into effect the object and intent of this aTticle, or of any act authorizing the sale of corporate real property, and the practice in such eases shall conform, as neai as may be, to the ordinary practice in such court." H Transfers While Insolvent or in Contemplation of Insolvency. 386. In general. " No corporation which shall have refused to pay any of its notes or other obligations, when due, in lawful money of theTTBited Sta'tos, nor any of its officers or directors, shall transfer any of its property to any of its officers, directors or stockliolders. directly or indirectly, for the payment of any debt, or upon any other consideration than the full va,lue of the property paid in cash. Xo conveyance, assignment or transfer of any property of any such corporation by it or by any officer, director or stockholder thereof, nor any payment made, judgment suffered, lien created^or security ; given by it or by any officer, , director or stockholder when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation, shall be valid, except that laborers' wages for ser- vices shall be preferred claims and be entitled to payment before any other creditors out of the corporation assets in. excess of vali^, prior liens or incum- brances. No corporation formed under or subject to the banking, insurance or railroad law shall make any assignment in contemplation of insolvency. Ever>- person receiving by means of any such prohibited act or deed any pfoperty of 8. General Corporation Law, § 73. 10. General Corporation Law, § 7i5. 9. General Corporation Law, §74. 11. General Corporation Law, § 70. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 449 the corporation shall be bound to account therefor to its creditors or stock- holders or other trustees. No. stockholder of any such corporation shall make any transfer or assignment of his stock therein to any person in contempla;tion of its insolvency. Every transfer or assignment or other act done in violation of the foregoing provisions of this section shall be void. No conveyance, assign- ment or transfer of any property of a corporation formed under or subject to the banking law, exceeding in value one thousand dollars, shall be made by such corporation, or by any officer or director thereof,, unless authorized by previous resolution of its board of directors, except promissory notes or other evidences of debt issued or received by the officers of the corporation in the transaction of its ordinary business, and except payments in specie or other current money or in 'bank bills made by such officers. No such conveyance, assignment or transfer shall be void in the hands of a purchaser for a valuaible consideration without notice. Every director or officer of a corporation who shall violate or be concerned in violating any provisions of this section, shall be personally liable to the creditors and stockholders of the corporation of which he shall be director or an officer to the full extent of any loss they may respectively sus- tain by such violation." 12 The assets of a corporation are a trust fmad for the pay- ment of its debts, upon which the creditors have an equitable lien as against stockholders and all transferees, except those purchasing in good faith for value. This is the general equity doctrine which the legislature has extended by section 66 of the Stock Corporation Law.^^ The intent of. the section is manifestly to protect the creditors of the corporation against collusive transfer to the officers. Where it appears, that the transfer is made simply for the purpose of a more effective enforcement of the claim, and not for the purpose of vesting the property in the president, the transfer is clearly not ob- noxious to the statute." 387. Construction and object of statute. The statute being remedial should not be strictly con- 12. stock Corporation Law. § 6«. 14. Sanders v. Barnaby, 173 App. Legislation leading to enactment of Div. 344, 159 N. Y. Supp. 579. this section discussed. Caesar v. Bev- In the absence of proof that a cor- nard, 156 App. Div. 724, 141 N. Y. poration had refused to pay any of Supp. 659, 688, affd. 209 N. Y. 570, 10.', its' obligations or that it was insolv- N E 1122 "^"^ '"" ^^^^ ^^^ insolvency was im- 13. Larsen & Son, Inc. v. Newmark mihent, an assignment by it of an & Davi^, Inc., 182 App. Div. 724, 17li account for goods sold and delivered N. Y. ^upp. aeS; Sherwood v. Hoi- to one of its officers and stockholders brook, 98 Misc. 668, 163 N. Y. Supp. does not violate section 66 of the 326j affd. 178 App. Div. 462. 165 N. Y. Stock Corporation Law. Weiser v. Supp. 514. As to trust fund doctrine, Marmalax Manufacturing Co., 95 Misc. see ante, par. 100. /''' \ 530. 159 N. Y. Supp. 671. 29 450 CORPORATIONS. strued.^^ Section 66 of the Stock Corporation Law Avas en- acted to prevent those occupying, confidential and fiduciary relations toward corporations from profiting directly or in- directly by information thereby acquired, and to prevent un- just discrimination and preferences among cj-editors of in- solvent corporations, or those bordering on insolvency. The statute relates to corporations which are financially em- barrassed or in danger of so becoming.^^ The statute pro- hibits officers and directors of an insolvent corporation, or of one about to become insolvent, from using their knowledge of its condition and their dominant position for their individual benefit in collecting their own claims, either through a volun- tary payment or through collusive and preferential liens to the prejudice of other creditors, not so favorably situated. It prohibits a preferential general assignment by a corpora- tion, though it does not forbid assignments without prefer- ences. It prohibits a transfer of any of the corporate assets to an officer, director or stockholder upon any other consider- ation than the payment of the full value of the property in cash." But it does not declare invalid all transfers of prop- erty or payments made to creditors of an insolvent corpora- tion, but only such as are made with the intent of gnving a preference to certain creditors over others. And therefore, unless it appears in an action to recover upon an assigned claim for services rendered and material furnished by plain- is. Caesar v. Bernard, 156 App. Div. sublet -the premises for a substantial 734, 141 N. Y. Supp. &59, €.88, affd. rent, there was, in effect, an illegal 209 N. Y. 570, 103 N. E. 1128; Larsen transfer of the corporate property" to & Son, Ine. v. Newniark & Daris, Inc., an officer within c the meaning of sec- 182 App. Div. 734. 170 N. Y. Supp. tion 66 of the Stock C'orpora.tion Law, 268; Kimball v. Cash, 107 Misc. 363, and on the insolvency of the corpora- 176 N. Y. Supp. 541. tion a judgment creditor may compel 16 Caesar v. Bernard, 156 Apip. Div. the lessee to account for the rents re- 724, 141 N. Y. Supp. 659, aff«. 209 N. ceived which she holds for the oredi- Y. 570, 103 N. E. 1122; Shaw v. An- tors of the corporation as a tirustee saldi Co., Inc., 178 App. Div. 589, 165 ex maleficio. Larsen & Son, Inc. v. N. Y. Supp. 872; Trustees of Masonic Newmark & Davis, Inc., i82 App. Div, Hall V. Fontana, 99 Misc. 497, 164 724, 170 N. Y. Supp. 268. N. Y. Supp. 370. 17. O'Brien v. East River Bridge Where the defendant corporation, or- Co., 161 N, Y. 539, 540, 56 N. E. 74; ganized to build and rent apartments, McGill v. Commercial Credit Co., 243 leased an apartment to the wife of its Fed. 637, 650; Throop v. Hatch Lith. president for the nominal rent of one Co., 125 N. Y. 530, 533, 36 N. E. 74'2; dollar per month and for no other con- Jones v. Blun et al., 145 N. Y. 333, sideration, and the lessee thereupon 340, 39 X, E. 954. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 451 tiff's assignor, a corporation, that plaintiff was an oiScer, di- rector, stockholder or a creditor of the corporation, the assignment is not null and void under section 66 of the Stock Corporation LaM^ and the statute is not a defense to the alleged cause of action.^* It is not to be construed literally as rendering illegal every disbursement by a solvent corporation after it has failed to pay an obligation falling within the pro- visions of the: statute.i^ The statute applies to transfers or assignments made by a corporation itself.^" While the statute seeks to accomplish the end aimed at by imposing a restraint^ upon the action of the corporation, its officers, directors and stockholders, nevertheless the consequences of action on their part, in contravention of the statute, is visited upon the creditor whose preference is attempted by them> The word "obligations,'' as used in the statute does not include open running accounts for sei'vices rendered to the corporation under written contracts fixing the rate of payment for such servi(.-es where the amount due thereunder at a given time can be ascertained only by an examination of the books of the party rendering the services, and by the bills presented there- for.^; The word "thereof," used in the second sentence, does not relate solely to a corporation which has " refused to pay any of its notes or other obligations when due, in lawful money of the TJnited. States," referred to in the first sente:nee,.^ The trile construction: of the statute prohibits the acquisition by a director , of . an insolvent corporation, who is also a creditor, ihrxjugh ; the process of .attachment, of a preferential lien on the corporate, asgets,^ There is no such, potency in the entity known as a co-partnership as to shield a stockholder of a cor- poration ffom the penalty denounced by this statute because he, happens to be a member of a firm and ttus a-ljow him to secure to himself a preference of his claim against a corpora- tion. If his co-partner, who is not a stockholder, is injured by the enforcement of the. statute, it may be a matter for adjust- ment between themselves, but offers no reason ^pr suspend- is! Bulova V. Harnett,' Inc., 11-! 537, 31 N. Y. Supp. 523. Misc! 94, 186 N. Y. Supp! 90. 2. Munziiiger' v. tJnited Press, 52 19. Shaw V. Ansaldi Co.. Ttic. 17« App. Div. 338, &5 N. Y. Supp. 194. App. IHv. 589, 165 N. Y. Supp. 872. 3. Munson v. Genesee Iron & Brass 20. Munson \. Genesee Iron & Bras? Works. 37 App. Div. 303. 56 N. Y. works. 37 App. Div. 208, 56 N. Y. Supp. 139. Supp. 139. 4. Tliroop t. H. L. Co., 125 N. Y. 1. Milbank V. De Riesthal, 82 Hun .'i3n. 333. 36 X. E. 742. 452 CORPORATIONS. ing the operation of the statute.^ The fact that transfers of property of a domestic corporation, in violation of the laws of this state, were made in another state does not render the act less fraudulent in law, nor does it relieve the officers there- of from liability therefor.^ 388. Assignment by officer or stockholder of claim against corporation. Where an officer of a corporation, having a valid claim against it which he could have enforced but for the fact that he was then an officer of it, and therefore, within the restraint of the statute, transfers his claim to another, so that the office and title cease to rest in the same person, the statutory re- straint upon its enforcement is removed, and it becomes en- forceable against the corporation, for the statute does not prohibit the assignment, by an officer or stockholder, of a claim he may have against the corporation, to secure or pay his bona fide creditors, where the transaction is in good faith, and with the intent of paying or securing a debt which he honestly owes. Accordiiigly it has been held that the mere relation of husband and wife between the parties to an assign- ment by an officer of a corporation, of a claim against the corporation, and their knowledge that the corporation was indebted to others, are not sufficient to justify a finding that the parties by their transfer intended to evade or circumvent the statute, when it is shown that the transfer was an abso- lute one, made in good faith for a valuable consideration, and for the sole purpose of paying a just debt which was owing by the assignor to the assignee.'' Where a director of an in- solvent corporation assigns his claim against the corporation, and the assignee obtains an attachment and levies upon the property of the corpoiiation, the fact that these proceedings on the part of the assignee result in an unlawful preference in favor of the director, as against other creditors of the cor- poration, does not constitute a defense to the cause of action. The remedy in such a case is to move to vacate the attachment and to set aside the execution.^ 5. Jones v. Blun et al., liS N. Y. 7. Jefferson County Nat. Bank v. 333, 340, 39 N. B. 954. Townlcy, 159 N. Y. 490, 54 N. E. 74. 6. McQueen v. New, 87 Hun 306, 33 8. Welling v. Ivoroyd Mfg. Co., 15 V. Y. Supp. 802; Olney v. Baird, 7 App. App. I)iv. 116, 44 N. Y. Supp. 374. affd. Div. 95, 40 N. Y. Supp. 202. 163 X. Y. 599, 57 N. E. 1138. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 453 389. Transfers in contemplation of insolvency. An act done by a corporation in tlie ordinary and usual course of its business, uninfluenced by the state of its atfairs, cannot be said to have been done in contemplation of insol- vency,^ and the mere fact that a corporation is insolvent does not necessarily render ineffectual the payment out of its money or the transfer of property in the usual course of busi- ness." The invalidity of a payment is conditioned on two facts : (1) The corporation must have been at the time of pay- ment insolvent, or its insolvency must have been imminent. (2) The payment must have been made, not received, with the intent of giving a preference to a particular creditor over other creditors of the corporation.^^ The prohibition against a transfer by a corporation in contemplation of insolvency is not limited to cases where payment of some obligation of the corporation has previously been refused. But where the par- ties to such a transfer know that its necessary effect will be to make the corporation unable to pay its debts, they will be held to have intended that consequence of their acts, and the transfer is illegal.^ A transfer by a corporation of all its 9. Payment, by a bank known by its managing officers and agents, to be insolvent, but continuing in business, of the check of a depositor wholly ignorant of its financial condition, i- niot within the meaning of the pro- vision of the Revised Statutes (1 R. S., 603, § 4) declaring it unlawful for any incorporated company to make any transfer or assignment in con- templation of its insolvency; and such payment cannot be recovered back by an assignee of the insolvent bank ap- pointed under the bankrupt law of the United States. Dutcher v. Importers & Traders'. Nat. Bank, 59 N. Y. 5. 10. 'Slalt V. Ensign,: 79 Hun 107, 110, 2.9 N. Y., Supp. 659. 11. Grandison v. Robertson, 34 Am. B. R. 609, 330 Fed. 985; 36 Am. B. E 453, 331 Fed. 7«5, 790. la. McGill V. Commercial Credit Co., 243 Fed. 637, 650; Cole v. M. T. Co.. et al., 133 N. Y. 164, 30 N. B. 847. Sale by the president of an insolvent corporation of its goods, to be paid for by goods to be furnished to its pi-esident — an assignee for creditors of the corporation may enforce, a claim for the value of the goods against the party receiving them from the cor- poration. Mott V. Edwards, 98 App. Div. 511, 90 N. Y. Supp. 303, affd. 184 N. Y. 541, 76 N. E. 1101. A transfer in contemplation of in- solvency is void — what amounts in law to such a transfer. See National Broadway Bank v. Wessell Metal Co., ■59 Hun 470, 13 N. Y. Supp. 744. Assignments of book accounts, made by an insolvent corporation in con- templation of insolvency and to give the assignee a preference, \yill be set aside at the instance of judgment credi- tors of the corporation. Dudensing y. Jones, 27 Misc. 69, 58 N. Y. Supp. 178. Sale to director while corporation in solvent is void. Berwind-^'\^lile Coal Mining- Co. v. Ewart, 11 Misc. 490, 33 N. Y. Supp. 716, affd. 90 Hun 60, 35 N. Y. Supp. '573. Payment to president for services 454 CORPORATIONS. property and effects, which has the effect of terminating the regular business of the corporation, and was made and ac- cepted by the transferee with that purpose, is illegal as against creditors of the corporation.^^ So the payment of its entire assets by an insolvent stock corporation to a single creditor, while largely indebted to others, constitutes an illegal preference under the Stock Corporation Law." The crt^ditors of an insolvent stock corporation to whom its officers, after they have been advised that its affairs are in a desper- ate condition, and have taken steps to secure the appointment of a receiver, have assigned accounts of the corporation, are not entitled to retain their proceeds on the ground that they were made to take the place of accounts which had been previ- ously assigned as security for loans made by such creditors, and which had been unlawfully collected by the corporation, and that, hence, they do not constitute a preference within the prohibition of the statute.^^ An officer of a corporation, with knowledge of its insolvency, cannot by a bookkeeping entry appropriate property df the corporation to pay a debt due to him. To sanction such an act would, in effect, permit the transfer of corporate property to an officer of an insolvent corporation for a consideration other than " the full value of the property paid in cash."^^ Proof that at the time of a transfer or assignment by a corporation it was in fact in- solvent is not conclusive evidence that the transfer or assign- ment was made " in contemplation of the insolvency of such company," to come within the prohibition of the statute the act must have been done because of existing or contemplated after failure to pay rent due. — Where services, and such amount, Ijaving been a hotel company has failed to pay cer- returned, may be deducted from the tain installments of rent due under its recovery. Montague v. Hotel Gotham lease, a subsequent payment to its Co., 149 App. Div. 687, 133 N. Y. Supp. president for services as nianager is 954, revd. on other grounds 208 N. ^' a violation of this section, prohibiting 442, 102 N. E. 513. transfers of property to officers or 13. Cole v. M. I. Co. et al., 133 N. stockholders of a company after il has Y. 164, 30 N. E. 847. failed to pay its debts, and the amount 14. Montague v. Hotel Gothiam Co., so paid may be recovered in an action 30« IST. Y. 442, 102 N. E. 513. by the receiver of the company. But 15. Hilton v. Ernst, 38 App. Div. 94, in such an action it is proper to allow 57 N. Y. Supp. 908, affd. 161 N. Y. the president a certain amount for the ZZ6. 55 N, E. 1056. rent of rooms and board to which he ' 16. Rock Island Butter Oo. v, Free- was entitled under his agreement 'fu. man, 83 Misc. 7, 144 N. Y. Supp. 317. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 405 insolvency," The test of insolvency is a general inability on the part of the corporation to pay its obligations as they be- come due in the regular course of business. ,Bu,t the mere fact that the assets of a corporation are less than its liabili- ties does not necessarily constitute insolvency .^^ 390. Intent to create preference. The mere fact that a corporation is shown to be unable to pay all its debts, does not necessarily render a payment or transfer by it in the usual course of business ineffectual. In order to constitute a preference under the statute the corpo- ration or its officers making payment must have known or ex- pected that it would have that efPect,^^ an intent to create a preference must be established,^" as of the time the trans- action occurred, without regard to later events.^ Expectation of financial assistance is immaterial on the question of an in- tent to prefer.^ The intent to prefer is of the very essence of tha invalidity declared by statute, and to sustain the avoid- ance of an. assignment this intent must be pleaded, proved and. f ound.^ So the invalidity of a transfer of property by a corporation to a person y^ho is not an officer, director or stockholder of the corporation is not made out by merely showing a transfer of property to a creditor in payment of a just debt, after the corporation has failed to meet at maturity, one or more of its obligations, but the proof must go further and show facts from which the inference must be drawn that the officers of the corporation making the trans- fer of the property did so with the intent of giving the creditor a preference at a time when the corporation was in- solvent or its insolvency was imttiinent.'' In the determination 17. Paulding v. Chrome Steel Co. et 338 Fed. 333; Abrams v. Manhattan al., 94 N. Y. 334. Consumers' Brewing^ Co., 142 App. 18. McGill V. Commercial Credit Co.. Div. 393, 395, 126 N. Y. Qoipp. 844. 343 Fed. 637, 650; Baker v. Emerson, 1. Howland v. Metropolitan Bank, 4 Apsp. Ddv. ,348, 38 N. Y. Supp. 576; 238 Fed. '543. Olney v. Baird, 7 App. Div. 95, 40 N. 2. Baker v. Emerson; 4 App. Div. Y. Supp. 303; Abrams v. Manhattan 3-l«, 38 N. Y. Supp. 576. Consumers Brewing Co., 143 App. a. Van Slyck v. Warner, 118 App. Div. 393, 396, 136 N.Y. Supp. 844. Div. 40, 103 N. Y. Supp. 1, affd. 193 19. Cardozo v. Broolclyn Trust Co., N. Y. 547, «4 N..E: 724; Dill & Obllina 36 Am. B. R. 351, 228 Fe^. 3i33. Co. v. Morison, 159 App. Div. 583; 144 20. G-randison V. Uobertson, 34. Am. N.Y. Supp; 8.94. B. R. 609, 2'30 Fed. 985; Oardozo v. 4. Milbanji v. Welch, 74 Hun 497, Brooklyn Trust Co., 36 Am. B. E. 351, 26 N. Y. Supp. 705. ' 456 coEPOEATioiirs. of the intent the rule to be observed is that where the evidence is capable of an interpretation which makes it equally con- sistent with the absence as with the presence of a wrongful act, that meaning must be ascribed to it which accords with its absence.^ Although an intent to prefer cannot be inferred for the mere fact that the corporation was insolvent and known to be so by its officers, the facts unexplained that it used practically all its cash in making payments to its officers and a single creditor, leaving other creditors unpaid, is suffi- cient to establish such intent.^ 391. Knowledge by creditor of insolvency of corporation; collateral security. A payment is void if made with an intent to give a prefer- ence without reference to the state of mind of the party who receives the payment.'' Yet a creditor holding security given in the regular course of business, and not in contemplation of insolvency, who releases the same, on payment in full is en- titled to protection even though unsecured creditors get noth- ing. But he is entitled to be paid in full only to the extent of the collateral held by him. Thus, when a creditor of a cor- poration holds notes indorsed by the president of the corpo- ration, and partially secured by mortgages executed on lands owned by the president and his wife, he will be protected on receiving payment by the corporation without knowledge of 5. Iiopez V. Campbell, 163 N. Y. 340, which were not sent out because of lank 57 N. E. 501. of funds, the failure to sign and send 6. Irish V. Citizens i Trust Co. of, out the checks was a confession of in- Utiea, 21 Am. B. E. 39, 163 Fed. 880; solvency, and the large payments made Cardozo v. Brooklyn Ti'ust Co., 36 Am. to relatives within a few days of .stup- B. E. 351, 328 Fed. 333. ping business constitute strong evi- Where in an action under section 66 dence of intended preferential pa> - of the Stock Corporation Law to set ments. Tlie fact that the eorpoiii'ion, aside transfers alleged to h-^e been which was an advertising ageiKv, wa.s made by a coi-poration while insolvent, forced to stop business by the refusal with the intent of giving a preference, of the Newspapers Publishers Associa- it appeared that the corporation made tioii to extend credit after said pay- several payments within a fi-w days ments were made, does no) overcome before it stopped business to tho the evidence that a preference was in- brother-in-law and the wife of a mem- tended. Sherwood v. Holbroolc, 188 ber of the corporation, from whom it App. Div. 712, 177 N. Y. Supp. 330, had borrowed money and that at the affd. 231 N. Y. 3'5 (mem.). time of said payments there were 7. Grandison v. National Bank of several thousand dollars of unsigned Rochester. 34 Am. B. K. 497, 320 Fed. cheeks drawn to pay its bills, but 981. POWEES, DUTIES AND FUNCTIONS OF CORPORATIONS. 457 its insolvency, to the amount of security surrendered, if he cannot be restored to his former position.* 392. Corporate mortgages executed in contemplation of insolvency. It is insufficient that insolvency and the execution of a mort- gage co-exist. It must be proven that a mortgage was made in contemplation of insolvency or it cannot be declared illegal on that ground.** So a mortgage executed by a corporation while insolvent pursuant to an agreement made when solvent, does not constitute a transfer in contemplation of insolvency or with an iktent to create a, preference.^" Likewise the re- 8. Wright V. Qansevoort Bank, 118 App. Div. asi, 103 N. y. Supp. 54S. 9. Everson v. Eddy, 59 Hun &20, 13 N. Y. Supp. 873; New Britain Nat. Bank v. Cleveland Co., 91 Hun 447, 449, 36 N. Y. Supp. 387, aflfd. 158 N. Y. 733, 53 N. E. 1138; Wills v. Venus Silk Glove Manufacturing Co., 170 App. Div. 353, 156 N. Y. Supp. 115. Mortgage executed with intention of continuing business — ^Where at the time a chattel mortgage vpas given, the corporation had not refused to pay any of its obligations, and it wias not given with the intention of creating a. prefer- ence, but with the honest intention of enabling the corporation to continue business, it was not void under sectiom 6'6 of the Stock Corporation Law. Swan V. Stiles, 94 App. Div. 117, 87 N. Y. Supp. 1089. A corporation was adjudged an in- voluntary bankrupt three months after it had executed a mortgage to a trustee to secure bonds issued to cer- tain of its creditors. The corporation continued business from the time of the execution of the mortgage to tbe very day when the petition of involun- tary bankruptcy was filed against it. Evidence in a suit for the foreclosure of the mortgage examined, alid was held, that although insolvency was im- minent at the time the mortgage was made,, neither the mortgage nor bonds were delivered or accepted with the in- tent of giving a preference to any par- ticular creditor of the company. Wills V. Venus Silk Glove Manufacturing Co., 170 App. Div. 353, 15-6 N. Y^ Supp. 115. In this case the court said: "I think this mortgage, then, falls within the category of corporation pro- ceedings discussed and approved in Sanford Tool Co. v. Howe, Brown & Co. (157 U. S. 813): 'Nor is it the case of the directors of a corporation in. fact insolvent, though continuing and expecting to continue in business, executing a mortgage on the property of the corporation to simply secure themselves for ,a past indebtedness; for here the corporation, although in- solvent within the rule which declares that insolvency exists when a debtor has not property sufiicient to pay his debts, was still a going concern and intending to continue its business, and the mortgage was executed not simply to secure directors and stockholdera for past indebtedness, but to induce them to procure a renewal or extension of paper of the company then matur- ing or about to mature, and also to ob- tain further advances of credit.' " 10. Matter of Metropolitan Dairy- Co., 35 Am. B. R. 4&6, 334 Fed. 444 ; Gunther v. Mayer, «7 Hun 116, SS N. Y. Svtpp. 50, affd. 138 N. Y. 654, 34 NT. E. 513: Miller v. Miller Knitting Co., 33 Misc. 404, 53 N. Y. Supp. 184. A mortgage given by a corporation to secure its guaranty of the bonds of another corporation previously issued 458 CORPORATIONS. newal of a chattel mortgage which was origihally given mider such circumstances as to constitute a purchase money mort- gage, and which contained a covenant to renew every year during the term thereof is not in violation of the statute since the renewal of the mortgage must be construed as relating back to and simply effectuating the contractual obligation originally assumed.i'^ Mortgages executed by a corporation in violation of. the statute may be attacked by a person who, after such mortgages were recorded, but, on the same day, obtains judgment in an action brought against ; the corpora- tion to recover damages for personal injuries. The fact that such mortgages were given to secure just obligations of the corporation, and were not fraudulent as ag'ainst creditors, is immaterial where it appears that the mortgagees knew that they were executed in contemplation of its insolvency .^^ 393, Validity of judgments against insolvent corporation. Obviously, the purpose of section 66 of the Stock Ooi'pora- tion Law was to prevent any improper act or omission on the part of a corporation or its officers which would result in securing to a particular creditor a preference over, its other creditors. If the corporation or its officers performed any act by which a creditor was enabled to obtain a judgment to which he was not entitled, or omitted to interpose any legal defense is not void, where such niiOrtgage waa quired by the act of 1871 (Chap. 481, given pursuant to an antecedent agree- Laws of 1871). In 1879, the debt re- ment made in good faith and for a maining unpaid, the formal assent of valuable consideration at the time of the stockholders was given and filed the guaranty and when the guarantor as required by said act and the act was not insolvent nor it* insolvency of lS78 (Chap.' 163, Laws of 1878), imminent, although it was insolvent and a new mortgage was executed iil when the mortgage was executed and lieu of the former one, and in pursu- may have intended to give the raort- anee and fulfillment of the original gagee preference over other creditors. agreement. At this time the corpora- Gay V. Hudson Eiver Electric TPower tion was insolvent. It Avas held, that Co., 190 Fed. 773. the evidence did not authorize a find- Money was loaned to a corporation ing that the mortgag^e wa.s given in in 1874 under an agreement with it contravention of the statute. ' Pauld- that payment should be secured by ing v. Ohrome Steel Company et al., 94 chattel mortgage. — A mortgage was N. Y. 334. aceordingly executed by the president 11. Black v.' Ellis, 197 N. Y. 402, and secretary of the corporation, with 90 N. E. 958. the actual assent of the. stockholders, 12. Munson v. Genesee Iron & Brass' but without the filing of a written as- W orks, 37 App. Div. 203, 56 N. Y. sent in the county clerk's office as re- Supp. 139. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 459; it had to his claim, and thus suffered an improper iudgment against the corporation, the judgment so suffered would be invalid.i^ The statute is violated where a creditor of a corpo- ration, who is also a stockholder and director thereof, obtains judgment against it, with the co-operation of his associates on the board of trustees, the corporation being insolvent." And judgments " suffered " by a corporation in a foreign state may be declared invalid under the statute.i^ In determining the question whether an insolvent corporation, or its officers, with the intent of giving a preference to a creditor, performed 13. Braem v. Merohants' Nat. Bank, 127 N. Y. 508, 2-8 N. E. 597 ;_ Lopez v. Campbell, 163 N. Y. -340, 346, 57 N. E. 501; Kmgsley v. First 'Nat. Bank of Bath, 31 Hun 329; Roaeman y. Seaver, 41 App. Div. 603, 58 N. Y. Supp. 677 ; Worthington v. Pfister Bookbinding Company, 3 Misc. 418, 23 N. Y. Siipp. 295. Proof that the president of an in- solvent corporation^ which was in- debted to his cousin, consented that the debt be divided into several notes, each of which was within the jurisdic' tion of the City Court of the city of New York, to the end that a foreign assignee of the; cousin might obtain upon the. notes summonses in that court returnable in two days, and that, after the summonses had been served upon the corporation, the president concealed the fact and refWiilied from putting the corporation into the hands of a receiver until after judgments had been , obtained upon the notes and levies had been ma,de under execution, renders the judgments void under the Stock Corpora,tion Law, prohibiting an insolvent corporation from making transfers ^ with a preferential intent. Rossman v. Seaver, r 22, IVTisc. 661, 51 N. Y. Supp. 91, aflfd. 41 App. Div. 603, 58 N. Y. Supp. 677. An insolvent corporation has. within the meaning of the statute, "suffered'' judgment, "with the intent of giving preference to any particular creditor over other creditors," where the proof is, that it gave a. particular creditor a demand note executed by its presi- dent, for a debt, that on the same day paym«nt was demanded, was refused, and suit begun, and that judgment was thereafter recovered by default, and that it was agreed when the note was delivered that the judgment should be entered in a county, other than that where the corporation did business, so that the other creditors might be kept in ignorance of the judgment and that there was also an understanding that the particular creditor should have a preference. Lodi Chemical Co. v. Pleasants Co.. 25 Misc. '97, 54 N. Y. Supp. ©68. But it has been held that an ar- rangement entered into between several creditors of a company, who knew of its insolvency, and a director of the company, whereby the creditoi-s brought actions, . and served the processes on the director, who concealed the fact un- til the time for answering had expired^ i and judgment had been obtained by default, does not amount to a trans- fer of the company's prpperty within the meaning of the statute. Varnum V. Hart, 119 N. Y. 101, 23 N. E. 183. 14. King V. Union Iron Co. of Buf- falo, 11 N. Y. Supp. 603, 3'3 St. Rep. 545. , 15. Olney v. Baird, 7 App. Div. 95, 40 N. Y. Supp. 202. 460 COKPOBATIONS. any act which enabled him to obtain a judgment, where the evidence is capable of an interpretation in which the absence of a wrongful act is equally consistent with the presence of such act, that meaning must be ascribed thereto which ac- cords with its absence, since a wrongful act can only be estab- lished by proof of such circumstances as are irreconcilable with any other theory than that the act was done.^^ 394. Eifect of failure to defend against valid claim. The vigilant creditor is not threatened by the statute with certain loss of the expense of legal proceedings, if at the time of the entry of judgment the debtor corporation should be in- solvent, or its insolvency imminent. He is not required to: determine at his peril the question of the insolvency or the threatened insolvency of the debtor corporation before commencing legal proceedings or entering the judgment in which they may result.^'' And so where a creditor has. a just claim to which the coi'poration has no defense, and he adopts the ordinary process and procedure of the court to enforce it, which results in a judgment by default, it cannot be properly held to be within the condemnation of the statute, the mani- fest purpose of which is not to prevent the honest creditors of a corporation from enforcing their debts by action.^^ So also the fact that a corporation and its directors permit a person, not a stockholder or director, to recover a judgment against the corporation, upon a claim to which so far as appears there was no defense, does not amount to an unlawful prefer- ence nor render the judgment voidable,^^ for the officers of a corporation are under no legal duty in the case of its insol vency to take measures to procure a disposition of its prop- erty, without preference, among all its creditors. They may, like an insolvent person, permit the creditors to take hostile proceedings and allow those to obtain preferences who are the most vigilant. Accordingly, an insolvent corporation is not obliged to defend any suit brought against it for the sole purpose of defeating a preference, and it may in such ease suffer default and thus allow a judgment to be obtained against it, knowing that the creditor designs to obtain, and 16. Lopez V. Oamipbell, 163 N. Y. 340, 57 N. E. 501. 340, 341, 57 N. B. 501. 19. Cummings v. American Gear 17. (Milbank v. De Riesthal, 82 Hun and Spring Co., 87 Hun 598, 34 N. Y. 537, 31 N. Y. Supp. 532. Supp. 541. 18. Lopez V. Campbell, 163 N. Y. POWERS, DUTIES AND FUJ^CTIONS OF CORPORATIONS. 461 will thus obtain, a preference. Such, couduct on its pa,rt (Joes, not constitute a transfer or assignment of its property, and there is nothing in the ; statute which condemns judgments tJius obtained.^" But the inference that the judgment was suffered with the intent of giving such creditor a preference may arise from evidence of an affirmative character, tending to show the existence of such a desire on the part of the officers of the corporaition, having linowledge of its situation. Such evi- dence may consist of acts done or words spoken by the officers of the corporation, under such circumstances as to manifest a wish or plan to create a preference in behalf of the prose- cuting creditor.-^ 395. JParticular transactions not fraudulent or in violation of statute. The directors of a corporation who, without knowledge of its hopeless insolvency, loan moneys to it for the purpose of relieving, it -from what they believe to be merely a temporary embarrassment, upon the faith of securities, which iii pur- suance of a resolution of . the board of directors are subse- quently, deposited with one of them as collateral to the loan, are entitled to retain such securities as against receivers of the corporation subsequently appointed.^ Likewise proof that a corporation organized for building houses, which, though heavily indebted, is not actually insolvent, has, so far as appears, in good faith transferred certain of its real es- tate to its chief stockholder in settlement of claims for ma- terials furnished by him; under contracts , with the corpora- tion, does not establish fraud which warrants, the setting aside of such conveyances as in fraud of a judgment creditor of the corporation subsequent in point of time to the transfer. Nor does it show a violation of; section 66 of the Stock Corpo- ration Law, which, thp,ugh intended to, prevent a preference among the creditors of a iaiUng corporation, does not pro- hibit diireetors from paying or securing a debt of a corpora- tipn.^ So ajso it has been held that where. a president of a ; corporation, which has a deposit in; a bank of ^vhich.he is a director, .upon 3 earniing, as a director, of the imminent insol- 20. yq'Vn.um v.. Hart et' al., .119 N. 537, 31 N. Y. Supp. 523. Y. 101, ioS, ®3 ii'. E. 183 ; French v. 2. Converse V. Sharpe, 37 App. Div. Andrew8,.,-;145 N. Y. 441, 44,4, 40 N". E. ,399, 55 N. Y. Supp. 1080, affd. ^161 N. 314; Ridgway v. Symona, 4. App. Div. Y. 571, 56 N. E. 69. 98, 38 N. Y.„Sugp. 8J95. . .3, Gordon y. Southgate Building Co., 1. .Milbank y. De Rieatlial. 82 Hun 109 jipp. Div. 838, 9'6 N. Y. Supp, 717. 462 COKPOKATIONS. vency of the bank,- immediately informs his corporation and assists and procures it to at once withdraw the deposit by means of its own check, and the bank never opened for busi- ness after the check was paid, there was no violation of the Stock Corporation Law, either upon the par^ of the corpo- ration or upon the part of its president, as a director of the bank, within the meaning of the statute.* A written assign- ment of a judgment, executed by a coustruotion company to a bank as collateral security for the construction company's then existing indebtedness to the bank, at a time when the corporation was insolvent, is not within the condemnation of section 66 of the Stock Corporation Law, when it appears that the written assignment was executed in pursuance of an oral agreement made at a time when the construction com- pany was not insolvent, by which the bank, in consideration of the construction company's verbal promise to execute the assignment, agreed to and did extend the constructicm com- pany's existing line of credit and make an additional loan to it.^ Likewise a conveyance is not void as giving an unlawful preference where the chief stockholders of a corporation, believed to be solvent, having sole charge and management of its affairs, hj agreement with its creditors made a transfer of all its personal property and a lease of its real estate to another corporation organized for the purpose of conducting the business for the beniefit of the creditors and extricating the corporation from its financial embarrassment, and agreed that no part of the profits should be paid to them, or to secured creditors who were amply protected.^ A trust com- pany, holding notes of a corporation subsequently adjudged a bankrupt, which were indorsed by a perfectly good indorsor, which in consideration of the transfer to it, by the corpora- tion, of certain property, and having no knowledge o^ notice which forbade it from so doing, surrendered its notes' and thereby lost the seeuril^' of the indorsements, cannot be re- quired to return the'^ property under the provision of the statute, even though the transfer of the property caused the insolvency of the corporation, but it is within the protection of the provision that no conveyance, assignment or transfer " shall be void in the hands of a purchaser for a valuable con- 4 'O'Brien v. TEast River Bridge Co.. 444^' aiffd, 175 N. Y. 50ft, 67 N. E. 161 N. Y. 539, 56 N. E. 74. 1089; ■ ' 5. Matter of Rogers fon^tnirtion 6. Gill v. ' Bell's' Ktiittiiig Mills, 128 Co., 79 App. Div. 419, 79 N. Y. Supp. App. Div. 691, 113 N. Y. Supp. 90. POWBKS, DUTIES AND FUNCTIONS OF CORPORATIONS. 463 sideration without notice."^ A pledge of a jewel by an agent of a corporation is not invalidated by the statute forbidding corporations which have not paid their obligations when due from transferring property to officers in payment of any debt, etc., when the pledge is not made to an otfioer, but to a third person who advanced money thereon.^ Where in an action by the receiver of a corporation to set aside an -issign- ment of corporate property as being in fraud of creditors it appears that the assignee paid cash therefor and assumed the debts of the corporation, which had done a losing business, and that out of the sum received the corporation paid debts, a finding that the assignment was fraudulent is unwarranted even though the assignee sold the property for double the amount five years after his purchase.^ 396. Assignment for benefit of creditors without preferences. At common law an insolvent corporation could make an assignment for the benefit of creditors,^" and in the absence of statutory restrictions, might prefer one creditor over an- other in the distribution of its property." Section 66 of the Stocky Corporation Law does not prohibit a corporation, which is insolvent and has- failed to pay its notes or other obligations wlien due, from executing to one of its directors a general assignment without' preferences, except as author- ized by the statute, for the benefit of creditors.^^ The right of a corporation to make an assignment for the benefit of creditors was in effect forbidden by the Eevised Statutes pro- hibiting transfers of property by an insolvent corporati(ui or its officers in contemplation of insolvency .^^ That provision 7. Perry v. Van Norden Trust Co., Paper Co., 38 App. Div. 488, 56 N. Y. ]92 N. Y. 189, 84 jSr. E. 804. .. Supp. 456; Munzinger v. United Press, 8. Wood V. Simpson, 149 App. Div. 53 App. Div. 338, 65 N. Y. Supp. 194; 471, 133 N. Y. Supp. IO619. . Home Bapk v, Brewster . & Co., 17 9. Van Slyck v. Woodruff, 118- App. • Miso, '443, 41 N, Y. Supp. 303, modfd. ;Div. 47i 103 N, Y. Sjipp. 139, affd. 192 . 15 App. JDiv. 338, 44 N. Y. Supp. 54. N. Y. 547, 84 ^. E. 734.. Assignment by corporation, while 10. Vanderpool v. Gorrnan, 140 N. indebted, of a mortgage to one of its Y. 563, 566, 35 -N.' E. 93'3; WQi'kum v. oifleers as trustee, for the benefit of its Caldwell, 3*7 Mise. 72, 58 N. Y. Supp. creditors, , witliout compliance" with 17i5. section 3 of tlie Debtor and Creditor 11. Grandison v. Robertson, 34., Am. Law, held to be invalid. In re Qolwell B;.E, ;609, 220 Fed^ 985;,CQats,y.,pon- J^ead, Co.,, 341 pd. 9S3. nell, 94N. Y. 168.' 13. 1 R. S., 603, § 4. : 12. Linderman v, Hastings Card & A general assignment by the directors 464 CORPORATIONS. was repealed by the Stock Corporation Law, sec. 66, and the common law right to make an assignment restored, subject to the conditions stated in that section." A general assignment without preferences, executed by a corporation, will not be set aside in a suit in equity instituted by a ju4gment creditor of the corporation for his sole benefit, because the officers of the corporation, prior to the assignment, made payments to themselves and others in discharge of existing obligations of the corporation, which payments were in violation of section 66 of the Stock Corporation Law, where there is no proof that the corporation itself authorized such payments.^^ Where pending a suit to sequestrate the property of a corporation and a motion for the appointment of a temporary receiver, the corporation makes a general assignment to its president for the benefit of creditors, the assignee is entitled to have the order appointing the temporary receiver provide that his right to possession of the assets as general assignee shall not be interfered with.^'' 397. Transfers within fonr months of bankruptcy. An assignment by a corporation of certain mortgages and liquor tax certificates to director creditors four months before filing a petition in bankruptcy, but when such corpora- tion was in fact insolvent, is void.^^ And a trustee in bank- ruptcy may recover a preferential transfer made in violation of the statute.^^ But where the demand notes of a stock cor- of a corporation of all its property is Co., 162 Fed. 315, 89 C. O." A. 33; In fraudulent and evil as against the re Salvator Brewing Oo., 183 Fed. 910. stockholders not consenting, whether 18. Grandison v. National Bank of the corporation be solvent or not. If Rochester, 34 Am. B. R. 4'97, 2.20 Fed. such assignment be in coritemplaiion 981; Grandlson v. Robertson, '34 Am. of insolvency, it is void by the stat- B. R. 609, 230 Fed. 985; Oardozo v. ute. Smith v. New York Cbnai^. Stage Brooklyn Trust Co., 36 Am. B. R. 351, Co., 18 Abb. Pr. 419, 28 How. Pr. 377. 22i8 Fed. 333. 14. Croll V. Empire St.ate Knitting A com.plaint in an action by a trustee Co., 17 App. biv. 282, 45 iST. Y. Supp. in bankruptcy of a corporation against 680. the president of the corporation and 15. Cretean v. Foote & Thorne Glass her mother, which alleges that during Co., 54 App. Div. 168, 66 N. Y. Supp. the ten years prior to the adjiidioa- 370. tion, when the corporation was insolv- 16. Rump V. Van Rensselaer Realty ent, its president used- the oorpbration Co., 138 App. Div. 2S9, 122 N.' Y. Supp ifunds to pay interest on m.- euted chattel mortgages to the defend- ant upon its sole assets; that prior to the 1st day of May, 1908, the plaintiff commenced an action against the cor- poration for the death of his intestate and recovered judgment on said date, and that execution has been returned unsatisfied, but fails to allege that the chattel mortgages were given for an inadequate consideration, or in pay- ment of an antecedent debt, or that the plaintiff was a creditor of the cor- poration on July 18, 1907, it is de- murrable. Ginsberg v. Automobile Coaching Co., 151 App. Div. 6a7, 136 N. Y. Supp. 354. A plaintiff, suing the assignee of an insolvent corporation to set aside an assignment of its only asset, made on the day tlie plaintiff recovered judg- ment against the assignor in a former axjtion, upon the ground that the as- signment was without consideration and was fraudulent as to the plaintiff, is entitled to an injunction pendente lite restraining the defendant from col- lecting or disposing of the claims as- signed, or of the moneys due thereon. Kemp V. Able Realty Maintenance Co., 174 Aipp. Div. 242, 160 jf. Y. Supp. 242. POWERS, DUTIES AND FinSTCTIONS OE COKPORATIONS. 467 upon obtaining an adjudication that the transfers and the pro- ceedings by which they were secured are invalid, to priority over the other creditors in the payment of its judgment from the assets of the corporation recovered inthe action.^ Where property of a corporation lias been divided among its stock- holders before all its debts have been paid, a j adgmont credit- or, after the return of an execution unsatisfied, may niain- tain an action, in the nature of a creditor's bill, against a stockholder to reach whatsoever was so received by him. It is immaterial whether he got it by fair agreement with his associates or by a wrongful act.^ A receiver of a corporation which, while insolvent, executed a bill of sale of its property in contravention of section 66 of the Stock Corporation Law, may maintain an action for conversion against the vendee, and is not obliged to bring a suit in equity to compel such vendee to account for the property thus transferred.^ He may also bring a suit to set aside a judgment recovered against it, by default, as violative of the provisions of the Stock Corporation Law.* The failure of the permanent re- ceiver of an insolvent corporation to publish the statutory notice, requiring all persons, having property of the corpora- tion in their possession, to deliver it to him, does not preclude him from maintaining an action to recover preferential pay- ments made by the corporation in violation of section 66 of the Stock Corporation Law.^ The language of said section 91-a of the General Corporation Law is sufficiently broad to 1. Lodi Chemical Co. v. National of the defendants who was then a, Lead Co.. 41 App. Div. 535, 58 N. Y. shareholder, it paid her a sum of Supp. 717. money, and in like manner made simi- 2. Bartlett v. Drew, 57 N. Y. 5&7; i^r payments to two other aharehold- HastingB v.l>re:vv, 7« N". Y. 9. ^ ^grs; that when these payments and al- 3. McQueen v. New, 45 App. Div. i ^^^^^ prefereiices were made, the cor- 579, 61 N. Y. Supp. 464. ■ • poration had refused paymerif of its 4. Spellman v. Looschen, 163 N. Y. ^^^^^ ^^^ ^^^^^ obligations; that the aaS, 56 N.'E. 741. ^ ■ .,■ ' A A , . ^ J 1. • , „ „f pavments m question were made, ana A complaint made by a receiver ot , f - i ... - . „j „.^-„„^a+;rvTi were accepted, with intent to. hinder, a domestic manufacturing corporation, r. > a,ppointed July 35, 1894, which alleged p. 103, modM. on heim v. Simon Reigel Oigar Co., 90 N. other grounds, 334 N. Y. 40, 130 N. E. Y. Supp. 3i55. 60. ' Power to give obligation for another's And a corporation authorized by its accommodation. — A corporation has no charter to insure lives, grant annul- power to enter into an agreement to ties, hold property in trust, and exe- pay to the landlord of another ooi- cute trusts has power by implication to poration a sum of money due from the loan and invest the funds intrusted to latter for rent in consideration of the its care. Farmers' Loan and Trust landlord's canceling the lease and re- Co. V. dowes and Wife, 3 N. Y. 470. leasing the tenant from furtJier liabil- 19. Fox V. iRural Honle Co., 90' Hun ity for rent. Morris v. Wiener Co., 365, 35 N. Y. Supp. 896, affd. 157 N. 65 Misc. IS, 119 N. Y. Supp. 163. Y. 684, 51 N. E. 1090. 1. National Park Bank v. German 20. Bridgeport City' Bank v. Empire American, etc. Co., 116 N. Y. 281, 23 Stone Dressing Co., 30 Barb. 431, 19 N. E. 567. How. Pr. 51; Fox V. Rural Home Co., 2. Carlaftes v. Goldmeyer Co., 73 90 Hun '36'5, 368, 3'5 N. Y. Supp. 896, Misc. 75, 12-9 N. Y. Supp. 396. affd. 157 N. y. 684, 51 N. E. 109O and 474 CORPORATIONS. authorized endorsement is known to the holder, the latter can- not recover against the endorsing corporation.^ Notwith- standing the general rule stated, a corporation is bound if it makes or indorses commercial paper for the accommodation of another in respect to a bona fide holder whg discounts it before maturity on the faith of it§ being business paper.* But this rule is based on the assumption that the officers mak- ing or indorsing a promissory note had „ authority from the corporation to make and indorse such notes in the ordinary course of its business, and it does not apply to a case where the officers purporting to act for a corporation do not have authority to sign commercial paper in the ordinary course of its business.^ The rule, that a corporation can neither make nor indorse commercial paper for ' accommodation, even though it be paid therefor, is not applicable to a case where a corporation assumes an obligation of another for the pur- pose of protecting its own interests where its property rights or interests might be affected." There is nothing malum in se or malum prohibitum in the loaning of its credit by a manu- facturing corporation, and where accommodation paper has been executed in its name by its president^ and the trans- actions have been ratified by the stockholders, and no other rights intervene, they are thus validated and may be enforced against the corporation.'' It seems, that a corporation dealing in manufactured goods, and needing them for sale, may, as a proper incident to its business, extend financial aid to a manu- facturer by advancing him money to enable him to furnish-the goods. This may be done by a loan of its own money, or by 3. Farmer & Son Co. v, Humboldt it, if it appear that the agent had fre- Pub. Co., 27 Misc. 314, 57 N., Y. §upp. quently before inqlorsed their paper 831. and procured it to be discounted by the 4. Mechanics Banking Association plaintiff, and received the avails, and V. New York & S. White Lead Gp., 35 that the corporation had recognized N. Y. 505; Jacobus v. Jamestown Man- the validity of such previous transae- tel Co., 211 N. Y. 154, 105 N. B. 210. tipns. Bank of Auburn v. Putnam, 1 5. Jacobus V. Jamestown Mantel Co., Abb. Ct. App. Dec. 80, 3 Keyes 343. 211 N. Y. 154, 105 N. E. 210. 6. Bacon v. Montauk BreTving, Co., When corporation liable on accommo- 3 30 App. Div. 737, 742, 115 N. Y. Supp. dation indorsement. — A corporation 617. cannot evade liability on negotiable 7. Martin v. N, F. P. Mfg. Co. et al., paper indorsed with their name by 122 N. Y. .165, 25 N". E. 30'3; Osborn v. their agent, for the accommodation of Montelac Park, 89 Hun 167, 35 N. Y. a third person, on the ground tliat the Supp. 610, affd. 153 N. Y. 672, .48 N. agent had no authority so to indorse E. 1106. POWERS, DUTIES AND FUNCTIONS OF CORPORATIONS. 475 indorsing the manufacturer's note, looking for reimburse- ment out of the goods to ' be manufactured and delivered.^ Where a corporation becomes a party to negotiable paper for accommodation, the burden is upon the holder of showing that he became such for value and without notice that the corpo- ration was an accommodation maker.^ An accommodation in- dorser of a corporation note cannot plead usury/" 403. Liability of corporation on debts and contracts of predecessor. It is within the power of a corporation to assume a contract of a person whose business and property it acquired, and such assumption need not be by any resolution or formal action on its part, nor by an instrument in writing, nor by any oral agreement in terms providing for the assumption thereof. If it be shown that it was intended by both parties to the orig- inal contract, and by the directors and officers of the corpo- ration who were stockholders thereof, that the contract, should be assumed by the corporation, the assumption thereof by it may be deemed established. The assumption by a corpora- tion, organized through the instrumentality of partners, and carrying on the business formerly transacted by the firm, of a contract procured by such firm, does not necessarily carry with it the assumption of all other contra:cts which such firm had entered into for the purpose of obtaining and executing the contract assumed." Where the m.anaging members of a 8. Holmes v. \'\'inard, 135 N. Y. To, dation note, upon Which finding plain- 25 N. E. 10S3. tiff, a holder foi- Falue, would be en- 9. Abbott V. Le Prevoht, l66 App. titled to recover. Div. 40, 151 N. Y. Soipp. 616 ;' Diirbrow 10. Stewart v. Biamhall, 11 Hun V. Swedish Iron & Steel Corporation, 139, affd. 74 N. Y. 85. ■ 95 Misc. 160, 158 N. Y. Supp. 701. 11. Hall v. Herter Bvotllers, SS Hun holding tliat in an action oh the note, 19, 31 N. Y. Siipp. 693: evidence thait the corporation gave it Liability —Of a new corporation, to one of its debtors under an arrange- orgaiuzed to take the place of another, meat pursuant to which it took a mort- for the tatter's debts.' Goldmark v. gage 'on tlie payee's machinery, tools, Magnolia Metal Co., 28 App. Div. 364, etc.. a.nd an assignment of accounts' to- 51 N. Y. Supp. 68. outlier with certain notes of the payee A corporation, organized by two, out received in exchange for the note in of the three, members of a firm in suit, by which arrS-ngement it was order to contintie the same business hoped that defendant through finan- and- in the same' manner, may ■ adopt oial aiSsdatance given the payfee would and assume an existing coiitract of eon- receive full payment of its indeBted- ployment made l)y the firm. Burke v. ness to defeildant, if believed by the Lincoln-Valentine Co., 28M:isc. 303, 58 jury, would aiithorize a finding that N. Y. Stipp. 1077. 1124. the note in suit was not an accommo- Evidence that a New York corpora- 476 CORPOKATIOIfS. corporation form a new one under a general law and transfer property to the new corporation to hinder, delay and defraud tion without intent to defraud its creditors, organized a corporation in another state under a different name, to which corporation its assets were transferred and which was managed in the same way as the former company and by the same persons ' (the business being continued in the same place) , and that the new company proposed to continue a contract made by the for- mer company, but reached no agree- ment in respect thereto, and received no benefits under the contract, is in- sufficient to warrant a, finding that the new company, either expressly or by neoessaiy inference, adopted the con- ti-aot. Goldmark v. iMagnolia Metal Co., 44 App. Div. 35, 60 N. Y. Supp. 435, affd. 170 N. Y. 579, 63 N. E. 1117. Assumption of contracts of foreign corporation. — Where a foreign cor- poration issued stock to be held as se- curity for the performance of its agree- ment to deliver bonds subsequently to be issued, and the stockholder sur- rendered the stock to a New York cor- poration, which took over the assets and assumed the liabilities of the foreign corporation, and received in ex- change therefor the stock of the New York corporation, he became a holder of fully paid stock; hut the domestic corporation was not bound by the agreement of the foreign corporation to deliver the bonds of Ijhe foreign cor- poration or to return the purchase price of its stock. Such action would l>e ultra Wres under the laws of this state. Hanle v. Consumers' Park Brewing Ci),, 150 App. Div. 582, 135 N. Y. Supp. 900. Liability in equity of domestic cor- l>oration for debts of its foreign pre- decessor. — Where the rights of bona fide purchasers have not attached, a domestic corporation, which has taken over all the assets and liabilities of a practically extinct foreign corporation which was controlled by substantially the same officers and stockholders and which also had its principal office and place of business in the city of New York, will be held liable upon an out- standing . merchandise debt contracted by the foreign corpoi'a.tion! and to that end equity will impress a trust, in u. sufficient amount to pay the creditor, upon the assets of the foreign, in the hands' Of the domestic, corporation. Clokey V. Internat. Rubber Clothing Co., 38 Misc. 326, 59 N. Y. Supp. 878. Assumption of control of corpora- tion. — Where a stockholder in a cor- poration ousted its officers, elected himself to the presidency, appointed liis clerk as secretary and treasurer, assumed all the duties of such officers in the management of the corporation, including the payment of obligations of such company to himself and trans- ferred all the interest of such corpora- tion to a new corporation for the stock of the new corporation, all of whicli stock he appropriated to himself, ho placed it beyond the power of the old corporation to carry out its contract, and he is deemed to have undertaken to look to the new corporation for tlii' discharge of the obligations of the old one, more especially when the busi- ness of the new corporation was ex- tremely profitable and it was able to reim'burse such stockholder for the amount of the indebtedness of the old corporation to him. Grant v. Cobre Grande Copper Co., 193 N. Y. 306, 86 N. B. 34. Where a domestic corporation, after a cause of action had accrued against it, transferred all its property to a new corporation of the same name and practically the same membership and the creditor obtained judgment against the old corporation, a com- POWEES, DUTIES AND FUNCTIONS OF CORPOKATIONS. 477 creditors of the old corporation, such property is still liable to be taken on execution as the property of the old corpora- tion.^^ 404. Power to guarantee bonds and other obligations of other corpora- tions. "^Any stock corporation may, in pursuance of a unanimous vote of its stock- holders voting at a special meeting called for that purpose by notice in writing signed by a majority of the directors of such corporation stating the time and place and object of the meeting and served upon each stockholder appearing as such upon the books of the corporation, personally or by mail at his last-known post-oflBee address at least sixty days prior to such meeting, guarantee the bonds of any other domestic corporatioiL engaged in the same general line of business ; and any stock corporation owning the entire capital stock of any other domestic stock corporation engaged in the same general line of business may in pursuance of a, two-thirds vote of its stockholders voting at a special meeting called for that purpose by notice in writing signed by a majority of the directors of such corporation, stating the time and place and object of the meeting and served upon each stockholder appearing as such upon the books of the corporation per- soTially; or by mail, at his last-known post-office address, at least sixty days prior to such meeting, guarantee the bonds of such other corporation." 13 A business corporation can only guarantee the bonds of an- other domestic corporation engaged in the same general line of business." But a contract by a corporation written on bonds issued by another corporation guaranteeing payment in full to receive a collateral mortgage on its own proper tj^ will be presumed to have been authorized by a vote of stockholders plaint in a second action brought ??. Y. Siipp. &63. against the new corporation fails to The incorporation of a voluntary state a cause of action where it merely association of alumni makes the cor sets forth the facts aforesaid and in poration the successor in rights and addition alleges that the execution has interests of the association in a fund been returned unsatisfied, that the for- raised by tlie association and traiis- mer assets of the old company were ferred to the institution of wliieh they sufficient to pay all liabilities includ- were almuni, on certain terms and con- ing the plaintiff's claim and that the ditions respecting the establishment of officers of the old company at the time a professorship. Associate Alumni v. of the transfer knew of the existence (General Theological Seminary, 163 N. of the plaintiff's claim. This, because Y. 417, 57 N. E. 636. there is no allegation that the new cor- 12. Booth v. Bunce, 33 N. Y. 130. poration knew anything of the plain- 13. Stock Corporation Law. § 8. tiff's claiin, no allegation of fraud, or This section applies to moneyed cor- any facts which would make the new potations. corporation responsible for the judg- Stock Corporation Law, § 5. raent obtained against the old com- 14. Harms C o. v, Michel Brewing pany. XAif of New York v. Eppiiiger Co., 338 N. Y. 363, 126 ^'. K. 705 ; & RuBseUCo., 170 App. Div. 747, 156 Rept. of Attj'. Genl. (1907), 290. 478 CORPOEATIONS. as required, in the absence of evidence to the contrary.^^ It is ultra vires for a corporation engaged in brewing to guarantee the payment of the liabilities of another company engaged in operating tugs and scows, where the latter busi- ness has no relation to the business of the guarantor. There can be no recovery on a guaranty where there is 'no proof that it was ever authorized by the directors of the corporation.^'' Corporate Bonds. 405. In general, A bond is an obligation to pay a fixed sum, with interest, and the payment may or may not be secured. Stock, as dis- tinguished from bonds, confers upoii the holder part owner- ship of the assets of the corporation and a right to dividends from surplus profits and to share in the assets on dissolution. A stockholder, whether common or preferred, cannot have a lien on the property of the corporation even though the stock by its terms creates a lien. Hence, where an instrument called a bond entitled the holder to a proportionate share in the sur- plus income of the corporation, if any, it is not a bond, but is a certificate of stock.^'' An owner of securities which have 15. Gay v. Hudson River Electric Power Oo., 190 Fed. 773. Purchasers of the bonds of a cor- poration secured by a trust mortgage, in the due course of business and with- out any knowledge of the transactions or agreements 0 N. Y. Supp. 636, holding ^hat the as to the truth or falsity of alleged limitation period upon an action at representations constitutes laches in law for fraud and deceit in the sale of bringing an equitable action for. t.he corporate bonds begins to run from the rescission of a subscription for cor- time of the purchase of the bonds, porate bonds on the ground of fraud under Oode of Civil Procedure, section and misrepresentations. 382, and six years having elapsed sincfe 15. McClelland v. liTorfolk Southern such purchase prior to the commence- R. Co., 110 N. Y. 469, 18 N. E. 337. ment of the action, plaintiff's action is 16. Atlantic Trust Co. v. Crystal barred. Water Co., 72 App. Div. 539, 76 N. Y. A delay of four or five years after Supp. 647. POWEES, DUTIES AND FUNCTIONS OF COBPORATIONS. 483 the right to assume that all restrictions upon this power have been, complied ;with,i^ Corporate bonds do not stand dis- honored upon their face and deprived of their negotiability so as to prevent a transferee from acquiring the status'of a bona fide holder, because coupons representing past-due unpaid in- stallments of interest are attached thereto, notwithstanding that the bonds provide that they shall become due, principal and interest, upon default in payment of any installment of interest for six months after . maturity and demand.^^ The right of a creditor of an insolvent corpora1;ion in the hands, of a receiver to have a preference oyer bondholders under a first mortgage is strictissimi juris;;, and such a creditor will not be entitled to such preference, or to call upon holders of re- ceivers' certificates, who have been paid part of their claim, to contribute to mate hinfi equal to them, on the ground that, although not holding Such certificates, his claim consists' of a loan to the corporation of money used in paying debts of a character for which receivers' certificates were subsequently authorizeld to be issued, by a judgment which declared that such certificates should be a first lien on the mortgaged prop- erty .^^ / 409. Interest coupons. The interest coupons att^Qhed to .a bond, where they refer to the bond, partake of the same character as the bond.^° And this character is not changed by cutting them from the bond,^ And although an action may be maintainable upon the coupons without production of ,the bond,- a recovery must be based upon the obligation contained in the, bond,; and cannot be, had contrary thereto.^ Irrespective of their negotiable character, coupons are mere evidence of accruing interest.^ The detach- 17. Ellsworth v. St. Louis, A. & T. Valley By. Cp. v. O'Connor, 95 App. H. R. Co., .98 N.- Y. 553. Diy. 6, 88, N. Y. Supp. 742< , 18. Buffalo L., T. .& S. J>. Co. ^ . l. McClelland v. Norfolk S. R. Go., Medina, Gas, Etc., Co., .1.&2 N, Y. ,67, no N. Y. 469, ^ISN. E. SS?; Hudson 56 N. B. '505. . Valley By. Co. v. O'Connor, 95 App. 19. Farmers' L. & T. Co. v. Bank. pj^, ^ gg ^- ^ g^pp ^^^ &^Mer. Xp}.,,Cp.,, 148 N. Y. 31.6,, 42 ■- g^ ^f,cielland v. Norfolk Southern N- B._707. , y- , c -n r. R- Co- 110 ^^- Y. 469^' 18 N. E. 237. ' aO. Moaelland v. Norfolk S. B. Co., , 110 N Y. 46.9. 18 N. E.'337; Kelly v. 3. Hudson Valley By. Co. v. O'Oon- Forty^SecOnd Street B/ Co., 37 App. nor,.,96,- App., Div. .fi, 8? N., Y. Supp, T)iv. 500,' 5i5 N. Y. Supp: IO965 HudsoJ) 743. 484 COBPORATIONS. ment of interest coupons from bonds secured by a trust mort- gage does not deprive the holders of the coupons of the se- curity of the mortgage.* But interest coupons detached from bonds secured by a trust mortgage prior to the certification of the bonds by the trustee and their sale and delivery do not come within the protection of the mortgage lien and the holder is not entitled to payment out of the proceeds of a sale of the property.^ So the guaranty of the payment of a bond does not accompany a coupon which has been severed and transferred to another person.^ But a corporation having it- self transferred the bonds and received the av^ails thereof, is estopped from denying its liability upon its guarantee of the coupons.' Upon the foreclosure of a corporate naortgage pre- ferring past-due interest coupons, a purchaser at the fore- closure sale with notice must redeem the coupons.* Section 333 of the Civil Practice Act, relative to actions upon lost negotiable instruments, applies to coupons payable to the bearer and formerly attached to a bond. The provision of the Stock Corporation Law, relative to the issue of a new certificate of stock in place of one lost, does not affect in any manner the liability of a corporation to its creditors under said section of the Civil Practice Act.^ Where in an action upon coupons, the defendant proves that they have been wrongfully diverted, the plaintiff must show that he is a bona fide holder.^" Interest is not collectible upon past due coupons while they are held by the owner of the bond which they ac- company, and, although an exception to the rule e:sists where the coupons have become separate and independent instru- ments, interest will not be allowed unless the claimant pleads and proves circumstances which will bring the case within the exception. 4. long Island L. & T. Co. v. Long 7. Arnot v. Erie Railway Co., 5 Hun Island City & Newton R. Co,, 85 App. 608, affd. (>7 N. Y. 315. Div. 36, »Z N. Y. Supp. «44, affd. 178 g. Holland Trust Co. v. Thbmson- N. Y. 588, 70 N. E. 1103. Houston Co., 9 App. Div. 473, 41 N. Y. 5. Holland Trust Co. v. Thompson- g^pp ^„^ ^^^ ^53 j^ y g^g ^^ j^ j, Houston Electric Co.. 170 N. Y. 68, &2 ^^^^ N. E. 1090; Klein v. East River Electric Light Co., 182 N. Y. 37, 34, 74 N. E. 495. 9. Rolston V. Central Park, North & East River R. Co., 21 Misc. 439, 47 6. Clokey v. EvansviUe & T. H. E. ^- Y- Supp. 650. Co., 1'6 App. Dlv. 304, 44 N. Y. Supp. 10. Wisner v. Osteyee Brothers, 24 631. Misc. 704, 53 N. Y. Supp. 793. POWBES, DUTIES AND FUNCTIONS OF COBPOKATIONS. 485 410. Trust mortgage to secure bonds. A mortgage g^iven to secure bonds is invalid where it is executed in excess of the market value of the property and under an avowed purpose to give bonds in payment of its debts to such creditors as would accept them, and to pay the non-consenting creditors with the proceeds of the remaining bonds, or leave them to their legal remedies against the equity of redemption for its effect is to coerce the creditors into ex- tending the time for the payment of their claims, by leaving the non-consenting creditors without security." And the ex- ecution of a proposed trust agreement and issuance of bonds will be restrained where it is inequitable and unjust in that to execute the plan would destroy the stockholders right of distribution in the surplus assets of the corporation.^^ The owner of all the bonds issued by a corporation secured by a trust mortgage should not be appointed substituted trustee when such trustee is vested with discretionary powers and the corporation contests the validity of the bonds. The office of trustee and beneficiary may not be vested in the same person." Whatever :cights, as against the mortgagor, are vested in the trustee of a mortgage given to secure the payment of bonds, inure to the benefit of the bondholder and are enforceable by him, in case of refusal or neglect on the part of his trustee to act for him upon request." Where a question as to the valid- ity of a corporate mortgage arises between bondholders under the mortgage and junior judgment creditors of the corpora- tion, the former, in case the bonds are valid securities as against the corporation, must, in the absence of fraud, pre- vail, as a creditor holds under and through his debtor, and, in the absence of fraud, is concluded by all the valid acts and assurances of the debtor.^^ Where a mortgage executed by a corporation to secure coupon bonds thereafter issued pro- vided that after a continuous default in payment of interest for a period of six months a majority in interest of the bond- 11. Jenkins v. John Good CJordage & 13. Matter of Radam Microbe Killer Machine Co., 56 App. Div. 573, &8 N. T. Co., 110 App. Div. 339, 97" N. Y. Supp. Supp. 339, affd. 168 N. Y. 679, 61 N. E. 76. jj^gQ 14. O'Beirne v. Allegheny & Kinzna 12. Smith V. Westchester Bronxvillo R. Co., 161 N. Y. 373, 45 N. E. »73. Realty Co., 78 Misc. 75, 137 N. Y. 15. Hamilton Trust Co. v. Clemes, Supp. 690; aflfd. 156 App. Div. 93n 17 App. Div. 153, 45 N. Y. Supp. 141, 141 N. Y. Supp. 1147. affd. IB'3 N. Y. 433, 57 N. E. 614. 486 CORPORATIONS. holders might declare the principal sum due by. an instrument in -writing, signed and acknowledged, the mortgagor- cannot be declared in default without presentation and demand of payment after the holders of a majority of the bonds have waived the strict performance of the provisions of the mort- gage by extending the time of payment of the coupons.^^ 16. Metropolitan Trust Co. v. Long due not acknowledged as. required by Acre El. L. & P. Co., 184 App. Dlv. the terms of the mortgage is insutfi- 156, in N. Y. Supp. 557, holding that cient. an election to declare the principal sum , REPBESENTATION OF COKPORATION. 487 CHAPTEE XXII. Representation of Corporation by Its Officers and Agents. In General. 411. Appointment, resignation and removal of officers and agents. 4ia. Power and authority of officers and agents generally. 413. Principles of agency applicable. 414. Acts within apparent authority of officer or agent. 415. Notice of authority of officers and agents. 416. Effect of by-laws. Authority of Particular Officers. 417. President's authority generally. 418. Particular instances of president's authority. 419. Treasurer's authority. 430. Secretary's authority. 431. General manager's authority. Application of Eules. 432. Contracts of employment. 423. Authority to execute and transfer negotiable paper. 424. Execution of commercial paper in interest of officer. 425. Wrongful use of checks. 426. Liability of corporation for wrongful acts of officers and agents. 427. Repudiation of wrongful acts. 428. Knowledge of officer or agent as knowledge of corporation. 429. Admissions and declarations by members of corporation. 430. Ratification of acts of officers and agents. 431. What amounts to ratification. 432. Proof of authority. 433. Execution of authority. In General. 411. Appointment, resignation and removal of officers and agents, " The directors of a stock corporation may appoint from their number a president, and may appoint a secretary, treasurer, and other officers, agents and -employees, who shall respectively have such powers and perform such duties in the management of the property and affairs of the corpora,tion, subject to the control of the directors, as may be prescribed by them or "in the by-laws. The directors may require a.ny such officer, agent or employee to give security for the faithful performance of his duties, and may remove him at pleasure. The policyholders, of an insurance corporation shall be eligible to election or appoint- ment as its officers." 17 17. Stock Corporation Law, § 30. The fact that a juror is in the See also Director?, ante, chap. XVIII. employ of a party to the action; or, 488 COBPOBATIONS. It is provided by statute that the directors of a stock cor- poration may remove officers, agents or employees at pleas- if a, party to the action is a corpora- tion, that he is an employee thereof or a shareholder or a stockholder therein; or in actions for damages for injuries to person or property, that he is a shareholder, stockholder, di- rector, officer or employee, or in any manner interested, in any insurance company issuing policies for protec- tion against liability for damages for injury to persons or property, shall constitute a good ground for a chal- lenge to the favor as to such juror. Oivil Practice Act, § 453. Agreement to appoint officers desig- nated by stockholders. — Where a per- son agreed in consideration of a trans- fer to himself of over eighty per cent, of its stock to advance to a West Vir- ginia mining company sufficient monej' to redeem its property from a, fore- closure sale and to furnish other money as required from time to time to oper- ate its mines until they should yield sufficient return to pay for working them, a provision in the contract that after the redemption of the property the secretary and treasurer of the com- pany would resign and the directors would appoint the individuals nom- inated by such person to the vacant positions and that a stockholders' meeting would then be called and ja. new board of directors elected is not a vital part of the contract and does not destroy its validity so as to con- stitute a defense to an -action by the company to recover damages for it< breach. San Eemo Copper Mining Co v. Moneuse. 149 A pp. Div. 26, 133 N. Y. Supp. 509. Where on the bankruptcy of a cor- poration the creditors and stockholders agreed to a reorganization of the com- pany and further agreed that the plaintiff, who had been interested in the old corporation, should be trenerfil manager of the new corporation, a court of equity will not compel the reorganized corporation to continue the services of the plaintiff by preliminarj' injunction, if there is substantial evi- dence that he has failed to perform the duties of his position in good faith and with diligence and that the con- tinuation of his services, will be detri mental to the business of the corpora- tion. The above rule holds although on the reorganization of the corpora- tion,, the creditors accepted bonds of the new company at par in lieu of their claims and certain of the stock of the new company was placed in trust subject to the terms of the re- organization agreement, on which stock the plaintiff had an equitable claim, for said facts did not make the plaintiif's contract of employment an essential part of' the trust agreement. But where there is proof that the de- fendants intend to dissolve the reor- ganized corporation although its busi- ness lias been improving under the plaintiff's management and that the corporation has met all its obligations and will shortly be able to discharge - its bonded indebtedness, in which case the plaintiff will come into the owner- ship of a profitable business, the court will restrain the dissolution of the cor- poration until a trial on the merits can be had, as otherwise the plaintiff might suffer irreparable damage. Barcus \ . Cooper, 184 App. Div. Ill, 171 N. T. Supp. 654. Where an owner of almost all of the stock of a corporation, in consideration of the cash purcliase of a portion thereof, agreed in writing under seal with the purchaser that he would cause his election as an officer of the cor- poration at an annual salary for five years and agreed to secure five policies upon his life, each for the amount o REPRESENTATION OF CORPORATION. 489 ure.^* As a general rule officers of a corporation may resign at will and the validity of their resignations does not depend upon their formal acceptance.^^ So when the secretary and treasurer of a corporation has tendered his resignation in a letter which, he delivered to the president, to take effect im- mediately, the resignation is complete when it is tendered and its validity is not dependent upon its ;aeceptance by the di- rectors or upon the election of his successor.^" Although the common-law rule that, to complete a resignation, it is neces- sary that the corporation manifest its acceptance of the offer to resign, has been abrogated in this state, an officer may make his resignation contingent on its acceptance.^ 412. Power and authority of officers and agents generally. The title to the property of a company is in the fictitious entity called the corporation, and its officers and agents only have authoritv to act for it.^ The rule is well established that the annual salary, and to assign them to the purchaser, who agreed to re assign one of said policies Upon per- formance at the close of the year, am) during the third year the vendor killed himself and the purchaser having re- assigned the first two policies collected the remaining policies, the, executors of the vendor having affirmed the con- tract and set it forth in their plead- ing, are not entitled to recover from the purchaser the proceeds of the ,ie maining policies, since the contract was illegal, notwithstanding the fact that the vendor owned a larger ^art of : stocis' when he made the agreement. This is true although the executors cont,end that the purchaser made the original t)reach of the agreement by resigning from the office to which In had been elected. Fabre v. O'Donohue. 185 App. Div. 779, 173 N. Y. Supp. 472. 18. Stock Corporation Law, § 30, pi 19. Zeltner v. Ze;ltner Brewing Co. 174 N. Y. 247^ 06 N. E. 810. 20. Manhattan Co. v. Kaldenberg, 165 N. Y. 1, 58 N. E. 790. 1. Durant,Land Imp. Co.v. Thomson- Houston Electric Co., 3 Misc. 183, 184, 31 N. T. Supp. 764, affd. 4 Misc 207, 2;i i\'. Y. Supp. 900. Recovery for salary after resigna- tion.-^Where a corporation requests one of -its officers to resign from its employment, and he resigns uncondi- tionally and turns over to his succes- sor the keys, books and papers in his possession, the contract of employment is canceled by mutual consent, and the officer cannot recover for salary ac- crued after sueh resignation. Merrill V. Wakefield Rattan Co., 1 App. Div. 118, 37 N. Y. Supp. 64. 8. Buffalo L., T. & S. D. Co. v. Medina Gas, etc., Co., 163 N. Y. 67, 56 N.,E. 5,05. The idea that a cotporation may be a separate entity, in the sense that it can act independently of the natural person composing it, or abstain from acting, where it is thejr will that it shall, has no found?ition in reason or authority, and is contrary to the fact. BuSTalo Loan Co. \. Medina Gas Co., 12 App. Div. 199,,' 210, 43 N. Y. Supp. 781, affd. 163 N. Y. 67, 56 N. E, 505. 490 COBPOEATIONS. a general officer of a corporation has power prima facie to do any act which the board of directors could ratify.^ But the officers of a corporation are special and not general agents; consequently they have no power to bind the corporation ex- cept within the limits prescribed by the charter and by-laws.^ In order to bind a corporation it is necessary to prove that the one who it is claimed acted for the corporation had authority, either express or implied to do so.^ But slight evidence only of authority on the part of a general officer of a corporation will generally be sufficient where a corporation is sought to be charged with liability upon an agreement made upon its behalf by him, to throw the burden on the corpora- tion to show the true relation which such officer bore to the corporation, the authority of such officer being peculiarly within its knowledge.*^ 413. Principles of agency applicable. The general rules of law relating to contracts and property rights apply to corporations as well as to individuals, and the principles of law of agency apply to both alike.' So a corpo- ration may be bound by the acts of its duly authorized agents in the same way that a natural person may be bound,^ and there is no difference in principle or precedent between the powers, duties and liabilities of the agents of corporations and those of natural persons, unless expressly made by the 3. Spitzer v. Born, Incorporated, 111 dian Trust Co., 203 N. Y. 331, 96 N. E. Mise. 595, 182 N. Y. Supp. 327. 751. 4. Adrianee v, Roome, 52 Barb. 399, 5- Coney Island Automobile Co. \. 411; Spitzer v. Born, Incorporated, 111 Boyton, 87 App. Div. 251, 254, 84 N. Y. Misc. 59-5. 18i2 N. Y. Supp. 387. ^'^PP- ^*'''- Authority to modify contracts. — Officers authorized to execiite a con A guaranty of a lease executed by the vice-president of a corporation is , , , tract for a corporation have no au- unenforceable where there is no affir- ^.j^^^j^y ^^ thereafter modify it. Wes- mative proof that the corpor^ion had tern Railroad Co. v, Bayne, il Hun any knowledge or information of the i,66„ affd. 75 N. Y. 1. existence of the guaranty, or knew 6. Nutting v. Kings County Elevated that the vice-president had executed E. Co., 21 App. Div. 72, 47 N. Y. Supp. it in the name of the corporation. 327. Aaronson v. Mayer Brewing Co.., 29 7. Martin v. Niagara P. P. Mfg. Co., Misc. 289, eo N. Y. Supp. 523. 132 N, Y. 165, 25 N. E. 803. •The vice-president of trust company 8. Young v. United States Mortgage may not bind the company by repre- & Trust Co., 214 N. Y. 279, 108 N. E. sentation in regard to the priority of 418; Wilson v. Kings County E. R. Co., a trust mortgage. Davidge v. Guar- 114 N. Y. 487. 21 N. E. 1015. REPRESENTATION OF CORPORATION. 491 act of incorporation or by laws.^ The mere appointment, however, of an agent by words in praesenti, but having refer- ence to a business to be entered upon at some future day, does not confer upon an agent authority in the interim to bind the principal."; A , corporation acting within the scope of its legitimate objects is bound by all parol contracts made by its authorized agent.^^ But it cannot be presumed that the agent of a corporation had authority to transact business which the corporation itself was not by its charter authorized to engage m. 12 414. Acts within apparent authority of officer or agent. It is the law that acts done by the executive officers of a corporation within the apparent scope of their authority in regard to the regular business of the corporation are pre- sumed to be the acts of the corporation and binding upon it, and the person dealing with such officers, under such circum- stances, is not required to prove specific authority from the board of directors.^' This rule is based on reason and the logic of the situation, for a corporation cannot so conduct its 9. N. Y., p. & B. R. Co. V. Dixon, 114 N. Y. 80, 21 N. E. 110. 10. Rathbun v. Snow, 133 N. Y. 343, 25 N. E..379. 11. Benesch v. John Hancock Mut. L. Ins. Co., 11 N..Y: Supp. 34-8, 33: St. Rep. 73. 12. Alexander et al. v. Cauldwell et al., »3 N. Y. 480. 13. Lyon V. West Side Transfer Co. 133 App. Biv. -777, 117 N: Y. Supp. 648; Spitzer v. Born, Incorporated, 111 Misc. 595, 182 N. Y. Supp. 337; Ernst v; Gary Safe Co., 113 Misc. 630, 185 N. Y. Supp. 168. Sale of property .^-Where a sale wa^ made by the treasurer of a corporation, not authorized by its by-laws to make such sale, but who was proved to have been in the habit of doing Such busi- ness, with the knowledge and sanc- tion of the company, and to have been in fact its sole managing agent, it was held, that the title passed by suoli sale. Phillips v. Campbell, 43 N. Y 371. Although an agreement by a bank to procure a release of a mortgage held by a third person is not primarily an agreement relating to banking, yet when made to *eciiie payment of a debt due to the bank it cannot be said to be foreign to the purposes, or be- yond the powers of the corporation. MeCraith v. Nat. Mohawk Valley Bank, 104 N. Y. 414, 417, 10 N. K. 862. . . - The authority of all the officers of a charitable or non-business corpora- tion to bind it by contract must be specifically proved. Brown v. Actors' Fund of America, 103 Misc. 578, 171 N. Y. Supp. 682. An insurance agent, authorized to solicit risks and write policies, has no implied authority to borrow money upon a promissory note executed by him in the name of the comipany, as its agent. Burlingame v.. Aetna In- surance Co., ae App. Div. 3'58, 55 N. Y. Supp. 387. 492 CORPORATIONS. business as to place in the power of one of its executive of- ficers the opportunity to create an impression that he was authorized to negotiate contracts, and reserve to itself, by secret means, a limitation upon his specific act directly within thesphere of his constant activity and performance of duty." And if a general officer does an act which is within the gen- eral scope of his powers, although circumstances may exist which render the particular act a violation of his duty, the corporation is nevertheless bound by his act as to persons dealing in ignorance of those circumstances, and is respon- sible to innocent third parties who have sustained damages occasioned by such act. And the liability of the corporation for the consequences of acts of its officers done within the scope of their general powers is not affected by the fact that the act which the officer has assumed to do is one which the corporation itself could not rightfully do.-'^ One claiming that the corporation by its course of dealing was estopped to deny the authority of its president must prove that he relied upon such course of dealing.^'^ The authority of the general officers of a corporation and their powers are facts peculiarly within its knowledge, and, therefore, slight evidence of such author- ity' is sufficient to call on the corporation to establish the absence of authority to act." As between a corporation iind third parties there is no obligation on the part of the latter to inquire whether an act is advantageous or disadvantageous to the corporation, nor do the obligations existing between a trustee and a cestui que trust obtain. And in the absence of 14. Shpunt V. Machinery Merchants, burial of the deceased employee which Inc., 112 Misc. 457, 183 N. Y. Supp. will be binding upon the corporation. 90. Noll V. Archer-Pancoast Co., 60 App. 15. Booth V. Farmers' and Mechanics' Div. 414, 69 N. Y. Supp. 1007. National Bank, 50 N. Y. 396, 400. 16. Stanley v. Franco-Amer. Fer- Hall V. Herter Brothers, 90 Hun 280, ment Co., 97 Misc. 401, 161 N. Y. 35 N. Y. Supp. 769, affd. 15% N. Y. Supp. 365. 694, 51 N. E. 1091; Simmons v. Thomp- 17. Malerba v. Friars Minor, Order son, 39 App. Div. 559, 51 N. Y. Supp. of St. Francis, 180 App. Div. 441, 167 1018. N. Y. Supp. 1000; Harrison v. Kepetti, Authority to contract for burial of 160 N. Y. Supp. 1018, 194 St. Rep. deceased employee.^ — Where an em- 1018, holding that where one owning ployee of a corporation is killed in its substantially all of the capital stook factory under such circumstances as of a corporation makes a contract of to raise a question as to tlie negligence employment for the corporation, which of the corporation, the principal offi- is partially performed by both parties, cera of the corporation have apparent slight evidence of authority to act for authority to make a contract for the the corporation ought to be required. REPRESENTATION OF CORPORATION. 493 fraud the sole duty of one dealing with an officer of such cor- poration is. to ascertain whether the agreement is one which the officer has an express or implied power to make.^^ If the terms of a contract entered into on hehalf of a corporation by its officers are extraordinary or unusual, such as are not ordinarily made by the president or other officer in the ordi- nary course of the transaction of the current busines? of the corporation, the party contracting with the officer is put upon inquijfy as to his authority.^' Accordingly a lease for three years by a manufacturing corporation is not within the ordi- nary and usual course of the corporate business, and where the by-laws provide that all contracts shall be executed by both the. president and secretary, such a lease, signed by the president only, does not constitute a corporate obligation, in the absence of proof that he had actual authority to sign.-" The right of third persons to rely on the apparent authority of corporate officers is subject to the condition that such third parties. have no notice or knowledge of a hmitation.on such authority.^ 415, Notice of authority of officers and agents. Persons dealing with the officers and agents of a corpora- tion are bound to take notice that their powers are derived from statutes, by-laws or usages which more or less define the extent of their authority, and in doubtful cases one must at his peril acquaint himself with the exact extent of that au.tlior- ity.^ Although it. has been held that one who deals with the 18. Aetna Explosives Co., Inc. \. ,2. Traitel Marble Co. v., Brown Bassick, 176 App. Div, 577, 163 N. Y. Brothers, 159 App. Div. iSS, 487. 14-1 Siipp. 917, aflfd. 330 N. Y. 767, llfi N. Y. Supp. 563, and eases cited, N. E. 1033. Where the owner of all the capital 19. Stanley v. Franco-Amer. Fer- stock of a corporation transfers the nient Co., 97 Misc. 401, 161 N. Y. same, the transferee, partially paying Supp. 365^ holding that the president therefor in cash and. subsequently de- and general manager of a business cor livering the, promissory notes of the poration has no apparent authority t• Brookiield, 77 App. Div. 295, 79 19. Powers v. Schlichf Heat & Power N. Y. Supp. 325. Co., 33 App. Div. 380, 48 N. Y. Supp. 1. Hill v. Troegerlith Tile Co., 168 237, affd. 166 N. Y. 662, 59 N. E. 1139. App. Div. 639, 154 N. Y. Supp. 535. 20. Connell v. Ernst-Marx-Nathan 2. Latiner v. Wonderland Amuse- Co., 3.5 Misc. 133, 71 N. Y. Supp. 313. ment Co., 161 App. Div. 554, 146 N. Y. Employment of general manager.-^ Supp. 779. 508 CORPORATIONS. by the officers of a corporation is not enforceable. So a con- tract by which a person was employed for life, made by the executive officers of a life insurance company assuming to act under a by-law, previously adopted by the board of trustees, empowering them " to appoint, remove and fix the compen- sation of each and every person except agents "employed by the company, ' ' is unreasonable, and not contemplated there- by, because, the term of office of said trustees being limited by statute, it must be assumed that they would not adopt a by- law authorizing the imposition of unreasonable contracts upon their successors in office.^ An agent who has been dis- charged from the service of the corporation may be restrained from entering on the premises of the corporation and assum- ing to act as when employed.* Generally an agent of a corporation, is not entitled to have a contract of employment specifically enforced; his remedy is by an action for damages." A written contract of employment made by the president of a corporation in the name of the corporation, being one which it had the power to authorize him to make, or to, ratify after it was made, is admissible against the corporation in an action by the employee to recover salary and commissions, for the presumption is that the president had power to make the con- tract, and the burden is on the corporation to show that it had S. Carney v. New York Life Insui- plaint of a business corporation in sub- ance Co., 162 N. Y. 453, 57 N. E. 78. stance alleges that the defendant, who A contract raa.de by the executive was an assistant general manager, has committee of the board of directors of been discharged because of an unwar- a, corporation which appoints a sole ranted attack upon the character o' selling agent for five years and entitles the president and general manager but the agent to six per cent, on all goods that the defendant, disregarding his sold by the agent or others, but does discharge, continues to come to the not bind the agent to sell, or to at- premises and engage in the business tempt to sell, any goods for the prin- and assumes to act as when employed, cipal or to transact any business for which tends to destroy the efficiencv the principal whatever, even if a cove- and discipline of the plaintiff's em- nant to use best endeavors to sell may ployees and results in the loss of sales be- read into it, is unreasonable, and and customers, etc., it is proper for under the circumstances disclosed is the court to issue an injunction pen- not binding on the corporation. Com- dente lite restraining the defendant mercial Wood & Cement Co. v. North- from ignoring the discharge or doinj ampton P. C. Co., 115 App. Div. 38S. the acts aforesaid. But the injunction 100 N. Y. Supp. 960, affd. 190 N. Y. should not go so far as to restrain the 1, 82- N. E. 730. defendant from performing his duties 4. Gutmann Silks Corporation \ . as a director of the corporation. Reilly, 189 App. Div. 258, 178 N. Y. 6. Cuppy v. Ward, 187 App. tMv. (rgs, Supp. 457, holding that where a oom- 176 N. Y. Supp. S33. EBPBESENTATION OF COBPORATION. 509 not been authorized.*' In an action to recover for services rendered to a corporation under a contract, it is error to ex- clude the contract which although not signed by the officers in their representative capacity recites that they were acting in their capacity as officers and that their act in entering into the contract was " on the exclusive account " of the corpora- tion, which act they were legally authorized to perform.'' 423. Authority to execute and transfer negotiable paper. As a general rule, an officer of a corporation cannot bind it on a promissory note without special authority, either from specific resolutions of the directors or from the by-laws.^ This rule applies also to the execution of accommodation paper.' And the general rule is that the treasurer of a corporation has no implied authority to execute commercial paper in the name of his corporation." Accordingly it has been held that there is nothing in the nature of the business of a water com- pany from which it can be implied that its treasurer, by virtue of his office, has authority to borrow money and to give notes 6. Norman v. Loomis.-Manning Filter Co., 123 App. Div. 739, 108 N. Y. Supp. 261. An agreement made by a corporation with a person to the effect that, If. he would- take charge of its affairs in the United. States and those of another concern (whicTi then owned all the stock of the corporation except that, held by the said person) and continue in charge until the Corporation had been placed on a paying basis and had earned enough to pay its debts, it would pay him a substantial interest in all its future net earnings "and without re- gard to any services rendered or re- quired thereafter," is valid and enfoi^- cible in equity by the person where he has performed upon his part. Dupig- nac V. Bernatrom, 37 Misc. 677, 76 X. Y Supp. 381, affd. 76 App. Div. 105, 78 N, Y. Supp. 705. 7. Valerite v. International Milling Co.. 119 App. Div.- 127, 103 N. Y. Supp 966. 8. Westcliester Mortgage Co. v. Mc- Intire, Inc., 171 App. Div. 518, 157 N. Y. Supp. 725, holding that where, in an action upon a general written guaranty for the pa,yment of a promissory note of a corporation executed by its presi- dent but not under the corporate seal, the defendant guarantor, vice-president and stockholder of the corporation, de- nies the allegation of the plaintiff as to the making of the note, it is neces- sary for the plaintiff to prove the au- thority of the president of the defend- ant 'corporation to make and deliver the liote, because the guarantor has a right to avail himself of any . defenses available to the corporation, the prin- cipal debtor. ■■ 9. Farmers' and Mechanics' Bank v. Empire Stone Dressing Co., 10 Abb. Pr. 47, 18 Super (5 Bosw.) 275. See also, ante. pars. 417-4i21. 10. Hubbard v. Lyenite Trap Rock Co., 178 App. Div. 531, 165 N. Y. Supp. 486. 510 CORPORATIONS. of the company therefor," An agent of a manufacturing cor- poration is not necessarily authorized to make a note on be- half of the corporation ; to render such a note valid as against the company, the powers of the agent must be shown.'- Jjike- wise the fact that a person is represented to be^ the manager of the business of a corporation in no way authorizes the con" elusion that he has tbe right to bind the corporation by his signature to commercial paper, where his duty is confined to opening the mail of the corporation, and transferring to the treasurer thereof whatever cheeks and moneys are found therein.^^ . The mere fact that an agent has, in one or more instances, made notes in his principal's name and applied the proceeds in part to the payment of his principal's debts with- out the latter 's knowledge, creates no liability on the part of the principal for notes subsequently made by the agent in tlie name of the principal. In order to create such an agency, by representation or estoppel, it is essential that the principal should have knowledge of the assumption by the agent of the powers he has exercised.'^ AVhere:a corporation has received the benefits of its promissory notes signed by its president and no question of fraud or bad faith is raised, the notes are valid obligations against the corporation, though they were not executed in the manner prescribed by the by-laws,^^ or by an officer possessing authority to execute them.^^ The pur- chaser of a promissory note, purporting to have been issued by a corporation, who makes the purchase under circum- 11. First Nat. Bk. v. Council Bluffs Pottier & Stymus Mfg. Co., 8 N. ^■ W. W. Co.. 56 Hun 413, 9 N. Y. Supp. Supp. 644; 18 St. Bep. 9.54. 859. Indorsement of note by treasurer, 12. Benedict v. Lansing, 5 Denio 283. held binding on the corpoKatiou. Bank 13. Railway Equipment Co. v. Lin- of Attica v. Pottier & Stymus Mfg. coin National Bank, 83 Him 8, 31 N. Y. Co., 1 N. Y. Supp. 483. 484, 17 S.t, Supp. 44. Rep. 337. 14. First Nat. Bk. v. CouncUi Bluffs 15. Na+. Spraker Bank v. Treadwell W. W. Co., 56 Hun 41-3, 9 N. Y. Supp. Co., 80 Hun 363, 30 N. Y. Supp. 77 8i59. But where the treasurer of a, cor- Milbank v. De Riesthal. 83 Hun 537, poration has for a number of years, 31 N. Y. Supp. 532; Grant v. Tres'l- with the knowledge and consent of his well Co., 83 Hun 591, 31 N. Y. Supp. principal, signed and indorsed business 703: Bigelow Oo. v. Automatic Gra.« paper in its name, such corporation i- Co.. 56 Misc. 389, 107 N, Y. Supp. estopped to deny the treasurer's au- 894. As to execution of authority, see thority to indorse an accommodation post, par. 433. note to a purchaser for value, who re- 16. Hubbard v. , Syenite-Trap Rock lied -upon these transactions as evidence Co.. 178 App. Dlv. 531, 165 N. Y. Supp. of his authority. Second Nat. Bank v. 486. REPRESENTATION OF CORPORATION. 511 stances whioli devolve upon him the duty of inquiry as to its validity, assumes no greater risk by his failure to make in- quiry, than the burden of proving that the facts he could have discovered, had he made inquiry, would not have protected him." The fact that certain promissory notes given by a cor- poration were executed by it in contemplation of insolvency and with an intent to prefer the payment of a debt due from it to its officers, is no defense in an action brought by the holder of the notes to enforce the maker's liability thereon. Relief against such a preference must be had either by a motion or by an action brought by the receiver of the corpo ration to set aside the lien of the judgment or of the execution issued thereon.^^ An officer of a private corporation having executed in behalf of the corporation a note for the price of property sold to it by a stranger, is estopped in a suit brought to charge him as a stockholder with the payment of such note, from alleging a want of power in the corporation to make the purchase.-^^ Where a person makes a promissory note in the name of a corporation he impliedly warrants that he has authority to do so,^ and, if he does not have such authority, he is liable upon the implied warranty for the damages which have: resulted from the breach. This liability, however, does not accompany the transfer of the note unless the claim aris- ing out of the implied warranty is also assigned to the trans- feree of the note.^* 424. Execution of commercial paper in interest of officer. Undoubtedly the general rule is that one who receives from an officer of a corporation the notes or securities of such cor- poration, in payment of, or as security for, a personal debt of such officer, does so at his own peril. Prima facie the act is unlawful, and, unless actually authorized, the purchaser will be deemed to have taken them with notice of the rights of the corporation.^ The principle, that where an offi.cer or agent of 17. Wilson V. Metropolitan Elev. R. App. Div. 128, 108 N. Y. Supp. 379. Co. 120 N Y. 145, 24 N.- E. 384. 1- Wilson v. Metropolitan Elev. R. 18. Bangs v. Na-fcional Macaroni Co., Co.,. 120 N. Y. 14/5, 24 N. E.: 384; Mil- ls App. Div. 522, 44 N. Y. Supp. 546. ler v. Reynolds, 92 Hun 40O, 36 N. Y. 19. Moss v. Averell, 10 N. Y. 449. Supp. 660; Sanitary Can Co. v. Mul- iSO. Miller v. Reynolds, 93 Hun 400, lins, 86 App. Div. 450, 83 N. Y, Supp. 36 N. Y. Supp. 660. 918' Fraudulent issue of corporate- notes Where a stockholder in a corpora- by officer, action against by trustee in tion,: without authority, executes cer- bankraptcy. Shepard v. 'Morgan; rI23 tain notes in the name of the cor- 512 CORPOEATIOKS. a corporation makes a corporate obligation payable to him- self, it bears -Tipon its face sufficient notice of his incapacity to issue it, when he attempts to deal with it for his own benefit, does not apply where the officer or agent deals with a corpo; rate note, executed by himself as such officer or agent, to a bona fide payee who gives full value therefor, though the note was made with the intention of using the avails thereof for hi s own advantage and benefit and he actually did so use such avails.^ So a corporation is liable on a note countersigned by its president for money loaned to it which was used for the purchase of claims against the corporation, which claims when paid were assigned to the president personally.^ Where an dfficer of a corporation, who practically owns it, and has power to raise money upon its negotiable bonds, presents such bonds to a trust company and receives a, loan upon them, the advances thus made, although further secured by the indi- vidual note of the officer, will be deemed to have been made to the corporation and not to the officer individually.* A cor- poration cannot dispute its liability on an endorsement where the president and managing director, having general charge of its finances, presents for discount a note made by a third person to his order and indorsed respectively by him and by the corporation, stating that the proceeds are to be used to take up an obligation of the corporation, and if the firm to which the note is presented, in reliance upon such statement discounts the note, the corporation is liable upon its indorse- ment although it never receives any of the proceeds of the dis' count.^ Where an officer of a corporation discounts a note potation for value, and charges the which received no benefit from the pro- notes on tlio books of the corporation ceeds thereof. Emmet v. Northern as obligations agaiiist himself, the Bank of N. Y., 173 App. Div. 840, 160 transaction does not ainount to an ap- N. Y. Supp. 183, affd. 221 X. Y. 506, propriation of any- part of the assets 116 X. E. 1043. of the corporation to the payriBnt of 2. Gheever v. Pittiibnrgh, etc, R. Co., the notes, and the holder of them has 150 N". Y. 59, 44 N. E. 701; Schreyer v. no lien on the shares of such stock- Bailey & Co., 97 App. Div. 185, 89 N. liolder, nor can he claim as an equitable Y. Supp. 870. assignee thereof. Bedford v. New York 3. Gaitley v. Albany Foundry Co, Iron Mine, 4 N_ y. Supp. 836,' 21 St. 157 App. Div. 10, ,141 k. Y. Soipp. 676. Rep. 439. 4. Buffalo Loan Co. v. Medina Gas A note, executed by the officers of Co., 12 App. Div. 199, 42 N. Y. Supp. a banking corporation without author- 781, affd. 1®3 N. Y. 67, -56 N. E. 50'5. ity should be oaheeled, where it ap- 5. Orvis v. WS,rner & Co., 75 App. pears that it Was issued for' purposes Div. 463, 78 N. Y. Supp. 328. foreign to those of the eor!poration Indorsement of a note by a corpora. REPRESENTATION OF CORPORATION. 513 made to the order of the corporation and the corporation re- ceives the money therefor, he thereby becomes a bona fide holder of the note and can transfer it to anybody he sees fit.* In an action against the directors of a corporation for fraudu- lently issuing in its name and negotiating promissory notes, purporting to be vaJlid obligations of the corporation, which have been transferred to bona fide holders for value, it is not necessary to allege in the complaint or to prove that the cor- poration has paid them- it is sufficient to aver that it is legally liable to pay.'' 423. Wrongful use of checks. Any person taking checks made payable to a corporation, which can act only by ageiits, does so at his peril and inust abide by the consequences if the agent who indorses the same is without authority, unless the corporation is negligent or is otherwise precluded by its conduct from setting up such lack of authority in the agents. If the priginal indorsement "was authorized, the diversion of the funds after indorsement would not make it a forgery; but, if the original indorsement was unauthorized, parties dealing with the wrongdoer and innocent parties alike, were bound to know the lack of the. agent's authority to convey title away from the; true owner to any one,* General authority to a corporate agent to indorse tion by its president, when the eor manufacturing corporation procured a poration is estopped' to deny his au- check {)ayable to its order and, having' thority. National Bank v. Navassa indorsed it in tl)e corporate name by Phosphate Co., 56 Hun 136, 8 N. Y. himself as president and general man- Supp. 939. When corporation bound by ager; delivered it to a trust corapany indorsement of note made by an agent. in payment of a personal loan obtained ijake Shore National Bank v. Butler hy himself and the secretaiy-tireasurer t'olliery Co., 51 Hun 63, 3 N. Y. Supp. of the corporation for the purpose of 771. . buying the stock thereof, pledged as 6. Hitchings v. St. Louis, etc. Co., collateral for such loan, the form of 68 Hun 33, 32 N. Y. Supp. 719. the check was notice to the tnlst com- 7. Metropolitan Elev. R. Oo. v. Knee- pany that such president was using tfie land et al., 130 N. Y. 134, 34 N. E. 381. prtf^ty of the corporation to pay the' 8. Standard S. S. Co. v. Corn Ex- personal debt of himself and the see- change Bank, 330 N. Y. 478, 116 N. E. retary-'treasurer of the corporation in 3>86; Wagner Tiradliig Co. v. Battery apparent 'Hola.tion of its rights. Ward Park National Bank, 338 N. Y. 37, 136 v. City Trust Oo., 193 N. Y. 61, 84 N. N"! E. 347. E. 585. ' ' ■ i J li .i Use of corporate check by president When a corporation accepts the of corporation to pay personal indebt- obligatioii of a tlili'd i>arty in settle- edness, -Wliere tlie president of a ment of the claim against its' presi- 33 514 , C^BPQEATIOp^g.- cheeky for corporate puirpps§s, clearly does not authorize him tp;i»dorse checks to his .own order and appropriate the money to his own personal jusei, and; the nature of that kind of a transaction: is such ,as to. give waxning that the checks were being diverted from usual business channels. When a bank aice^pts checks payable to a corporation and^ so indorsed by its president, as president, for deposit to the account of the president himself, it does so at its peril to ascertain whether he: had authority, tp^ indorse,, them, ^nd by his indorsement transfer the money to be paid thereon to his personal account. If the president had no such authority, title to the money in question never passed to the defendant and if it received it, it did so without authority and must account and make pay- iri^ht to the owner .^, ' The authority to make a restrictive en- doi^feement on a check does riot authorize the making of a gen- eral endorsement." The indorseriient bf commercial paper bj^ the president of the corporation in its behalf is not author- i^'ed by a general resolution of the board of directors giving him' authority to transact alt the banking business for the cbiilpany and authority to sign all checks, drafts and rtione- taty bbiigatioris of any kind, against and for any bank de- posits wheresoever made in the company's name.'^^ A deposi- . -tor who authorizes his clerk to take his checks to his bank for deposits does not vest in thfe clerk so dangerous a ^ower as to preclude the depositoi- frbm setting up the lack of authority of the clerk if he indorses the depositor's name thereon in blank and innocent persons cash the checks for him without inquiry.^^ The payee of; corporate checks who receives them dent for the unauthorized use of a dent in the name of the corporation, corporate cheek, there is a ; novation follo\yed by his own individual indorse- and it can thereafter look onlj'to the ment, is not an indorsement by the cor- subsitituted debtor for reiinbursement. poration, especially where such method 'Security Warehousing Co. v.' Am. Ex- was not authorized by the certificate of change Nat. Bank, 118 App. Div. 350, incorporation. Moch Co. v. Security 103 N. Y. Supp. 399. • Bank of New York, 166 App. Div. I2l, 9. Wagner Trading Co. v. Battery 151 N. Y. Siipp. 756. Park National Bank, 228 N. Y. 37, 126 18. Standard 6., S. Co. v. Corn Ex- N. E. 347. change Bank, 220 N.Y. 478, 116 N. E. 10. Standard S. S. Co. v. Corn Ex- 386, holding that where the plaintifif change Bank, 220 N. Y. 478, 116 N. E. had provided it& stenographer with a 386. rubber , stamp with wljjch to indorse 11. Hitchings v. St. Louis, etc. .Co., checks for deposit as follows: "Pay to 68 Hun 33, 22 N. Y. Supp. 719. the order of the Greenwich Bank: The Improper indorsement of check. — Standard . Specialty Co.," lier author- The indorsement of checks by the pr^Sii- ity to indorse was limited strictly to EEPRESBNTATION OF CORPORATION. 515 from the treasurer of the corporation' in payment of a debt not owed by the corporation, but in payment of one which he has treated as the treasurer's individual debt, where the lat- ter has no actual or apparent authority to issue such checks either in payment of his own debt or that of a third person, is chargeable with notice of his incapacity to issue them and is bound to inquire as to the real situation, and where he accepts the checks without question and draws the money thereon, he is liable in an action by the corporation to recover the amount paid as money received by him to its use.^^ But a bank is not the use of this stamp, to be followed by the words in her handwriting: "Percy H. Pinder, Treasurer," and where she indorsed certain checks wholly in her own handwriting with the words "Standard Steam Specialty Company, Percy H. Pinder, Treasurer," and also indorsed her own name thereon, and the checks were then cashed for her, and she converted the money she thus obtained to her own use, such indorse- ment was without authority, and, there- fore, a forgery, and since no title passed thereby the bank is liable to the de- positor. But see McCabe Hanger Mfg: Co. V. Chelsea Exchange Bank, 183 App. Div. 441, 170 N. y. Supp. 759. Ivolding that a secretary and book- keeper oi a corporation who had au- thority to make bank deposits by stamping the name of the corporation upon the checks and depositing them to the credit of the corporation, did not make a forged indorsement where, hav- ing used the stamp, he wrote his own name as secretary and cashed a check with a third person who afterwards de- posited it in his private bank account. The unauthorized diversion of the check by the secretary of the corpora- tion did not make his indorsement a forgery, nox render the bank with which the check was subsequently deposited guilty of conversion, if it took the same without notice of the diversion. ■ 13. Rochester & C. T. E. Oo: v. Pairour, 164 N. Y. 281, '58 N. E. 114. Where the treasurer of a corpora- tion was authorized to sign checks in its name against its funds for the pur- pose of its business, and in violation of liis trust drew cheeks signed' by him- self as treasurer, with the name of the corporation where the name of the bank is ordinarily found and with the name of the bank in the margin, mak- ing the same payable to the order of the defendant, » stockbroker, who ac- cepted them in payment of the treas- urer's individual speculative account, vyhich checks were in fact paid from the corporation's deposit, the defendant, owing to the nature of the transaction,- was put upon inquiry as to the author- ity of the treasurer to draw such checks in payment of his own indebted- ness and, where it appears that the de- fendant made no effort whatever to in- qtiire as to the treasurer's authority, he is liable in a suit by a trustee in bankruptcy of the corporation, arid a judgment dismissing the complaint on the merits should be reversed and a new triai oi'dered. Heig v; Caspary, 191 App. Div. 660, 181 N. Y. Supp. 633. Where the treasurer of the plaintiff, a domestic corporation, who was also the president of the defendant corpora^ tion, and by virtue of his office com- pletely dominated the defendant's af- fa.irs and had control of its finaiices; drew checks in the name of the plain- tiff upon its bank of deposit, payable to the defendant, the proceeds of which were deposited to the defendant's credit, and' said ■■ officer credited liis own in- 516 COBPOBAIIONS. bound to inquire for the authorization of the treasurer of a corporation to draw the corporation's check to his own order when there is on file with it a resolution of the board of di- rectors of such corporation giving the treasurer the usual general authority to draw and indorse checks. However, where there are any circumstances indicating fthat a check is being used or is intended to be used for the officer 's personal rlebtedness to the defendant upon the looords of the eorporation by the amount of such cheeks, which were not given in payment or liquidation of any indebtedness owing l)y the plaintiff to the defendant, and such cheeks were drawn without tlie aiitbority or con- sent of any of the other officers of the plaintiff, it may recover the amount thereof from the defendant. On proof of the facts aii^oresaid, it was proper for the court to direct a verdict for the plaintiff for the amount of said checks, for, undea- the circumstances, the de- fendant, even without the admissions of its acting treasurer, as to his knowl- edge, was put upon eflaoaoious inquiry resipeeting the transactions, and it was chargeable with knowledge which would liave been disclosed by its records, that the cheeks were not given in payment of any indebtedness, from the plaintiff to the defendant, and were used to liquidate a debt o>f the defendant's president to it. Roekey River Develop- ment Co. V. German American Brewing Co., 3 93 App. Div. 197, 184 N. Y. Supp. 155. Where the treasurer of a corpora- tion, by a resolution of its board ot directors, was '"empowered to. eseeute contracts or other obligations, sigii or endorse checks, notes or drafts, and othei'wise perfpirm the usual duties per- taining to the office of treasurer," and a copy of said resolution was on file with the bank Avhere the corporation had its account., and on Jtay fifth of the same year the treasurer applied at the office of a steamship companv foi- a pas-sage ticket on one of its steam- ships to sail Au} enable the company to cancel the ticket, the corporation, its negligene© haying enabled the dishonest treasurei' io per- petrate the fraud, must stand the loss. Thornton '■ v. Netherlands-Amer. Steam Nav. Co.,-" 178 App. Biv. 604. 165 IST. Y. Supp. ©82; ) i:,' .- KEPEBSENTATION OF- COEPOBATION. 517 benefit, or where the bank in any way participates in the di- version to its own benefit, the duty of inquiry exists, but the rule should not be unreasonably extended so as to clog busi- ness, especially since corporations may easily protect them- selves by strictly limiting the authority given to draw and indorse their cheeks." 426. liability of corporation for wrongful acts of officers and agents. A principal, who neither authorizes nor ratifies a wrongful act committed by his agent, outside the scope of his employ- ment, is not liable therefor. Hence a corporation is not liable for a wilful trespass of a person employed by it, although the act be authorized and sanctioned by the president and general agept thereof.^^ But the acts of an agent within the scope of his employment, even if unlawful, are corporate acts,^® and so an investigator employed by a corporation * ' to see to the wit- nesses and take statements and to interview witnesses, ' ' those who " expect and those who are witnesses," upon the trial of actions against it, without limitation as to the means to be em- ployed, is the agent of the corporation in whatever he does which directly relates to and promotes that part of the corpo^ rate business and if in order to promote its interest he sees fit to use the power intrusted to him by an attempt to bribe a witness to testify falsely in its favor, he must be deemed to have acted in the course of his employment, and his act is that of the corporation, against which evidence thereof is admis- sible without proof of some corporate act expressly author- izing him to tamper with the witness." While a director of a corporation who knowingly issues or sanctions the circulation of a false prospectus containing untrue statements of ma- terial facts, the na,tural tendency of which is to deceive the public and induce it to purchase the stock, is responsible to those injured thereby,^* yet an action mil lie against a cor- poration to recover damages for false representations con- tained in a. prospectus issued by it, upon the faith of which representations the plaintiff subscribed to the sto'ck of ah-- other corporation." The fact that the corporation after the 14. Thornton v. Netherlands-Amer. 175 App. Div. 580, 163 N. Y. Supp. 561. iSteam Nav. Co., 17« App'. Div. 604, 165 17. Nowaek v. Metropolitan St. Ry. N. Y. Supp. 58S. Co., 166 N. y. 433, 60 N. e. 33. 15. Vanderbilt v. Eiehmond Turn- 18. See ante, par. 313. pike Co., 3 N. Y. 479. 19. Benedict v. Guardian Trust Co., 16. Milliken v. Fi-iabie, Coon & Co., 58 App. Div. 302. 68 N. Y. Supp. 1082, 518 COEPOKATIONS. purchase of stock acquired title to property and thereby made the statements in the circular true, is immaterial when the action is to rescind the purchase on the ground that the state- ments which induced it were false and fraudulent when made.^** A corporation which executes its certi^cates of stock in blank and leaves them where they may be secured and wrongfully issued by a clerk, is liable for damages resulting from the wrongful aet of its agent in issuing and negotiating the certificates without authority and for his own benefit, for if by its careless method of dealing with its stock certificates, a corporation makes it possible for them to be issued, aiid for an innocent third person to be thereby injured, it is liable to the third person for the damage thus sustained, although it may not be liable on the certificate as such. It is no ansy?^er that the officers trusted in the honesty of their clerks^ that these clerks had never before committed a similar act, and, therefore, that its possibility was not present in their minds. This liability rests upon the two principles of law, well set- tled by authority and in harmony with natural justice: that^ ■^here one of two innocent persons, must suffer by the wrong- ful act of another, the one who placed it in ;the power of such person to do the wrong must bear the loss ; and when one of two innocent persons must suffer a loss from the fraud of a third, the loss must be borne by him whose negligence enableri the third person to commit the fraud. The principles apply to corporations as well as to iiatural persons.^ ~ , 427. Kepudiation of wrongful acts. Directors who own a majority of tbe stock can no more f 61 their own benefit and advantage appropriate the property of the corporation than tFe directors who own a minority, and where the act is in itself a violation of the duty that arises from the fiduciary relation that exists between the corporation and its officers and directors, the corporation can rescind that act and hold its directors responsible for the violation of theii? trust; and a vote of the stock owned by the directors ratify- ing or approving the act of the directors which violates their duty to the corporation, although a majority of the stock of the corporation, does not protect them, or avoid responsi- bility to the corporation' for a violation of their duty whioh' V ■ ' ; I,, 20. Lehman-Charley v. Baatlett, 13^5 .1. Hudsou Trust Co. v. American App. Div. 674, 120 N, Y. Supp. 501, Linseed Co., 190 App. Div. Z89, 180 N; ■ffd. 302 N. Y. 534, 95 N". E, 1135-.- ■; . Y. "Supp. 17. ■,: <■ - KEPRESENTATIDK OF OOftPORATION. 519 they owe'to it.^'AccordiHgly whetetlie' owners of property promote the organization of a corporation so that they may dispose of the property to it and make a secret arrangement with two of the directors whereby they are to divide between themselves the difference. between the actual value of the land and the pu'rchase price, tlie corporation,, upon the discovery of the fraud, may rescind the sale.^ Where a director of a gas and electric company Jiolding but one share of stock, being chairman of its executive committee, participated in nego- tiations whereby the corporation made contracts to furnisih power, etc., practically free of cost, to, another corporation, of which the director was the largest singlo; stockholder, and the terms of such contracts are grossly inequitable, burdensome and unconscionable, they may be repudiated by the corporaj- tion.* But shareholders may generally agree that illegal acts of directors shall be lawful and, proper, and where they haye done so the corporation cannot complain.^ Though a.^cor.por ration has received the benefit of a loan it can repudiate the agreement made by its president as to an unlawful rate of in- terest but it will be liable'f or interest at the legal rate as upon quantum, meruit/' , , .. v . i !_ 428. Knowledge of oiRcer or agent as knowledge of corporation. ' Ordinarily knowledge upon the part of an agent of a corpo> ration imputes knowledge to the corporation, because of the duty of the agent to disclose information he possesses jierti- nent to his agency. It is equally true that:this rule has its ex- ceptions in those instances where the' agent is engaged in transactions for his own benefit and hostile to the benefit of his principal or the benefit of some other person in a manner detrimental to his principal and then the presumption of dis- closure does not follow.'' While notice to a director may not of itself be notice to the corporation, yet it is a fact from which such iiotice may be inferred by the jury.^ ' 2. Hinds v. Fishkill &. Matteawan 301, 37 N. Y. Supp. 742, affd. 157 N. Gas Co., 96 App. Div. 14, 88 K Y. Supp. Y. 710. 954- , 6. Stanley v. Franco-Amer. Ferment 3. Finck V. Canadaway Fertilizer Co., i^^^^ g^ ^^^ ^g^^ ^g^ jj y g^ p 3^5 152 App. Div. 391, 136 N. Y. Snipp. 914, » t,^ , x>. „ ,. ., ' modfd 208 N. Y. 607, 102 N. E 1102. f' ^^^, ^"^'^ Development €0. r. 4. Globe Wooleu Go. v. Uti* *^« unauthorized sale. Giebler The fact that the president of a ^*ff' Co- v. Kranenberg, 103 App. D.v, manufacturing corporation, who, in 471, 93 N. Y. Supp. 843. defiance of the wishes and against the ' «. Mo*t6n v. Metropolitan Life. Ins. express prntesl of a majority of the Co., 34 Hun-366, affd. 103 N. Y. 645. bbard of directors of siich corporaiibti, -'7. Moss V.' Avprell.lO N. Y. 449. 524 GORPOEATIONS. authorize or ratify.^ But it has been held that proof that a promissory note purporting to be made by a corporation was signed by its president and secretary, does not show that it was the note of the corporation, or prove that it was made by its authority.^ And in an action upon the promissory note of a manufacturing corporation, executed by its treasurer, the production of the note by the plaintiff claiming to be a holder in due course does not establish a prima facie case and cast upon the defendant corporation the burden of showing its treasurer's want of authority, for the treasurer of such cor- poration has no implied power by virtue of his office to make promissory notes in its name, and the burden is upon the plaintiff to show, either that said treasurer in fact did have authority, expressly conferred by the by-laws or directors, or to be implied from a prior course of dealing, or that the cor- poration is estopped from denying such authority.^" So, also, 8. Patteson v. Ongley Electric Co., 87 Hun 462, 34 N. Y. Supp. 309, aflfd. 155 N. Y. 674, 49 N. E. 1101; Westchester Mortgage Co. v. Mclntire, Inc., 174 App. Div. 446, 161 N. Y. Supp. 384; Ichelson y. Schlein & Spns, Inc., 103 Misc. OT3, 171 N. Y. Supp. 2. An amended, complaint alleging that the president of an insurance company for whose obligations the defendani baa toeoome liable by mergeri borrowed stock trom the plaintiff whioh was sold by the pledgee and a loan to said presi- dent paid from tlie proceeds; thaA a de- mand was duly made for the return of tho stock before it was sold by the. pledgee; that a portion of the proceeds of the loan was used by the president for hds individual benefit and the re- mainder for thp benefit of th^ defend- ant's predecessor in repurchasing bonds; that the defendant's predecessor did not pay or deliver any considera- tion either to the plaintiff or to its president or otherwise for the proceeds of the loan used for its benefit, and de- manding judgment for the sum used for the benefit of the defendant's predeces- sor but failing to allege whether or not the president of the defeedanit's ,pre- decessor was authorized by it to bor- row and pledge the stock, fails to state a, cause of action and is demurrable. Logan V. Fidelity-Phenix Fire Ins. Co., 187 App. Div. 153, 175 N. Y. Supp. 505. 9. People's Bank v.. St. Anthony's R. C. Church, 109 N. Y. 51S, 522, 17 N. E. 408; Bangs v. National Macaroni Co., 15 App. Div. 52a, 44 N. Y. Supp. 546; Nat. Bank of Newport v. Snyder Mfg. Go., 107 App. Div. 95,, 94 N. Y. Supp. 982. 10. Hubliard v. Lyenite Trap itock Co., 178 App. Div. '531, 165 N. Y. Supp. 486, holding that where the by-laws of such corporation forbade the treasurer to issue notes, except upon the approval of the iboard of directors or its execu- tive committee, and no such approval to the note in suit was formally given, and no executive committee was ever appointed, and it appears that the payee of the note owned all the stock of the corporation and entirely directed its affairs, it was error to exclude evi- dence that other notes had been signed by the treasm-er under like circum- stances and had been paid by the cor- poration, for if such were the fact the note, became a binding obligation, but it seems, that if the rights of other creditors should intervene, the burden REPRESENTATION OF CORPOEATION. 525 the production of a note signed by the president or other of- ficers of a non-business corporation does not of itself make out a prima facie case against the corporation." And in order tb charge a corporation with liability upon a contract pur- porting to be signed in its name by an individual as its treas- urer, it is necessary for the party alleging such liability to prove that the individual signing the contract had authority, either express or implied, to do so on behalf of the corpora- tion and to represent and bind it.^^ 433. Execution of authority. A corporation must use its corporate name in the trans- action of its business and a contract for the sale of the real property of a corporation, signed with a fragment of its entire corporate name, is not well executed ; and a cheek, drawn to a payee designated by a like fragment of the corporate name, is insufficient to form the basis of a recovery in an action by the corporation against the drawer.^^ The title to corporate prop- would be upon the defendant to show that fact in order to escape liability on the note. Where a note is made payable to a corporation and endorsed by a perSbn T^ho aidds to his name, treasurer, etc. ; parol prooi that he is such pflficer^, is not suflB-oiemt evidence of his authority to transfer such note. Knight v. Lang, 3 Abb. Pr. 337, 4 E, D. Smith 381, 11. Westchester Mortgage Co. v. Mc- Infcire, Inc., 174 App. Div. 446, 161 N. Y. Supp. 384. 12. Coney Island Automobile R. Co. V. Boyton, 87 App. Div. 351, 84 N. Y. Supp. 347. 13. Searsdale Pub. Go. v. Carter, 63 Misc. 371, 116 N. Y. Supp. 731. See also ante, par. 58. , . : . Where a pprporation adopts a by-law providing that all contracts by it in- volving a liability for $500 or more must be in writing, executed bj' botli the president ?ind treaaurpjr,. and at- tested, by .l^he seal ,pf,the com,pany, it cannot be l^eld liable on a lease to it reserving % rent eixceeding $500, and executed by the president alone, with- out the seal, of the company; and this whether the lessor had notice of the by- law or not. Bohm v. V. Loewer's Gaiabrinus Brewery Co., 5 N. Y. ' Supp. 514, 16 Daly 80. Where in an action to recover rent on a written lease which was signed by the president of the defendant corpora- tion and delivered to the plaintiffs by the, defendant's secretary who knew of the execution of the lease, the defense interposed was that a by-law of the de- fendant required the secretary together with the president to sign all agree- ments, but neither the president, secre- tary nor any other officer of the defend- ant was produced on the trial, nor was any evidence given that the act of; the president, was not authorized other than the by-law mentioned, it will be pre- sumed that the president of the defend- ant had the power to execute the lease iu question. Spitzer v. Bom, Incorpor- ated, 194 App. Div. 739, 185 N. Y. Supp. 875. ■, . An agreement. signed by an ofScer of a corpoTation, in its behalf, for the sale of its stock, under a mistake as to the 5:^6 COKPOKATIOjSTS. erty is in the corporate entity and not in its stqckKolde.rs, and a personal bill of sale of such property made by the president of the eorpordtion does not transfer title, although such presi- dent owns substantially all of the stock." But a letter signed by the president of a corporation, individually and not as president, accepting the proposal of another, a'Sdressed to the president in his official capacity, to do certain work, does not render him individually liable on the contract, where the pro- nouns " we " " our "and " us " are used, and the party making the proposal knew when he received the reply that the president was acting for the corporation.^^ Likewise a satis- faction piece of a judgment in favor of a corporation, which shows upon its face that it was executed by its president in his official capacity, is binding upon the corporation, although not executed in the name of or under the seal of the corpo- ration.^^ But where a negotiable promissory note has been given for the payment of a debt contracted by a corporatibn, and the language of the promise does not disclose the corpo- rate obligation, and the signatures to the paper are in/the names of individuals, a holder, taldng bona fide and without notice of the cirfeUijistances of its marking, is entitled, to hold the note as the personal undertaking of its signers, notwith- standing they affix to their names the title of an office. Such an affix will be regarded as descriptive of the persons and not of the character of the liability. Unless the promise purports to be by the corporation, it is that of the persons w:ho sub- scribe to it J and the fact of adding to their names an abbre- fact of a sale of such stock having been 15. Richardson Press v. Vandergrift, made to the. purchaser, bj' another of- 165 App. Div, 180, 150 N. Y. Supp. fieer of the corporation — audi mistake 238. occurring in consequence of the errone- jg. Booth v, .farmers', and Mechanics' ous statement of the purchaser — is not ,^ Bank 50 N Y 396 binding on the corporation. Otter r. ' G„aranty.-It seems,' that a corpora- Brevoort Petroleum Conipanv.iBO Barb. ,..,.,, , ., . , »._ „„ TV ,, „„ tion 18 liable upon a guaranty *hioh 247, 36 How. Pr. 330. r s j 14. Palmer v. Ring, 113 App. Div. "^^"^ "P°" '^^ ^^^ *° ^ ^''^ ^"^^- 643, 99 N. Y. Supp. 390, holding that ^'"^^^l obligation of its pres-ident, and in an action for conversion brought by ^^^ ^ ^™*er instead of thp corporate the receiver of siieh corporation to re- seal attached, where it is admitted that cover the value of corporate property the president of the corporation, whose conveyed only by the personal bill of name was identical with that of the sale Of its president, it is error to dis- corporation, intended to bind the eor- miss the complaint, and tlie defendant porsition, and it appears that he was is put to proof to show some -transfer authorized to do so. Hall v. Ocha) 34 from' the 'corporation itself. App. Div. 103, 54 N. Y. Supp. 4. BEPRESENTATIGiN Q^ qOBPORATION. 527. viation of some official title has no legal sig-nification as quali- fying their obligation, and imposes no obligation upon the corporation whose officers they may be.^' There is no particu- lar form required by sta,tute for the acknowledgment of an instrument, when such acknowledgment is made by a corpo- ration, but it is the policy of the law to uphold such an in- strument when substance is' found in the certificate, and it should be the aim of courts, in cases of. defective certificates, to preserve and not to destroy their efficiency.^* 17. Oasco Nat. Bank v. Clark, 139 N. Y. 307, 34 N. E. 908. Form of corporate note. — A promis- sory note stating "we promise to pay to the order of ourselves," etc., signed, "Hudson Valley Knitting Co., F. A. Fales, Treae." and indorsed, Hudson Valley Knitting Co., "F. A. Fales, Treas, "F; a. Fales, "K. B. Dowsley." is the note of the corporation £ind not the individual note of Fales. anS Do^a- ley. Union iS'ational Bank v. Scolt, 53 App. Div. 65, 66 N. Y. Supp. 145. ■ A note, eommencing "For value re- ceived, we promise to pay," signed "W. Gilmore,, President; D, 0. Sharpe, Sec- retary of the Hobart Agricultural Horse and Cattle Show Association," and con- taining no reference in the body there- of to the corporation, is, upon its face, the individual note of the two makers. Bush V. Gilmore, 45 App. Div. 89, 61 iST. Y. Supp. 682. 18. Pruyne v. Adams Furniture & Mfg. Co., 93 Hun 214, 36 N. Y. Supp.; 361, affd. 155 N. Y. 639, 49 N. E. 1103.. AfSdavit in replevin action. — Where tlie plaintiff in a replevin action is a corporation, the affidavit required to be delivered to the sheriff with the requi- sition may be made by aaiy officer en- gaged in the management of- the eor-.- poration who is familiar with the, facts;. National Enameling & Stamping Co. V. Kaplan, 53 App. Div. 96, 65 N. Y. Supp. 732. 528 OOBPORATIONS. CHAPTEE XXIII. Ultea Vibes Contbacts. 434. In general. 435. Effect of ultra vires contracts. 436. When plea of ultra vires will not prevail. 437. Ratification of ultra vires acts, 438. Pleading defense of ultra vires. 439. Political contributions prohibited. 434. In general. Contracts of corporations are ultra vires when they involve adventures or undertakings outside and not within the scope or powers given by their charters.^' The doctrine is based upon the theory that it is for the interest of the public that corpora- tions should not transcend the limits of their charters; that the property of stockholders should not be put to the risk of engagements which they did not undertake ;- that if the con- tract be prohibited by statute every one dealing with the cor- poration is bound to take notice of restrictions in its charter, whether such charter be a private act or a general law,^" The modem doctrine, as stated by Chancellor Kent,^ is to con- sider corporations as having such powers as are specifically granted by the act of incorporation, or as are necessary for the purpose of carrying into effect the powers expressly granted, and as not having any others. It has been frequently stated that the validity of contracts of corporations is to be determined by comparing the contract made with the charter, and if upon such comparison it appears that the contract was neither expressly authorized, nor a necessary or reasonable incident to the exerci^ of the powers specifically granted, the contract is ultra vires.^ A contract made by a corporation without legislative sanction, and hence in excess of its powers, but involving no moral turpitude and offending against no express statute, is not necessarily " illegal " in such a sense 19. Leslie V. Lorillard et al., 110 N. 33 Misc. 300, 68 N. Y. Supp. 335. Y. 519, 531, 18 N. E. 3'63; Jemison et 20. De La Vergne Co. v. German Sav- al. v. Citizens' Sav. Bank, 122 N. Y. ings Institution, 175 XJ. S. 40, 59. 135, 140, 35 N". E. 264; Brisay v. Star 1. 2 Kent Oomm. ,299. Co., 13 Misc. 349, 35 N. Y. Supp. 99; 2. Bath G«,s Light Co. v. Claffy, 151 Virgil V. Virgil Practice Clavier Co., N. Y. 24, 39, 45 N. E. 390. ULTRA VIBES CONTEACTS. 529 as to prevent tlae maintenance of any action upon it.^ An agreement by a public service corporation with another cor- poration engaged in the same business not to exercise its frau chise, is ultra vires.* A business corporation not incorpora- ted under the Banking Law has no authority to issue certifi- cates upon which it is to receive annual or monthly payments during a specified period at the termination of which it is to pay the holder a certain amount with a portion of the profits of the company and with a privilege to the holder of using the payments, with accrued interest, in the purchase of real estate from the company or of receiving a paid-up certificate or cash according to certain values.^ The fraudulent conveyance of all its property by one corporation to another, is ultra vires as to judgment creditors of the corporation making the trans- fer.^ It is ultra vires and beyond the power of a corporation to enter into an independent enterprise, entirely foreign to and disassociated from its chartered business.'' So, also, speculative contracts entered into for the sale or purchase of stock by a savings bank at the stock board or elsewhere, sub- ject to the hazard and contingency of gain or loss, are ullra vires, and' a perversion of the powers conferred by its charter.* Corporations, in the absence of restrictions, may borrow money for the purposes of their business, and for the like purpose may procure sureties whose contracts of indem- nity are valid,^ and a corporation jnay without special author- ity make a note or draft, or accept a draft, for a debt con- 3. The defense of ultra vires will not 45 N. E. a90. defeat an action brouglit by a lessor 4. Leslie v. Lorillard, 40 Hun 392. corporation to enforce, to the extent of 5. Jacobs v. Monatan Realty Invest- past due rent and unpaid taxes', a bond ing Corp., 160 App. Div. 449, 145 N. executed to it by a lessee corporation Y. Supp. 611, affd. 312 jST. Y. 48, 105 and sureties to secure performance of N. E. 968. the terms of a lease, not malum in se 6. Ctole v. Millerton Iron Co., 59 Hun or expressly prohibited by law, but not 317, 13 N. Y. Supp. 851, affd. 133 I^. within the expressed or implied pow- y. 164, 30 N. E. 847. era of the lessor corporation, and un- 7. Fifth Ave. Coach Co. v. City of der which the lessee has occupied and j^^^ York, 5S Misc. 401, 111 N. Y. enjoyed the leased premises and prop- g^^^ 759, affd. ia6 App. Div. 657, 110 efty, where the enforcement of the con- ,^, ^ g^^^ ^^^^^ ^^_ ^^ ^^ y ^^^ tract is tb indemnify the lessor cor- ^^ j^_ ^ ^^^^ ^^^ ^^^ ^^ ^ ^^^ poration and its stockholders for the . , • 4. 1 n-i- o ■ deprivation 6f the use of their property »■ J^™""" «* ^l" ^- ^ '^^'f "« ^^^^^^ during its >st possession by the lessee Bank, 123 N. ^Y. 135, 35 K. E. 264. urider the unavftliorized lease.' Bath 9- Hope Mutual Life Ins. Co. v. Per- Gas Light Co. v. Clafly, 151 N. Y. 24, kins', 38 N. Y. 404. 34 530: CORPORATIONS. tracted in its legitimate business.^" It is uot ultra vires for a trading corporation to lend money to one dealing with it, so as to enable the borrower to carry on the transactions.^^ So where a corporation was organized to give theatrical repre- sentations and operas and to own the necessary ^properties, it w;as not ultra vires for it to acquire the business, properties and good will of one engaged in a similar business within this state.'^^ Other instances of contracts that have been held not to be ultra vires will be found in the notes.^^ 435. Effect of ultra vires contracts. The modern and reasonable doctrine that contracts into which corporations may lawfully enter are such only as are expressly or impliedly authorized by their charters, is never- theless frequently disregarded in practice, and when this is done and a corporation enters into a contract beyond its chartered powers, the question arises which has been the sub- ject of debate and of much difference of opinion, how shall 10. Partridge v. Badger, 25 Barb. 146; Moss V. Oakley, 2 Hill 265., 11. Holmes, Booth & Haydens v. Wil- lard, 53 Hun 629. 5 N. Y. Supp. 610, affd. 125 N. Y. 75, 25 N. E. 1083. 12. Metropolitan Opera Co. v. Ham- merstein, 162 App. Biv. 691, 147 N. Y. Supp. 532. , , 13. Cutting, removing and storing ice from its reservoir are properly incident to the main purposes of a company in- corporated to furnish pure and, whole- some water to a municipality and are within the corporate powers. People ex rel. Goff V. Kirk, 65 Misc. 657, 122 N. Y. Supp. 604, affd. 136 App. Div. 45, 119 N. Y. Supp, 862. • Guaranty of a lease, executed by a brewing corporation in consideration of the lessees promise to buy beer from the corporation is not ultra vires. Kochler & Co. v. Eeinheimer, 26 App. Div. 1, 49 N. Y. Supp. V55. A coven- ant indorsed upon a lease of saloon premises, by which a brewing company guarantees to the owner the rent of such premises, on which tlie tenant sells beer manufactured by the guarantor, is not a contract ultra vires, and is vali4> although tlie guaranty has upon it only a wafer, instead of the corporate seal of the company. Holm v. Lipsius Brew- ing Co., 21 App. Div. 204, 47 N. Y.' Supp. 518. SemWe, that a corporation organizeil under the law;s of the State of New York for the manufacture and sale of ale and beer, has power to. make a con- tract to purchase a quantity qf hotel furniture. Keating v, American Brew:, ing Co.,. 62 App. Div. 501, 71 N. Y. Supp. 95. A certificate of incorporation, .stat;. ing that "the objects for whjch the company is formed are to manufacture soaps and oils and to sell the game," is capable of a eonstraetion which, would authorize the corporation to sell soaps other than those of its own manu- facture. Petrolia Mig. Oo. v. Jenkins, 29 App. Div. 403, '51 N. Y. Supp. 1028. The use of funds to destroy compefjir tion by a corpoi^ation organized for the purpose of printing and selling books is ultra vires. Colles y. Trow .City Directory Co., 11 Hun 397. ULTRA yiEES , QQiS^TKACTS. 531 such a contract be treated by the courts, and whether the conr tract can create any rights as between the parties wliich the courts will enforce. There are some propositions pertaining to the general subject which are beyond dispute. One is, that a contract by a corporation to do an imnaoral thing, or for any immoral purpose, or, to use a convenient expression, a con- tract malum in se, is void and gives no right of action. The doctrine, however, is not peculiar to contracts by corpora- tions. It has its root in the universal principle that persons shall not stipulate for iniquity. Another principle of general recognition is that a corporation cannot enter into or bind it- self by a contract which is express^ prohibited by its charter or by statute, and in the application of this principle it is im- material that the contract, except for the prohibition, would be lawful. No one is permitted to justify an act which the legislature within its constitutional power has declared shall not be performed. The series of cases in this state, known as the Utica insurance cases, afford an apt illustration. It was held that the restraining acts which prohibited the exercise of banking powers, including the discount of paper, by other than banking corporations, rendered void securities taken on such discount by corporations not possessing banking powers; and this, although the object of the restraining laws seems to have been the protection of the chartered banks in the monopoly of banking. ■ But in not infrequent insjtanees corpo- rations enter into unauthorized contracts, which are neither mala in se nor mala prohibita, or when the only prohibition or restriction is implied from the grant of specified powers. It is this class of eases whieh open the field of controversy.^^ In the absence of proof showing a want of authotity on the part of a corporation in making a contract, or of a violation of its charter, a claim that the contract is ultra vires will not be upheld ; ev^ery presumption is to the contrary .^^ The courts, in coiisidering the effect of ultra vires acts, have always recog- nized the distinction between business and trading corpora- tions and corporations whose purposes are largely fiduciary.^*' In general no private citizen has the power to question, by resort to legal proceedings, the action of a corporation as be- ing ultra vires, where he- has no other interest therein than 14. B?ith «Qaa,, Light Co. V. Qlaffy, 151 16. Gflause v. Commonwealth . Trust N. Y 24, 45 N.' E. 390. Co., 196 N. Y. 134, iiS/'iBi, 89' N. 15. Rider Life Raft Co. y..Eoach<. 97 E. 476. N. Y. 378. 532 COEPOHATIONS. any other citizen. The people, through the attorhfey-general, are the proper parties." A corporation cannot enforce a mortgage which it has obtained by a transfer, taken contrary to the express provision of its charter. The mortgagor may avail himself of such illegality, and thereby show that the cor- poration has no valid title to the mortgage.^^ "Where a pay- ment has been made upon a contract which is ultra vires, it cannot be recovered back since both parties are in pari delicto.^^ An injunction may be granted to restrain a corpo- ration from carrying on ultra vires business against the ob- jections of stockholders.^" ' 436. When plea of ultra vires will not prevail. That kind of plunder which holds on to the property -but pleads the doctrine of ultra vires against the obligation to pay for it, has no recognition or support in the law.^ Accord- ingly the plea of ultra vires will not, as a general rule, pre- vail, whether interposed for or against a corporation, when it will not advance justice but mil accomplish a legal wrong.^ The plea of ultra vires, according to its just meanings imports, not that the corporation could not, and did not in fact,' make the unauthorized contract, but that it ought not to have, made it. Such a defense, therefore, necessarily rests upon the vio- lation of trust or duty toward the shareholders, and is not to be entertained where its allowance will do a greater wrong to innocent third parties.^ Defense of ultra vires to the claim of 17. iStarin v. Edison et al., 112 N. N. Y. 37« ; Ddamond Match Co. v. Roe- Y. 206, 215, 19 N. E. 670. ber, 10& N. Y. 473, 13 N. E. 419,; Les- 18. Green v. Seymour, 3 Sandf. Ch. lie v. Lorillard et aL, 110 N. Y. 519, 285. 531, 18 N. E. 363; ' Leinkauf et al. v. 19. Cimndngham'v. M. S. & F. C. E. Lombard et al., 137 N. Y. 417, 33 N. Co., 63 Hun 439, 18 N. Y. Supp. 600, E. 472; Remington & Son Pulp & Pa- aflfd. 138 N.Y. 614', 33 N. B»108i2.' per do. v. Ca-swell, 126 App. Div. 142, 20. Burden v. Burden, 8 Appi Div. 110 N. Y. Supp. 556; Mitchell v. Fojr- 1«0, 40 N. Y. Supp. 499, aflfd. 15? N, , est Cdty printing Co., 18i7 App. Div. Y. 287, 54 N. E. 17; Langie v. Hebing, : 743, 176 N. Y. Supp. 157; Higgins v. 160 N. Y. Supp. 621, 194 St. Rep. Hocking Valley Railway Co., 188 App. 621. Div. 684, 177 1^. Y.'Stupp. 444; Cuitis 1. Seymour v. Spring Forest Ceme- f- Natalie Anthracite Coal Co., 39 Misc. tery Assn.. 144 N. Y. 333, 39 N. E. 586, 80 N. Y. Supp. 603, affd. 89 App. '365; Higgins V. Hocking Valley feail- Div. 6i. 86 N:'Y. Supp. 413, affd.'^ 181 way Co., 188 App. Div. 684, 177 N. Y'. N. Y. 543, 73 N. E. 1122.- Supp. 444. 3. Bissell v. Michigan S. & N. I. R. 2. Rider Life Raft Co. v. Roach, 97 Co., 22 N. Y. 258. ULTEA YIBES CONTRACTS. 533 a corporation only applies to an ex&cntory and not to an ex- ecuted contract.^ It is now very well settled that a corpora- tion cannot avail itself of the defense of ultra vires where the contract has been in good faith fully performed by the other party, and the corporation has had the full benefit of the per- formance and the contract.^ Accordingly where a corpora- tion guarantees the payment of dividends upon its stock, it cannot repudiate the guaranty as ultra vires and retain the consideration received by it therefor.^ Likewise where a cor- poration has fully performed a contract on its part to manu- facture and deliver certain articles, it is no defense to an ac- tion brought to recover the purchase-price, that the contract was not within or incidejital to its chartered powers and privi- leges or the purposes for which it was created^ While a cor- poration cannot avail itself of the defense of ultra vires when a contract has beeuiin good faith fully performed by the other party and the corporation has had the benefit of the perform- ance, this rule adopted for the protection of the innocent, and based upon good faith, should not be extended so as to protect the corporation's directors upon contracts authorized by 4. Doubleday, Page & Co. v. Shu- maker, &0 Misc. aa?, 113 N. Y. Supp. 83. Where the act or contract of a cor- poration is not within the scope . Buffalo Grape Sugar Court of the city of New York has n.i Co., 63 How. Pr. 516. o power to make an order for substi- 3., Poland >. United Traction Co., SS tutett service of a summons on. a cor- App. Div. 3,8,1, 85 N. Y. Supp. 1, affd. poration .defendant. United .States ACTIONS BY AWp^ AGAIIf^]:. CORPORATIONS. 543 , 'Jl^e object of the legislature in pro^sriding for service upon a., domestic corporation, was^to provide for: service upon an officer or agent of tiie company charged with some general dilty, one who occupies a position of respcttisibility and has ah interest in the general management arid prosperity of the coppany. It is not, essential, to tlie, satisfaction of the statute, that the person served should have the entire charge or con- trol of the corporation or of its business. If he sustains sufficient character and rarik to rend-er it reasonably certain that the corporation wiU be apprised of the service, the re- quirement of the statute is answered.'' Service upon one of tWe officers nahied rieed not be made while the officer is acting officially or engaged in the business of the corporation.* But after a corporation has been dissolved service cannot be made upon one of its 'officers.' A corporation, like a natural person, may appear voluntarily by attorney, arid siich appearance gives jurisdiction to the same extent as if there was actual service of process,-^" Iri an action to dissolve a corporation, if there be '^ no person in existence upon whom service of the sunirrions can be made under the provisions of section four hundred and thirty-one of the Code of Civil Pro- cedure (now Civil Practice Act § 228), service of the summons in sUjCh action may be made in such manner as the court upon application by petitiori may direct. "" " Where a summons is issued- in any court of record, an order for the service thereof : upon a defendant, \sfhether a domestic corporation other, than a muni- cipal corporation,: a joint-stock or other ■ unincorporated , association having a president or treasurer residing within the state, or a natural person residing within the state, , may be made by the court, or a, judge thereof, or the county judge of the county ,Ty here the action is triable, upon satisfactory propf that the plaintiff has been or will be unable, with due diligence, to make pergonal service of the summons within the state." 12 , " The order must direct that the service of the summons be made (1) by leav- in,g a copy thereof, and ,qf the order, if the defendant Is a domestic corporation or joint-stock or other unincorporated association, at its principal office or place Cast , Iron Pipe & Foundry Co, y. 87 X. Y. 137, 141. Eoberts & Co., Inc., 114 Misc. 560, 187 9, Hetzel v. Tannehill Silv. Min. Co.. N. Y.,-Supp. 95, 4 Abb: ,N. C. 40. 7. Hathaway v. Ameripan Mining 10. Attorney General v.. Guardian Stock Exchange, 31 Hu9 575; Barrett Mutual Life Ins., Co;, 77 N! Y. 273. y. ,JAm, Tel. ,Etc.. Co.,, 56 Hun 430, 10 11. Genera,l Corporation Law, § 103, N. Y. Supp. 138, affd. 138 N. Y. ,491, pt., as arad. by L. 1913,ch. .204. 34 N. E. 289 :, 12. Civil Practice ' Act, § 230. 8. Pope V. Terre Haute Car Mfg. Co,. ; ,. - 544 COEPOEATIOK'S. of business; or if a natural person, at the residence of the defendant, with a person of proper age. If upon reasonable application admittance can be obtained and such person found who will receive it; or (2) if admittance cannot be so obtained nor such person found, by affixing the same to the outer or other door of the defendant's said place of business or office, or of his residence, and by depositing in a post-office another copy thereof, properly inclosed in a post-paid wrapper, addressed to the defendant at its said principal office, or place of busi- ness, or to him at his place of residence, or (3) in the ease of a natural person, upon proof by affidavit that no such residence can be found, service of the sum- mons may be made in such manner as the court may direct." 13 445. Service on particular officers; service on resigned officers. Service of summons upon the vice-president of a domestic corporation, or upon one who performs corresponding duties under a different appellation, is a sufficient service upon the corporation." A cashier within the meaning of the statute is the financial agent of a corporation having exclusive charge of the funds.^^ Service upon an assistant treasurer of a cor- poration is invalid, as he is not a person designated by the (tivil Practice Act upon whom service may be made.^^ Ser- vice upon a de facto officer of a corporation is sufficient." Ser- vice upon an officer of a corporation, who has formally re- signed in good faith, is invalid.-"^ Accordingly service of pro- cess is not binding where made upon a director who has sent in his resignation, although such resignation has not been formally accepted,^' or upon a director after he has sold his stock and his successor has been elected.^" But service of a summons upon the president of a corporation, after he has resigned, will not be set aside where the president tendered 13. Civil Practice Act, § 231. on other grounds 132 App. Div. 217, 14. Balmford v. Grand Lodge A. 0. 116 N. Y. Supp. 841. U. W., 16 Misc. 4, 37 N. Y. Supp. 64"), 16. Winslow v. Staten Isl. E. T. Co., 15. Winslow V. Staten Island Eap. 51 Hun 298, 4 N. Y. Supp. 169. T, Co., 51 Hun 298, 4 N. Y. Supp. 169 : 17. Stillman v. Associated Laer Eisenhofer V. New Yorker Zeitung Pub. Makers Co., 14 Misc. 503, 35 N. 'S'. Co., 91 App. Div. 94, 86 N. Y. finpi). Supp. 1071. 438. 18. Carnaglian v. Exporters' & Pro- One who is in charge of the office of ducers' Oil Co., 57 Hun 588, 11 N. Y. a life insurance company incorporated Supp. 172; Yorkvillc Bank v. Zeltner under the laws of this state and doinn B. Co., 80 App. Div. 578, 80 N. Y.'Supp. business within it who receive? and 839; Buchanan v. Prospect Park Hotel coUects premiums paid at the home Co., 14 Misc. 435, 35 N. Y. Supp. 71:.>. office, and receipts therefor as cashier. 19. Wilson v. Brentwood Hotel Co . is the cashier of the corpoi;ation. 'B,us- 16 Misc. 48, 37 N. Y. Supp. 055. sell v. Washington Life Ins. Co., 6:3 20. Beardsley v. Johnson, 121 N. Y. Misc. 403, 115 N. Y. Supp. 950, revd. 334, 24 N, El 380. ' ACTIONS BY AND AGAINST CORPORATIONS. 545 his resignation in bad faith.^ Service on an officer after he has resigned is good where the by-laws or statute provide that the officers shall hold over until their successors are chosen and have qualified.^ 446. Service on managing agent. Service upon a managing agent is sufficient service on the corporation,^ but to be so he must have general power as contra distinguished from an agent not having discretionary authority.^ I'hus, service is snffioient where made upon a super- intendent in a certain locality,^ such as a general superintend- ent of a telegraph company,^ or the division superintendent of a railroad.'' But service upon an assistant superintendent of a corporation, whose duties are really those of a foreman, is insufficient, even though the person served delivered the simi- mon§ to the corporation Tflj^ich promptly repudiated the ser- vice.* An agent of a life insurance company who has the en- tire superintendence of all the business in a certain district, having assistants and sub-agents, is a " managing agsnt," although subject to the direction of the home office.^ But where his duties are confined to superintending certain solici- 1. Zeltner. V. Zeltner Biewina; Co. 5. Belian v. Phelps, 37 Misc. 718, 59 85 App. Div. 387,, 83 K Y. Supp. -366. > N. Y. Supp. 713. 2. Badger v. U. S., 93 U. S. 599; 6. Barrett v. Amer. Telep. & Teleg. Timolat v. Held Co., 17 Misc. 556, 40 Co., 5& Hun 430, 10 N. Y. Supp; "138, N. Y. Supp. 692. HjJlding over after; aflfd. 138 N. Y. 491, 34 N. B. a89. But the election of his sucoeaaor is suffi- ot^iej'iii'ise . as to. service, on telegrajph eient. SYidenJberg v. Lee Con8trucj;io)i operator. Jepaon y. Postal Teleg. Co., Co., 'OT Misc. ©51, 58^ ^T. Y. Supp. '391. 20 N. Y. Supp. 300. ' 3. Pearsons v. Buflfalo City ;Mills, 29 7. Eochester, etc., . E. Co. v. N. ; Y App, Div. 45; 51 N. Y. Supp. 645; Muni- L. E. & W. E. Co.. 48; Hun 190, 15 St. cipal Mortgage Co. v. iFpur Hundred Eep. 686; Palmer v. Pennsylvania Co., Sixty-one Eighth Avenue Co., Inc., 19.", 35 Hun 369^ aflfd. 9.9 N. Y. 679; Fal- App. Div. 370 (fact^ shovfing that per tiska v^.'N. y.,,L. E. & W. R. Co., 12 son served was ina.na,ging agent) ; Brun Mm., 47i8, 33 ;N. Y. Supp. 679, affd. v. Northwestern Realty Co., 52 Mise. 151 N. Y.,650, 46 N. E., 1146; Brayton 5»8, ipa N. Y. Supp. 473. v., N. Y., L. E.,& W. E. Co., 72 Hun ft. StuTjing V. Met. I4fe Ins. Co., 78 602, 85 1^. Y. Supp. 264, Hun eiO", '28 N. Y. i Supp. 9'60. Service 8. Kranieii; v. Buffalo Union Furnace on baggage-master is insuiBoient. Flynn Co., 132 App., Div. 415, 116 N. Y. Supp. v., Hudson R, H. Co., 6, How. Pr. 308. 1101. So also on person employed by atre«!t 9. Ivesv. Met. Life Ins. Co,, 78 Hu" railway company to superintend pur- 32. 28 N. Y. Supp. 1030; Murray >. chase ofrihorae? and f eesi, . iBmerson v. AmeriWB Oas. Jns. Co., 88. ApP' P"'- Anburn & O. L. E. Co., 13 .Hun 150i 234. 85 N.Y. Supp. 44,9. ; ■...;.■,., ;>o:o- 35 - •. -■ 546 COEPOEATIONS. ting agents, whom he has no authority to employ or discharge, he is not a " managing agent. "^^ 447. Service of orders on corporation. "An injunction order, or an order requiring a person to attend and be ex- amined, made as prescribed in this article, must be served as follows: 1. The original order under the hand of the judge making it must be exhibited to the person to be served.: 2. A copy thereof and of the affidavit upon which it was made must be delivered to him. Service upon a corporation is sufScient if made upon an officer to whom a copy of a summons must be delivered where a summons is personally served Hpon the corporation; unless the officer is specially designated by the judge, as prescribed in section' seven hundred and ninety of this act." U " Where the injunction order is granted by the court, it must be served by delivering a certified copy thereof; where it is granted by a judge, it must be served by showing the original order and delivering a copy thereof. Service of thie order upon a corporation may be made as prescribed by law for making personal service of a summons upon a corporation. Copies of the papers upon which the order was granted must be delivered with the copy of the order." 12 448. Examination of corporation before trial. " When an adverse party, or an originsll owner of a claim mentioned in the foregoing section, whose testimony may be taken as provided in such section by deposition, is a corporation, joint-stock association or other unincorporated asso- ciation, the testimony of one or more of its officers, directors, managing agents or employees, which is material and necessary, may be so taken." 13 The Code of Civil Procedure (§ 872) authorized the exam- ination of officers, directors and managing agents of a corpo- ration where their testimony was necessary and material, but does not include the employees of such corporation." The 10. Schryver v. Met. Life Ins. Co., 2:i 36 Hun 433. N. Y. Supp. 1098. Examination permitted. — Farmers' 11. Civil Practice Act, § 798. Nat. Bank v. Underwbod, 6 App. Biv. 12. Civil Practice Act, § 883. 373, 39 N, Y. Supp. 596; Donaldson 13. Civil Practice Act, § 389. v. Brooklyn Heights R. Co., 119 App. 14. Prior to the amendment of the Oiv.- 513, 104 N. Y. Supp. 178. Code in 1880, it was determined that A person who is the manager of the the provisions authorizing an examina- chemical department of defendant'h tion of the party to an action did not business is "managing agent thereof." include, and, therefore, could not be ex- Miller v. Jahn Co., Inc., 104 Misc. 370. tended to the officers, servants, agents 172 N. Y. Supp. 219. or employees of a party, although sucli A corporation suing a formeir officer a party wa^ a corporation, and it was for breach of trust, may examine the accordingly held that the directors 6f defendant before trial. Beer Import- a corporation eould not be compelled ing Co. v. Boross, 136 App. Div. 649. to submit to an examination befori' 121 N. Y. Supp. 342. trial. Reichmann v. Manhattan Co. In an action by a stockholder against ACTIONS BY AND AGAINST CORPpBATIONS. 547 Civil Practice Act has extended the right of examination to include employees of a corporation. Where it is essential to a plaintiff's cause of action to prove certain correspondence, negotiations, agreements and proceedings of the corporation of which they are stockholders by, concerning the defendant, another corporation,; the plaintiffs are hot required, as a con- dition precedent, to the right to the examination of the de- fendant before trial, to request that a copy of the records and papers desired be delivered.^^ A plaintiff in an action against a corporation upon a contract is entitled to an examination of the officers of such corporation in order to ascertain whether the person who entered into the contract was authorized by the corporation to do so.^i A corporation sued for an alleged a corporation for false representations. where plaintiff's affidavit avers thai out of certain documents in possessio!; of the company or its officers he will be able to deduce proof of the falsity of the representations to be used at the trial, etc., an order will be granted for examination before frijil of officers. Blocker v. Guild, 15 Daly 348, 7 N. Y. Supp. 651. In an action brought by a printer to recover damages for the breach of a contract whereby the defendant cor- poration agreed to give him preference over other printers in executing its printing work, the defendant may, oii an examination of its vice-president and treasiiref before trial, properly be required to disclose the names of tlic persons to whom it gave printing and the quantity of work given to each person. Bruen v. Wliitman Co., lOfi App. Div. 348, 94 N. Y. Supp. 304. In an actibn upon a life iiisurance policy, examination before trial of the officers of a mutual life insurance com- pany to establish the existence of a fund sufficient to pay a policy issued by it. MoCoy v. Mutual Reserve Life Ins. Co., 84 App. Div. 315, »2 N. Y. Supp. 638. Collusive arrangement as to use of an associated press franchise by pub- lishing corporations may be shown by an examination of the officers of such corporations before trial. Press Pub. Co. V. Star Co., 33 App. Div. 343, 53 N. Y. Supp. 371. Unauthorized use of trade name and conspiracy to injure business may be shown by examination of defendant corporation before trial. Solar Bak- ing Powder Co. v. Royal Baking Powder Co., 128 App. Div. 550, 112 N. Y. Supp. 1013. The provision of section 871 of the code providing for the examination of a "person not a party" authorizes only the examination of one who can testify at the trial and therefore does not apply to a corporation. Chartered Bank of India v. North River Ins. Co.. 136 App. Div; ■646, 121 N. Y. Supp 399. See also, , Civil Practice Act. § 288. 15. .lacobs 1. Mexican Sugar Refin- ing Co., 112 App. Div. 655, 98 N. Y. Supp. 541. 16. Horst \. Ynengling Brewing Co., 1 App. Div. 639, 37 N. Y. Supp. 3; Bloom •/. Pond's Extract Co., 27 Abb. N. C. 366, 18 N. Y. Supp. 179. In an action upon a contract made by an agent of the defendant, the plaintiff, being unable to find the agent, may examine the defendant before trial as to the authority of the agent to make the contract. Railway Age & North- western Railroader v. Pryibil, 18 Misc. 561, 42 N. Y. Supp. 697. 548 CORPORATIONS. fraudulent conspiracy cannot claim exemption from an ex- amination before trial upon the ground that the evidence which the plaintiff will seek to elicit from one of its officers will tend to involve him in a criminal offense. The privilege of the officer to refuse to answer incriminating questions is purely personal to him and he may waive that privilege; it cannot be asserted by the corporation itself." There is no authority for the examination of an officer of a corporation, as such, apart from the examination of the corporation itself.^* A corporation cannot be examined through a person who has ceased to be an officer.^^ Where, a corporation sues upon a promissory note of which it has become the holder, it may be examined before trial through its officers as to matters of de- fense alleged by the defendant, although they occurred prior to the formation of the corporation, where the officers had personal knowledge thereof. Under such circumstances the prior knowledge of the officers is irnputable to their corpora- tion.^" Under section 296 of the Civil Practice Act on the examination of a corporation before trial through its officers and agents, the court may require the production of books and pa.pers which may be offered and received in evidence in addi- tion to use thereof for the purpose of refreshing the memory, but that section does not authorize a general inspection of books and papers.^ .449. Affidavit and order. The affidavit for the examination of a defendant corpora- tion must: state the office, or position in such corporation held by the person whose testimony is material and necessary ,2 and the names of the attorneys for the respective parties with 17. Kellogg V. Mately Supply Co.. River Ins. Co., 136 App. Div. 646, 12] ]68 App. Div. 671, 154 N. Y. Supp. N. Y. iSupp. 399. 3.59. 20. New. York Assets Realization 18. Town of Hancock v. First Nai . Co. v. Pforzheimer, 158 App. Div. 700. Bk., 93 N. Y. 83; Jacobs v. Mexican 143 N. Y. Supp. 897. Sugar Refining Co., 113 App. Div. 657. 1. Harby Steamship Co., Inc. v. 98 N. Y. Supp. 543; Shumaker v. Staten Island Shipbuilding Co., 181) Doubleday, Page & Co., 116 App. Di\ . App. Div. 769, 178 N. Y. Supp. 818. 303, 101 N. Y. Supp. 587; Meade v. 2. See also E,uleB of Civil Practice Southern Tier Masonic Relief Associa- Rule 133. Turk v. Koehler, 144 App. tion, 119 App. Div. 761, 104 N. Y. Supp. Div. 53, 138 N. Y. Supp. 809; Williams 523; Herman v. Tapley Co., 64 Misc. v. Western Union, Teleg. Co., 1 Civ. 466, 118 'N. Y. Supp. 803. Pr. Rep. .394, 47 Super. Ct. (15 J. & 19. .Chartered Bank of India v. Nortli S.) 380. ACTIONS BY AND AGAINST GOKPORATIONS. 549 their residence or office addresses.^ The order in form should authorize an examination of the corporation and provide that the information be elicited by an examination of certain of its officers.* And so an order for the examination of a defendant corporation before trial is improper in form where instead of requiring the examination of the corporation itself it provides for the examination of its managing agent as the adverse party, if such agent is not a party to the action adverse or otherwise.^ An order which does not purport to require the corporation defendant to be examined, but is directed against its officers individually, should not be vacated, as it may be cured by amendment.^ An order for the examination of a de^ fendant corporation as an adverse party, through the per- sonal examination of specified officers, is an order for the ex- amination of the corporation itself, not one for the exam- ination of the officers as such. The examination is entirely distinct from an examination of a former officer of such cor- poration As a witriess.'' An error in the fbrm' of the order should be cured by modification.* An examination of a cor- poration through its officers should not provide for the ex- amination of all the officers at the same time and place if no necessity therefor is shown, but only those should be re- quired to appear who are definitely shown to have knowledge of material facts, and of these no greater number than is necessary,' It seems, that where the defendant is a foreign corporation.iiot doing business in this state^ the order for an examination before trial should not require the corporation to bring its books into this state for examination, there being nothing to show that they are within the jurisdiction, and the plaintiff should be left to his remedy by commission to obtain proof of the entries in the bopks.^" 3. Miller v. W. K. Jahn Co., Inc.', 64 Misc. 46&, 118 N. Y. Supp. 803. 104 Misc. 370, 172 N. Y. Supp. S19. 7. Searle t. Halstead & Co., 139 4. Jacobs V. Mexican Sugar Refining App. Div. 134, 103 N. Y. Supp; 98'4. Co., 112 App. Div. 657, 98 N. Y. Supp. g Meade v. Soutbern Tier Masonic 54»; Educational Films Corporation v. ^^^^^ Association, 119 App. Div. 761. Lincoln & Parker Co., Inc., 192 App. ^^ j^ ^ ^ ^^^ Div. 621, 193 N. Y. Supp. il3. See „ c , t, , • t> j r^ -c, ' . 9. Solar Baking Powder Co. v. Royal also, Civil Practice Act, § 294. „ , . t. ^ ^ .,v„ a t^- /- 5. Verdi V. Nocenti Co., 177 App. taking Powder Co., 128 App. Div. 550, Div. 489, 164 N. Y. Supp. a36. "» N. Y. Supp: 1013. 6. Kram v.' Jewish World Pub. Co., 10- Kram v. Jewish World Pub. Co.. 176 App. Divi 840, 163 N. Y. Supp. 176 App. Div. 840, 163 N. Y. Supp. 261. Contra, Herrman v. Tapley Co.. 261. i)50 CORPORATIONS. 450. Production of corporate books and records. "A person shall not be compelled to produce upon a trial or hearing a book of account, otherwise than by an order requiring him to produce it or a subpoena duces tecum. Such a subpoena must be served at least five days before the day when he is required to attend. At any time after service of such a subpoena or order, the witness may obtain, upon such a notice as the judge, referee or other officer prescribes, an order relieving him wholly or partly from the obligations imposed upon him by the subpoena or the order for production, upon such terms as justice requires touching the inspection of the book or any portion thereof, or taking a copy thereof or extracts therefrom, or otherwise. An order may be made, as prescribed in this section, by a judge of the court, or in a special pro- ceeding pending out of court before an officer, by the officer, or in either case, by a referee duly appointed in the cause and authorized to hear testimony. A justice of the peace, or other judge of a court not of record, may make such an order in an action brought in his court at mu; time after the o.ommeiicement thereof. ' ' lOa " The production upon a trial, of a book or paper belonging to or under the control of a corporation, may be compelled in like manner as if it was in the hands, or under the control, of a natural person. For that purpose, a, subpoena duces tecum, or an order made as prescribed in the last section but one, as the case requires, must be directed to the president, or other head of the corpora- tion, or to the officer thereof, in whose custody the book or paper ia. ' ' H ' ' Personal attendance pursuant to subpoena duces tecum, or an order, made as prescribed in sections four hundred and ten or four hundred and eleven of this act, requires a public officer to attend .'iini bring :i book or paper tinder his con- trol, whereof subpoena or order is deen.K-d to lie sufficiently oborod, if the book or paper is produced by a subordinate officer or employee of the corporation, or in the public office, who possesses the requisite knowledge to identify it and to testify respecting the purposes for which it is used. If the personal attendance of a particular officer of the corporation or ^jublic officer is required, a subpoena, without a duces tecum clause, must also be served upon him. "12 451. When proof of corporate existence unnecessary. "In such an action (by a corporation) the plaintiff m-iMl lui) [iruve, upon the trial, the existence of the corporation, unless the answer is verified, and contains a specific allegation that the plaintiff, or the defendant, as the case may be, is not a corporation." IS • This rule applies to foreign as well as domestic corpora- tions.^* A mere denial in any form is not sufficient to raise an issue on the existence of the corporation. The answer must contain specific allegation to, the effect that the plaintiff is not a corporation. If it does not the plaintiff need not lOa. Civil Practice Act, § 411. 14. Vulcan v. flyers. 58 Hun 161, 11. Civil Practice Act, § 413. 11 N. Y. Supp. 663; McElwee Mf^ 12. Civil Practice Act, § 414. Co. v. Trowbridge, 68 Hun S8, 28 N. ^' 13. Rules of Civil Practice, Rule 93, Supp. 674, affd. 142 N. Y. 679, 37 N. E. Bubd. 2. 885. ACTIONS BY AND AGAINST COBPOKATIONS. 551 prove the incorporation.^^ Hence, a general denial, inter- posed by a corporation to an action for goods sold to it, does not put in issue its incorporation and the plaintiff need not prove it.i^ Where a complaint alleges that plaintiff is a cor- poration organized under a law of this state, ^nd the answer simply avers that defendant has no knowledge or information sufficient to form a belief as to the truth of the allegation, plaintiff is not required to prove the corporate existence ; such an averment is not equivalent to a " specific allegation " that plaintiff is not a corporation, which is requisite to impos3 upon it the burden of proof." Likewise a denial of incorpo- 15. United States Vinegar Co. v, Schlegel, 143 N. Y. 537, 38 N. B. 729; Goldsmith v. Wells Co., 85 Hun 489, 33 N. Y. Supp. ra7; Nibkerson V. Can- ton Marble Co,, 35 App. Div.: Ill, 54 N. Y. Supp. 705; Crocker v. Muller, 40 Miac. 685, 83 N. Y. Supp. 189 ; Erie & Jersey R. Co. v. Brown, 57 Misc. 164, 107 N. Y. Supp. 983, affd. 133 App. Diy. 655, 107 N, Y. Supp. 989. 16. Dentz Lithograpliing Co. v. In- ternational Registry Co., 3S,Mi^c. 687, 66 N. Y. Supp. 540; Commercial Bank of Keokuk v. Pfeiffer et al., 108 N. Y. 243, 15 N; E. 311 ; Methodist Episcopal . Church y. Tryon, 1 Penio,451; Black- burn V. American News Co., 89 App. Div. 83, 85 N. Y. Supp. 440.; tyiiett V. Sea Beach R. Co., 178 App. Div. 113, 164 N. Y. Supp. 1029;. Schmidt v. Nelke Art Lithographic Co., 17 Misc. 124, 39 N. Y. Supp, 353; Riley v. Metropoli- tan St. Ry. Co., 36 Misc. 789, 74 N. Y. Supp. 873; Bank of Havana v. Wick- ham, 7 Abb. Pr. 134, 16 How. Pr. 97. aflfd. 30 N. y. 355. It is not necessary for a foreign corporation suing in this state; to establish its corporate existence, where there: is no affirmative allegation that it is not a corporation. Atlantic Con- struction Co.: V. Krensler, 40 App. Div. 368,: '5,7 ISr. Y. Supp. 983. , Special proceeding. — When the ma- terial allegations in the moving affi- davit or verified petition in a special proceeding are not denied by some counter affidavit, they stand sufficiently proved for the purposes of the ulti- mate order. Matter of N. Y., L. & W. E. Co., 99 N. Y. 13, 1 N. E. 37. Attachment.^-'Since an affirmative allegation that defendant is a foreign corporation would suffice to establish the fact upon a trial in the absence of an affirmative allegation that the defendant is not a corporation, such a positive and unqualified allegation in an affidavit to procure an attachment is a suflicient foundation therefor. Simons v. Lehigh Mills Co., Ltd., 53 Misc. 368, 104 N. Y. Supp. 739. See also, Fiero on Particular Actions and Proceedings,; Vol. 1, p. 703, et seq. 17. Concordia Savings and Aid Asso- ciation V.' Read, 93 N. Y. 474. In. condemnation proceedings brought by a railroad company po acquire lands, an answer which merely denies any knowledge or information suffi- cient to form a belief as to the incor- poration of the railroad and the powers conferred upon it by statute is in- sufficient to raise an issue, for the pro- visions of Rule 93 of the. Rules of Civil Practice apply to. condemnation pro- ceedings. Long Island Railroad Co, v . Jones, 151 App. Diy. 407, i35 N. Y. Supp. 594. But it has been held that the pro- vision has no application to, a proceed- ing instituted by a corporation for the condemnation of land; but, by forc.r oi section 3365 of the Code (now Con- demnation Law, § 9), an answer in 552 COEPOBATIONS. ration upon information and belief is not sufficient to put plaintiff to proof thereof.^* An allegation upon information and belief,; that there is no such corporation as the plaintiff is not specific allegation that the plaintiff is not a corporation, and it raises no j.ssue upon that question.^^ The failure of the answer to present an issue as to the defendant's incorpora- tion cannot be aided by any statements contained in the A'erifi- cation thereof.^" The provision of the Eules of Civil Practice that a corporation defendant may not deny its existence at the time of the commencement of the action, does not preclude proof, under a general denial, that a contract alleged to have been made in the name of the defendant was made at a time when it had no corporate existence.^ 452. Action against corporation upon note or contract for payment of money absolute: Extension of time to plead: Judgment. " In an action against a foreign or domestic corporation to recover damages for the non-payment of a promissory note, or other evidence of debt, for the absolute payment of money, upon demand or at a particular time, the answer must be verified," 2 " In an action brought upon a, promissory note, or other written evidence of debt for the unconditional payment of money, payable on demand, or at a specified time, no order extending the time to plead shall be granted without notice of at least two days to the plaintiff's attorney." 3 • These provisions in part appeared first in 1825 as part of an act to prevent fraudulent bankruptcies by incorporated com- panies, and provided that in every suit against such company " upon any contract, note, or other evidence of debt," judg- Buch a proceeding which contains a Cantine Co. v. Warshauer, 7 Misc. 412, denial of any knowledge or informs- 28 N. Y. Supp. 139; Lamson Consol. tion by the defendaiit sufficient to Store Service Co. v. Conyngham, 11 form a belief as to the allegation of Misc. 428, 32 N. Y. Supp. laft; Snow, the petition in regard to the petitionei- Church & Co. v. Hall, 19 Misc. 655, 44 being a corporation, raises an issue N. Y. Supp. 427; East River Electric which the petitioner must m#et by Light Co. v. iClark, 18 N. Y. Supp. proof. Matter of Broadway & Seventh 463, 45 St. Rep. 635; East River Bank Avenue Railroad Company, 73 Hun 7. v. Rogers, 7 Bosw. 493. 25 N. Y. Supp. 1080. 19. First Nat. Bank v. Sla,ttery, 4 18. Bengston v. Thingvalla Steam- App. Div. 421, 38 N. Y. Supp. »59. ship Co., 31 Hun 96; Vulcan v. Myers, 20. Nickerson v. Canton Marble Co., 58 Hun 161, 11 N. Y. Supp. 663; Mc- 3B App. Div. Ill, 54 N. Y. Supp. 705, Elwee Manufacturing Co. v. Trow- 1. Galdipri & Co., Inc. v. Arthur bridge, 68 Hun 38, 22 N. Y. Supp. 674, Waist Co., 98 Misc. 612, 163 N. Y, affd. 142 N. Y. 679, 37 N. E. 835 ; Post Supp. 612. Publishing Co. v. Bennett, 164 App. 2. Civil Practice Act, § 252. Div. 633, 149 N. Y. Supp. 867; Ma,rtiii 3. Rules of Civil Practice, Rule 86 ACTIONS BY AND AGAINST CORPOEATIONS. 553 ment should be given on the return day, unless it should ap- pear to the court by affidavit that the corporation had a good and substantial defense on the merits.* The scope and ap- plication of this provision was indicated by the Supreme Court a few years later .^ It was held that a policy of insur- ance issued by an incorporated insurance company was not a contract, note or other evidence of debt within the meaning of the statute, and that the provision applied only to an action upon some instrument which is, in itself, evidence of debt, as a note, bond or bill of exchange. The same construction was again asserted in 1829.® The provision was then incorpora- ted in the Revised Statutes with a change of phrase plainly intended to accord more clearly with the interpretation of the court.'' The word " contract " was omitted and the ex- pression " for the absolute payment of money on demand, or at any particular time," inserted, and these amendments of the original language were preserved in the Code and in the Civil Practice Act. Taking into view the history of the pro- vision, the decisions upon it in its original form, and the later changes of its language, it should be confined strictly to actions upon instruments which admit on their face an existing debt payable absolutely, and so it does not apply to a contract of life insurance payable only upon certain specified conditions,* or to a guaranty of the payment of rent,' or to a certificate of stock of a building and savings association with a guaranty of payment of the principal thereof,^" or to an action wherein it is sought to charge a corporation as indorser of a promissory note," or to an action on a note of another corporation, the payment of which the defendant corporation has assumed,^^ or to an ac- tion against a corporation as indorser ,^^ or to an action upon 4. L. 1825, ch. 305, § 4. 10. Tautphoeus v. Harl>or & Sulrar- 5. Anonymous, 6 Con. 41. ban Assn., M App. Div. Z3, 88 N. Y. 6. Tyler v. Aetna Fire Ins. Co., 2 Supp. 709. Wend. 280. H- Shorer v. Times Print & P. Co.. 7. 3 K. S. 458, §§ 8 and 9. 119 N. Y. 483, 33 N. B. 979. 8. New York Life Ins. Co. v. Uni- 12. Fifty-third Nat. Bank of Cinoin- versal Life Ins. Co., 88 N. Y. 424; Mc- nati y. Hudson Refrigerator Co., 153 Kee V. Metropolitan Life Ins. Co., 25 N. Y. S^pp. 168. Hun 58p. !?■ Shprer v. Times Print & Publish- 9. Canavello y. Michael & Co., 31 ing Co., 53 Hun 88, 6 N. Y. Supp. 6.S. Misc. 170, 63 N. Y. Supp. 967. aflfd. 119 N. Y. 483, 33 N. E. 979. 554 COKPOKATIONS. a note joined with an action for goods sold and delivered." The statute does apply to an action to recover the amount of interest coupons on negotiable promissory notes,^^ and to an action by an accommodation indorser and holder against the maker of a corporate note.^^ The provision applies to a mu- nicipal corporation; and this, although by its charter it is authorized to sue and be sued, to complain and defend." It has been held applicable in the New York City Municipal Court,^^ and Marine Court,^^ but not applicable in Justices' Courts.^" The technical provision in the Code of Civil Pro- cedure which permitted the plaintiff to take judgment unless the defendant served with his answer or demurrer an order permitting the issues to be tried has been omitted from the Civil Practice Act since an order was generally granted as a matter of course on proof no stronger than a verification.^ The provisions of the Civil Practice Act prescribing a limit- ation of time for the enforcement of a civil remedy in the courts of the state do not affect an action to enforce the pay- ment of a bill, note, or other evidence of debt issued by a 14. McGovern v. Bulman-Warren Paint Co., 55 N. Y. Supp. 767; Bradley V. Albermarle Fertilizing Co., Z Civ. Proc. Rep. 50. 15. Boyle v. Staten Island Co., 87 Hun 233, 33 N. Y. Supp. 836. 16. Ford V. Binghamton Hydraulic Power Co., 54 Hun 451, 7 N. Y. Supp. 714, affd. 121 N. Y. 664, 24 N. E. 1093. 17. Moran v. Long Island City, 101 N. Y. 439, 5 N, E. 80. 18. Duke V. Mount Morris Construc- tion Co., 127 App. Div. 39, 111 N. Y. Supp. 313. In an action in the Municipalf Court of the City of New York against a domestic corporation to recover upon a check, the plaintiff will be deemed tf have waived the provisions of this sec- tion requiring an order of a judge di recting the trial of the issues raised by the answer, unless he gives notice of his intention to enforce such pro visions to the defendant. Blenderman V. Bellis Co., 64 Misc. 65, 117 N. Y. Supp. 897. 19. Schlegel v. American Beer and Ale Bottling Co., 12 Abb. N. C. 280, 64 How. Pr. 196. 20. Center v. Hoosick River Pulp Co., 43 Misc. 247, 88 N. Y. Supp. 548. 1. The foUo^viiig cases construed the provision rOf the Code of Civil Proce- dure requiring the service of an ordel- permitting a trial of the issues. Ford V. Binghamton Hydraulic Power Co., 54 Hun 451, 7 N. Y. Supp! 714, affd. 121 N. Y. 664, 24 N. E. 1093; Water- town National Bank v. Westchester County Water Works Co., 19 Misc. 685, 44 N. Y. Supp. 1101; Pennypacker v. Levis & Co., 63 Misc. 384, 116 N. Y. Supp. 771; Hein v. Standard Die & Tool Works. Inc., 113 Misc. 137, 184 N. Y. Supp. 78: Sehlesinger v. Meyer Realty Co., 114 N. Y. Supp. 341 ; Hut- son V. Mortisania Steamboat Co., 12 Abb. N. C. 278, 64 How. Pr. 268; Barr Co. V. Kuntz & Co., 18 Abb. N. C. 476 : Beaumond v. Diecks, etc., Co., 5 Civ. Proc. Rep. 274, 14 Abb. N! C. 100. ACTIONS BY AlTD AGAINST CORPOBATIONS. 55!! moneyed corporation, or issued or put in circulation as - money .^ 453. Action to compel determination of claim to real property. An action to compel the determination of a claim to real property may be maintained, as prescribed in article 15, of the Eeal Property Law, by or against a corporation, or by or against an unincorporated association, as if it was a natural person, or such an action may be maintained by or against the receiver or other successor of any such corporation or association.' 464. Bight to maintain action for libel. That a corporation has the right to maintain an action for libel, when the publication assails its management, or credit, and inflicts injury upon its business, or property, is a propo- sition, which is true upon principle and which has the support of authority. It is as much entitled to the protection of the law, in those respects, as a natural person. It differs from the latter, in that it has no character to be affected by a libel; but its right to be protected against false and mali- cious statements, affecting its credit, or property, should be beyond question. There has been some dispute in the cases as to the necessity of setting out the specific damage, which a corporation claims to have suffered from a libellous publica- tion; but the better rule seems to be that such an averment is not necessary, when the language is of so defamatory a nature as to directly affect credit and to occasion pecuniary injury.* It is now settled, that a corporation may sue for any libel upon it as distinct from a libel upon its, individual members, and, that a corporation engaged ixL business may maintain an action for libel without proof of special damage where the language used concerning it is defamatory in itself and in- jurioTisly and directly affects its credit and necessarily and directly occasions pecuniary injury.^ A corporation may maintain an action for libeil without proof of special damage if the. charge is defamatory and injuriously directly affects its credit or the management of its business and necessarily 2. Civil Practice Act, § 58. Leather Bank v.; Thompson, 18 Abb. 3. See Code of Civil Procedure, § Pr. 413. 1550 5. Union Associatpd Press v. Heath. 4. Reporters^ Associa^tion t. Sun 49 App. Div; 247, 253, 63 N. Y. Supp. Printing & Publishing AsBoeiation. 186 9€. N. Y. 437, 79 N. E. 710; Shoe and 556 COEPOEATIONS. causes pecuniary loss. Words accusing a banking corpo- ration of having participated in the sale of intoxicating liquors contrary to law are libelous per se.^ 455. Defenses of usury prohibited. "No corporation shall • hereafter interpose the defense of usury in any action. The term corporation, as used in this section, shall be construed to include all associations, and joint-stock companies having any of the powers and privileges of corporations not possessed by individuals or partnerships." 7 Neither a corporation nor a stockholder thereof can main- tain a suit to set aside .any of its obligations as usurious.* Where a corporation is the primary debtor one who guaran- tees payment cannot interpose the defense of usury sin.ce he stands in no better position than does the corporation.^ So an indor&er or other surety upon corporation paper cannot avoid liability thereon upon the ground that the corporation has agreed to pay a rate of interest beyond that allowed by law as to natural persons.^* And usury is not a defense to an action against the accommodation indorser of a note made by a corporation and negotiated for its benefit/^ nor against a corporation organized to conduct the business of a testator though it was appointed administrator of the estate with the will annexed.^^ The statute only prevents the avoidance by a corporation of its own contract upon the ground of usury, and so where property is pledged to secure a usurious loan, a cor- poration succeeding to the rights of the pledgor is not pro- hibited from demanding and recovering the property pledged.^^ 456. Effect of appointment of receiver. The appointment of a receiver for a corporation does not necessarily dissolve the corporation.^'' Such a receiver has no 6. Fir^t National Bank of Waverly N. Y. '51, 134 N. E. 94. V. Winters, 335 N. Y. 47, 131 N. K. 10. Knapp v. Harkness, 60 N. Y. 612. *59. 11. Weinreb v. Coleman Stable Co.. 7. General Business Lavr, § 374. 70 Misc. 535, 137 N. Y. Supp 343 Laws 1860, ch. 178, which forbade a ^^ DeMoltke-Hirstfeldt v. Garner & corporation to interpose the defence of ^^^ ^^^ ^p^ ^.^ ^^^^ ^^^ ^ ^ usury, repealed as to corporations, all existing statutes in regard thereto 558. MacQuoid~vrQue'ens"Esta°tes^l43'App. 13- Merchants : Exchange National Div. 134, 127 N. Y. Supp. 8&7. ^^"^ ^- Commercial Warehouse Co.. 8. MacQuoid v. Queens Estate, 143 ^^ N- Y. 635. App. Div. 134, 137 N. Y. Supp. 867. 14- Knouer v. Globe, Etc., In?. Co., 9. Salvin v. Myles Realty Co., 337 14 J. & S. 370. ACTIONS BY AND A&AINST OORPOKATIONS. 557 absolute right to be substituted as plaintiff in an action brought, the granting of the order of substitution is under sec- tion 83 of the Civil Practice Act and, hence, is discretionary with the court.^^ And where, after the commencement of an action by a corporation to recover an iiid'ebteduess, it becomes insolvent and a receiver of its assets is appdinted, this does hot affect the right of action; this may still be asserted by it and the action continued by the receiver without any substi- tution, so long as there is no dissolution of the corporation by judgment of the court.^^ And if a new receiver is appointed in place of the one originally appointed, the action may con- tinue in the name of the original receiver.^'' The appointment of receivers of. a corporation, in the absence of an injunction restraining the officers of such corporation from defending a pending action against it, does not deprive such officers of the right to continue the defense thereof, ^^ though the receiver may be substituted.^' -A^nd whpre the receiver of a railroad is discharged and the railroad sold, it is not necessary to sub- stitute the purchaser as defendant in an action against the 16. Shaped Seamless Stocking Co. v. Snow, ChuTcii & Co., SO Misc. 319, 45 N. Y. Supp: 849. Substitution denied. — The substitu- tion is properly denied where it ap- pears that the defendant in the action has been instrumental in having the receiver appointed, and that the plain- tiff's attorney has a greater interest in the recovery than the plaintiff has Shaped Seamless Stocking Co. v. Snow, Church' &■ Co., 19 Misc. 431, 44 N. Y. Supp. 321, affd. 'ao Misc. 319, 45 N. Y. Supp. 849. ' l6. Tracey v. Sank of Selina, 37 N. Y. 533; Knaiier V. Globe,' Etc., Ins. "Co., 14 J. & S: 370; United States Vinegar Co! v. iSpamer, 143 N. Y. &76, 3« N. E. 731; Phoenix Warehouse' Co. V. Badger, 6 HUn 393, affd: 67 N. Y. 394; Piatt V. Ashman, 33 Hun 330. AnciUat^ refcieiiver.— An acti6n by a foreign corporation may be continued in its name after the appointirient of an ancillary receiver in this ' state. Sigua Iron Co. v. Brown, 171 'N. Y. 488, 64 N. E. 194. '' When plaintiff had no right to com- mence action. — Section 7 5© cannot be invoked by a receiver for the purpose of enabling him to continue an action in the name of a plaiatiflwho had no right to oommehce it'. Mutual Bank v. Burrell, 39 Misc. 333, 60 N. Y. Supp. 533. 17. Hegewiseh' Y. Silver, 140 N-; Y. 414, 35 N. E. 658; Dougherty v. King. 41 Appr Div; 1, 58 N. Y. Supp.' 67. revd. on other gfoutads! 165 N. Y. eS ? . 59 N; E. 1121; 18. Farmers' ■ Loan "& 'Tr^st ' Co. v. Hoffman House, 1 Misc. 358; 27 N. Y. ^upp. 634. ^■' lis. Tracy v. Bank of Selma, 37 N. Y. 533. Compare Owen v. Kellogg, 56 Hun 455, 10 N. Y. Supp. 75. But where the ooi'poration is dissolved, the action dies unless a living person is substituted. See Tracy v. Bank of Selma, 37 N. Y. 533. 558 COBPOBATIONS. receiver, but the action may be continued against the re- ceiver.^" 457. Effect of dissolution on pending actions. The dissolution of a corporation defending an action abso- lutely prohibits further proceedings in the action, as to such corporation, uiitil receivers or directors or other persons are substituted in place of the defendant corporation.^ All pro- ceedings after the dissolution are void, a judgment entered against the corporation under such circumstances is a null- ity.^ The authority of the attorney of record in the action to act ceases upon the dissolution of his client, and he can take no further steps in the action.^ A corporation which has been enjoined from the exercise of its franchise is not dissolved and it may be sued until there is a judgment of dissolution.^ 458. Substitution of receivers or directors on dissolution. At common law, upon the dissoliition of a corporation, its liabilities were extinguished and its personal assets went to the crown and the realty to the grantor thereof.^ While the common law rule, in its entirety was never adopted in this state, it has been held that,, in the absence of statutory author- ity authorizing the continuance of an action against a corpo- ration by the substitution of its receiver or trustees, the action 20. Baer v. MoCullough, 176 N. Y. the time of the expiration of its phar- 97, 68 N. E. 129; Dougherty v. King, ter is not a creditor, within the mean- 41 App. Wv. 1, 58 N. Y, Supp. 67, revd. ing of the statute, and that such ae- on other grounds 1®5 N. Y. 657, 59 tion cannot be continued against the N. E. 1131. directors.: . 1. MoCulloch V. Norwood, 58 K. Y. 2. McCuUoch v. Noxwiood, 58 N. Y. 563; Sturgia V. Vanderbilt, 73 N. Y. 562; Matter of Norwood, 32 Hun 196; 984; People v. Bjiickerbocker L. Ins. Wamaley v. Horton Co., 87 Hun 347, Co., 106 N. Y. 619, 13 N. E. 447 ; 34 N. Y. Supp. 306. Hepworth v. Union Ferry Co,,; 63 Hun 3. Wamsley v. Horton Co., 87 Hun 857, 16 N. Y. Supp. 693; Wamstey v. 347, 34 N. Y. Supp. 306. Horton Co., 87 Hun 347, 34 N. Y. Interposing defense. — The dissolved Supp. 306; People v. Mercantile Credit corporate defendant cannot interpose a Guarantee Co., 65 App. Div. 306, 78 defense in the action; its attorney can- N. Y. Supp. 8'58. But see Grafton v. not plead the dissolution of the de- Union Ferry Co., 13 N. Y. Supp. 8i78, fendant. Wamaley v. Hortpn Co., 8T 40 St. Rep. 137, affd. 19 N. Y. Supp. Hun 347, 34 N. Y. Supp. 306. 966, 46 St. B.ep. 549, holding that tht 4. Kincaid v. Dwinelle, 59 N. Y. 548. plaintiff iu an action pending against 5. iShayne v. Evening .Post Pub. Co., a corporation for personal injuries at 168 N. Y. 70, 61 N. E, 115, ACTIONS BY AHD AGAINST GOKPOBATIONS. 559 absolutely abated and could not be revived.^ By chapter 295 of the Laws of 1832, an action against a corporation upon its dissolution could be ordered continued against its representa- tive or successor in interest. Unless the substitution of such person was ordered, the action against the corporation diedJ The statute of 1832 was repealed in 1880, but in the meantime changes were made in the corporation laws so that power generally existed to continue actions upon the dissolution of the corporation.^ The court now possesses the same power to continue actions pending against a corporation when it is dissolved under section 101 of the Gehera:! Corporation Law as was conferred upon the Court of Chancery by chapter 295 of the Laws of 1832.3 Section 35 of the General Corporation Law provides : "Upon the dissolution of any corporation, its directors, unless other persona shall be appointed by the legislature, or by some court of competent jurisdiction, shall be the trustees of its creditors, stockholders or members, and shall have full power to settle its affairs, collect and pay outstanding, debts, , and divide among the persons entitled thereto the money and other property remaining after pay- ment of debts and necessary expenses. Such trustees shall have authority to sue for and recover the debts and property of the corporation, by their name as such trustees, and shall jointly and severally be personally liable to its creditors, stockholders and members, to the extent of its propei;ty and • efflects that shall come into their hands." Section 221, subdivision 3, of the General Corporation Law, providing for the, dissolution of corporations by re,ason of the expiration of the time limited for its corporate existence, pro- vides: ' 'Said corporation, shall nevertlieless continue in existence for the purpose of paying, satisfying and discharging any existing debts or obligations, collecting and distributing its assets and doing all other acts required in order to adjust and wind up its business aijd affairs, and may sue and be sued for the purpose of enforcing such debts or obligations, until its ; business and affairs are, fully ad- justed and wound up. " Section 5 of the Business Corporations Law, in part.- pro- vides: / - !rt 6. Matter of Norwood, sa Hun 196; 562; Sturgis v. Vanderbilt, 73 N. Y. Matter of Yuengling Brewing ^o-i, 24 384; Piatt v. Ashman, 33 Hun 330. App. .Div. 323, 49 N. Y. Supp. 12. See 8. Hepworth v.. Union Ferry Co., 62 also, Grafton v. Union Ferry Co., 13 Hun 357, 16 N. Y. Supp., 693. N.Y! Supp. 878,, 40 St. Rep. 137, affd. 9. People v. Troy Steel & Irop Co., 19 ilSr. y.' Supp. 966, 4« St. Rep. 549. 82 Hun 303, .31 N. Y.. Supp, 337. 7. MoCulloch v. Norwood, 58 N. Y. 560 COBPOKATIONS. "The dissolution of any such corporation for any cause shall not take away or impair any remedy against it, its stockholders or officers, for any liabilities in- curred previous to. its dissolution. ' ' By virtue of these sections, an action against a corporation, may, upon its dissolution be continued against its receiver or its directors or trustees." But, it has been held that, upon the dissolution of a corporation not subject to the General Corporation Law or General Business Law, no authority exists for the continuance of an action against it and it abates." Thus, as such statutes are only applicable to domestic corporations, it has been held that an action against a foreign corporation cannot be revived upon its dissolution.^^ The liabilities of a corporation, upon its dissolution, do not devolve upon its receiver or its directors or trustees so as to authorize their substitution under section 83 of the Civil Prac- tice Act;^^ iO. Gordon v. Evening Post Pub. Co., 66 N. Y. Supp. 828; Marstaller v. Mills, 143 N. Y. 398, 38 N. E. 370. Compare In re N. Y. Oxygen Co., 33 N. Y. Supp. 726; Grafton v. Union Ferry Co., 13 N. Y. Supp. 878, 40 St. Rep. 137, affd. 19 N. Y. Supp. 966, 40 St. Rep. 549. Negligence. — A cause of action against a domestic business corpora- tion for injuries caused by its negli- gence does not abate upon its dissolu- tion, but survives, and an action is maintainaJble against its trustees hold- ing the property for the purposes of distribution. Marstaller v. Mills, 143 K. Y. 398, 38 N. B. 370. Libel. — ^An actibn for libel survives the dissolution of the corporate de- fendant and may be continued against its former directors to reach assets of the corporation. Shayne v. Evening Post Pub. Co., 168 N. Y. 70, 61 N. Y 115. Appeal. — ^An appeal may be taken by the receivers of a corporation in the name of the corporation, frOm an order entered against the corporatism after the appointment of* the receivers. People V. Troy Steel & Iron Co., 82 Hun 303, 31 N. Y. Supp. 337. 11. Matter of Yuengling Brewing Co., 24 App. Div. 223, 49 N. Y. Supp. 12. 12. Wamsley v. Horton Co., 17 Misc. 327, 39 N. Y. Supp. 963, affd. 12 App. Div. 312, 42 N. Y. Supp. 767, affd. 153 N. Y. 687, 48 N. E. 1107; Matter of Stewart, 39 Misc. 275, 79 N. Y. Supp. 525, affd. 86 App. Div. 627, 8t N. Y. Supp. 1117, affd. 177 N. Y. '558, 69 N. E. 1131. Foreign corporation. — When a foreign corporation is dissolved in the state oi its incorporation it ceases to exist everywhere as a legal entity and an action pending against it in this state fails. Matter of Stewart, 39 Misc. 375, 79 N. Y. Supp. 525, affd. 86 App. Div. 627, 83 N. Y. Supp. 1117, affd. 177 N. > 558, 69 N. E. 1131. -The mode .of con- tinuing an action against a foreign corporation after its dissolution' is a matter of practice governed by the laws of this state. SturgeS v. Vanderbilt 73' N; Y. 384. '' 13. Owen \ . Kellogg, 56 Hun 455, 10 N. Y. Supp. 75; Wamsley v. Horton Co., 17 Misc' 3a7;'39 N." Y. Supp. 963 affd. 12 App. Div. 312, 42 N. Y. Supp. 767, affd. 153 N. Y. 587, 48 N. B. 1107. ACTIONS BY AND AGAISTST COBPOEATIONS. 561 469. Stay of proceedings in actions coUusivfely brought by directors against a corporation. " If an action is brought against a' corporation by the procurement or default of its directors, or any of them, to enforce any claim or obligation declared void by law, or to which the corporation has a valid defense, and such action is in the interest or . for the benefit of any director,; and the corporation has by his connivance made default in such^ action, or cpngented to the validity of such claiid or obligation, any member of the corporation may apply tp the supreme court, upon affidavit, setting forth the, facts, for a stay of proceedings in such action, and on proof of the facts in such further manner and upon sucli notice as the court may direct, it may stay such proceedings or set aside and vacate the same, or grant such other relief as may seem proper, and which will not injuriously affect an innocent party, wliB, without notice of such wrongdoing stnd for a valuable consideration, has acquired; rights under such proceedings." n This section gives relief only in •cases where the action therein referred to is in the interest or for th^ benefit of the director of a corporation againgt' which it is brought; but it is a pecuniary interest or benefit that the section contem- plates, and not an interest arising, out, of relatioiiship.^^ "\^ere certain directors of a corporation, for their, own benefit, pro- cure an action to be .brought upon notes of the corporation to which it has 3^, valid defense, and it cpUusiyely defaults in said action and permits its property to be taken on execution, a large stockholder, whose stock is sought to be made worthless by the scheme, will be granted an order undqr this section vacating the judgment, and he will be "permitted to come in ahd defend the action in behalf of the corporation, and by an attorney of his' own selection.^^ 460. Injunction suspending business of corporation and restraining oflSlcers from performance of duties. " An injunction order, suspending the general and ordinary business of a cor- poration, or suspefliding, from office, or restraining from the performance . of :, his duties, a trustee, director, or other; officer thereof, can ,]j,e . grante^, -only, by , the court, upon notice of the applicfition therefor, to the proper officer of _ the cor- poration, or to the trustee, director, or other officer en joiped. If such an in- iunction order is made, otherwise than as prescribed in this section, it is void." 17 This provision is not clear. It is difficult to tell what is the general as distinguished from the ordinary business of the corporation. The only interpretation that C3.n, satisfy the 14. General Corporation Law, § ^3 16. Matter of Virgil, 26 Misc.' 33'a 15. Mb,tter of Gardner, 86 Htin 3C 57 N. Y. Supp. SS. 33 N. Y. Supp. 336. 17. General Corporation Law, § 30r. 36 562 COEPOBATIONS. jnile of construction, to give full effect to eveiy word used, is one that shall prohibit the granting of an injunction ex parte which shall suspend generally the ordinary business of a cor- poration. The section has no application where the injunction restrains only a single act or duty.^^ An injunction granted ex parte, in violation of this section, is void.^^ An injunction will not be granted to restrain the investment of surplus funds.^" The provisions of this section apply to business done, whether the charter of the corporation pernaits it or not.^ The fact that a railroad corporation has been alleged to be insolvent, and that a receiver thereof has been appointed in an action brought against it, does not authorize the court to restrain the receiver from proceeding to construct the road, as authorized by the company's charter, so long as its corpo- rate rights and franchises have not been adjudged to be forfeited in an action brought against it by the people.^ A clause contained in an order to show cause why a director should not be permitted to examine the corporate books, stay- ing defendants from removing said director pending the pro- ceeding, is not an injunction within the meaning of this sec- tion.' An order to show cause why an injunction should riot be granted is a sufficient notice of the application for such in- junction.* 461. Officers and agents may be compelled to testify in certain actions. In an action to sequestrate corporate property or by the attorney general to annul a corporation, it is provided by statute that: "a stockholder, officer, alienee, or agent of a corporation, is not excused from answering a question, relating to the management of the corporation, or the 18. Town of Fort Edward v. Hudson ester and State Line Railway Co., 12 Valley Ry. Co., 137 App. Div. 438. ir Hun 242. N. Y. Supp. 753. * 20. Bach v. Pacific Mail S. S. Co., 12 19. Injunction restraining directors ^^^^- ^^- ^- ^- ^'''^■ . ■ i.. .J 1. Mayor, Etc. v. Starin. 56 N Y from passing, voting upon, or consider- ^ ' omim, dd j.^. i . ing a resolution declaring the office Super. Ct. 153, , , ^ J , i- 2. Moran v. Lydecker, 27 Hun 582, of treasurer vacant and elcjcting an- ,^ ,,. .|,j « „.„ other, granted ex parte in violation o. 3 p^^j^ ^^ ^^j" g^^^^^^ ^_ ^^^^.^ this section; prohibiting the granting Bros., 69 Misc. 70, 125 N. Y. Supp. 9.58. of an ex parte , injunction suspendinj,- 4. Gossy. Warp Twisting In Machine the general and acting business of ; Co., 133 App. Div. 122, 117 N. Y. Supp. corporation, is void. Wilkie v. Rocli- 328. ACTIONS BY AND AGAINST CORPORATIONS. 563 transfer or disposition of its property, on the ground that his answer may ex- pose the corporation to a forfeiture of any of its corporate rights, or will tend to • convict him of a criminal offense, or to subject him to a penalty or forfeiture. But his testimony shall not be used, as evidence against him, in a criminal action or special proceeding. ' ' 5 462. Supplementary proceedings. Although since the amendment of the statute,^ supplemen- tary proceedings may be maintained against domestic corpo- rations by judgment creditors, such right does not authorize the appointment of a receiver. The amendment simply has the effect of making domestic corporations subject to the pro- visions of the Civil Practice Act for the institution and main- tenance of supplementary proceedings, and does not change the law so as to allow preference to be obtained by the cred- tors of insolvent corporations.'' 5. General Corporation Law, § 301. 7. Boucker Oontracting Co. v. Calla- 6. Code Civ. Proc. § 24,63, amd. by lian Contracting Co., 218 N. Y. 321 L. 1908, ch. 378 (now Civil Praetict 113 N. E. 257. Act. § 777). 564 COEPOEATIONS. CHAPTEE XXV. Sequesteation of Cobpoeate Peopebty. 463. In general. 464. Application to court. 465. Bringing in creditors to prove claims. 466. Pleadings. 467. Papers to be served on attorney general. 468. Temporary injunction against corporation and officers. 469. Injunction staying action hy creditors in certain cages. 470. Requisite of injunction against corporation. 471. Collection of amount due on stock subscriptions. 470. Temporary receiver. ; i 473. Additional powers and duties of temporary receiver. 474. Permanent receiver. 475. Additional, duties and liabilities of permanent receiver. 476. Effect of judgment of sequestration and appointment of receiver. 477. Distribution of property by judgment. 463. In general. " Where iinal judgment for a sum of money has been rendered against a cor- poration created by or under the 13,-wa of the state, and an execution issued thereupon to the sheriff of the county, v?here the corporation transacts its gen- eral business, or where its principal office is located, has been returned wholly or partly unsatisfied, the judgment creditor may maintain an action to procure a judgment sequestrating the property of the corporation, and providing for a distribution thereof, as prescribed in section one hundred and twelve of this chapter (General Corporation Law) ."8 Article sixth of the General Corporation Law relating to an action for sequestration does not apply to a religiotis cor- poration, or to a municipal or other political corporation, created by the constitution, or by or under the laws of this state, or to any corporaljon which the regents of the univer- sity have power to dissolve, except upon the application of the regents, or of the trustees of such a corporation, and in aid of its liquidation under such dissolution.^ A sequestra- tion action is simply a summary mode of compelling the appli- cation of the property of a corporation, which has allowed an execution to be returned unsatisfied, to the payment of its 8. General Corporation Law, § 100. action. Form No. 364. Judgment in 9. General Corporation Law, § 300. sequestration action. Form No. 266. Forms: Complaint in sequestration SEQUESTRATION OF COKPOEATE PROPERTY. 565 debts.^° An action for sequestration is equitable and in the nature of a creditors' bill/^ and must be based on a final judg- ment and tbe issue and return unsatisfied of an execution,^^ and, therefore, a creditor at large who has no judgment is not entitled to the; benefits of the statute.^'^ The statute plainly excludes the case where the company,, though insolvent, is possessed of sufficient property, real or personal, within the county where it transacts its general business or where its principal office is located to: satisfy the judgment creditor's execution. It is a proceeding looking solely to the sequestra- tion of such assets of the company as are not leviable. It is only when creditors have had all the tangible property of the company within one or. the other of the specified counties ap- plied upon their execution and there is still a balance unpaid thereon that the court is authorized to appoint a receiver, and it is only the assets which are left after the application in this way of the tangible property, that are to be distributed in the sequestration proceedings equally among all the creditors.^* The statute has not changed the rule requiring that execution shall issue before ah equitable action in the nature of a credit- or's bill can be maintained against a corporation,^^ and does not supersede the attorney-general's power to institute pro- ceedings to dissolve, nor the power of a general creditor with- out a judgment to institute proceedings to restrain the im- proper exercise of certain powers, or to procure the payment 10. Townaend v. Oneonta, C. & R. S. Furniture Co., 8 App. Div. 43, 40 N. Y. E. Co., 88 App. Div. 208, 84 N. Y. Supp Supp. 454. 427. See also, Fiero on Particular Ac- 12. Mann v. Pentz, a Sandf . Ch. a57, tions and Proceedings, Vol. 1, p. 7fi7 revd. on other grounds 3 N. Y. 415; g^ ggq Rodbourn v. Attica, Ithaca and Erie It is said in Seals v. Buffalo, Etc. R. Co., 38 Hun 369. Construction Co., 49 App. Div. 589, 63 13. Dambman v. Empire Mill, 13 N. Y. Supp.. 635, that the purpose of Barb. 341; National Broadway Bank § 100 is more extended than might' be v. Wessel Metal Co., 59 Hun 470, 13 inferred from the section taken by N. Y. Supp. 744. itself. That beyond the sequestratio" 14. National Broadway Bank v. Wes- of the property of the corporation, tli- sel Metal Company. 59 Hun 470. 13 relief reaches ' out for ' whatever lia- N. Y. Supp. 744. bility can be acquired; that it is no.1 15. Application. — This section does restricted to whatever technii^ally be not refer to or include actions by credi- longs to the corporate entity, but lia- tors to set aside fraudulent judgments, bility "for the payment of the debt" Easton National Bank v. Buffalo Chemi- of the creditor is one of tbe tests for eal Works, 48 Hun 557, 1 N. Y. Siipp. making a stockholder a party. 350.. ^ 11. Proctor V. Sidney Sash, Blind & 566 CORPOEATIONS. of his debt ; each proceeding may go on with the rights pecu- liar to each, subject to the power of the court to restrain un- necessary suits.i^ A judgment creditors' action to sequestrate the property of a corporation and a proceeding taken by its directors to procure a voluntary dissolution of it are of equal dignity, and a permanent receiver appointed in the creditors ' action may be appointed as temporary receiver in the disso- lution proceeding." A suit by a creditor to sequestrate the property of an insolvent cdrporation may be maintained in a Federal court.^* 464. Application to conrt. " All applications to the court shall be made in the judicial district where the principal office of the corporation against which proceedings are taken is located, excepting such applications as are made in actions brought by the attor- ney general on behalf of the people of the state, and all such applications shall be made in the judicial district in which the action i? triable." 19 465. Bringing in creditors to prove claims. " In such an action, the court may, at any stage of the action, before or after final judgment, make an order requiring all the creditors of the corporation to exhibit and prove their claims, and thereby make themselves parties to th<> action, in such a manner, and in such a reasonable time, not less than six months from the first publication of notice of the order as the court directs; and that the creditors, who make default in so doing, shall be precluded from all benefit of the judgment, and from any distribution which may be made thereunder, except as hereinafter provided. Notice of the order must be given by publica- tion, in such newspapers, and for such a length of time, as the court directs. Notwithstanding such order any such creditor who shall exhibit and prove his claim in the manner directed thereby, with proof, by affidavit or otherwise, that he has had no notice or knowledge thereof in time to comply therewith, any time before an order is made directing a final distribution of the assets of such corporation, shall be entitled to have his claim receiyed, and shall have the same rights and ibenefits thereon, so far as the assets of such corporation then remain- ing undistributed may render possible, as if his claim had been exhibited and proved within the time limited ]fey such order." 20 In an action to sequester the property of a corporation, ledger entries of corporate indebtedness made in his own handwriting by the secretary, treasurer and general manager of the defendant, are incompetent to prove such corporate in- debtedness to him. But the minute book of the corporation 16. Dambman v. Empire Mill, 12 18. Robinson v. Mutual Reserve Life Barb. 341. Tns. Co., 162 Fed. 794. 17. Matter of Hoagland, Robinsor 19. General Corporation Law, § 314. Co.. 36 Misc. 28, 72 N. Y. Supp, 435. 20. General Corporation Law, § 303. SEQITESTRATIOlir OF CORPORATE PROPERTY. 567 containing a resolution of the stockholders in the handwriting of snch claimant should be received when supported by the evidence of a stockholder who was present, although possibly with some reserve, by reason of the intimate relations be- tween the corporation and the claimant whom the resolution is to serve.^ 466. Pleadings. The complaint in an action by a judgment creditor for sequestration need not state the facts on which the judgment was obtained, showing a valid cause of action against the cor- poration, nor need it state that the action is brought for the benefit of other creditors.^ A judgment creditor seeking to sequestrate corporate property to satisfy his judgment may, if a fraudulent transfer of the property is alleged, join as parties defendant the persons who hold such property in their possession.^ Stockholders and trustees of a corporation may, if a personal liability is claimed to exist against them, be made parties to an action to sequestrate corporate property,* and the statute provides that : " Where the action is brought by a creditor of a corporation, and the stock- holders, directors, trustees, or other officers, or any of them, are made liable by law, in any event or contingency, for the payment of his debt, the persons, so made lia/ble, may be made parties defendant, by the original or by a supple- mental complaint; and their liability may be declared and enforced by the judgment in the action." 4a Accordingly a judgment creditor who brings an action to set aside as fraudulent a trust deed executed by the corpora- tion and judgments obtained against it, and to sequestrate property of the corporation and have it appropriated to the payment of its debts, may, under § 109 of the Greneral Corpo- ration Law, enforce in the same action the liability of the shareholders of the corporation arising out of their failure to pay for the capital stock subscribed for by them, and enforce the personal liability of the trustees for filing a false 1. Purick V. Port Jefferson Electric 3. Proctor v. Sidney Sash, Blind and Light Co., 186 App. Div. 214, 174 N. Y. Furniture Co., 8 App. Div. 43, 40 N. y. Supp. 385. For a discussion of this Supp. 454. section see, post, par. 537, action for 4. Bagley & Sewall Co. v. Lennig, 61 dissolution. ''''''' App. Div. 36, 70 N. Y. Supp. 343. 2. Woodard v. Holland Medicine Co.; 4a. Gpneral Corporation T.aw. 5 109. 15 N. Y. Supp. 128. 39 St. Rep. 411. 568 COEPOEATIONS. certificate to the effect that the capital stock was all paid in.^ The action may he joined with a cause of action to have set aside as fraudulent, certain judgments in favor of the trus- tees, and &, certain trust deed, and with an action, seeking a personal judgment against the trustees for their failure to fulfill certain statutory duties.^ But if the stockholders and directors who are personally liable are not made parties an independent action may be maintained against them for the statute provides that: " Where the stockholders, directors, trustees, or other officers of a corporation, who are made liable, in any event or contingency, for the payment of a debt, are not made parties defendant, as prescribed in the last section, the plaintiff in the action may maintain a separate action against them, to procure a judgment, declaring, apportioning and enforcing their liability." 7 " In an action brought as prescribed in either of the last two sections, the court must, when it is necessary, cause an account to be taken of the property and of the debts of the corporation, and thereupon the defendant's liability must be apportioned accordingly; but, if it aflBrmatively appears, that the corporation is insolvent, and has no property to satisfy its creditors, the court may, without taking such an account, ascertain and determine the amount of each defendant's liability, and enforce the same accordingly." 8 467. Papers to be served on attorney-general. "A copy of all motions and all motion papei's, and a copy of any other application to the court, together with a copy of the order or judgment to be proposed thereon to the court, in every action or proceeding for the dissolution of a corporation or a distribution of its assets, shall, in all cases, be served on the attorney-general, in the same manner as provided by law for the service of papers on attorneys who have appeared in actions, whether the applications but for this section would be ex parte or upon notice, and no order or judgment granted shall vary in any material respect from the relief specified in such copy, order or judgment, unless the attorney-general shall appear on the return day and shall have been heard in relation thereto ; and any order or judgment granted in any action or proceeding aforesaid, without such service of such papers upon the attorney-general, shall be void, and no receiver of any such corporation shall pay to any person any monev directed to be paid by any order or judgment made in any such action or proceeding, until the expiration of eight days after a certified copy of such order or judgment shall have been served as aforesaid upon the attorney-genoral. "9 An action brought to sequestrate the property of a corpo- ration is an action for " a distribution of its assets," within 5. Bagley & Sewall Co. v. Lenning, 8. General Corporation ,Law, § 111. 61 App. Div. 26, 70 N. Y. Supp. 243. 9. General Oorpoiration Law, § 312. 6. Bagley & Sewell Co. v. Lenning, For a further discussion of this section 61, App. Div. 36, 70 K Y. Supp. 242, see, post, par. 523. 7. General Corporation Law, 5 110. SEQURSTEATION OF COEPOBATE PROPEETY. 569 the meaning of the statute and copies of all notices and all motion papers in every such action must be served upon the attorney-general.^" The provision of the statute relates only to domestic corporations, and notice need not be given to the attorney-general of proceedings to sequestrate the property of a foreign corporation brought in this state.^^ 468. Temporary injunction against corporation and officers. "In an action, brought as prescribed in this article, the court may, upon proof of the facts authorizing the action to be maintained, grant an injunction order, restraining the corporation, and its trustees, directors, managers and other officers, from collecting or receiving any debt oi demand, and from paying out, or in any way transferring or deUyering, to any person, any money, prop- erty, or effects of the corporation, during the pendency of the action; except by express permission of the court. Where the action is brought to procure the dissolution of the corporation, the injunction may also restrain the corporation, and its trustees, directors, managers and other officers, from exercising any of its corporate rights, privileges, or franchises, during the pendency of the action; except by express permission of the court. The provisions of title second of chapter seventh of the code of civil procedure, relating to the granting, vacating or modifying of an injunction order, apply to an injunction order, granted as prescribed in this section ; except that it can be granted only by the court. ' ' 13 469. Injunction staying action by creditors in certain cases. ' ' In such an action, the court may, in its discretion, on the application of either paTty; at any stage of -the action, before or after final judgment, and with or without security, grant an injunction order, restraining the creditors of the corporation from bringing actions against the defendants; or any of them, for the recovery of a sum of money, or from taking any further proceedings in such actions, theretofore commenced. Such an injunction has the same effect, and, except as otherwise expressly prescribed in this section, is subject to the same provisions of law, as if each creditor, upon whom it is served, wag named therein, and was a party to the action in which it is granted. ' ' 13 470. Requisite of injunction against corporation. "An injunction order, suspending the general or ordinary business of a corpo- ration, or suspending from office, or restraining froin the performance of his duties, a trustee, director, or other officer thereof, can be granted only by the 10. Whitney v. New York & A. K. 12. General Corporation Law, § 103. Co., 3S Hun 164; Matter of Stone- Forms: Order appointing receiver bridge, 13 N. Y. Supp. 770, 37 St. with temporary injunction. Form No. Rep. 617, affd. 128 N. Y. 618, 38 N. E. 281. 253. 13. General Corporation Law, § 302. 11. MacNabb v. Porter Air-Lighter For discussion of this section see, post, Co., 44 App. Div. 102, 60 N. Y. Supp. par.«26. 694. 570 CORPORATIONS. court, upon notice of the application therefor, to the proper oflacer of the corpo- ration, or to the trustee, director, or other officer enjoined. If such an injunction order is made, otherwise than as prescribed in this section, it is void." 1* 471. Collection of amount due on stock subscriptions. "Where the stockholders of the corporation are parties to the action, if the property of the corporation is not sufficient to discharge its debts, the interlocu- tory or final judgment, as the case requires, must adjudge that each stock- holder pay into court the amount due and remaining unpaid, on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the corporation. ' ' IB "If it appears, that the property of the corporation, and the sums collected or collectable from the stockholders, upon their stock subscriptions, are or will be insufficient to pay the debts of the corporation, the court must ascertain the several sums, for which the directors, trustees, or other officers, or the stock- holders of the corporation, being parties to the action, are liable; and must adjudge that the same be paid into court, to be applied, in such proportions and in such order as justice requires, to the payment of the debts of the corpora- tion. "16 472. Temporary receiver. ' ' In such an action, the court may also, at any stage thereof, appoint one or more receivers of the property of the corporation. A receiver, so appointed, before final judgment is a temporary receiver, until final judgment is entered. A temporary receiver has power to collect and receive the debts; demands, and other property of the corporation; ,to preserve the property, and the pro- ceeds of the debts and demands collected; to sell or otherwise dispose of the property as directed by the court; to collect, receive and preserve the pro- ceeds thereof; and to maintain any action or special proceeding, for either of those purposes. , He must qualify as prescribed by law for the qualification of a permanent receiver. Unless additional i powers are specially conferred upon him, as prescribed in the next section, a temporary receiver has only the powers specified in this section, and those which are incidental to the exercise thereof." IT An application for the appointment of a receiver under a judgment rendered in a judgment creditor's action, brought to sequestrate the pro^prty of a corporation pursuant to the provisions of the Greneral Corporation Law, should be made in the action, and is wrongfully entitled as a special proeeed- 14. General Corporation Law, § 305. porary receiver, Form No. 883. Order For a discussion of this section see, extending powers of temporary re- post, par. 525. eeiver, Form No. a84. Petition for ae- 15. General Corporation Law. § 113. counting by temporary receiver, Form 16. General Corporation Law, § %14. No. 28'5. Order discharging temporary 17. General Corporation Law, § 104. receiver, Form No. 285. Order dis- Forms: Order appointing temporary cha/rging temporary receiver and can- receiver, Form No. 380. Bond of tern celing bond. Form No, 287. SEQUESTRATION OP CORPORATE PROPERTY. 571 ing.^^ A temporary receiver will not be appointed in an ac- tion for the sequestration of the property of a domestic cor- poration, on the complaint alone, imsupported by affidavit or other evidence shomng the necessity of the receivership/^ and this is true even though, having the usual verification, such complaint states all the allegations thereof positively; such relief should not be granted until final judgment, except in a case where it satisfactorily appears that it is essential to the protection of the plaintiff's rights that it be granted be- fore. Facts and circumstances with reference to the con- dition and management of the corporate affairs, showing that the appointment of a temporary receiver is necessary in order to render effectual a final judgment in favor of the plaintiff, should be shown.^" In a suit to sequestrate the property of a corporation notice of motion to appoint a receiver must be given to the attomey-geaieral.^ It is the duty of a temporary receiver to collect the property of the corporation and he is authorized to maintain any action or special proceeding for the purpose. He has power under section 104 of the General Corporation Law to maintain an action to recover from a third person money collected by him under a judgment en- tered against the insolvent corporation upon an offer made by it for the purpose of giving an unlawful preference ; and the insolvent corporation is hot a necessary or proper party defendant to such action.^ Ata application by a tempoiary receiver, appointed in an action to sequestrate the property of a corporation, for a warrant to examine persons as to their alleged possession of property of the corporation is a " special proceeding,?' within the meaning of section 104 of the General Corporation Law, authorizing such a proceed- ing.^ An assignee for the benefit of creditors, under an assignment made pending a suit to sequestrate the property 18. Matter of Chauncey, 191 App. man House, 37 Misc. 140, 58 N. Y. Div. 359, 181 N. Y. Srnpp. 653. Supp. 337. 19. Federman v. Standard Churn gO. Kieley v. Barron & Cooke H. & Manufacturing Co., 138 App. Div. 49S. p (^ ^ g^ ^pp jjj^. g^^ g^ jg- y. Supp. 113 N. Y. Supp. 834. 306 When receiver appointea.-A receiver ^- ^ ^ ^.^^^ ^.^ _^ ^^ ^^^^^^.^ of the .property of a corporation will not be appointed unless the litigants, ^- *^- ^^ """ ^**- who invoke such action, clearly estab- 2- ^ealis v. American Tube & Iro„ liah that the remedy is necessary td- Co., 150 K Y. 43, 44 N. B. 944. protect their interests from imminent 3. Rich v. Sargent Granite Co., 30 and serioua injury. Thalmann v. Hoff- N. Y. Supp. 139, 61 St. Rep. 853. 572 CORPORATIONS. of a corporation and a motion for the appointment of a tem- porary receiver, is entitled to have the order appointing the temporary receiver provide that his right to possession of the assets as general assignee shall not be interfered with. Such assignee, having qualified, has a right to the custody of the assets until the assignment be set aside, or, in an action brought for that purpose, the court stays his control over the funds, or substitutes some other for him.* Where a tempo- rary receiver, appointed in an action to sequestrate the prop- erty of a corporation, has duly executed and filed the requisite bond, and thereafter, under the judgment in the action, is con- tinued as permanent receiver, while a further bond may be exacted in the discretion of the court, he is under no obli- gation to furnish it until required to do so, and his failure to do so does not affect his power to act as permanent receiver.^ 473. Additional powers and duties of temporary receiver. "A temporary receiver, appointed as prescribed in the last section, is, in all respects, subject to the control of the court. In addition to the powers con- ferred upon him, by the provisions of the last section, the court may, by the order or interlocutory judgment appointing him, or by an order subsequently made in the action, or by the final judgnlent, confer upon him the powers and authority, and subject him to the duties and liabilities, of a permanent receiver, or so much thereof as it thinks proper; except that he shall not make any distribution among the creditors or stockholders, before final judgment, unless he is specially directed so to do by the court. ' ' 6 474. Permanent receiver. "A receiver appointed by or pursuant to a final judgment in the action or a temporary receiver who is continued by the final judgment, is a permanent re- ceiver, and has all the powers and authority conferred, and is subject to all the duties and liabilities imposed upon a receiver in article eleven of this chapter. ' ' 7 The purpose of appointing a receiver in sequestration pro- ceedings is to provide fgr a just and fair distribution of the property of the corporation and of the proceeds thereof among its fair and honest creditors in the order and in the proportions prescribed by law in case of the voluntary dis- solution of a corporation.^ A receiver, of a trust and life in- 4. Rump V. Van Rensselaer Realty 7. General Corporation Law, § 106, Co., 138 App. Div. Z89, 133 N. Y. Supp. as amd. by L. 1909, ch. 340. 912- 8. Townsend v. Oneonta, C. & R. S. 5. Jones v. Blum et al., 145 N. Y. 333, R. Co., 88 App. Div. 308, 84 N. Y. Supp. 39 N. E. 954. 427. 6. General Corporation Law, § 103. SEQUESTRATION OF CORPORATE PROPERTY. 573 surance company, appointed in sequestration proceedings, represents the stockholders, policy holders and creditors of the corporation, is vested with title to all its property and choses in action and may maintain an acton to set aside an illegal transfer of all its property made by it or its officers.^ And a receiver of a mutual life insurance corporation, ap- pointed in sequestration proceedings, has power, as statutory successor to the rights of the directors, to levy assessments upon the outstanding capital stock notes of the corporation and his authority to do so depends only upon the existence of facts which render the assessment necessary and proper.^" A judgment creditor's action to sequestrate the property of a corporation and a proceeding taken by its directors to pro- cure a voluntary dis,solution of it are of equal dignity, and, hence, where the court has duly appointed a permanent re- ceiver in the creditor's action, a temporary receiver subse- quently appointied in the dissolution proceeding, without notice to the creditor and apparently without knowledge in the court of the appointment of the permanent receiver, takes no title to any of the property of the corporation. The. di- rectors have, however, a right to prosecute their proceeding, and, where there is nothing for the temporary receiver to re- ceive, the court may vacate his appointment and appoint the permanent receiver as temporary receiver in thje proceeding of the director s.^^ A receiver of a bank, who has Iseen finally discharged, will hot be allowed to intervene in proceedings to reach newly discovered assets of the bank and to receive fees thereon, as he would have ho authority to receive or pay out the fund and therefore could earn no fees.^^ 475. Additional duties and liabilities of permanent receiver. "A permanont recoiver sJiaJl keep an account of all moneys received by him, and 'on the' first' day of January, April, July and October, in each aid every year make and file a written statement, verified by his oath' that such statement is correct and true, showing the amount of money received by such receiver, his agents 'or attorneys, the amouiit he has a right to retain and the items for which lie' claiins to retain the saine, and the distributive share due each pei'son in- lerested therein. ITp shall pay pueli distributive share to the person or persons 9.' Raymond V. Security Trust & I.. 11. Matter of Hoagland, Robinson Ina. Co., 44 Misc. 31, 89'N.'T. Supp. Co.. 36 Misc. 38, 72 K- Y. Supp. 43.". 753, affd. 101 App. Div. 546. 91 y. Y 12. Matter of Grand' Central Bank. 8upp. 1(J41. '"■ • ' '• 37 MiSc. 116, 57 N. Y. Supp. 418, affrl. 10. Regfener v. Phillips, 36 MiSc. 311 42 App. Div; 157, 58 N. Y. Supp. 103" m y. Y. Supp. 174. '"- '■" 574 COBPORATIONS. entitled, thereto, on demand, at any time after such statement. Such, account, statement, and all the books and papers of the corporation in the hands of such receiver, shall at all reasonable times be open for the inspection of all persons having an interest therein. And in case of neglect or refusal to comply with either' of the above requirements, or any duty inlposed upon him, the supreme court, at either an appellate division or special term, shall, on the application of the party aggrieved, unless , such neglect or refusal shall be satisfactorily ex- plained, to the court, forthwith remove such receiver, and appoint some suitable person as receiver in his place. Such removal shall not vitiate or annul any legal proceedings had by such receiver; but such procedings shall be continued by such successor as if no removal had been made. Such receiver shall also be liable to pay to the party interested, interest at the rae of ten per centum per annum on all moneys due to such party and retained by him more than one day after such demand made as aforesaid. "13 476. Effect of judgment of sequestration and appointment of receiver. A judgment appointing a receiver in a sequestration action, brought by a creditor against a corporation under the pro- visions of section 100 of the Gfeneral Corporation Law, does not dissolve the corporation or prevent the prosecution of actions against it," prevent the corporation from defending actions against it,^^ or deprive it of power thereafter to take and prosecute appeals from judgments recovered against it.^^ So until the corporation is dissolved, a contract may be en- forced against it as well after as before the appointment of a receiver. The sequestration interrupts the ordinary business of a corporation, but does not necessarily affect the corporate franchises, and if the assets are more than sufficient to liqui- date its liabilities, the surpliis goes back to the corporation on paying its creditors. The corporation is entitled to havp the action for sequestration discontinued and receiver ' di«r charged." After judgment has been entered for the plaintff another creditor of the defendant should not be allowed to open the judgment and defend, when it is not shown that he has any defense on the i^erits.^* 13. General Corporation Law, § lo; tinues during existence of final judg 14. People V. Troy Steel & Iron C(i;. ment. Kodbourn v. Utica, Ithaca an(' Sa Hun 303, 31 N. Y. Supp. 337. Erie K. Co., 38 Hun 369. 15. Parry > . American Opera Co., 12 17. Parry v. American Opera Co., 12 Civ. Pro. Rep. 194, 9 St. Rep. 536, Civ. Pro. Rep. 194, citing Mann v. citing Mann v. Pentz, 3 N. Y. 419; Pentz, 3 N. Y. 419; Angell v. Silsbury, Angell V. Silsbury, 19 How. Pr. 48. 19 How. Pr. 48. 16. Auburn Button Co. v. Sylvester. 18. Trowbridge v. Troy & New Rng- 68 Hun 401, 22 N. Y. Supp. 891. land Ry. Co., 113 App. Div. 325. 90 Appointment of receiver only con X. Y. Supp. 435. SEQUESTRATION OV CQBPQKATB PROPERTY. 575 477. Distribution of property by judgment. ' ' A ftnal judgment in an action, brought against a corporation, as prescribed in this article, either separately or in conjunction with its stockholders, direc- tors, trustees, or other officers, must provide for a just and fair distribution of the property of the corporation, and of the proceeds thereof, among its fair an.l honest creditors, in the order and in thei proportions prescribed by law, in caso of the voluntary dissolution of a corporation." 19 19. General Corporation Law, § 112. \K>»t, par. 535. For a discussion of this section see 576 CORPORATIONS. CHAPTER XXVI. VoijUssttary Dtssoltjtion. Without JiidicidU. Froceedings. 478. Dissolution before beginning business. 479. Dissolution before expiration of time limit. 480. Meeting and consent of stockholders. 481. Effect of dissolution. 482. Effect on obligations of corporation. 483. Dissolution at teiniinatiou of corporate existence. Through Judicial Proceedings. 484. In general. 485. Nature of proceeding. 486. Practical dissolution without judicial proceedings. 487. Necessity thal^ dissolution be beneficial to interest of stockholders. 488. Effect of pending suits by stockholders or action by attorney general. 489. Duty of directors to present petition. 490. Petition when directors do not agree. 491. Contents of petition. 492. Affidavit to be annexed to petition. 493. Amendment of schedules annexed to petition. 494. AVhere petition presented. 495. Order to show cause. 496. Publication of order to show cause. 497. Service, entering and filing order to show cause. 498. Notice to attorney general. 499. Reference, hearing and decision. 500. Motion for final order. 501. Granting final order. 503. Vacating final order: Costs: Appeal. 503. Effect of dissolution generally. 504. Effect on corporate obligations and liabilities. 505. Certain sales, transfers Bnd judgments after filing petition void. 506. Directors as trustees on dissolution. 507. Appointment and powers of temporary receiver. 508. Application for appointment. 509. When receiver to be appointed: Vacating order. 510. Possession of property by receiver. 511. Injunction restraining creditor. 512. Powers, duties and liabilities of receiver. 513. Appointment and powers of permanent receiver. 514. Who may be appointed. 515. Omission, defect or default of receiver. VOLUNTARY DISSOLUTION. 577 Without Judicial Proceedings. 478. Dissolution before beginning business. '"The incorporators iiaia«d in any certificate of incorporation filed for the purpose of creating a domestic stock corporation, other than a moneyed or transportation corporation, may, before the payment of any part of the capital, and before beginning business, surrender all corporate rights and franchises, by sighing, verifying and filing in the oMee of the secre- tary of state and the clerk of the county where the certificate of incorpo- ration is filed, a certificate setting forth the names of the incorporators, that no part of the capital has been paid, that there are no liabilities, that such busi- ness has not been begun, and surrendering all rights and franchises; and proof of the facts set forth in such certificate to the satisfaction of the secretary of state; and thereupon the said corporation shall be dissolved, and its corporate existence and power shall cease. In case any incorporator of such a corpora- tion shall be deceased, then the aforesaid certificate may be made by the sur- viving incorporators providing two years shall have elapsed since the date of its incorporation, but in such case the certificate shall set forth the fact that one or more of said incorporators is deceased. "20 479. Dissolution before expiration of time limit. ' ' Any stock corporation, except a moneyed or a railroad corporation, ma-y be dissolved before the expiration of the time limited in its certificate of incorpo- ration or in its charter as follows: 1. The board of directors of any, such corporation, may at a meeting called for that purpose, upon at least three days' notice to each director, by a vote of a majority of the whole board, adopt a resolution that it is in their opinion ad- visable to dissolve such corporation forthwith, and thereupon shall call a meet- ing of the stockholders for the purpose of voting upon a proposition that such corporation be forthwith dissolved. Such meeting of the stockholders shall be held not less than thirty nor more than sixty days after the adoption of such jesolution, and the notice of the time and place of such meeting so called by the directors shall be publisjied in one or more newspapers published and circulating in the county wherein such corporation has its principal office, at least once a week for three weeks successively next preceding the time appointed for holding such meeting, and on or .before the day of the first publication of such notice, a copy thereof shall be served personally on each stockholder, or mailed to him at his last known post-office address. Such meeting shall be held in the city, town or village in which the last preceding annual meeting of the corporation was held, and said meeting may, on the day so appointed, by the consent of a, majority in interest of the stockholders present, be adjourned from time to time, and iiotice of such adjournment shall be published in the newspapers in which the notice of the meeting is. published. If at any such meeting the holders of two-thirds in amount of the stock of the corporation, then outstanding, shall, in person or by attorney, consent that such dissolution shall take place and signify such con- sent, in writing, then such corporation shall file such consent, attested by its sec- 20. General Corporation Law, § 230. Vnvm No. 34. Forms: Gertificate of dissolution. 37 578 CORPOEATIONS. retary or treasurer, and its president or vice-president, together with the powers of attorney signed by such stockholders executing such consent by attorney, .with a statement of the names and residences of the then existing board of directors of said corporation, and the names and residences of its officers duly verified by the secretary or treasurer or president of said corporation, in the office of the secretary of state. i" 2. The secretary of State shall thereupon issue to such corporation, in dupli- cate, a certificate of the filing of such papers and that it appears therefrom that such corporation has complied with this section in order to be dissolved, and one of such duplicate certificates shall be filed by such corporation, in the office of the clerk of the county in which such corporation has its principal office; and thereupon such corporation shall be dissolved and shall cease to carry on business, except for the purpose of adjusting and winding up its business. The board of directors shall cause a copy of such certificate to be published at least once a week for two weeks in one or more newspapers published and circulating in the county in which the principal office of such corporation is located, and at the expiration of such publication, the said corporation by its board of directors shall proceed to adjust and wind up its business and affairs with power to carry out its contracts and to sell its assets at public or private sale, and to apply the same in discharge of debts and obligations of such corporation, and, after paying and adequately providing for the payment of such debts and obligations, to distribute the balance of assets among the stockholders of said corporation, according to their -respective rights and interests. 3. Said corporation shall nevertheless continue in existence for the purpose of paying, satisfying and discharging any existing debts or obligations, collecting and distributing its assets and doing all other acts requred in order to adjust and wind up its business and affairs, and may sue and be sued for the purpose of enforcing such debts or obligations, until its business and affairs are fully adjusted and wound up. 4. After paying or adequately providing for the debts and obligations of the corporation the directors may, with the written consent of the holders of two- thirds in amount of the capital stock, sell the remaining assets or any part thereof to a corporation organized under the laws of this or any other state, and engaged in a business of the same general character, and take in payment therefor the stock or bonds or both of such corporation and distribute them among the stockholders, in lieu of money, in proportion to their interest therein, but no such sale shall be valid as against any stockholder, who, within sixty days after the mailing of notice to him of such sale, shall apply to the supreme court iu the manner provided by section seventeen of the stock corporation law, for an appraisal of the value of his interest in the assets so sold; unless within thirty days after such appraisal the stockholders consenting to such sale, or some of them, shall pay to such objecting stockholder or deposit for his account, in the manner directed by the court, the amount of such appraisal and upon such payment or deposit the interest of such objecting stockholder shall vest in the person or persons making such payment or deposit."! 1. General Corporation Law, § 221. of coiporate property in dissolution Forms: Certificate cf dissolution proceedings until proper terms of sale by stockholders, Form No. 25. are made and infornmtion, as to the Injunction granted to restrain sale property to be sold, is given. Tread- VOLUNTABY DISSOLUTION. 579 The motives of the directors in procuring the voluntary dis- solution of a corporation are immaterial, if the statute has been complied with.^ It seems plain that the directors of a corporation may not distribute its assets among the stock- holders, where the corporation is not formally dissolved, without at least giving the creditors some notice.^ 480. ]\Ieetmg and consent of stockholders. A stock corporation can be dissolved without judicial pro- ceedings only when the holders of two-thirds in amount of the entire outstanding stock of the corporation consent thereto in writing.^ It has been held, by the attorney-general that the provisions of section 42 of the General Corporation Law as to waiver of notice do not apply to proceedings for dissolution without judicial proceedings,^ But he subsequently ruled that the three days' notice to each director, provided by subdi- vision 1 of section 221, might be dispensed with by written waiver duly executed before the meeting.® The place of meet- ing for the purpose of voting upon a proposition to dissolve a corporation, must be in the city, town or village in which the last preceding annual meeting of the corporation was Iield within this state. Such annual meeting to have been legal, well \-. United Verde Copper Ck>., 47 proceeding to dissolve the New York App. Div. 613, 63 N. Y. Supp. 708. corporation and to compel them to ac- Action by minority stockholder to count to it for certain profits, it was enjoin . sale of assets upon dissolution. alleged that the dissolution pi-oceed- Treadwell v. United Verde Copper Co., ings had been instituled in. order tha.t 134 App. Div. 394, 119 N. Y. Supp. lia. the defendants .might escape liability Remedy of minority or dissenting on a guaranty of the preferred stock stockholders.— See Treadwell v. United of the New York corporation owned Verde Copper Co., 134 App. Kv. 394, by the plaintiffs. Brown v. Mitchell- 119 N. Y. Supp. 113; Homer & Co. y. Lewis Motor Co., 174 App. Div. 430, Lawrence, 86 Misc. 95, 149 N. Y. Supp. 161 N. Y. Supp. 162. 82, affd. 166 App. Div. 930, 153 N. Y. 2. Knickerbocker v. Groton Bridge Supp. 1140. & Manufacturing Co., Ill App. Div. Complaint in action to set aside dis- 145, 97 N. Y. Supp. 595. solution, exarnined and held insufficient. 3. Darcy v. Brooklyn &, New York Knickenbocker v. Groton Bridge ^ Fcriy Co., 137 App. Div. 167, 170, 111 Manufacturing Co.,. Ill App. Div. 145, X. Y. Supp. 514, affd. 196 N. Y. 99, 97 N. Y. Supp. 595. 89 N. E. 461. Injunction granted where, in a suit 4. Rept. of Atty, Genl., Jan. 13, by the stockholders of a New York 1913. corporation ag'ain«t a foreign corpora- 5. Opinion of Atty. Genl.; June 11, tion and its directors, who were also 19(15, 4 State Dept. Rep. 513. the directors of the New York corpor- 6. Opinion of Atty. Genl., Aug. 11, ation,. to enjoin the defendant? from 1915, 5 State Dept. Rep. 450. 580 . CORPORATIONS. must necessarily kave been within the boundaries of the State of New York. The meeting must be called originally for such place, and if called for an improper place cannot be legally ad.iourned.'' A stockholder wronged by the fraudulent disso- lution of a corporation may sue, the cause of, action does not belong to the corporation.* '■ 481. Effect of dissolution. The cori^oration is continued by section 221 of the General Gor];)oration Law for the purpose of suing and being sued, and therefore, an action for tort brought against a corpora- tion after its dissolution should be brought against the corpo- ration and not against the directors who have become trustees for the benefit of creditors.^ An action in the nature of a creditor's suit cannot be maintained by a creditor of an ex- tinct corporation, to reach funds of the corporation paid out to stockholders before dissolution, without a valid judginent and execution against the corporation or its successors, or without first exhausting the creditor's remedies against the property remaining in the hands of the corporation or re- ceived by its trustees on its dissolution." The officers of a corporation, being'trustees of its assets after a voluntary dis- solution, may execute a valid assignment of a claim for moneys due under a contract.^^ Where the directors acting under an agreement for the voluntary dissolution of a corpo- ration taken pursuant to section 221 of the Greneral Corpora- tion Ijaw, or at least taken along lines quite similar to those prescribed by such section, declare a dividend upon the stock of the corporation, deposit the funds applicable to the pay- ment of the dividend with a trust company, acting as their agent in the matter, and notify the stockholders that the divi- 7. Kept, of Atty. Genl., Jan. 18, ousted from office, and, at least, in the 1912.. absence of other action by the stock- 8. Vogt V. Vogt, 119 App. Div. 518, holders the duty to liquidate the busi- 101 N. Y. Supp. 164. ness devolves upon them. Planters vi 9. Cunningham v. Glauber, 133 App. National Nassau Bank, 174 App. Div. Div. 10, 117 N. Y. Supp. 866. 354^ ^gg jg- y. Supp. 397. affd. 220 N. The adoption of a resolution by a y. 677 116 N E 1070 national bank for voluntary liquida- ' ' ' ' ' ^ _ , ,. , .. . i, 10. Sturges v. Vanderbilt, 73 N. \. tion does not eflfeet a dissolution of the : " 384 corporation but merely susipeaids its or- ; ' dina,ry functions. It continues in ex- 11- Asphalt P. & C. Co. v. City (it isl^nce ,for the purpose of liquidating New Xork,, 149 App. Div. 622, 134 .N, its affaire and. its. directoj-s are not 5?. Supp. 433. VOLUNTARY DISSOLUTION. 581 dead will be paid by the trust company on demand, the stock- holders may, in the event Of the refusal of the trust company to pay the dividends on demand, maintain an action against the directors to recover the amount of the dividend as for money had and received, although such money is still in the hands of the trust company .^^ A stockholder has no right to an individual share of the assets on the winding up of the business of the corporation, but only a right to participate in the proceeds of a sale.^^ Since a corporation, though dis- solved, continues in existence for the purpose of being sued, its existence and its business situs must be deemed to con- tinue for the purpose of enforcing a judgment obtained against it.^^ .1 482. Effect on obligations of corporation. The words " debts or obligations," contained in section 221 of the General Corporation Law, which, though authorizing dissolution of a corporation, continues its existence "for the purpose of paying, satisfying and discharging any existing debts or obligations," and provides that "for the purpose of enforcing such debts or obligations" the corporation may sue and be sued " until its affairs are fully adjusted and wonnd up," are as broad as the word " liabilities." The legislature did not mean that a privilege to dissolve at the pleasure of the stockholders Should become, a privilege,- at the like pleas- ure, to change the course of distribution. Liabilities whether oh contract or tort are to be paid and the liquidatbr is to pay them.^^ But the debts and obligations must be existing at the time of dissolution and does not apply to a claim for the breach of a covenant against incumbrances arising after dis- 12. .Taneway v. Burn, 91 App. Div. to appear by the person who, at the 165, 86 N. Y. Supp. SS8, affid.: 180 KT. time of the filing of tlie dissolution i-er- Y. 560, 73 N. E. 1125.. . tiflcate was president of the corpora- ls. HoECg. T. Edwards, 69 MUc. ^37, tion, a, motion to vacate thp order on l"i N. Y. Supp. 1035. the ground that the eorpora,tion had 14. Sanitary Brass Works. Tnc. r. heen dissolved prior to thp institution Rubin St, M'arcus, Inc., 110 Mi<;c. 565, of the supplementary proceeding, and 180 N: Y. Supp. 619, holding that the upon the further groiuid that the cor- corporation must bo deemed to have an poration has no place of business, must officer who, under section 790 of the be denied and said pr-G8id(?>nt direetod to Civil Practice Act, can be directed to appear for examination, .ittend .and be examined in proceedings 15. €ity of New York v. New York' wip-filemratary to execution, and where Jc 'South Brooklyn Ferry & S, T. Co., eucli an order directs the corporation 231 N. Y. IS. 131 N. E. 554. 582 COKPOBATIONS. solution and based on the payment made by a grantee to se- cure the extinguishment of a lease.^^ Prior to the enactment in 1896 of section 57 of the Stock Corporation Law (now General Corporation Law § 221), providing that a stock corporation upon its dissolution '' shall nevertheless continue in existence for the purpose of paying, satisfying and dis- charging any existing debts or obligations, collecting and dis- tributing its assets and doing all other acts required in order to adjust and wind up its business and alfairs, and may sue and be sued for the purpose of enforcing such debts or obli- gations, until its business and afPairs are fully adjusted and wound up, ' ' actions on contested claims were brought against the directors, but now such actions must be brought against the corporation, where it has been dissolved without appli- cation to the court pursuant to sections 220 and 221 of the General Corporation Law. Whether or not the directors should be joined as defendants has not been judicially deter- mined, but the action, in any event, does not lie against the di- rectors alone.^'' Prior to the enactment of the present section 221 of the General Corporation Law, actions for injuries re- sulting from negligence,^* for libel,^* and for assault,^" were maintainable against the directors of dissolved corporations. Even though the directors of a corporation after dissolution have illegally distributed its assets without providing for a judgment on which the corporation was liable, a receiver pen- dente lite will not be appointed in a subsequent action by the judgment creditor against the corporation and its directors, be- cause, owing to the distribution the corporation owns no prop- erty and the directors who participated in the distribution i..re jointly and severally personally liable for the damage sus- tained by the judgment creditor.^ 483. Dissolution at termination of corporate existence. A corporation ceases to exist by virtue of the expiration of the term stated in the certificate of incorporation, and no ad- 16. Oity «f New York v. New York 18. Marstaller v. Mills et al.. 143 N. & South Brooklyn Ferry & Steam Y. 398, 38 N. E. 370. Transportation Co., 104 Misc. 438, 172 19. Shayne v. Evening Post Publish- N. Y. Supp. 495. iiig Co., 168 N. Y. 70, 61 N. E. 115. 17. Marstaller \. MiUs, 143 N. Y. 20. Hepworth v. Union Ferry Co., 62 398, 38 N. E. 370; Cunningham v. Hun 857, 16 N. Y. Snpp. 692. Glauber, 133 App. Div. 10, 117 N. Y. 1. Tapley O). t. Keller, 133 App. Div. Supp. 866. ' 54, 117 N. Y. Supp. 817. VOLUNTAEY DISSOLUTION. 583 judication of a court is necessary to terminate the corporate life.^ Upon the termination of the existence of a corporation organized under the Business Corporations Law the legal title to the property vests in the directors under § 35 of the General Corporation Law, in trust for the creditors and stock- holders,^, and section 221 of the General Corporation Law which provides for a continuation of the existence of a corpo- ration after dissolution for the purpose of paying its ohli- tions, does not apply.* Where a corporation upon dissolution by the expiration of its charter has no creditors the stock- holders are the equitable owners of all the corporate property and should institute a special proceeding for the appointment of a trustee under section 35 of the General Corporation Law and then require the trustees so appointed to prosecute an action against the sole remaining director for an accounting: But still the stockholders have a sufficient interest to enable them to maintain an action for an accounting against the sole remaining director, a trustee ex maleficio, charged with con- verting to his own use and mixing with his own funds the property of which the stockholders are the sole equitable owners.^ Through Judicial Proceedings. 484. In general. "If a majority of the directors, trustees, or other officers, having the manage- ment of the concerns of a corporation created by or under. the laws of the state, discover that the stock, effects, and other property thereof are not sufficient to pay all just demands, for which it is liable, or to afford a reasonable 2. Matter of Friedrqan, 177 App. declared and paid until the eorpora- Div. 755, 164 N. Y. Supp. 892. tion was adjudged a- voluntary bank- 3. Matter of Friedman, 177 App. rupt, the directors who, upon the ex- Div. 755, 164 N. Y. Supp. 892; Wilson pii'ation of the, , charter of the corpora- V, Brown, 107 Misc. 167, 175 N. Y. tion, became trustees for the creditors Supp. 688. and stockholders and such as were 4. Wilson V. Brown, 107 Misc. 167, elected directors between the date of 175 N. Y. Supp. 688, holding that tlic expiration of fhe corporate exist- where after the date when bylimita- fciKie and the adjudication in bank- tion' of its charter thp, existence of a ruptcy are severally liable for thMr , solvent corporation ceased, though, v\n- ^failure to wind up the affairs of the der section 37 of the General Corpora- corporation and ^ for their participation tion Law, it could have been continued, in the continuance of its business the capital stock was tw'ice iiwreased, thereafter. a corporate mortgage executed, ^stoek- 5. De; Martini v. McCSaldin-, 184 4pP- holders' meetings held and dividends Div. 222, 171 N. Y. Supp. 528. 584 COEPOKATIONS. security to thos&. who may deal with it; or if, for anj' reason, they deem it benefieial to the interests of the stockholders that the corporation should be dissolved, they may present, a petition to the supreme court praying for a final order dissolving the corporation, as prescribed in this article. ' ' 6 "This article (General Corporation Law, Article IX) does not apply to an incorporated library Society, to a religious corporation, o.r to a select school or academy, incorporated by the regents of the university or by the legislature, or to a municipal or other political corporation. ' ' 7 "In the case of corporations affected by the provisions of this article (Gen- eral Corporation Law, Article IX) and not having stockholders, it shall- be sufficient for the purposes of this article to notify, name and refer to the ' members ' of such corporations, instead of ' stockholders, ' as lierein pro- vided. "8 The provisions of the General Corporation Law are sub- stantially a re-enactment of the Revised Statutes relating to the same matter; and the history of the legislation shows a clear intent to allow a dissolution of all kinds of corporations organized for carrying on business of any character, or organized for any purpose other than such corporations as are expressly excluded from the operation of the provisions under consideration." A corporation which has been enjoined 6. General Oorporatdon Law, § 170. Consolidator's note. — This, article consists of Ch. 17, Tit. 11 of the Code of CHvil Procedure, entitled "Proceed- ings for the voluntary dissolution of a corporation." It has been inserted in this chapter as Art. 9 without change but with the addition of one or two provisions not now found in the Code of Civil Procedure, but applicable to the suibjeet. See also Fiero on Par- ticular Actions and Proceedings, Vol. 1, p. 805, et seq. 7. General Corporation Law, § 195. 8. General Corporation Law, § 177. 9. It was held, in Miatte# of Peti- tion for the Dissolution of the Sports- men's Assoc, 2 N. Y. Supp. 63, 17 St. Itep. 879, 15 Oiv. Pro. 315, that the pro- visions of the Code as to the voluntary dissolution of a corporation applied only to corporations organized for the purposes of trade, business, and profit, and not to those of a social character. In Matter of Amei-ioan Dramatic Fund Assoc., 3 N. Y. S'upp. 793, 32 Abb. N. C. 331, it was hold that the Code pro- visions applied to all eorporatiojis, ex- cept to an incorporated library socieity, to a religious corporation, or to a select school or academy incorporated by the Regents of the University, or liy the legislature, or to a muniicipal or other political corporation, all of which are exempted from the provisions of sec- tion 3419 (now G«n. Corp. L., § 170) by section 3431 (now Gen. C'ovp. L., § 195) ; that the corporations whose object is the constitution and admin- istration of a fund for the pajiuent of annuities and allowances to mem- bers and beneficiaries, ' and for the burial of those entitled to interment under its by-laws or regulatioim, are within the provisions of the Codf . aid further that the property of sucli cor- poration may be distril)uted according to a, plan approved by the niembpra of the aasociatdon ; and it is not an ob- jection to dissolution, that owing to the nature of the corporation some of the details prescribed by statute, as to distribution Iiy veeeivpr, cannot be car- ried out. VOLUNTARY DISSOLUTION. 585 from the exercise of its corporate franchises and deprived of its property, and thus has ceased to exist for all practical pur- poses, is not thereby actually dissolved. It cannot be dis- solved save by tbe judgment of a court of competent juris- diction. Until such, judgment is rendered, creditors may pro- ceed by suit against it, unless restrained by injunction, and its stockholders do: not cease to be such.^" 485. Nature of proceeding. A proceeding for the voluntary dissolution of a corporation is purely statutory and the statute must be strictly complied with.^^. And while the court acquires jurisdiction by filing a petition, it has no power or authority to take any other step than such as is conferred by statute.^^ But the court must have implied authority to do whatever is necessary to render effective the contemplated purpose of the proceedings.^^ A court of equity has not, by virtue of its general and inherent powers, the right to dissolve the corporation, such right being entirely statutory.^* 10. Kincaid v. I>wmelle, 59 N. Y. 548. 11. Matter of Binghamton General Electric Co., 143 N. Y. aSl, 38 N. E. 297; Matter of Dolgeville Electric Light & Power Co., 160 N". Y. 5i0iO, 5:5 N. E. 387; Chamberlain v. Rochester S. P. V. Co., 7 Hun 557; Matter of Lenox Corporation, 57 .App. Mv. 515, 68 N. Y. Supp. 103, affd. 167 N. Y. 633, 60 N. E. 1115; Matter of Malcolm Brew- ing Oo., 78 App. Div. '593, 79 N. Y. ■Supp. 1057 ; Knickerbocker Trust Co. V. Tarrytown, W. P. & M. R. Co., 133 App. Dir. 385, 117 N. Y. Supp. 871; Matter of Duibois, 15 How. Pr. 7 ; Mat- ter of Mart, aa Abb. N. C. 337, 5 N. Y. Supp. 83. See also Fiero on Par- ticular Actions and Proceedings, Vol. 1, p. 805. The earliest legislation on this sub- ject in this State was in 1817, the history of which is reviewed, opinion Vann, J., in Matter of Trustees of Im- porters & Grocers' Exchange, 133 N. Y. 313, 30 N. E. 401, where it is held that the method prescribed by stat- ute is exclusive and must be aubatan- tially followed. 12. Matter of Simonds Mfg. Co., 39 App., Div. 576, 57 N. Y. Supp. 77«. la. Matter of S«neea Oil Co., 153 App. Div. 594, 596, 138 N. Y. Supp. 78, affd. 208 N. Y. 545, 101 N. E. 1121. 14. Blivin v. Peru Iron & Steel Co., 9 Abb. N. C. 305, 60 How. Pr. 380; Magee v. Geneseo Academy, 1 N. Y. Supp 709, 17 iSt. Rep. 331, citing Kimoaid v. Dwinelle, 58 N. Y. 548; Denike v. N. Y. & Rosendale Lime Co., 80 N. Y. 5Se. The power of the court in proceed- ings fqy the voluntary dissolution of a corppration is purely statutory, and does not. depend I on its, general equity powers. Matter of Tarrytown, White Plains & M. R. Co., 133 App. Div. 397, 117 .N. y. Supp. 695. 586 COBPOBATIONS. 4:86. Practical dissolution without judicial proceedings. A corporation cannot cease to exist of its own will. Its life continues until either the charter period has expired or the court has decreed the dissolution. The law made it and the law alone can put an end to it. It cannot sell its property in order to deprive itself of existence/^ nor is it dissolved by ceasing to do business/^ and a corporation omitting to per- form a duty imposed by its charter, or to comply with its pro- visions, does not ipso facto lose its corporate character." There is no obligation, however, to the state or to the public imposed upon a private corporation to carry on the business for which it was formed. It may, at any time, put an end to its transactions and voluntarily wind up its affairs.^^ And in the case of private corporations exercising no public or quasi public functions, the right of the company to discontinue its operations when they have become unprofitable for the pur- pose of protecting its shareholders from loss is undoubted.^' So all the stockholders of a corporation uniting may un- doubtedly surrender the franchises of the corporation and work its dissolution, though a portion of them cannot do so in the absence of statutory authority,^" and when a corpora- tion, with the consent and approval of all its stockholders, sells its entire property and effects with the intent and for the pur- pose of discontinuing the business of the corporation, and de- clares itself dissolved, does no business afterward, holds no meetings, and owes no debts, these acts are equivalent to a surrender of its corporate rights.^ It has been said, however, that at common law neither the directors nor a majority of the stockholders have power to sell or otherwise transfer all the property of a going, prosperous corporation as against the dissent. of a single stockholder; but, where the corporation is without available c^p-pital and without the means of procur- ing it and with its de jure corporate existence at an end, where the further prosecution of its business will be unprofit- able if not impracticable, a vote of the majority of the stock- is. People F. Ballard, 134 N. Y. 269, 10 N. Y, Supp. 81, affd. 134 N. Y. 240, 894, 32 N; E. 54. • 31 ST. E. 911. 16. Gary v. Schoharie Valley Macbine 19. Levin v. Mayer, 86 Misc. 116, Co., 3 Hun 110, 4 T. & C. 385. 149 N. Y. Supp. 112. 17. Day v. Ogdensburg & L. C. E. 20. Denike v. New York, etc.. R. Co.. Co., 107 N. Y. 129, 13 N.' E. 765. 80 N. Y. 599. 18. Skinner v. Smith, 56 Hun 437, 1. Webster v. Turner, 12 Hun 264. VOLUNTAEY DISSOLUTION. 587 holders for a sale of the corporate property and the close of the business of the corporation is justified.^ 487. Necessity that dissolution be beneficial to interest of stockholders. Directors, of a corporation have the legal power to com- mence proceedings for a voluntary dissolution, and it is their duty to do so, if for any reason they deem it beneficial to the interests of the stockholders that the corporation should be dissolved. It is not necessary that the corporation should be insolvent in order to justify the proceedings for dissolution and the final dissolution of the corporation.^ Courts will not interfere with the power belonging to majority stockholders to pass upon the advisaJbility of the dissolution of the corpo- ration, but the majority interests of a corporation occupy a fiduciary relation toward it and the minority stockholders and are required to exercise the utmost good faith, and equity will grant relief for bad faith, fraud or other breach of trust.* And the law, as well as ordinary justice and sound business policy, requires that the existence of a corporation shall not be attacked, within the period fixed by its charter, by its board of directors acting in bad faith, fraudulently or through the intent to punish or oppress a stockholder. The provision of section 221 of the General Corporation Law that the board of directors of a corporation may " adopt a resolution that it is in their opinion advisable to dissolve such corporation " con- templates and enacts that the majority of the whole board shall be of the opinion, or shall believe upon the evidence within the range of their official duties, that it is advisable to dissolve the corporation forthwith. The directors, in reach- ing their belief, cannot consider or give weight to their per- sonal wishes, comfort or advantage. Their action must be based upon the belief that the interests and welfare of the cor- poration and the stockholders generally will be promoted by the" dissolution. And a court of equity will protect a minor- ity stockholder against the acts or threatened acts of the board of directors or of the raanagjng stockholders of the cor- poration which violate the -fiduciary relation and are directly injurious to the stockholders. The courts cannot pass upon the question of expediency of a proposed dissolution of the St. Hoag V. Edwai*d», 69 Misc. 237, 4. Major v. American Malt & Grain 124 N. Y. Supp. 1035. CO., 110 Misc. 132, 181 N. Y. Supp. 3. Jameson v. Hartford Fire Ins. Co., 152. 14 App. Div. 380, 44 N. Y. Supp. 15. 588 COBPOEATIOJSrS. corporation, but they can, and will, whenever the facts pre- sented to them in the appropriate action demand, inflexibly uphold and enforce, in accordance with established equitable principles, the obligations of the fiduciary relation. The good faith of the individual defendants is a proper and fundamen- tal subject to be adjudged. Bad faith, fraud, or other breach of trust constitutes a foundation for equitable relief.^ The words, ' ' beneficial to the interests of the stockholders. ' ' con- tained in the statute, were not intended to make it mandatory upon the court to decree a dissolution in cases where it would be beneficial to a majority of the stockholders, when the best interests of the minority demand a continuance of the corpo- ration's existence. The intention is to confide a discretionary power to the court to order a dissolution if, in its opinion, aud viewing all the circumstances of the case, the best interests of the stockholders will be subserved thereby. In the exercise of such discretion, the court is bound to consider the interests of the minority as well as the majority.^ When the interests of the stockholders of a corporation are so discordant as to pre- vent efficient management and a. large majority of both trus- tees and members wish to wind up its affairs, a dissolution thereof will be beneficial to the interests of the stockholders, because the object of its corporate existence cannot be at- 5. Kavanaugh v. Kavanaugh Knit- coipoi-ate property and of the plain- ting Co., 2^6 N. Y. 185, 133 N. E. 148, tiflf's proportional interest therein, liolding that a complaint, therefore, states a cause of action and its dis- which alleges that the individual de- missal upon a motion for judgment on fendants, who constituted a majority the pleadings was erroneous, of the board of directors of the defend- 6. Matter of Rateau Sales Co., 201 ant corporation, at a meeting of said N. Y. 420, 94 N. E. 869 ; Matter of Im- board instituted the proceedings pro- porters & Grocers' Exchange, 132 N. vided by section 321 of the General Y. 2il2, 30 N". E. 401. Corporation Law to dissolve the cor- Where an increase of the capital poration, and that they did ftot adopt stock of a corporation is necessary in the resolution instituting the dissolu- order to avoid the borrowing of money tion proceeding as the result of or upon the personal indorsement of the through a bona fide and ' honest con- two equal owners of all the stock, one sideration of the facts affecting the of- whom is desirous of selling the un- general interest of the corporation and issued stock, hut the other refuses ;to its stockholders, but in affirmative bad join, an, application under section 172 faith and for the sole purpose of per- of the Q«n«i'al Corporation Law for mitting the individual defendants to the dissolution of the, corporation will dissolve the same against the will and be granted. Matter of Bown Brothers, desire of the plaintiff and for the pur- Inc., Ill Misc. 394, 181 N. Y. Supp. pose of depreciating the value of the 460. ; . . VOLUNTARY DISSOLUTION. 589 tained. Under such circumstances it is better for all that a dis- sol|ition should l)e ordered, so that the minority may reincor- porate upon some more practicable basis, if they so desire, and the majority; may no longer be forced to keep up a feeble and useless organization,, in which they take no interest and from which they derive no benefits Likewise when the stock, ef- fects, and property of a corporation are not sufficient to pay all of its just demands or to afford a reasonable security to those who deal with it, or if for any other reason the interests of the stockholders require itj the officers of the corporation may ask for its dissolution and for the a'ppointmeht of a re- ceiver under proceedings for a voluntary dissolution, in which case the officers are not required to resign, but the action is instituted in their official capacity.^ Where the corporation and its creditors have an apparent cause of action against the officers and directors of the corporation for the maladminis- tration of its affairs, a petition by directors for the voluntary dissolution should be denied, with costs to be paid by the petitioners personally.^ 488. Effect of ^ieiiding suits by stockholders or action by attorney- general. The lact that, stockholders. had brought a suit in equity to secure to the corporation the benefits of a contract which the petitioners had assumed to allow to be forfeited, against its real interests, in which action, demurrers to the complaint were overruled, is a material circumstance bearing on the question whether a dissolution should .be decreed. To dis- solve the corporation, before that litigation has been deter- mined on the merits, deprives the minority stocljholders, in ad- vance of any redress therein.^" The right and power conferred upon the officers of an- insolvent corporation to prosecute a proceeding for the voluntary dissolution thereof and the dis- tribution of its property, through the niedium of receivers, among those entitled to receive it, is permissive merely, and cannot be construed as a surrender by thp state of its right to enforce a forfeiture of the^ charter of the corporation when- 7. Matter of ApiplieEution of Trustees 9. Matter of Great Northern Trading of the Inuporters & G-rOcera' Exchange Co., 168 App. Div. 536. 153 N. Y. Supp. for a Voluntary Dissolution, 132 N-. Y. 213.. 212. 30 N. E. 401, 10. Matter of Eatean Sales Co., 201 8. Zeltner v. Zeltner Brewing Oo., N. Y. 420, 94. N. E. 869. 174 N. Y. 347, &6 N. E. 810. 590 COEPOKATIONS. ever it sees fit to do so." So after the state superintendent of banks has taken possession of the assets of an insolvent bank- ing corporation with the intention of having an action brought by the . attorney-general to dissolve the same, the directors cannot anticipate such action on the part of the state by in- stituting a proceeding for voluntary dissolution.^ 489. Duty of directors to present petition. "It shall be the duty of a majority of the directors or trustees of every corpo- ration created by or under the laws of this state to present a petition as prescribed in the last section (General Corporation Law, § 170) whenever directed so to do by a majority in interest of its stockholders. " 13 "Sections one hundred and seventy-one and one hundred and seventy-two of this chapter (General Corporation Law) do not apply to a savings bank, a trust company, a safe deposit company, or a corporation formed to rent safes in burglar and fire-proof vaults, or for the construction or operation of a railroad, or for aiding in the construction thereof, or for carrying on the business of bank- ing or insurance, or intended to derive a profit from the loan or use of money. ' ' 14 De facto directors may join in a petition for the voluntary dissolution of a corporation.^^ Newly-elected directors of a manufacturing corporation have a right to stop voluntary proceedings for the dissolution of the corporation which have been initiated by their predecessors in office.^^ Accordingly where there is no allegation of actual insolvency, the pendency of dissolution proceedings shoiild not be allowed to interfere with the efforts of a board of directors recently elected to put 11. Where, in an action brought by tary dissolution abated by the entry the Attorney-General toi obtain a jijdg- of the judgment of dissolution of the ment dissolving a banking. corporation, corporation in an action brought by he alleged that it wa-s insolvent, had the Attorney-General. Matter of Mur- suspended its ordinary ibusiness, and ray Hill Bank, 14 App. Div. 318, 43 that the Superintendemt of Banks had Jf. Y. Supp. 836, aff-d. 153 N. Y. 19fl. taken possession of its property, and 47 N. E. 298. the answer did not deny the insolvency. 12. Matter of Murray Hill Bank, 153 but alleged as a separate defense that. >f- Y. 199, 47 N. E. 398. prior to the oommenoemeut of the ac 13. General Corporation Law, § 171. tion, proceedings had been taken for Forms: Petition and schedules, a voluntary dissolution of the corpor- Forms Nos. 270, 271. ation, it was held that the pendency 14. General Odrpofation Law, § 173. of such proceedings was not a bar to 16. Matter of Manooa Temple Asso- the maintenance of the action by the elation, 138 App. Div. 796, 113 N. Y. Attorney-General. People v. Murray Supp. 173; MacMahon v. Stephney Hill Bank, 10 App. Div. 338, 41 N. Y. Spare Wheel Agency, 140 App. Div. Supp. 804. It was subsequently held 554, 125 N. Y. Supp. 823. in connection with the same proceed- 18. Matter Of .Tones Co., 67 Hun 360, ings that the proceeding for a volun- 23 N. Y. Supp. 3181 VOLUJSTTAEY DISSOLUTION. 591 the corporation on a firm basis, and an injunction to that end should not be granted." A proceeding for dissolution by the action of the directors is the proceeding of the corpo- ration as such, and the directors are not personally liable to an attorney for his services in regard to such proceeding, un- less by some special promise they undertook to pay him'there- for.i8 490. Petition when directors do not agree. "If a corporation, created under a general statute of the state for the formation of corporations or under any special act or character has an even number of trustees or directors who are equally divided respecting the manage- ment of its affairs, or if the stock of such corporation is equally divided into not more than two independent ownerships or interests, or if the entire stock of the corporation is, at that time, owned by the trustees or directors who are even in number or equally divided representing the management of its affairs, or if the stock is so divided, that one-half thereof is owned or controlled by per- sons favoring the course of part of the trustees or directors and one-half thereof is owned by persons favoring the course of the other trustees or directors, the trustees or directors or the stockholders or one or more of them may present a petition as prescribed in section one hundred and seventy of this chapter. ' ' 19 Under the provisions of the statute, authorizing the disso- lution of a corporation in case th& directors are unable to agree as to the management thereof, the court may, in proper cases, direct the assets remaining after the payment of the expenses of the receivership and of the debts and liabilities of the corporation, to be sold and the proceeds divided among the stockholders.^" 491. Contents of petition, "The'petition must show that the ease is one of those specified in sections one hundred' and seventy and one hundred and seveiity-two of this chapter, and must 17. Dissolution refused virhere prepa- ■ petitioning directors, in control of the rations were making to reduce the coi-poration and had given notice to the stock and continue. — An order of refer- stockholders of a special meeting to re- emce, ohitained by three directors of a duce the capital stock, wi' h a view to domestic corporation hasdng seven ori- avoid dissolution or threatened insolv- ginally, requiring all parties ifl: inter- ency, actual insolvency not being al- est to show cause yyhy the corporation leg«d in the petition for dissolution. should not be dissolved, ought not to Matter of Colton, 36 Misc. 571. 57 N. be granted wliere it appears that, at Y. Supp. 556. - i . , the time when the dissolution proceed- 18. Drew v. Longwill, 81 Hun 144, 30 ings were begun, directors, who were N. Y. Supp. 733. ~ at least such de facto and who repre- 19. General Corporation Law, § 172. sented a lai^3 majority of the stock-- 20 Ma' ter of Woven Tape Skirt Co., holders, were, to the knowledge of the 8 Hun 508. 592 CORPORATIONS. state the reasons, which Induce the petitioner or petitioners to desire the dis- solution of the corporation. A schedule must be annexed to the petition contain- ing the following matters, as far as the petitioner or petitioners know, or have the means of knowing the same : 1. A full and true account of all the creditors of the corporation, and of all unsatisfied engagements, entered into by, and subsisting against, the corporation. 2. A statement of the name and place of residence of each creditor, and of each person with whom such an engagement was made, and to whom it is to be performed, if known; or, if either is not known, a statement of that fact. 3. A statement of the sum owing to each creditor, or other person specified in the last subdivision, and the nature of each debt, demand, or other engagement. 4. A statement of the true cause and consideration of the indebtedness to each creditor. 5. A full, jiist, and true inventory of all the property of the corporation, and of all the Ijooks, vouchees,' and securities, relalting thereto. 6. A statement of each incumbrance upon the property of the corporation, by judgment, mortgage, pledge, or otherwise. 7. A full, just, and true account of the capital stock of the corporation, specifying the name of each stockholder ; his residence, if it is known, or if it is not known, stating that fact; the number of shares belonging to him; the amount paid in upon his shares ; and the amount still due thereupon. ' ' l The petition for the dissolution of a corporation must fully conform to the statute in every particular.^ It must state, facts showing that the dissolution of the corporation will be bene- ficial to the interests of the stockholders, and it is not enough to allege that the parties differ as to the management of the affairs of the company, and that the petitioners, who own one- half of the shares of the corporate stock, are convinced that if the methods and plans of the other parties in relation.to the management of the corporation be carried into effect the re- sult will be the financial ruin of the corporation.^ The statute should be construed to mean that the petition must show that the case is one of those specified in section 170 or 172 of the General Corporation L|,w, that is to say, it need not be shown that the case comes within sections 170 and 172, for the word " and " as used in said clause should be construed to mean " or." And so the petition for a voluntary dissolution need not allege in every case that a majority of the managing di- rectors or trustees deem it beneficial to the interests of the 1. Gteneral Corporation Law, § 174, Forms: Petition ■ and schedules, as amd. by L. 1909, ch. 340. Form Nos. 270, 871. 2. Ex parte Dubois, 15 How. Pr. 7, 3. Matter of Pyrolusite Manganese 6 Abb. Pr. 386. Co., 29 Hun 429. VOLXINTAEY DISSOLTJTION. 593 stockholders that the corporation be dissolved.^ Under the statute requiring a full, just, and true inventory of all the property of, and the statement of all the books, vouchers, and securities relating to, the corporation to be annexed to a peti- tion for the voluntary dissolution thereof, if an omission ex- ists and does not show lack of good faith, nor afford evidence of a fraudulent purpose, an objection thereto does not go to the jurisdiction of the court, and may be obviated by evi- dence.^ It should be stated in the schedule that the stock not stated to be issued to the stockholders named is still owned by the corporation, or at least that it has not been issued. The property ought to be identified in the inventory, and to be so fully described, as, if it be lands, by metes and bounds, or by references to conveyances or otherwise, that the receiver may be enabled to take 'possession of the property. Such an in- ventory, and a full statement of the books, vouchers, and securities relating to the property will be required, in order to piit it in the power of the receiver to be certain that he has received' all the pi^operty, and to bring such actions, or take such other steps as may be necessary to pay the liabilities of the company.® The provision of section 174 of the General Corporation Law is complied with where the schedule to such a petition by the ciirectors of a bank, whose property is in the possession of the Superintendent of Banks, states that it contains the required rnatteir so far as known, and that there are "a number of other depositors whose names are unknown to petitioners," and gives the aggregate claims of 4. Matter of MaLougUm, 176 App. bonks, and that they have appropriated , IMv. 6&3, 163 N. Y. Supp. 547, holding the money of the corporation and that where a petition for the volun- wasted it in extravagant expenditures, tary di'ssplution ; of a corporation pur- etc., to the loss of the petitioner's in- suant to: seo]t>ion. 172 of the General vestment, it sufficiently complies with Oorporation Law seta forth that there the requiremeoits of sections 170, 172 is a deadlock between the stockholders, amd 174 of the ' Geiieral Corporation the petitioner owning fifty per cent of Law so as to warrant an order ap- the stock, and thla/t a dissolution will pointing a referee arid requiring all be beneficial to thd Interests of the interested parties to show cause be- etoditholders in that the other stock- tore him why the corporation should holder, together vrith a dummy stock- not be dissolved. holder under his control, who together 5. Matter of Santa Eulalia Silver owned the other fifty per cent of S'toik, Mining' Co., 4 N. Y. Supp. 174, 31 St. removed the petitioner from office as Eep. 89, affd. 115 N. Y. 657, 21 N. treasurer, excluded him from the man- E. 1119. '■' ■ ■ agemeiit of the business, refused to al- G. Mattel of Westchester Iron Co., low hiin to examine the corporation's 15 How. Pr. 7. 38 594 COEPOBATIONS. all depositors.' Statements contained in the moving papers, used upon the application for an order, showing that notes of the corporation had gone to protest, that suits to which the corporation had no defense were pending upon overdue claims and that other creditors were threatening to sue and that the company's assets amounted only to a few thousand dollars and a heavily mortgaged apartment house, are suifi- cient to warrant a finding that the corporation was insolvent within the meaning of section 170 of the General Corporation Law.* 492. Affidavit to be annexed to petition. "An aflldavit, made by each of the petitioners, to the effect that the matters of fact, stated in the petition and the schedule, are just and true, so far as the affiant knows or has the means of knowing the same, must be annexed to the petition and schedule. ' ' 9 To empower the Supreme Court to entertain a proceeding for the voluntary dissolution of a corporation, the petition presented must have been verified by a majority of the d.U rectors, in strict pursuance -of the statute." A petition by ex- ecutors must be signed by each of them.^^ 493. Amendment of schedules annexed to petition. ' ' The court may, at any stage of the proceedings before final order, on the ap- plication of the petitioners, or a majority of them, or on the application of tbe temporary receiver, grant an order amending the schedules annexed to. the original petition, by the insertion of additional ' items, or by making the state- ments or inventory fuller and in greater detail than as originally filed, with the like effect as though said petition and schedules had been originally presented and filed as amended. ' ' 12 The amendments to a schedule permitted by this section contemplates an increase of the schedule or of the inventory, and not a decrease.^^ * 7. Matter of Murray Hill Bank, 9 aflFd. 167 N. Y. 623, 60 N. E. 1115. App. Div. 546, 41 N. Y. Supp. 914. 9. General Corporation I^aw, | 175. 8. In such a case the order granting 10. Matter of Dolgeville Elpotric the application is not void because it Light & Power Co., 160 N. Y. ,'iOO, 55 fails to recite that insolvency has been N. E. 387. shown to the satisfaction of the 11. .Matter, of Ehret, 70 Miac. 576, court, as the court, having acquired 137 N. Y. Supp. 934. jurisdiction, can correct such defect 12. General Corporation Law. § 189. nunc pro tunc. Matter of Lenojf Corp.. 13. Mai'.ter of Hitchcock Mfg. Co., 1 57 App. Div. 515, «8 N. Y. Supp. 103, App. Div. 164, 37 N. Y. Supp. 834. VQLUNTAKY DISSOLUTION. 595 494. Where petition presented. "The papers must be presented at a special term of the supreme court, held within the judicial district, embracing the county wherein the principal oflSce of the corporation is located. ' ' 14 The principal business office of the company is at the place specified in its articles and its by-laws and reports, where all its books of transfer, stock-books, and accounts of receipts and disbursements are kept, and the election of directors held.i6 495. Order to show cause. "In a case specified in sections one hundred and seventy-one and one hundred and seventy-two of this chapter the court may, in its discretion, entertain or dismiss the application. Where it entertains the application, or where the cause is one of those specified in section one hundred and seventy of this chapter, the court must make an order, requiring all persons interested in th€i corporation to show cause before it, or before a referee designated in the order, at a time and place therein specified, not less than six weeks after the granting of the order, why the corporation should not be dissolved. ' ' 16 If a perusal of the order will not inform either the creditors or stockholders that the dissolution of the corporation Is de- manded or contemplated by the proceedings, the order is void, and the court will not acquire complete jurisdiction over the proceedings sought to be instituted by the bQa,rd of di rectors." Still it has been held that an order requiring per- sons interested to show cause why the prayer of the petition should not be granted is a substantial compliance with the statute, and sufficient, although served without a copy of the petition.^^ The referee appointed may hear and determine 14. General Coi-poration Law, § 176. eree's report, appointing receiver and 15. Olmstead v. Rochester & P. R. for injunction. Form No. 278. Oo., 8 St. Rep. 856, affd. 106 N. Y. 17. People v. Seneca Lake Grape & 673, 13 N. E. 937. Wine Co., 53 Hun 174, 33 St. Rep. 346. 16. General Coi-poration Law, § 178, 5 N. Y. Supp. 136, following ]V(atter as amid, by L. 1909, ch. 340. of Pyrolusite Manganese Oo., 39 Hun Forms: Order to show cause before 429, 3 Civ. Pro. 270. referpp with injunction, Form No. 272. 18. Mattel' of Jensen Co., 128 N. Y. Order to show cause appointing tcm- 550, 28 N. E, 665. But see Matter of porary receiver. Form No. 373. Ref- Pyrolusite Manganese Co.. 29 Hun eree's report, -Form No. 375. Notice of 429, holding that an order requiring filing referee's report, Form No. 276. all persons interested, to show cause Notice of motion to confirm report of "wh^ the prayer of the petitioiiep referee, and for order of dissolution, should not be granted'' does not corn- Form jfo. 277. Order conferring ref- ply with the requirements of the atat- 596 CGBPOKATIONS. a controversy between the stockholders, based on a claim that certain stockholders have the right to a preference on the dis; tribution of the assets, and the court may provide by its final order for the distribution of the assets among those entitled thereto.-^^ Upon the service of an order to sh^pw cause pur- suant to this section, the only matter to be presented to the court is whether or not the corporation shall be; dissolved, and the persons served are not required to watch the proceedr ings or to appear for the purpose of receiving notice of the steps to be taken in the matter, until the hearing upon the order to show cause has been had.^" :,- 496. Publication of order to show cause. "A copy of the order must be published, as prescribed therein, at least once in each of the three weeks immediately preceding the time fixed therein for show- ing, cause, in, one or more newspapers, speeiiied in the order,- published in the city or county wherein the order is entered."! Although an order to show cause, which does not direct its publication as required by the statute, is defective, the court having jurisdiction may correct the defects by an order nunc pro ttmc.^ 497. Service, entering and filing order to show cause. ' ' A copy of the order liuist be served upon each of the persons, specified in the schedule as a creditor or stockholdfeT of the corporation, or as a person to ■ft'hom an engagement of the corporation is to be performed, other than a person whose residence is stated to; be unknown, or to be without the United States. The. service must be made either personally, at least ten, days before the time aj- . pointed for the hearing; or by depositing a copy of the order, at; least twenty days before the- time so appointed, in the post-o&ee, inclosed in a postpaid wrapper, addressed to the person to be served, at his residence, as stated in the schedule. ' ' 3 "The order must be entered, and the papers must be filed, within ten days after the order is made, with the clerk of the coijnty where the principal office of the corporation is located, "4 498. Notice to attorney-general. "A copy of all motions and all motion papers, and a copy of any other applioa- ute, and that all proceedings founded 80. Matter of Siinonds Makufaetur- thereon are void for lack of jurisdic- ing Co., 39 App. Ddv. 576, '57 N. Y. tion; and that the objection may be Supp. 776. taken by any of tlie parties to the pro-, 1. General Corporation Law, | 179. ceedings, and at any stage thereof. 8. Matter of Christian Jensen Co.,* 19. Matter of Seneca Oil Co., 153 128 N. Y. 550, 3-8 N. E. 665. App. Div. 594, 138 N. Y. Supp. 78, 3. General dorporation Law, § 180. afTd. 308 N. Y. 545, 101 N. E. 1121. 4. General Corporation Law, § 181. VOLUNTARY DISSOLUTION. 597 tion to the court, together with a copy of the order or judgment to be proposed thereon to the court, in everr action or proceeding for the dissolution of a corpt)ratiou or a distributioil of its assets, shall, in all cases, be served on the at- torney-general, in the same manner as provided by law for the service of papers on the attorneys who have appeared in actions. Whether the applications but for this section would; be ex parte or upon notice^ and no order or judgment granted shall vary in any material respect from the relief specified in such copy, order or judgmp.nt, unless the attorney-general shall appear on the i:et\irn day and shall have been heard in relation thereto; and any order or judgment granted in any action or proceeding aforesaid, without such service of such papers upon the attorney-general, shall be void, and no receiver of any such corporation shall pay to any person any money directed to be paid by any order or judgmensb made in any such action or proceeding, until the expiration of eight days after, a certified copy of such order or judgment shall have been served as aforesaid upon the attorney-general. ' ' 5 The requirement of the statute, that a copy of all motions and of motion papers, and a copy of any other application to the court, together with a copy of the order or judgment to be proposed thei^eon, shall, in every action for the dissolution of a corporation, be served on the attorney-general, applies to proceedings for the voluntary dissolution of corporations, and the purpose of the statute is to require notice to be given to the attorney-general of the time and place when the petition will be presented to the court, 'SO that he may be present and be heard upon an initiatory application, as well as all the other proceedings to be had in the matter, and unless such notice is served or waived the court has no jurisdiction to entertain the proceedings, and the order is void,^ as well as all proceedings under it.'' But the: requirements of the statute with reference to service of notice upon the attorney-general in proceedings for the dissolution of a corporation may be satisfied by the acceptance of short notice.^ If the attorney-general has not 5. General Corporation Law, § 313. town, W. P. & M. R. Oo., 133 App. Div. For a further discussion of tliia sec- 285, 117 N. Y. Supp. 871. But see tion in connection with an action for Matter of Genetva Basket Co., 71 Misc. dissolution, see post, par. 523. 156, 127 N. Y. Supp. 943, holding that Forms : Notice -to Atty. Genl,, Form notice to the Attorney-General is not jj„ 074. required of an applicaition for an ojrder 6. People V. Seneca, Lake Grape & to show cause why a petition for the Wine Co., 52 Hun 174, 23 St. Rep. 346, volumtary dissolution of a corporation 5 N. Y. Supp. 136; Knickerbocker Trust should not be granted. Co. V. Tarrytown W. P. & M. R. Co., 8. In a proceeding to dissolve a cor- 133 App. IMv. 285, 117 N. Y. Supp. poration, the omission to give the S71_ Attorney-General formal notice of a 7. Knickerbocker Trust Co. v. Tarry- motion to dismiss; on the hearing of 598 CORPORATIONS. been served with the papers he cannot, after a motion made, validate the proceeding or vest the court with jurisdiction by admitting due and timely service of notice of motion, or by signing waivers antedating the order, though he may, pos- sibly, confer jurisdiction by waiving services before the motion is brought to a hearing.^ The attorney-general must be given notice of an application for the voluntary dissolution of a corporation, whether the corporation is solvent or insol- vent, and the court may vacate an order to show cause why the corporation should not be dissolved, granted without such notice; the fact that the court had not power to make such order does not prevent it subsequently vacating it>'^ 499. Reference, hearing and decision. "If a referee was not designated in the order to show cause, the court may, in its discretion, appoint a ref ere when or after the order is returnable. ' ' U ' ' At the time and place specified in the order, or at the time and place to which the hearing is adjourned, the court, or the referee, must hear the allegations and proofs of the parties, and determine the facts. ' ' 12 On the hearing the question as to whether the proceedings are being taken in bad faith and for fraudulent purposes and with intent to defraud" the stockholders can be determined, and the dissolution can be opposed upon those grounds.^* And a dissolution may be deemed to permit contesting stockhold- ers to demand that the corporation institute a proper action against the directors for official misconduct or in the event of refusal to permit the stockholders to institute a representa- tive action when the facts presented by the contestants dis- close a possible cause of action.^* A petition for the vohm- tary dissolution of a corporation and the appointment of a re- ceiver of its property signed by two of the three directors and stockholders and the holders of two-thirds of the capital which an order of dissoliltion was 10. People v. Seneca Lake Grape & made, was immaterial, where he was Wine Co., 53 Hun 174, 5 N. Y. Supp. served with the motion pa/pers on the 136; Matter of Broadway Ins. Co., 23 order to show cause, and with the or- ^pp, Diy_ ggg^ ^g jj y. Supp. 399. der applied for, and, two days before ^^ General Corporation Law, § 185. the hearing, admitted due service of ^^ q^^^^^, Corporation Law,, § 186. the proposed order of dissolution, and ^3 j^^^^^^ ^ ^^^^ ^^ of notice of settlement. Matter or ■' e 144 Peekamose Fishing Club, 151 N. Y. 511, 45 N. E. 1037.. 1*- Matter of Quicksilver^ Mining 9. Matter of S:rong Co,, 128 App. Co., 186 App. Div. 347, 174 N. Y. Supp. Div. 208. 112 N. Y. Supp. 557. 338. VOLUNTARY DISSOLUTION. 599 stock, which alleged that the third director and stockliolder had stated that he desired the dissolution of the corporation and that said dissolution was for the best interests of. the stockholders, should be dismissed on the motion of the third director where it appears that at the time the petition was presented the third director not only did not desire dissolu- tion but was opposed thereto.^^ ' ' The court or the referee is entitled to use, upon the hearing, the original pe- tition, and the schedules annexed thereto; and the clerk must transmit them ac- cordingly, upon the written order of the judge, or of the referee. In that case, they must be returned with the decision or report." 16 ' ' The decision of the court, or the report of the referee, must be in writing, and must be made and filed vsith all convenient speed. It must contain a state- ment of ^ihe effects, credits, and other property, and of the debts and other engagements, of the corporation, and of all other matters, pertaining to its affairs. "17 The failure of a referee to make in his report, a statement of the effects, credits and other property, and of the debts and other engagements of the corporation, and of all other mat- ters pertaining to its affairs, is fatal to the validity of the proceedings and renders an order dissolving the corporation, entered upon such defective report, void.^^ And a statement that the schedules annexed to the petition are correct is not a compliance with the statute.^^ 500. Motion for final order. "Where the hearing is before a referee, a motion for a final order must be made to the court, upon notice to each person, who has made himself a party to the proceedings, by filing with the elfcrk, before the close of the hearing, a notice of his appearance, in person or by attorney, specifying a post-ofSee within the state, where such a notice may be served. The notice may be served as pre- scribed in the code of civil procedure for the service of a paper upon an attorney in an action. Where the hearing was before the court, a motion for a final order 15. Matter of Qowles Realty Co., 193 the petition considered upon the exact App. Div. 874, 184: N. Y. Supp. 778, truth of the attitude of all the direc- holding that the third director should tors at the time of presentation, not be denied the right to have the pe- 16. General Corpora' ion Law, § 188. tition dismissed because the court did 17. General Corporation Law, § 187. not make a final order upon the peti- 18. Matter of Doynton Saw and File tion, but sent it to a. referee before Co., 34 Hun 369. whom she could appear and contest the 19. Matter of Pyrolusite Manganese merits, for, before the court entertained Co., 89 Fun 489. jurisdiction, she was entitled to have 600 CORPORATIONS. may be made immediately, or at such a time and upon such a notice, as the court prescribes. "20 It is not proper, upon a motion to substitute the name of a foreign assignee for the creditor to whom payment is di- rected to be made, to determine the conflicting rights of _ such assignee and attaching crediltors in this state, but the assignee should be required to present those questions, either upon a rehearing after an application to open the final decree, or upon an application to vacate the attachments.^ 501. Granting final order. The statute prescribes that the allegations and proofs of the parties must be heard and determined by the court or a referee. And it is only after such hearing and determination of the court thereupon, made after notice, that the final order of dissolution can be made.^ Still if all the parties to such a proceeding appear before the court for the purpose of pro- curing a final order, the court is authorized to dispose of the matter, although no formal notice has been given by the pe- titioner. If the petitioner, in a proceeding for the voluntary dissolution of a corporation having an even number of trus- tees equally divided respecting its management, neglects or refuses, after a referee has been appointed, to apply for a final order, it is competent for the court, on special application of any person interested, to direct the petitioner to move, so that the interests of all may be protected.^ The referee appointed may hear and determine a controversy between the stockhold- 80. General Corporation Law, § 190. tioner and the other parties to show Foi-ma: Order for dissolution and cause why a final hearing should not appointment of receiver, Forms No. be had and the proceeding dismissed 379. and a dissolution denied, the court ac- 1. Matter of Hulbert Bros. & Co., 160 quires jurisdiction (on notice to the X. Y. 9, 54 N. E. 671. • attorney-general) to make a final or- 2. Matter of Malcolm Brewing Co., a^r dissolving th« corporation, on the 78 App. Div. 593, 79 K. Y. Supp. 1057. default, on an adjourned day, of the 3. Jurisdiction to make final order p^^^^ ^^^ ^^^^^ ^^^ ^ ^^.^ ^^ ^^ on default. — When the petitioner, in a , u iu • i v f . solution, where the circumstances show that the motion was in effect and in proceeding for the dissolution of a cor- poration under section 171 of the Gen- eral Corporation- Law, haa filed a ref- ^^^ contemplation of the parties an eree's report but does not apply for a application for a final hearing of the final order, and all the parties appear proceeding upon the merits. Matter before the court on an order obtained of Peekamose Fishing Club, 151 N. Y. by one of them requiring the peti- 511, 45 N. E. 1037. VOLUNTARY DISSOLUTION. 601 ers as to the right to a preference on the distribution of the assets, and the court may provide by its final order for the distribution of the assets among those entitled thereto.* The fact that.the report of the referee on a petition for dissolution enumerates more books of the corporation than are contained in the schedule annexed to the petition, is not a ground for refusing a final order, the trustees having made the schedule in good faith.^ 502. Vacating final order: Costs: Appeal. The Supreme Court in its inherent power to set aside and vacate its orders and judgments may set aside an order for the voluntary dissolution of a corporation where substantial justice will be subserved. The court is not precluded from vacating such order on the theory that 'the corporation became forever legally dead on the entry of the order, and it is not necessary that the order in voluntary dissolution proceedings be tainted with fraud or irregularity in order to authorize the court to set it aside; it is sufficient that it was improvidently granted. An order to show cause why an order for the volun- tary dissolution of a corporation should not be vacated need not be served on all the stockholders and creditors of the cor- poration, where the attorney-general and the receiver of the corporation and the only stockholder who appeared in the original dissolution proceedings are before the court, and the directors, other than the moving party, have ceased to have any interest as stockholders and the creditors are duly pro- tected by a bond given by the moving party ; stockholders who did not appear in the dissolution proceedings are not neces- sarily parties to a motion to vacate ah order of dissolution.'' There is no provision in the statute with respect to the costs and expenses of tlie proceeding but being a special proceeding the provisions of the Civil Practice Act relating to costs on such proceedings govern. There is no express statutory pro- vision for taxing stenographer's fees, and the rule is that they are not taxable unless the parties have expressly stipulated 4. Matter of Seneoa Oil Co., 153 6. Matter of Automatic Chain Co., A^p. Div. 5&4, 138 N. y. Supp. 78, affd. 134 App. Div. 863, 110 N. Y. Snpp. 308 N. Y. 545, 101 N. K. il21.' 379, affd. 198 N. Y. 550, 92 N. E. 1077. 5. Matter of 8anta Eulalia .Silver holding that the corporation was sol- Mindng Co., 3 Supp. 221. aifdv 4 N. Y. vent and that the order of dissolution Supp. 174,' 21 St. Rep. 89;' affd. 115 was improvidently granted. N. Y. 657, 21 X. K. 1119. ■ ■ 602 CORPORATIONS. that they may be taxed as disbursements.'' The court has no authority to grant an extra allowance to the petitioners in a proceeding for the voluntary dissolution of a corporation.* But where all parties in interest had notice of the dissolution proceeding and an opportunity to appear, a stipulation, fixing the referee's fees at an increased rate, consented to by all persons, is binding, although not agreed to by the attorney for the temporary receiver. This, because the receiver was not formally a party to the proceeding and had no authority to grant or withhold consent with respect to the referee's fees. The court necessarily has implied authority to require that the expenses of the proceeding be paid out of the corporate property which it is required to administer and distribute and such is the practice in dissolution proceedings, and so the costs and disbursements, with the exception of the stenog- rapher 's fees, should be paid by the permanent receiver from the corporate funds and should not be taxed against the op- posing stockholder personally.® Such a proceeding under the statute is a special proceeding; and a final order made therein is reviewable as of right by the Court of Appeals.™ But the propriety of refusing to set aside an order dissolving a corpo- ration, entered on default, cannot be questioned in the Court of Appeals." 503. Effect of dissolution generally. The ancient rule that the liabilities of a corporation as 7. Matter of French, 181 App. Div. tliat thereafter by consent of counsel 719, 168 N. Y. Slipp. 988, affd. 224 N. for the petitioners and for the oppos- Y. 555, 120 N. E. 863,. holding that ing stockholder he made a minute of where, in a voluntary proceeding for the stipulaiion, said stipulation should the dissolution of a corporation, the at- not be construed as authorizing the torneys for the petitioners and for the taxation of the stenographer's fees in opposing stocldiolder who was also a tlie proceeding. It was evidently in- creditor, stipulated that a stenographer tended that they should be a joint be employed at a certain per diem fee, cliarge against the responsible parties, and his fee for copies of the minutes 8. Matter of, TaiTytown, White was also stipulated, and the affidavit- I'lains & M. R. Co., 133 App. Div. 297, of the stenographer shows that he had 117 IT. Y. Supp. 695. an understanding with the petitioners 9. Matter of French, 181 App. Div. by which they were to pay one-half of 719, 168- N. Y. Sup]>. 988, affd. 234 Ms charges, and that it was at the X. Y. 555., 120 N. E. 863. suggestion of one of the attorneys that 10. Matter of Hulhert Brothers & he entered the stipulation In the minu- Co., 160 N. Y. 9, 54 N. E. 571, tes in order to bind the opposing stock- 11. Maifter of Peelsamose Fishing holder for one-half of his c!harges, and Cluib. 151 N. Y. 511, 45 N. E, 1037. VOLUNTARY DISSOLUTION. 603 ■well as the debts owing to it are extinguished by the disso- lution of the corporation, the personalty vesting in the king and the real estate in the donor, has been entirely ignored by the law-making power in this state, which has instead pro- vided a more equitable method for the distribution of the assets, which secures to the stockholders what is left after those are satisfied who have valid claims against the corpo- ration.^2 And so the effect of a voluntary dissolution of a cor- poration is to place all its property and all its assets in the custody of the law to be collected and applied by its directors or a person appointed by the court.^^ A final decree dissolv- ing a corporation and appointing a permanent receiver, which orders a sale of the realty subject to specified liens, does not have the effect of divesting the liens of existing judgments not referred to therein, and, until any particular judgment is satisfied from the moneys in the hands of the receiver, it is the right of the owner of the judgment to proceed to ex- ecution and sell subject to the order of the court.^* A judg- ment recovered in another state, against a corporation organ- ized under the laws of this state after such corporation has been dissolved in an action to which the receiver was not a party, is not enforceable in our courts against the receiver, although it is valid under the laws of the state in which it was recovered.^^ 504. Effect on corporate obligations and liabilities. A corporation which has been voluntarily dissolved is not thereby relieved from the obligations of its contracts unless it be shown that the dissolution was necessary because of its financial condition.^^ So a lease to a corporation is not term- inated by its dissolution, and its covenant to pay rent does not thereupon cease to be obligatory." A cause of action against a domestic business corporation for injuries caused by its negligence does not abate upon its dissolution, but surviVies, and an action thereon is maintainable against the trustees la. Shayne v. Evening Post Publish- 15. Rodgers v. Adriatic Fire Ins. Co., ing Co., 168 N. Y. 70, 61 N. E. 115. 148 N. Y. 34, 42 N. E. 515. 13. Walsh V. Seger Bros., 1 St. Rep. 16. Stannard v. Reid & Co., 114 App. 189. ' Div. 135, 99 N. Y, Supp. 567. 14. Matter of Coleman,, 174 N. Y. 17. People v. National Trust Co., 82 373, 66 N. E. 983. N. Y. 283. 604 CORPOEATIONS. holding the corporate property for the purposes of dis- tribution.^^ 505. Certain sales, transfers and judgments after fling petition void. ' ' A sale, asaigmnent, mortgage, conveyance, or other transfer, of any property of a corporation, made after the filing of a petition as prescribed in this article, in payment of, or as security for, an existing or prior debt, or for any other consideration; or a judgment, thereafter rendered against the corporation by confession, or upon the acceptance of an offer, is absolutely void, as against the receiver appointed in the special proceeding, and as against the creditors of the corporation. "19 The -word" transfer " as used in the statute means a pass- ing over to another of an existing right to the thing trans- ferred, which right shall survive the transfer. It does not in- clude, and the inhibition of the statute does not apply to, the extinguishment or satisfaction of a chose in action, either by payment in full, or by part payment which is taken in full satisfaction.^" It was not the object of the statute to bar a corporation from collecting debts due it, but was intended to prohibit transactions designed to favor one or more creditors, or to give them a preference over others.^ A judgment ob- tained by a Confession against a corporation after the petition had been presented for the voluntary dissolution of such cor- poration, is not entitled to a preference, either as against the' real or personal estate in the hands of the receiver, who was " 18. Marstaller v. Mills, 143 N. Y. 398. Consolidators' note. — This section is 38 N. E. 370. the same as the following section of But it has been held, that a, cause the Revised Statutes wliich latter sec- of action for personal injuries sustained tion therefore has been repealed : by reason of the alleged negligence of "All sales, assignments, transfers, a corporation, not incorporated, so far mortgages and conveyances of any part as the record shows, under the act pro- of the estate real or personal, includ- vidihg " for the organization and regu- ing things in action, of every such cor- lation of certain business corporations " poration, made after the filing of the (Laws of 1875, chap. 611), n§r under petition for a dissolution thereof, in the Business Corporations Law (Laws pa,yment of, or a security for, any of 1892, chap. 691), does not survive existing or prior debt, or for any other the subsequent voluntary dissolution of consideration, and all judgments eon- the corporation and the appointment fessed by such corporation after that of a receiver of its property, and hence time, shall be absoUitely void as against the court has no power to permit tli o the receivers who may be appointed action to be continued against such re- on sUcli petition, knd as against the ceiver. Matter of Yuengliiig Brewing creditors of such cosporation." (R. S., Co., 34 App. Biv. S33, 49 N. Y. Supp. pt. 3, ch. 8, tit. 4, art. 3, § 71.) 12, distg. Marstaller >-. ]Mills, ante. 26. Sands v. Hill, 55 N. Y. IS. 19. General Corporation Law. § 193.' 1. Sands v. Hill, 55 N. Y. IS. VOLUNTARY DISSOLUTION. 605 subsequently appointed.^ But where a just debt exists against an insolvent corporation, against which an action is brought, the fact that the corporation fails to defend is not alone suffi- cient to justify the inference that the judgment was suffered with intent to give a preference, and a judgment so entered is not invalid iinder the statute.^ ..A court has no power, in pro- ceedings taken for the voluntary dissolution of a corporation, to order a general assignee of the corporation to deliver its assets to a receiver of the corporation, appointed in such pro- ceedings, where, although such proceedings were begun before the date of the general assignment, the receiver was ap- pointed after that time, and where the general assignee was not a party to the proceedings in which the receiver was ap- pointed.* 506. Directors as trustees on dissolution. Upon the voluntary dissolution of a corporation the di- rectors become trustees for the creditors, the statute provid- ing that : "Upon the dissolution of any corporation, its directors, unless other persons shall- be appointed by th^ legislature, or by some court of competent jurisdiction, shall be, the trustees of its creditors, stockholders or members, and shall have full power to settle its affairs, collect and pay outstanding debts, and divide among the persons entitled thereto the money and other property remaining after payment of' debts and necessarj' expenses. Such trustees shall have authority to sue for and recover the debts and: property of the corporation, by their name as such trustees, and shall jointly and severally be personally liable to, its creditors,; stockholdeja or memhei-s, to the extent of its property and effects that shall come iijto their hands. ".B It is the duty of the directors acting as trustees to settle the affairs of the corporation, collect assets, pay debts, and divide the money and other property remaining among the persons entitled thereto. Even though the directors of a corporation after dissolution have illegally distributed its assets without providing for a judgment on which the corporation was liable, a receiver pendente lite ^y^iUnot be appointed in a subsequent action by the. judgment creditor against the corporation and its directors. This, because owing to the distribution the coi'- a. Matter, of Waterbury, 8 Paige 380. 401, 45 N. Y. Supp. J6. 3.. Matter of .Muehlfeld & Haynes 5. Qeners^l , Corporation Law, § 35. Piano Co., 12 App. Div. .492, 42 N. Y. 6. Tapley Co. v., Keller, ;133 App. Supp. SOa,-. i' ;, ,:,■.■! Div. 54, 117;^..Y,kSupp, ,817. 4. Matter of Muehlfeld, 16, App. Div. ,,,• .^ 606 COEPOEATIONS. poration owns no property and the directors who participated in the distribution are jointly and severally personally liable for the damage sustained by the judgment creditor.^ 507. Appointment and powers of temporary receiver., "If it shall be made to appear to the satisfaction of the court that the corporation is insolvent, the court may, at any stage of the proceedings before the iinal order, on motion of the petitioners on notice to the attorney-general, Or on motion of the attorney-general on notice to the corporation, appoint a tem- porary receiver of the property of the corporation, which receiver shall have all the powers and be subject to all the duties that are defined as belonging to temporarily receivers appointed in an action, in section one hundred and four of this chapter. The court may also, in its discretion, at any stage in the pro- ceeding after the appointment of a temporary receiver, upon like motion and notice, confer upon such temporary receiver the powers and authority^ and sub- ject him to the duties and liabilities of a permanent receiver, or as much thereof as it thinks proper, except that he shall not make any final distribution among the creditors and stockholders, before final order in the pi-ocoedings, unless- he is specially directed so to do by the court. "7 A court of equity appointing a receiver pendente lite can sell the property in the receiver's hands whenever such course becomes necessary to preserve the interests of all the parties.' Where, in proceedings for the voluntary dissolution of a corporation, the tempoi'ary receiver of the corporation is made the permanent receiver, an accounting by the temporary receiver to himself as permanent receiver is unnecessary, and an adjudication' made upon such an accounting, on notice to the attorney-general alone, is not binding upon creditors who had not appeared in the proceedings and who received no 7. General Corporation Law, § 182. and duties of a temporary receiver are Consolidators' note. — This section not defined to any large extent by provides for the powers and duties of statute, but are mainly matters of a temporary receiver and makes appli- judicial discretion. The powers, duties cable to a temporary, receiver appointed and liabilities of receivers consolidated in proceedings for the voluntary dis- in art. 11 of this chapter apply only solution of a corporation the powers to permanent receivers. For a note on and duties of a temporary receiver ap- the subject see 19 Abbott's New Cases, pointed in an action for sequestration 359. As to receivers generally, see and for the dissolution of a corpora- post, chapter XXIX. tion. This was accomplished by the Forms : Order appointing temporary reference to § 1788 of the Code of Civil receiver, Form No. 383. Order extend- Procedure, which reference has been ing powers of temporary receiver, changed to § 104 of this chapter where Form No. 384. § 1788 of the code has been incor- 8. Porter v. Fraser, 6 Misc. 55?,, 27 porated in this chapter. The powers X. V. Supp. 517. VOLUNTARY DISSOLXTTION. 607 notice of the accounting; such creditors are, on the account- ing of the permanent receiver, entitled to require him to ac- count for everything received by him in his capacity as tem- porary receiver.^ 508. Application for appointment. ' ' Every application made for the appointment of a receiver of a corporation other than applications made by the attorney-general on behalf of the people of th« state, shall be made at a speci'al term of the supreme court held in and for the judicial district, in which the principal business of8,ce of the corporation is located. "10 ' ' Applications made by the attorney-general for the appointment of a re- ceivei of a corporation shall be made in the judicial district in which the action in which the appointment is sought is triable. "H An order to show cause why the corporation should not be dissolved need not necessarily precede an order appointing a temporary receiver. It is the common practice to grant such an order at the same time that the order to show cause for dis- solution is granted, or immediately thereafter and before the service thereof. The statute , does not prescribe how soon after the filing of a petition this latter order must be granted. So that even though the order to show cause for dissolution TfSias void for. failure to comply with the , requirements of the" statute, and no proceedings could be taken under it affecting such dissolution, the order appointing the temporary receiver is perfectly valid.^^ An application for the appointment of a temporary yeceiver and for an injunction restraining credit- 9. Matter of Simonds Mfg. Co., 39 relating to applications for the appoint- App. Div. 576, 57 N. Y. Supp. 776. As ment of receivers and otherwise will to accounting by receivers generally, be found in § 314 under the head of see post. pars. 637^632. provisions applicable to more than two 10. General Corporation Law, § 183. of the. actions or proceedings incorpo- Consolidators' note.— The statute of. rated in this chapter. ]883, a portion of which is here con- H- General Corporation Law, § 108. soiidated, applies to proceedings for 12. Knickerbocker Trust Co. v. Tarry- the voluntary dissolution of a corpora- town, W. P. & M. R. Co., 133 App. tion. People v. Seneca Lake Gtape & Div- 385, 117 N. Y. Supp. 871. Under Wine Co., 52 Hun 174, 5 N. Y. Supp. the Revised Statutes it was held that 136. See also V. S. Trust Co. v. N. Y., the appointment of a receiver before W S & B R. Co.. 101 N. Y. 478, 5 the return of the order to show cause, N. E. 316 ; Matter of Broadway In- was unauthorized, the court having no surahee Go., 23 App. Div. 38«, 48 N. Y. authority to appoint a receiver except Supp. 299; McNabb ^. Porter Air in confiol-mity with the statute. Cham- Lighter Co., 44 App. Div. 102, 60 N. Y. berlain v. Rochester S. P. V. Co., 7 Supp. 694. A more general provision Hun 557. 608 COEPOKATIONS. ors from suing an insolvent corporation may be made at the same time.^^ 509. When receiver to be appointed : Vacating order. A temporary receiver should not be appointed on the volun- tary dissolution of a corporation without a full hearing of persons representing the majority interests of stockholders and creditors." The sole authority for appointing a tempo- rary receiver and granting an injunction, enjoining creditors from prosecuting their claims at the commencement of a pro- ceeding for the voluntary dissolution of a corporation, is that conferred by sections 182 and 184 of the General Corporation Law, and if the statutory authority is not followed strictly, the order will be void. But if there is any evidence tending to show the requisite facts giving the court jurisdiction, the order is not a nullity, although it may have been improvi- dehtly granted and may be set aside on a motion timely made for that purpose.^^ No case is made for the appointment of temporary receivers of the property of the corporation, in proceedings for the voluntary dissolution of a corporation, where the schedule required by section 174 of the General Cor- poration Law shows a surplus instead of a deficiency of assets.'^^ It is not permissible, upon a motion made to vacate the order appointing temporary receivers, to show by the af- fidavits of certain directors, submitted in opposition to such motion, that the fornier valuation of the assets of the corpo- ration shown by the sciiedule was erroneous, and that at the time when the directors made their affidavits, a period four months later, the corporation was insolvent," 510. Possession of property by receiver. By the proper presentation to a state court, after due notice of the application, of Ej^petition praying for the dissolution of a corporation and the appointment of a receiver, the court ac- quires jurisdiction of the subject matter, and although the re- ceiver has not actually taken the property of the corporation 13. Matter of Trustees of Simonds App. Div. 515,68 l>f. Y, Supp. 103,. affd. Soap Co., 61 Hiin 637,. 16 N. Y. Supp. 167 N. Y. i6S3, 60 N. E. 1115. 338. 16. Matter of Hitchcock Mfg. .Co., 1 14. Matter of Manoca Temple As?o- App.,Div.. 164, .^7 N. Y. Svipp. 834. ciation, 138 App. Div. 796. 113 N. Y. 17., Matter of Hitelieoek Mfg. Po., 1 Supp. 173.' App, ,Div, 164,, 37 N. Y. Supp., 834. 15. Matter of Lenox Corporation. 5" VOLXJKTARY DISSOLUTION. 609 into his manual possession, the jurisdiction of the court over it is exclusive. The appointment of the receiver is completed by the filing and entering of the order appointing him, al- though; he may be directed to execute and file a proper bond before he proceeds to discharge his duties, when that is done he can take actual manual possession of the, property .^^ And then his right to the possession of the property of the corpo- ration relates back, upon the filing of his bond, to the time when the order appointing him and enjoining creditors from prosecuting their claims was entered^ and a judgment creditor, whose execution is delivered to the sheriff after the entry of siich order, but before the filing of the receiver's bond, acquires no lien thereon.^^ An order granted in a pro- ceeding for the voluntary dissolution of a corporation by a justice of the Supreme Court at his private residence in the city of New York signed " Enter, Wm. N. Cohen, J. S. C," is an order of a court of record, and does not become oper- ative so as to entitle the receivers appointed thereby to moneys of the corporation on deposit with a bank until it is entered in the. county clerk's office.^* The appointment of a receiver does not disable the corporation from moving to vacate an attachment against its property.^ The omission of receivers of an insolvent corporation, appointed in proceed- ings taken for its voluntary dissolution, to serve upon the at- torney-general notice of the application for an order directing the sale of its property by them, is cured by a subsequent order of the court, made upon due notice to the attorney-gen- 18. Matter of Schuyler, S. T. B. Co.. of Gies Lithographing Co., 7 App. Diy. 136 N. Y. 169, 33 N. E. 633, revd. 154 550, 40 N. Y. Supp. 146, holding 'that U. S." 256, under the title of Moraii v. an execution delivered to a sheriff has Sturges, upon the ground that the priority over an order appointing a state court had no jurisdiction as to temporary receiver, filed later during maritime liens, and was incapable of the same day. Matter of Muehlfeld displaeiiig them; that tlio District & Haynes Piano Co.. 13 App. Div. 493, Court of the United Sftates had sueli 43 N. Y. Supp. 803. holding that a jurisdiction, and that the judgmenf judgment recovered against an in- under review was an unlawful inter • solveht Corporitibn, after the filing of ference with proceedings in that court. a petition for its voluntary dissolii- 19. Matter of Jansen Co., 138 N. Y. tion and before the appointment of a 550, 38' N. E. 66S ; Matter of Schuyler receiver, is valid. S. T. B. Co., 136 N. Y. 169. 33l N. E. 80. Wilcox v. Nat. Shoe & Leather 633, revd. on other ^ grounds 154 TJ.^ S. Bank, 67 App. Div. 466, 73 IST. Y. Supp. 356;' Matter of Lenox Corporation, 57 90O.i ■ ',,.■! App. Div. 515, 68 N. Y. Supp. 103, affd. 1.' Waverly Co. v. Wortliington Co., 167 N. Y. 633, 60 N.<*E. 1115; Matter 4 Misc.M?, 34 N; Y. Supp. 331. ■ 39 610 CORPORATIONS. eral, confirming sucli sale, and directing the re-entry nunc pro tunc of the order authorizing the sale. This is certainly the case under the provisions of section 194 of the General Cor- poration Law.^ The sale of a corporation's reversionary in- terest in a lease should be stayed pending the hearing and decision of an appeal from the order of classification.^ 511. Injunction restraining creditor. "If a temporary receiver be appointed, the court may, in its discretion, on like motion and notice, with or without security, at any stage of the proceeding before the final order, grant an injunction, restraining the creditors of the corporation, from beginning any action against the said corporation for the re- covery of a sum of money, or from taking any further proceedings in such an action theretofore commenced. Such injunction shall have the same effect and be subject to the same provisions of law as if each creditor upon whom it is served was named therein. "4 Although the court has no power to grant an injunction re- straining creditors from suing the corporation, unless a re- ceiver has been appointed, the application for the appoint- ment of the receiver and for the injunction may be made at the same time.^ But where a corporation was not insolvent at the time of the application, no injunction against creditors should have been grantedi^ Upon the appointment of a re- ceiver the property of the corporation comes into the posses- sion of the court, and it has power to preserve and protect it by prohibiting any interference therewith in any action there- after instituted. Even as to property of which the corpora- tion had wrongfully obtained possession before the appoint- ment of a receiver, after it has passed into his possession the owner may not, without first obtaining leave of tho court, re- plevy it in an action against the receiver.'' If the order ap- pointing a receiver does not restrain a judgment creditor ■i!- ! 2. Johnson v. Eayner, 35 App. Div. corpoi-ation, under the provisions of 598, 49 N. Y. Supp. 959. the Revised Statutes, an injunction re- 3. Matter of Quicksilver Mining Co., straining the creditors from proceed- 184 App. Div. 637, 172 N. Y. Supp. ing against the corporation to enforce 410. their demands cannot be granted at the 4. General Corporation Law, § 184. same time with the order to show 6. Matter of Trustees of Simonds cause why such dissolution should not Soap Co., 61 Hun 627, 16 N. Y. Supp. be had. 328, distg. Matter of French Manu- 6. Matter of Hitchcock Mfg. Co., 1 facturing Co., 12 Hun 488, holding that App. Div. 164, 37 N. Y. Supp. 8-34. upon the presentation of an applica- 7. Matter of Jensen Co., 188 N. Y. tion for the voluntary dissolution of a 550, 28 N. E. 665. VOLXJNTAEY DISSOLUTION. 611 from prosecuting Ms action against the corporation, Ms issue of execution and levy thereunder are proper and cannot be construed as a contempt of court.^ The proceeding is purely statutory and the restraining power of the court is such as is given by the statute and the equity power of the court does not extend to the sequestration of the property of a corpora- tion by means of a receiver. So the court has no power to re- strain creditors of the corporation from disposing of its bonds, held as collateral to loans under lawful contracts, em- powering them to seW The injunctive power of the court before the final order in such proceedings is Ijniited to re- straining the prosecution of actions for a sum of. money only, and the prosecution of a foreclosure action against the prop- erty of the corporation cannot be restrained by injunction;" such an action is not one for the ' ' recovery of a sura of money " within the meaning of the statute." But a fore- closure action, instituted by an opposing stockholder, pending a reference in a dissolution proceeding, may be stayed by the court, in order to enable the receiver to sell the equity of the corporation.^^ An order restraining proceedings against cor- poration contractor being dissolved does not prevent the filing of a mechanic's lien against the property of the owner for money due from the corporation.^' 512. Powers, duties and liabilities of reqeiver. While a receiver of a corporation appointed pendente lite does not possess aU the powers of a permanent receiver, he is just as much the representative of the creditors and share - holdprs as though,. his appointment was invested, with the quality of permanency; among the duties imposed upon him is that. of receiving. and preserving the property of the corpo- ration, and his relation to the parties whom he represents is so highly fiduciary as to require of him the exercise of the iit- 8. Bennett v. Complete Electric Con- 988, aflFd. 224 N. Y. 595, 120 N. E. struction Co., 8 App. Div: 301, 40 N. Y. 963. Suppi' 1139. • 11. Matter of Hamilton Park Co., 1 9. Matter of Biaghamton General App. Kv. 375, 37 N. Y. Supp.'310. ' Electric Co., 143 N". Y. 261, 38 N. E. 12. Matter of French, 181 App. Div. 397. ... 719; 168 N. Y. Supp. 988. affd. '224 10. Matter of Tarrytown, White X. Y. 555, 120 N. E. 863: ' Plains & M. K. Co., 133 App. Div. 297, 13. Matter of Simorids Furnace Co., 117 N. Y. Supp. 695; Mattier of French, 30 Misc. 209, 61 N. Y. Supp. 974. 181 App. Div. 719, 168 N. Y. Supp. 612 OOBPOKATIONS. most good faith in all his dealings.^^ He. is in all respects subject to the control of the court, and such receiver appointed before final judgment has his powers defined by section 104 of the Greneral Corporation Law.^^ That section reads as follows: _ , "In such an action, the court may also, at any stage thereof, appoint one or more receivers of the property of the corporation. A receiver, so appointed, before final judgment is a temporary receiver, until final judgment is entered. A temporary receiver has power to collect and receive the debts, demands, and other property of the corporation; to preserve the property,^ and the proceeds of the debts and demands colested; to sell or otherwise dispose of the property as directed by the court; to collect, receive and preserve the proceeds thereof; and to maintain any action or special proceeding, for either of those purposes. He must qualif je as prescribed by law for the qualiiieation of a permanent receiver. Unless additional powers are specially conferred upon hiin, as prescribed in the, n^xt section, a temporary receiver has only, the, powers specified in ^this section, ajifl thoso which are incidental to the exercise thereof. " l* . . While a temporary receiver in an action to dissolye a corporation is only the custodian of the property, he has an equitable lien or interest in it for the benefit of the creditors, the property being regarded as a trust." A. tempo- rary receiver, as such, has no authority to continue the busi- ness of a concern, and, unless he is authorized to do so by the court, the estate cannot be charged with liability incurred by him in the business.^^ But being invested by section 104 of the General Corporation Law with power to preserve the 14. Matter of Murray Hill Bank, 14 No. 394. Order extending powers of App. Biv. 318, 43 N. Y. Supp. 830, affd. temporary receiver and authorizing re- 353 N. y. 199, 47 N. E. 398; Atkins eeiver to sell, Form No. 395. Petition v. Judson, 33 App. Div. 43, 53 N. Y. for instructions as to sale of real es^ Supp. 504. tate, Form No. 296. Agreement by re 15. Buckley v. Harrison. 10 Misc. eeiver with counsel. Form No. ',398.' 683, 31 K, Y. Supp. 999. 17. Myers v. Myers, 18 Misc. 663, 16. General Corporation taw, § 104. 43 N. Y. Supp. 737, alfd. 15 App. Biv. Forms: Petition for accounting by 448, 44 N. Y. Supp. 513. temporary receiver. Form No. 385. 18. Appleton v. jyeleh, 39 Misci 343, Order discharging temporary receiver, .45 N. Y. Supp. 751, citing Meyer v. Forrn No. 386. 'Order discharging tern- Lexpw, 1,4PP- Wv. 116, 37 N. Y. Supp. porary receiver and canceling bond. 67; Sa.yles v, Jourdan, 3 N. Y. Supp. Form No. 387. Notice- of motion for 837, 19 St. Rep. 349, affd. 131 N. Y. order extending powers of temporary 685, 34 N. E. ,1098. ,; receiver and directing sale of property. Forms: , Petition for .leavf to con- Form No. 393. Petition for order en- ti;iue business, Forjii ISTp. 390. Order tending powers of temporary rei>eiver autUorijiing continuance of .tiuBiness, and directing sale of property, Form Form No. 391. VOLXTNTABY DISSOLUTION. 613 property of the corporation and the proceeds of debts and de- mands collected, he may, as auxiliary to such power, be authorized by the court to finish and complete the outstand- ing contracts of said company. Such receiver is not indi- vidually liable for material purchased by him in order to com- plete contracts made by the corporation, where it appears that the material was purchased upon the understanding that it was a liability of the receivership.^^ A receiver, merely as such, may not disaffirm acts of the corporation whose assets he holds or its directors, if it does not appear that it was in- solvent or has creditors to be protected or that those having an equitable interest in the property affected have repudiated the transaction.^" The court should not, except for the most cogent reasons, authorize a temporary receiver to sell all the property of the corporation prior to the entry of the final order dissolving the corporation.^ 513. Appointment and powers of permanent receiver. "Upon an application for a final order, if it appear to the court in a case specified in section one hundred and seventy of this chapter that the corpora- tion is insolvent, or, in a case specified either in that section, or in sections one hundred and seventy-one and one hundred and seventy-two of this chapter, that for any reason a dissolution of the corporation will be beneficial to the interests of the stockholders and not injurious to the public interests, the court must make a final order dissolving the corporation, and appointing one or more receivers of its property. But in the case of a solvent corporation, the court may, if there is no objection by creditors, dispense with a receiver and pro-idde in the final order for the distribution of the assets. The order shall be entered in the office of the clerk of the county in which the principal business office, or the principal place of business of the corporation is located, and a certified copy thereof, if a banking corporation,, shall be filed in the office of the superintendent of banks, '.if an insurance corporation, in the office of the superintendent of in- surance; and if a business, transportation, railroad or membership corporation, 19. Nason Manufacturing Co. v. Gar- thereof, certain chattel mortgages heW den, 53 App. i)iv. 363, 65 N. Y. Supp. by the . corporation wOTild also depre- 147; Olpherts v. Smith, 54 App. Div. chte in value and that the, temporary 514, 66 N. Y. Supp. 976. aflfd. without i-eceivers who were au^thorized to con- opinion, 173 N. Y. 593, 65 N. E. 1130. ^-^^^^ ^^^ business had not been able 20. Forker v. Brown. 10 Misc. 161. ^^ ^^^^^^ ^j^^ Msiness by making loans SO N. Y. Supp. 837, affd. 159 N. Y. ^ , x ,,, ^,. ^ ^j. o\j j.1. J.. iJu-iJt.. "« , ^ j^^^ customers' to enable them to fit 540, 53 N. B. 1135. ^, . . j »,x • i- ' „ . . X up thear pflace® and obtain licenses, 1. What is not sufficient reason for / ,., , ^ . ^ _, . _ \l, i ii. ,- ^ i.„„ does not constitute a sufficient reason selling. — Evidence that the liquor tax certificates held by '^he corporation to ^^^ authorizing a sale of the property secure adv^«es to its . customers were cf the corporation prior to its diasolu- eonstantly depreciating in value and tion. Matter of Maleom Brewing Co.. ,th^t,i3f not renewed at the expiration 7?, App, Div. 593, 70 N. Y. Supp. 1057. 614 COKPOBATIONS. ia the office of the secretary of state. Upon the entry of the order and the filing of a certified copy thereof as herein provided, the corporation is dissolved. A receiver appointed under this section shall have all the powers, duties and lia- bilities of receivers under article eleven of this chapter. ' ' 2 The life of a corporation continues until the final order is made dissolving the same, whereupon the receiver appointed becomes in practical effect the representative of such corpo- ration for certain purposes.^ A receiver ought not to be al- lowed in any way by statements or by his conduct to mislead parties to further his own interests. He has power to contest the validity of mortgages on the corporation's property upon a sale thereof subject to such mortgages.* The appointment of a permanent receiver of the property within this state of a foreign corporation, with power to collect and distribute the same, supersedes a prior appointment by the same court, al- though made in another action and in another judicial dis- trict, of a temporary receiver appointed to preserve the prop- erty of the same corporation until a final judgment for its dis- tribution should be entered.^ 514. Who may be appointed. "The court, may, in its discretion, appoint a director, trustee, or other officer, or a stockholder of the corporation, a receiver of its property. ' ' c 2. General Corporation Law, § 191, or by reference the provisions in the as amd. by L. 1909, cb., 240, and L. Revised Statutes relating to the pow- 1916, ch. 53. ers, duties and liabilities of receivers. Consolidatots' note. — In the title in The provisions of the Revised Statutes the Code of Civil Procedure relating to referred to have been consolidaited in proceedings for the voluntary dissolu- art. 11 of this chapter and have been tion of a corporation there will be incorporated in this article relating to found no statement of the powers, proceedings for the voluntary dissolu- dnties and liabilities of receivers who tdon of a corporation iby a reference may be appointed in such proceedings, at the end of § 191 as follows: "A There is not even a reference in the receiver appointed under this section proceedings conferring upon the rcceiv- shall have all the powers, duties and ers appointed in the proceedings the liabilities of receivers under art. 11 of powers, duties and liabilities of re- this chapter." As to powers, duties and ceivers. The omission, however, is liabilities of receivers generally, see supplied by L. 1880, ch. 245, § 1, subd. post, chapter 591, et seq. 3, p. 359, which provides as follows: 3. Drew v. Longwell, 81 Hun 144^ 30 "Sections 66 to 89 (Revised Statutes, N. Y. Supp. 733. pt. 3, ch. 8, tit. 4, art. 3), both in- 4. Matter of Wendell Machiiie Co., elusive, which are hereby made ap- 2 App. Div. 16, 37 N. Y. Supp. 444. pUcable to a receiver appointed as pre- 5. Glines v. Binghamton Trust Co., scribed in § 3439 of the Code of Civil 68- Hua 511, 32 N. Y. Supp. 1033. Procedure." These sections of the Re- 6. General Corporation Law, § 192. vised Sta/tutes comprise in themselves Consolidatots' note. — ^This section ia VOLUNTABY DISSOLUTION. 615 Upon a voluntary dissolution of a corporation, any of its officers or stockholders may be appointed receivers, if not otherwise disqualified.'' But an assignee of the same estate is not a proper person to be appointed receiver.^ A person should not be appointed by the court as a receiver who by his own acts or 'the position he occupies, stands in any improper relation to the cause. Nor generally will a person be ap- pointed receiver, if objection be made by either party, where the court has no personal acquaintance with him.^ A refer- ence is proper to take and state the account of a receiver ap- pointed under this section upon the voluntary dissolution of a corporation.^" 515. Omission, defect or default of receiver. "In a proceeding for the voluntary dissolution of a corporation, the court may, in the furtherance of justice, upon notice to the attorney-general, and the attorney-general not obJ€eting, and upon such further notice to creditors or others interested as the court shall direct, which notice may be made by mail upon all persons and corporations not residing or existing within the. state, relieve a receiver from any omission, defect or default, in any proceeding or act required by law to be taken or done, or in the giving of any notice required by law to be given, and the court may upon like notice, confirm any act of a receiver, and any decision, report, order or judgment made in such proceeding. ' ' U The omission by a receiver to serve upon the attorney-gen- eral notice of an application for an order to sell its property is cured by a subsequent order of the court made upon due notice to the attorney-general confirming such sale and direct- ing the re-entry of an order therein nunc pro tunc. Upon the confirmation by the court the title of the purchaser at the sale becomes effective. It is immaterial if stockholders of the cor- poration received no notice of the application for the order oi confirmation.^^ the same as the following provision in 8. Eichberg v. Wickham, 21 N. Y. the Revised Statutes which latter pro- Supp. 647. vision therefore has been repealed: 9. Smith v. New York Consolidated "Any of the directors, trustees or other Stage Co., 28 How. Pr. 20S. . officers of such corporation, or any of 10. Matter of Home Book Co., 60 its stockholders, may be appointed re- Misc. 560, 112 N. Y. Supp. 1012. ceivers." E. S., pt. 3, ch. 8, tit. 4, 11, General Corporation Law, § 194. art. 3, § 66. 12. Johnson v. Raynor, 25 App. Div. 7. Matter of Eagle Iron Works, S 598, 49 N. Y. Supp. 959. Paige 385. 61 6 COBPOEATIONS. CHAPTEE XXVn. Action for Dissolution. Corporations Generally. ^ 516. Grounds for dissolution. 517. Who may maintain aetion. 518. When attorney-general must bring action. 519. Application to court; reference. 520. Venue in action by attorney-general. 521. Pleading; parties. 522. Officers and stockholders as parties to action; separate action against officers and stockholders; determination of liability. 523. Service of papers on attorney-general. 524. Compelling officers and agents to testify. 525. Temporary injunction. 526. Staying action by creditors. 527. Bringing in creditors. 528. Appointment and powers generallj' of temporary receiver. 529. Additional powers and duties of temporary receiver. 530. Permanent receiver generally. 531. Additional duties and liabilities of permanent receiver. 532. Application by attorney-general for appointment of receiver. 533. Appraisal of property. 534. Effect of judgment dissolving corporation and appointing receiver. 535. Provisions in final judgment. 536. Attorney's claims. 537. Becovery of stock subsciiption. 5"8. Entry of judgment nnd filing certified copy. Moneyed Corporations. 539. Application of statute. 540. Temporary injunction and receiver. 541'. Permanent injunction a^^d receiver; bond. 542. Inventory and appraisal. 543. Conversion of assets into cash. 644. Employment of counsel. 545. Notice to creditors. 546. Allowance, rejection and adjusimeiit of claims by receiver; appointment of referee. 547. Final settlement and distribution. 548. Notice of account and accounting liy receiver. 549. Proceedings upon accounting. 550. Claims barred after distribution of assets. 551. Limitation of actions against director or stockholder. ACTION FOB DISSOLUTION. 617 Corporations Generally. 516. Grounds for dissolution. "Ill either of the following cases, an action to procure a judgment, dis- solving a corporation, created by or under the laws of the state, and forfeiting its corporate rights, privileges and franchises, may be maintained, as pre- sc]ibed in the next section: 1. Where the corporation has remained insolvent for at least one year. 2. Where it has neglected or refused, for at least one year, to pay and dis- charge its notes or other evidences of debt. 3. Where it has suspended its ordinary and lawful business for at least one year. 4. If it has banking powers, or power to make loans on pledges or deposits, or to make insurances, where it becomes insolvent or unable to pay its debts, or has violated any provision of the act, by or under which it was incorporated, or of any other act binding upon it. ' ' 13 "Article six of the general corporation law, relating to in- voluntary dissolution, "does not repeal or afEeot any special provision of law, prescribing that a particular kind of corporation shall cease to exist, or shall be dissolved, in a case or in a manner, not prescribed in this article; or any special provision of law, prescribing the mode of enforcing the liability of the stockholders of a particular kind of corporation. ' ' 14 "The provisions of article six of the general corporation law relating to involuntary dissolution, "do not apply to a religious corporation; or to a municipal or other political corporation,, created by the constitution, or by or under the laws of this state ; or to any corporation which the regents of the university have power to dissolve, except upon the application of the regents, or of the trustees of such a corpo- ration ; and in aid of its liquidation under such dissolution'. ' ' IB An action is maintainable by the attorney-general under leave of the court to dissolve a private corporation where it appears that it has never exercised its powers or franchises and that such non-user is willful and without justification; also, that its officers have conspired to do other and illegal acts under cover of the corporation.'^ The provision fixing 13. Gfeneral .Oorporatdon liaw, § 101. 14. General Corporation Law, § 115. As to two systems of procedtire 15. General Corporation Law, § 300. against corporations for dissolution,, 16. People v. Milk Exchange, 133 provisions of Revised Statutes and the N. Y. 565, 30 N. E. 850. See also Piero Code, see Herring v. N. Y., L. E. & W. on Particular Actions and Proceedings, R. Co.. 105 N. Y. 340, 389, IZ N, E. Vol. 1, p. 774, et seq. 763. 618 CORPOBATIONS. the period of non-user which will give a right of forfeiture of corporate rights and franchises, i. e., one year, makes a mere lion-user for a less period no ground for a dissolution." But the statute declaring that a corporation which, for one whole year, has remained insolvent or suspended its ordinary busi- ness, shall be deemed to have surrendered its franchises, is cumulative, and not a limitation upon the common law rule previously existing in this state. In order, however, to infer a surrender of corporate franchises from suspension of busi- ness, for less than a year, the circumstances must be such as to show that the corporation has lost all power to continue or to resume its business.^* Where a corporation has sus- pended its ordinary and lawful business for more than a year owing to bankruptcy proceedings brought against it, a disso- lution of the corporation under the statute is proper. So, too, a dissolution is proper when corporate notes have not been paid for more than one year although the corporation has been discharged in bankruptcy, the discharge not operating as payment or protecting the corporation from an action to dissolve it.^^ Insolvency means a general inability to answer in the course of business a liability existing and capable of being enforced. A corporation, like an individual, is insol- vent when it is not able to pay its debts. It may be insolvent although no judgments have been recovered against it/" but the fact that judgments are being entered against a corpora- tion and that it is unable to meet these obligations establishes a" condition of insolvency.^ Still a corporation cannot be said to have committed an act of insolvency, or to have neglected 17. People V. Atlantic Avenue K. Co., having become actually insolvent had 125 jST. Y. '513, 36 N. E. 633, holding suspended its business for less than a that failure of street ear company to year under a resolution to wind up its run cars for five days does not consti- affairs, was not thereby dissolved, the tute non-user authorizing action for corporation having buildings, machin- dissolution. • ery, stock and assets, by which it might As to acts that do not show that a have carried on its business. Bradt corporation has suspended its ordinary v. Benedict, 17 N. Y. 93. business for a year, so as to authorize 19. People v. Troy Chemical Co., 118 the entry of a judgment decla,ring it App. Div. 437, 104 N. Y. Supp. 23. dissolved. See Kelsey v. Pfaudler Pro- 20. People v. Excelsior Gas Ldght cess Co., 45 Hun 10, 19 AWb. N. C. 437. Co., 3 How. Pr. N. S. 137, 8 Civ. Proc. 18. United Glass Co. v. Vary, 7« Rap. 39'0i. Hun 103, 39 N. Y. Supp. 636, affd. 153 1. Nes-lis v. American Tuibe & Iron N. Y. 121, 46 N. E. 312. Co., 76 Hun 220, 27 N. Y. Supp. 733, A manufacturing corporation which affd. 150 N. Y. 42, 44 N. E. 944. ACTION FOR DISSOLUTION. 619 or refused to pay its obligations, because its demand notes remain outstanding until payment has been demanded.^ When the directors of an insolvent banking corporation have com- menced a special proceeding for voluntary dissolution under the General Corporation Law, sections 170-195, after the superintendent of banks has taken possession of the property and business of the corporation, an action for involuntary dis- solution instituted by the attorney-general in the name of the people under the Banking Law and the General Corporation Law, sections 101-115, although begun, after the special pro- ceeding, takes priority. So fai; as the Banking Law, being a • special and later statute applying to banking and kindred cor- porations only, is necessarily inconsistent with the general and earlier statute regulating the voluntary dissolution of corporations generally (General Corporation Law, Sees. 170- 195), the provisions of the former are paramount.^ An action for the dissolution of a corporation may be maintained in the Federal courts.* ' ' One-half of the capital stock of every such corporation shall be paid in within one year from its incorporation, or the corporation shall be dissolyed, and the directors within thirty days after such payment shall make a certificate of the fact of such payment, which shall be signed and acknowledged by a majority of the directors, and verified by the president or vice-president and secretary or treasurer, and filed in the ofSces where the certificates of incorporation are filed. ' ' B. Failure to file the certificate of payment of one-half of the capital stock does not effect a dissolution ipso facto, but an action by the attorney-general is necessary .^ 517. Who may maintain action. "An, action specified in the last section, may be maintained by the attorney- general, in the name and in behalf of the people. And whenever a creditor or stockholder of any corporation submits to the attorney-general a written state- ment of facts, verified by oath, showing grounds for an action under the provisions of the last section, and the attorney-general omits, for sixty days after this submission, to commence an action specified in the last section, then, and not otherwise, such creditor or stockholder may apply to the proper epurt for leave to commence such an action, and on obtaining leave may maintain the same 2. Denike et al. v. N. Y. and R. Lime, 5. Business Corporations Law, § 5, etc. Cto. et al., 80 N. Y. 599. pt. 3. Matter of Murray Hill Bank, 153 Forms: Certificate of payment of N. Y. 199, 47 N. E. 398. half of capital stock, Form No. 3. 4. Robinson v. Mutual Reserve Life 6. Greneral Corporation Law, § 131. Ins. Co., 162 Fed. 794. See also cross reference. 620 COEPOBATIONS. accordingly; and if there be no person in existence upon whom service of the summons can be made under the provisions of section four hundred and thirty- one of the code of civil procedure (now Civil Practice Act, § 228), service of the summons in such action may be made in such manner as the court upon application by petition may direct. " 7 ' The provisions of the statute are not applicable to a joint stock corporation, one or more members of which may in- stitute an action for its dissolution whenever a suitable oc- casion arises rendering it legitimately desirable to wind up its affairs.^ Creditors at large cannot apply for the disso- lution of a corporation on account of its insolvency.^ An action to procure a judgment dissolving a corporation which may be brought either by the attorney-general or by a creditor or stockholder, must be brought either in the name of the People of the State or in the name of the party in interest and not in the name of the People on the relation of the party in interest.^" A corporation attacked by the state for insolvency may, even after a receiver is appointed, use their corporate funds for their own protection in the litigation if their action 7. General Corporation Law, § 102, ai3 amd. by L. 1912, ch. 204. Petition for involuntary dissolution denied on ground that since complaint was made, compliance with law as to resident director and place of business has been miade. Rept. of Atty. Genl. (1913), Vol. 2, p. 413. Petition for involuntary dissolution, or annulment of the charter, of a membership corporation denied upon the ground that the petitioner had failed, to present to the Attorney-Gen- eral any good reason to believe that an action can be maintained in behalf of the People of the State; illegal acts of an agent not authorized or adopted by some corporate act is no ground for annulment. Opinion of Atty. Genl., May 20, 1914. See also Piero on Par- ticular Actions and Proceedings, Vol. 1, p. 778, et seq. 8. Snyder v. Lindsey, 92 Hun 432, 36 N. Y. Supip. 1037, modified as to other propositions 157 N, Y. 616, 52 A". E. 593. 9. Cole V. Knickerbocskfir Life Ins. Co., 23 Hun 255. 10. People ex rel. Hearst v. Ramapo Water Co., 51 App. Div. 145, 64 N. Y. Supp. 532. Action without relator may be main- tained by Attorney-General against bank which superintendent of banks has authorized dissolved. People v. Manhattan Real Estate & Loan Co., 74 App. Div. 535, 77 N. Y. Supp. 837, revd. on other grounds 175 N. Y. 133, 67 N. E. 319. A party other than the state may not in a collateral proceeding contend that a corporation has by a failure to exercise its corporate powers forfeited its existence; that can only be accom- plished by the judgment of a court of competent jurisdiction in an action brought for that purpose by the attor- ney-general, in the name of the state, under section 101 of the General Cor- poration Law. Village of Fredonia v. Fiedonia Natural Gas Light Co.. 84 Misc. 150, 145 N. Y. Supp. 820, revd. on other grounds, 162 App. Div. 924, 146 N. Y. Supp. 1116. ACTION. L FOE DISSOLUTION. 621 is taken in good faith and with a reasonable hope of success in the controversy.^^ 518. When attorney-general must bring action. ' ' Where the attorney-general has good reason to believe, that an action can bf maintained in behalf of the people of the state (to dissolve a corporation) he must bring an action accordingly, or apply to a competent court for leave to bring an action, as the case requires; if, in his opinion, the public interests require that an action should be brought. In a case where th© action can 'he brought only by the attorney-general in behalf of the people, if a creditor, stockholder, diractor, or trustee of the corporation, applies to the attorney-general for that purpose, and furnishes the security required by lavp, the attorney-general must bring the action, or apply for leave to bring it, if he has good reason to believe, that it can be maintained. Where such an application is made section nineteen _ hundred and eighty-six of the code of civil procedure applies thereto, and to the action brought in pursuance thereof. "12 The duty of the attorney-general is absolute and not dis- cretionary upon receiving a report from the Superintendent of Banks that an institution is unsound.^' 519. Application to court; reference. "All applications to the court shall be' made in the judicial district where the principal office of the corporation against which proceedings are taken is located, excepting such applications as are made in actions brought by the attorney-general on behalf of the people of the state, and all such applica- tions shall be made in the judicial district in which the action is triable. "U ' ' A reference shall not be made, of course, upon the consent of the parties, in an action * * * against a corporation, to obtain a dissolution thereof, the appointment of a receiver of its property, or the distribution of its property, unless it is brought by the attorney-general; '' * * In a case specified in this section, where the parties consent to a reference, the court, in its discretion, may grant or refuse a reference ; and, where a reference is granted, the court must designate the referee. If the referee thus designated refuses to serve, or if a new trial of an action tried by a referee so designated is granted, the court, upon the application of .either party, must appoint another referee. "15 520. Venue in action by attorney-general. "An action or proceeding brought by the attorney-general, on behalf Of the people of the state against; any corporation for the purpose of procuring its dissolution, the appointment of a receiver, or the sequestration of its property, 11. Attorney-General v. Atlantic Mu- Law. as added by L. 1920, eh. 918., tual .Mfelns. Co., 3 How. Pr. N. S. 13. People v. Mercantile Co-operative 1^6. , i . Bank, 53 App. Div. 295; fi5 N. Y. Supp. 12, General, Corporation Law, § 304. 766. Section 1986 of the Code of Civil Pro- 14. General Corporation Law, § 314. cedure is now §§ 155, 1203 of the Civil 15. Civil, Practice Act, § 465, pt. Practice Act and § 69. of the Executive 622 COEPOEATIONS. may be brought in any county of the state, to be designated by the attorney- general. ' ' 16 521. Pleading; parties. The court has no general jurisdiction of an action brought for the dissolution of a corporation ; its power in that respect is derived solely from the statute, and unless the complaint in an action brought to dissolve the corporation shows the jurisdictional facts, the court has no power to act, its decree is void, and the corporation still exists." Hence, when the action is based upon an alleged violation of law the complaint should distinctly state what law or what provision of the cor- " porate charter has been violated ; a general allegation that it has violated a law without specifying the particular law is manifestly insufficient.^* In an action to dissolve a corpora- ls. General Corporation Law, § 315. 17. Where the jurisdictional facts are not alleged in the complaint in such an action, and judgment is en- tered dissolving the corporation, the judgment ma,y be treated as valid so far as it relates to . the sequestration of the property of the corporation, but so far as it purports to dissolve the corporation it is a nullity. Osborn v. Montelac. Park, 89 Hun 167, 35 N. Y. Supp. 610, aflfd. 153 N. Y. 673, 48 N. E. 1106. The complaint in an action by a stockholder to procure the dissolution of a corporation alleged that the or- dinary and lawful business of the cor- poration had been suspended for at least a year and the submission of a written statement of facts to the At- torney-General and his failure to in- stitute an action within sixty days, and further alleged in substance that in a, prior proceeding by the corporation in voluntary dissolution, pursuant to sec- tion 331 of the General Corporation Law, a certificate had been issued by the Secretary of State to the effect that the corporation had complied with said section in order to be dissolved in pur- suance thereof, but that said proceed- ing was taken without notice to the plaintiff or to minority stoekholdera and for the purpose of defrauding the plaintiff and minority stockholders, etc., in pursuance of a conspiracy set forth in the complaint. The relief de- nianded was that the voluntary dissolu- tion be set aside. It was held, that as the complaint did not allege that the uptice to stockholders required by the statute (General Corporation Law, § 231) had not beeen published or that no notice had been served upon or mailed to the stockholders, the com- plaint failed to state a cause of ac- tion. Knickerbocker v. Groton Bridge & Manufacturing C*>., Ill App. Div. 145, 97 N. Y. Supp. 595. Liability of stockholders when stock was fully paid, especial in order of sequestration. See sequestration. 18. People V. Manhattan Real Estate & L. Co., 175 N. Y. 133, 67 N. E. 319, holding that an allegation, which is merely a statement of the opinion of the superintendent of banks and the attorney-general that it is unsafe and inexpedient for the defendant to con- tinue to transact business is not a suf- ficient basis for a judgment dissolving the corporation and distributing it^ as- sets through the medium of a receiver or otlierwise. ACTION FOR DISSOLUTION. 623 tion for failure to carry on its business for over a year, a cor- poration from which the one in question claims to have ac- quired its rights, and which is alleged to have ceased to exist before the transfer of such rights, is a proper party .^^ It seems, that the directors are not necessary parties defendant in such action when no personal judgment is asked against them.^" But in an action brought by a judgment creditor of a corporation to procure a dissolution thereof and a seques- tration of property fraudulently transferred by it, the per- sons or corporations who hold such property in their possess- ion may be joined as parties defendant.^ 522. Officers and stockholders as parties to action; separate action against officers and stockholders; determination of liability. "Where the action is brought by a creditor of a corporation, and the stock- holders, directors, trustees, or other officers, or any of them, are made liable by law, in any event or contingency, for the payment of his debt, the persons, so made liable, may be made parties defendant, by the original or by a supplemental complaint ; and their liability may he declared and enforced by the judgment in the Kction. ' ' 2 The provisions of this section do not apply to actions by the attorney-general, and he cannot be compelled to make stockholders parties defendant.^ Sections 109-111 of the Gen- 19. People V. New York CSty Cen- judgment entered went beyond the tral Underground R. Oo., 21 N. Y. i-egular purposes of the a-ction, yet as Supp. 373, 50 St. Rep. 454, affd. 137 N. the stockholders had voluntarily ap- Y. 606, 33 N. E. 744. peared, the court had power to enter ao. Knickerbocker v. Groton Bridge final judgment on the qiiestion. See & Manufacturing Co., Ill App. Div. also Fiero on Particular Actions and 145, 97 N. Y. Supp. 595. Proceedings, Vol. 1, p. 784, et seq. 1. Matter of Sayre, 70 Apip. Div. 329, 3. Individual liability of stock- 75 N. Y Supp. 286. holders. — Where the permanent re- 2. General Corporation Law, §. 109. ceiver of a banking corporation, ap- Voluntary appearance by stock- pointed in an, action to dissolve it holders. — ^In People v. Hydrostatic brought on behalf of the people, refuses :^aper Co., 88 N. Y. 623, it was held to sue, as he may sue, stockholders thai in an action by the attomey-gen- upon their individual statutory liabil- eral to dissolve a manufacturing cor- ity to make up a deficiency of assets pofation,, where it appeared that the over existing liabilities because the ac- stoe served upon the Attorney-General. Where it is to be brought before the court by an order to show cause, a copy of the order to show cause, and of the proposed order, should be served upon him. It is not necessary to serve upon him a notice of the application for the order requiring cause to be shovm. Greason v. Goodewillie-Wyman Co., 38 Hun 138. 9. Cole V. Millerton Iron Co., 133 N. Y. 164, 30 N. E. 847. 10. Matter of Eustace v. N. Y. Build- ing L. bo., .98 App. Div. 97, 90 N. Y. Suf^. 784, 11. In re Vanamee, 55 Hun 606, 8 N'. y. Supp. 319, aflfd. 119 N. Y. 646, 33 N. E. 1149; Matter of Stonebridge, 57 Hun 441^ 10 k Y. Supp. 737. . 12. Morrison v. Menhaden Co., 37 Hun 533. 13. Matter of Peekamose Fishinp Club, 151 N: Y. 511, 45 N. E. 1037. 14 Kept, of Atty. Genl. (1913), Vol. 3, p. 601. ' 15. Matter of Columbian Insurance Co., 51 Hun 639, 4 N". Y. Supp. 603. 626 CORPORATIONS. taken under the statutes, to determine the question as to the validity of claims against a corporation which has been dis- solved and whose assets are in the hands of a receiver, it is not necessary that a copy of the motion papers should be served upon the attorney-general.^^ Likewise^ the attorney- general need not be given notice of every suit brought by a receiver by authority of the court," or of an application for an order to show cause why books should not be produced on an accounting.^^ 524. Compelling officers and agents to testify. "In an action, brought as prescribed in article fifth, sixth or seventh, a stock- holder, officer, alienee, or agent of a corporation, is not excused from answering a question, relating to the management of the corporation, or the transfer or disposition of its property, on the ground that his answer may expose the corpo-. ration to a forfeiture of any of its corporate rights, or will tend to convict him of a criminal offense, or to subject him to a penalty or forfeiture. But his testimony shall not be used, as evidence against him, in a criminal action or special proceeding. ' ' 19 525. Temporary injunction. "In an action, brought as prescribed in this article, the court may, upon proof of the facts authorizing the action to be maintained, grant an injundtdon order, restraining the corporation, and its trustees, directors, managers and other officers, from collecting or receiving any debt or demand, and from paying out, or in any way transferring or delivering, to any person, any money, property, or effects of the corporation, during the pendency of the action ; except by express permission of the court. Where the action is brought to procure the dissolution of the corporation, the injunction may also restrain the corporation, and its trustees, directors, managers and other officers, from exercising any of its corporate rights, privileges, or franchises, during the pendency of the action; except by express permission of the court. The provisions of title second of chapter seventh of the code of civil procedure (now article 51-53 of the Civil Practice Act), relating to the granting, vacating or modifying of an injunction order, apply to an in- junction order, granted as prescribed in this section; except that it can be granted only by the court. "20 "An injunction order, suspending the general and ordinary business of a corporation, or suspending f rom"office, or restraining from the performance of his duties, a trustee, director, or other officer thereof, can be^ granted only by the court, upon notice of the application therefor, to the proper officer of the corpo- ration, or to the trustee, director, or other officer enjoined. If guch an injunc- tion order is made, otherwise than as prescribed in this section, it is void. ' ' 20a 16. People V. American Steam Boiler 18. Greason v. Goodewillie-Wyman Ins. Co., 3 App. Div. 504, '38 N. Y. Co., 38 Hun 138. ' Supp. 406. 19. General Corporation Law, § 301. 17. Nealis v. American Tube & Iron 20. General Corporation Law, § 103. Co., 76 Hun 230, 27 N. Y. Supp. 733, aOa. General Corporation Law, § affd. 150 N. Y. 43, 44 N. E. 944. 305. ACTION FOR DISSOLUTION. 627 An injunction granted in an action for dissolxition may be modified only on notice to the attorney-general.^ 526. Staying action by creditors. "In sueli an action, the court may, in its discretion, on the application of either party, at any stage of the action, before or after final judgment, and with or without security, grant an injunction order, restraining the creditors of the corporation from bringing actions against the defendants, or any of them, for the recovery of a sum of money, or from taking any further proceedings in such actions, theretofore commenced. Such an injunction has the same effect, and, except as otherwise expressly prescribed in this section, is subject to the same provisions of law, as if each creditor, upon whom it is served, was named therein, and was a party to the action in which it is granted. ' ' 2 It is th.e policy of the law in order to expedite the adminis- tration, avoid excessive expense, secure uniformity in remedies, and' equality in rights among creditors, to bring all claimants into the common forum which will be provided, if necessary, in the action itself, in which the corporation is dis- solved and the receiver appointed.^ So the supreme court having acquired jurisdiction of proceedings for winding up the affairs of * corporation, and having appointed a receiver, has jurisdiction to stay the suit of a creditor brought to re- cover assets to which the receiver is entitled, in whatever court such suit may be pending. The stay may be granted on motion in the proceedings ; it is not necessary for the receiver to bring an action for that purpose,* and the order is not sub- ject to every provision of the statute and rules applicable to 1. Dohn V. Buffalo Amusement Co., void — especially where the person 66 App. Div. 446, 73 K. Y. Sapp. 95. sought to be restrained from prosecut- 2. General Corporation Law, § 303. ing the foreclosure action has obtained 3. Marshall v. Wendell, 45 App. Div. an order of the court permitting him 130, 61 N. Y. Supp. 13. to maintain the same. Davidson v. This section does not authorize the Good Cordage & Mach. Co., 63 App. court to grant an order restraining a Div. 366, 71 N. Y. Supp. 565. person holding a mortgage covering ^ creditor cannot be enjoined for real estate owned' by the corporation, enforcing the personal liabilities of di- which nrortgage was given by a former ^^^^^^ ^^ stockholders after a receiver owner of such real estate and was not , • j. j ■ .. ■ uYvuqi oi o"^" ic jjg^g jjggjj appointed m an action by a assumed' by the corporation, from „• * j.,, .. ■, . "^ .. ^ , , _,. r. director against the corporation and prosecuting an action to foreclose such ,. , ,, mortgage until after the Court of Ap- <=o-d>--ectors. Mason .. New York Silk peals has decided an appeal taken to Mfg. Co., 37 Hun 307. it from a judgment adjudging a mort- 4- Attorney-General v. Guardian Mu- gage executed by the corporation to be 07, 47 N. ■£. ,788. ,f , 1*8; Attorney General v. North Ameri 14., P^oiJie \% , Ameriean Loan & Tru ii ciin Life Inp. Co., 91 N. Y.. 57. Co.. 177 X.' Y. 331/69 X. E, 429. ' ' ' '' " " ' ''^ ■ '. • 638 CORPORATIONS. stances, no equitable reason can be perceived why the claims of counselfor defending the action should be preferred to that of other creditors.^'' Accordingly the employment of counsel to resist dissolution proceeding is unjustifiable where it appears that, notwithstanding the actual insolvency of the corporation, its officers, with full knowledge, attempted to con- tinue it in business by fraudulent means and the receiver will not be permitted to pay, as a preferred claim, out of the fund in his hands, a reasonable allowance to counsel for services rendered in the defense of the proceeding, although the coun- sel may have acted in good faith and stopped the defense on discovering that the corporation was insolvent." 537. Recovery of stock subscription. "Where the stockholders of the corporation are parties to the aetion, if the property of the corporation is not sufficient to discharge its debts,, the interlocu- tory or final judgment, as tlie case requires, must adjudge that each stockholder pay into court the amount due and remaining unpaid, on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the corporation. "18 "If it appears, that the property of the corporation, and the sums collected or collectible from the stockholders, upon their stock subscriptions, are or will be insufficient to pay the debts of the corporation, the court must ascertain the several sums, toif which the directors, trustees, or other officers, or the stocjkholdeTS of the corporation, being parties to the action, are liable ; and must adjudge that the same be paid into court, to be applied, in such proportions and in such order • as justice requires, to the payment of the debts of the corporation. '' 19 The provisions of this section are only applicable to ac- tions by creditors and do not apply to actions by the attorney- general.^" 538. Entry of judgment and filing certified copy. "The final judgment in an action brought as prescribed in this article (Gen- eral Corporation Law, Article VI) shall be -entered in the office of the clerk of the county in which the principal business office, or the/principal place of busi- ness of the corporation ■ is located, and if it is adjudged that such corporation be dissplyed,, a certified copy of. svfih judgment shall, if a banking corporation, be filed in tlie office of the superintendent of banks; if an insurance . corporation, in the office of the sujjerintendehi of insurance; and if a liusiness, transportation, railroad or memtiership corporation, in the office of the secretary of state. ' ' 1 16. People V. Commercial Alliance 19. General Corporation Law, § 114. Life Ins. Co., 148 N. Y. 563, 43 N. E. 20. People v. Commercial Bank, 37 1044. Misc. 16, 74 N. Y. Supp. 806, aflfd. 72 17. People V. Commercial Alliance App. Div. 633, 76 N. Y. Supp. 1035. Life Ins. Co., 148 N. Y. 563, 42 N. E. 1. General Corporation Law, § 116. 1044. as added by L. 1916, ch. 163. 18. General Corporation Law, § 113. Forms: Judgment, Form No. 268. ACTION . FOB DISSOLUTION. 639 Moneyed Corporations. 539. Application of statute. "Except as provided in sections one hundred and fifty- five, one hundred and flfty-eight, subdivision two, and one hundred and sixty of this article, this article shall apply to all actions for the appointment of receivers of moneyed cosporations brought by the attorney-general, and to all receivers of such corpo- rations heretofore or hereafter appointed, and to the settlement and adjustment of their accounts and distribution of assets in their hands, and all proceedings with reference thereto hereafter to be taken, and shall supersede and repeal all pro- visions of law inconsistent herewith, so far as the same relate to actions for the sequestration, annulment or dissolution of moneyed corporation. As to all other corporations and as to matters not affected by this article, provisions of law here- tofore existing shall remain in full force and effect. ' ' 2 640. Temporary injunction and receiver. "Whenever the attorney-general shall commence an action against a moneyed corporation upon the information of either the superintendent of insurance, or the superintendent of banks, for the dissolution or sequestration of the property or annulment of the charter of a corporation formed under or subject to the bank- ing or insurance law, and shall' be satisfied that it is unsafe and inexpedient for such corporation to continue doing business, the supreme court may, on his application, in a case provided by law, appoint a receiver thereof, and may on such appointment grant an injunction restraining such corporation from carry- ing' on its business unlal the further order of the court. The court may, in its discretion, dispense with notice of the application. ' ' 3 Although the statute governing the appointment of re- ceivers of moneyed corporations allows the court in its dis- cretion to dispense with notice of the motion, notice is con- templated, nevertheless, unless there be some emergency re- quiring immediate action. Hence, an exercise of the discretion must' be based on some proven facts showing the necessity for instant action to prevent some impending wrong. In all other cases notice should be given.* 541. Permanent injunction and receiver; bond. ' ' The court, on granting an order without notice, either for the appointment of a receiver or for an injunction, or for both forms of reUef , as herein pro-wded, shall make an order that the corporation so proceeded against show cause at a term of ,the court to be- held not more than thirty days thereafter, why such receiver and injunefiion should npt be permanent, guch order shall be served not less than eight days before the; date upon which the hearing thereon is to be had. Unless the court otherwise directs, the receiver appointed in the first in- 2. General Corporation Law, § 161. 4. People y. Oriental Bank, 124 App. 3. General Corporatioij Law, § 150. Div. 741, 109 N. Y. Supp. 50«. 640 COKPOBATIONS. stfincc shall bn permaneut receiver of such corporation, and the injunction shall be continued during the pendency of the litigation. Such receiver shall, unless otherwise ordered b.y the court, continue to act as such up to and after final judgment, and until the affairs of the corporation shall be finally settled and its property distributed by him according to law. The bond to be given by the receiver on his appointment shall be fixed at such sum and so conditioned that it shall continue in force and effect until the final discharge of such receiver, including any liability which may be incurred by said receiver by virtue of his appointment as such in the final judgment, in case he shall be so named therein. "6 A receiver of a moneyed corporation is presumed to have been appointed as a permanent receiver by reason of the statute and in any event he will be treated as such where his answer alleges that he is a permanent receiver.^ 542. Inventory and appraisal. "It shall be the duty of the receiver to take an inventory and make an ap- praisal of the assets and property of the corporation. In case the corporation is subject to the banking law, two disinterested appraisers shall be appointed by the superintendent of banks to aid in this duty, and in case' the corporation is subject to the insurance law, such appraisers shall be appointed by the super- intendent of insurance. Ten days' notice of such inventory and appraisal shall be given to the corporation and such inventory and appraisal shall be com- pleted and filed with the clerk of the supreme court in the county in which the trial is to be had, within ninety days after the appointment of such re- ceiver, and a certified copy thereof in the office of the attorney-general, and in the office of the superintendent of banks, or in the office of the superintendent of insurance, as the case may be, unless for good cause shown the officer ap- pointing, such appraisers shall, in writing, extend the time for the completion thereof. Such appraisers shall receive as compensation a reasonable sum, not exceeding fifteen dollars per day and actual and necessary expenses, to be paid by the receiver upon the approval of the officer by whom they were named. The leceiver shall bo chargeable with the amount of such inventory and shall be re- lieved therefrom to the same extent and upon the same grounds as in the like case of an executor. "7 543. Conversion of asset^into cash. ' ' The receiver shall proceed, immediately upon his appointment, to convert the assets of the corporation into cash. "8 The provision that a receiver shall proceed, immediately upon his appointment, to convert the assets into cash does not mean that he shall sacrifice them but that he must usereason- 5. General Corporation I^w, § 151. 190 N. Y. 546, 83 N. E. 1130. 6. Prince v. ScMesinger, 116' App. 7. General Corporation Law, § isa. IMv. 500, 101 K Y. Supp. 1031. aff.l 8. GenCral Corporation £aw, § i.-iS. ACTION FOR DISSOLUTION, 641 able diligence and proceed with sucli speed as will accord with the circumstances.^ 544, Employment of counsel. "It shall not be lawful for any receiver to pay to any attorney or counsel any costs, fees or allowance" until the amount thereof shall have been stated to the specifil term, as expenses incurred by such receiver and shall have been ap- proved by that court by an order- duly entered. Any such order shall be the subject of review by the appellate division and the the court of appeals on appeal thereto taken by any party. The receiver may employ not to exceed one counsel unless the employment of additional counsel shall be authorized by the supreme court after notice to the attorney-general of an application therefor. ' ' lo 545. Notice to ci^editors. "1. Within thirty days after a receiver qualifies he shall cause to' be pub- lished once a week for twelve weeks in a newspaper published at the principal place of business of the corporation, a notice to all creditors of the corporation to present their claims to such receiver at his place of business within fifteen days after the last publication of such order. He shall also mail a copy of such notice to all the creditors of the corporation known to him or as shown on the books of the company, at their last known place Of residence. 2. The receiver of any title guaranty company heretofore or hereafter, appointed, which; com- pany is authorized by law to issue policies of insurance or agreements of in- demnity or guaranty, and which corporation hsis issued and outstanding at the time of the appointment of the receiver, policies of insurance or agreements of indemnity or guaranty, ex.ceeding two thousand in number, shall not be required to mail to the holders or owners of said policies of insurance or of said agree- ments, the notice required by law to be given to creditors of an insolvent moneyed corporation ; but such receiver shall cause a notice tO' be published twice a week, for four successive weeks, in two newspapers published in the county where said corpo- ration has its principal place of business; which said notice shall require all credi- tors and owners and holders of outstaudiug polipies of insuranpe or agi'eements of indemnity or guaranty, to exhibit and prove their claim, within sixty days; and, in default of so doing, shall be precluded from all benefit of the judgment and from any and all distribution which may be made thereunder, except that the creditor ol- holder or owner of any policy or agreement of indemnity' or guaranty, who shall exhibit or prove his claim, with an affidavit that he had no notice or knowledge thereof, in time to comply with the provisions hereof, at any time before an order is made directing a final settlement and distribution of assets 9. People v. New York Building Loan , during tlie pi'ogress of the receivership Banking Co., 41 Misc. 363, 84 N. \. to such as are approved in writing b(jf Supp. 844, affd. 9.6 App. . T)iv. 635. 8S the attorney general; (2) to prohibit N. Y. Supp. 1113. the allowance of compensation to an 10. Gei^eral Corporation Law, § 1.51. attorney "unless an agreement for his Prior to the amendment pf 1904 it compensation has been made in writ- was held that, two things were sought ing upon the approval of the attorney by the section: (i) To limit the pay- general." Cahdee i. Cunneen, 92 App. ments on account for legal services . Div. 'i'l, 86 N. Y. Supp; 723. 41 ' 642 CORPORATIONS. of such corporation, shall be entitled to have his claim received, and shall have the same rights and benefits thereon, so far as the assets of such corporation then remaining undistributed may be applied, as if his claim had been exhibited and proved within the time limited by such notice. This subdivision shall apply to receivers of all ihoneyed corporations. ' ' U 546. Allowance, rejection and adjustment of claims by receiver; ap- pointment of referee. " The receiver shall have the same power and authority with reference to the allowance or rejection of claims as is given to executors, and no reference shall be had to pass upon claims except such as may be disputed by such receiver. In case any claim shall be disputed, the receiver shall immediately upon the expiration of the time for the presentation of claims, upon notice to the parties whose claims have been rejected, apply to the court for the appoint- ment of a referee to hear and determine as to the allowance thereof. Claims allowed by the receiver shall be subject to objection upon the final settlement and their validity may be determined as the validity of claims against estates are determined upon final settlement by a surrogate."i2 A copy of the papers on a motion for the appointment of a referee pursuant to this section should be served on the at- torney-general.^^ When a creditor of an insolvent bank, whose claim has been referred, has had no notice of the referee's decision or opportunity to review the same prior to an appli- cation by the receiver to have his accounts, including the claim referred, confirmed by the court, it is the duty of the receiver to bring the claim to the attention of the court so that a final order of distribution be not made until the validity of the claim is fully determined, and when the claimant has had no opportunity to review the referee's decision prior to the con- firmation of the receiver's accounts, he is not concluded by an order for the distribution of funds in the receiver's hands. The determination, of a referee, as to the validity of a claim is not final and the right to review such determination still exists." ' 547. Final settlement and distribution. " The receiver may apply for a final settlement of his accounts and an order for distribution at any time after the expiration of six months, and shall so apply within eighteen months after qualifying as such. Tlie attorney-g6H.eral 11. General Corporation Law, § 155, X. Y. Supp. 784. See also, General as amd. by L. 1909, ch. 840. Corporation Law, § 312. 12. General Corporation Law, § 156. 14. People v. Federal Bank, 123 App. 13. Eustace v. New York Building- Div. 810, 107 N. Y. Supp. 811. Loan Banking Co., 98 App. Div. fl7, 90 ACTION FOB DISSOLUTION. 643 or any creditor, or party interested, may apply for an order that the receiver show cause why an accounting and distribution should not be had at any tim* after the expiration of one year after the receiver qualifies; and it shall be the duty of the attorney-general, after the expiration of eighteen months from the time the receiver enters upon his duties, in ease he has not applied for a final settlement of his accounts, to apply for such an order on notice to such receiver. In case of such application by a party other than the receiver, the court shall direct the receiver to take steps to account with all convenient speed. The receiver is not required or authorized -to file any account, except as herein provided, except by special order of the court."i5 The statute does not prevent the court from directing pay- ment, except upon an aocountingj of the receiver's fees, nor does the exercise of such power prior to an accounting con- stitute an abuse of discretion where it appears that the pend- ency of certain litigations alone prevents the receiver from rendering his final account and the attorney-general made no request for an accounting prior to the payment of the fees, and that the order directing the payment of the fees reserves air questions as to the right of the receiver thereto for deter- mination upon the next accounting.^^ 548. Notice of account and accounting by receiver. "1. The receiver shall file his account, together with, a statement of the items and amount? claimed by his counsel, up to that date with the court and a duplicate thereof, together with the vouchers, with the attorney-general, at least thirty 4ays before the time fixed for his final settlement and accountings a,nd the attorney-general shall serve upon the attorney for the receiver any objections he may have to the account, or to the statement as to the items and amounts claimed by counsel for compensation, appearing in such account on or before such hearing. The receiver shall als6 within ten days after the filing of the account, mail to each creditor of the corjiwration a notice of the time and piace of the filing of his account, and a noticp of the time and place of the presentation of the accounfto the court. Unless oibjection is made to the items of the account by a creditor or on behalf of the attorney-general, no referee shall be appointed to pass thereon, but the same shall be examined and settled by the court. In case objection is made a referee may be appointed to take the testimony and report the same to the court. a. Prior to the final settlement of accounts of a receiver of any moneyed corporation, having in force, at the time of his appointment, outstanding policies of insurance or agreements of indemnity or guaranty, exceeding two thousand 15. General Corporation Law, § 157. ch, 40, is changed by tlie statute. The old practice of partial settle- People v. Manhattan Fire Ins. Co., 77 menta by a receiver, and the annual c App. Div. 517, 79 N. Y. Supp. 11. semi-annual accounting under Special 16. People v. Anglo-American , S. & Term orders which prevailed under :L. L. Association, 107 App. Div. 870, 94 1883, ch. 378, as amended by L. 1885, N. Y. Supp, 1113. 644 CORPORATIONS. in number, said receiver shall give notice to all of the creditors and to the owners or holders of said policies of insurance or agreements of indemnity or guaranty, issued or entered into by such insolvent corporation, by publication of a notice publishied at least twice a week, for three successive weeks, im- mediately preceding the making of an application for a final settlement of his accounts and for an order for the distribution of the assets in his hands. Said notice shall state the fact that an application for a final settlement of his accounts and for an order for the distribution of the assets in hand will be made, and shall also state the time and place, when and where the application will be made. Upon the hearing of such application and motion, the court shall, unless objection is made to the items of the account by a creditor or by a holder or owner of a policy of insurance or agi'eement of indemnity or guaranty, or on behalf of the attorney-general, examine and settle the said accounts, and make an order for the settlement, adjustment and distribution of the assets in the hands of the receiver. Where objection is made to the items of account, the court may refer the same to a referee to examine and pass thereon. This subdivision shall apply to receivers of all moneyed corporations heretofore or hereafter appointed. "17 The statute whict regulates accountings by receivers of moneyed corporations, affects the procedure only, and it was competent for the legislature to make such statute applicable to accountings by receivers who had been appointed prior to its passage.^' - 549. Proceedings upon accounting. " Upon any accounting by the receiver, after the expiration of the time for creditors to present claims, the court shall direct the receiver to immediately convert the entire assets of the corporation in his haftds into cash, in ease any of the assets have not been so converted, unless good and sufficient cause to the contrary shall appear to the satisfactioiv of the coui't, such as to authorize an order granting the receiver additional time for that purpose, and upon any such accounting the court shall direct the receiver to distribute the assets of the corporation in his hands to the persons entitled thereto, except so much thereof as may be necessary to be retained for the purpose of administering the trust and making payment upon contested claims, and upon such claims as may thereafter be presented and entitled to be paid. Whenever the attorney- general shall apply for an qjder to show cause why an accounting should not be had by a receiver by reason of his failure to so account within twelve months after his appointment, and shall deem it advisable to designate counsel to act on his behalf, the court may, upon the accounting, make a reasonable allowance by way of counsel fee to counsel so designated."!? 550. Claims l)arred after distribution of assets. " Upon the granting of the application and the making of the order of dis- tribution, as |jrovided in subdivision two of section one hundred and fifty-eight 17. General Corporation Law. § Lis Co., 7T App. Div. 517, 79 N. Y. Supp as amd. by L. 1909, ch. 340. H. 18. People v. Manhattan Fire In', 19. Oeneral Corporation Law, § 15i). ACTION FOR DISSOLUTION. 645 of this article, and the distrihution of the assets in the hands of tlie leceiver. in the manner directed by the order of the court, all claims of the creditors or of holders or owners of policies of insurance or agreements of indemnity or guaranty, against such receiver, shall be barred. This section shall apply to receivers of all moneyed eorporations."20 551. limitation of actions against director or stockholder. ■'An action against a director or stockholder of a moneyed corporation, , or banking association, to recover a penalty or forfeiture imposed, or to enforce a liability created by the common law or by statute," must be brought within three years after the cause of action has acerued.l The amendment of 1897, changing the time of limitation from six to three years in actions to enforce the common-law liability of directors of moneyed corporations was held un- constitutional as to causes Of action Which accrued three or more years prior to its taking effect.^ Prior to said amend- ment it was held that the section did not apply to actions to enforce a common-law liability.^ The statute runs in the case of a national bank, from the time when the comptroller of the currency declares the directors' liability to be due.^ 20. General Corporation Law, § 160. 3. Brinckerhoff v. Bostwick, 99 N. Y, as amd. by L. 1909, eh. 240. 185, 1 N. E. 663. 1. Civil Practice Act, § 49, subd. 4. 4. Beckham Vi Hague; 38 Misc. 606. 2. Gilbert v. Ackerman, 159 N. Y. 78 N. Y. Supp. 79. affd. 80' App. Dir. 118. 53 N.. E. 753. 626, 80 N. Y. Supp. 1129. 646 COKPOBATIONS. CHA.PTEE XXVIII. Forfeiture of Franchise. 553. Action by attorney-general by direction of legislature^ 553. Action by attorney-general by leave of court: Grounds for forfeiture. 554. Constmetion and application of statute. 555. Wlien forfeiture clause self-executing. 556. Forfeiture for non-user. 557. Forfeiture of charter of corporations for maintaining nuisance generated in another state. 558. Revival of corporation where charter forfeited for maintaining nuisance. 559. Enforcement and waiver of forfeiture. 560. Application to court for leave to commence action. 561. When attorney general must bring certain actions. 562. When application by attorney general for leave to sue granted. 563. Notice of application. 564. Order granting leave and appeal therefrom. 565. Parties, pleading and proof. 566. Compelling officers and agents of corporation to testify. 567. Venue of action by attorney-general. 568. Bringing in creditors to prove claims. 569. Jury trial. 570. Temporary injunction, 571. Injunction staying action by creditor. 573. Requisites of ' injunctions against corporations in certain cases. 573. Final judgment. 574. Filing and publishing judgment. 562. Action by attorney-general by direction of legislature. " The attorney-genera,l, whenever he is bo directed by the legislature, must bring an action against a corporation created by or under the laws of the state, to procure a judgment, vacating or annulling the act of incorporation, or any act renewing the corporation, or continuing its corporate existence, upon the ground that the act was procured upon a fraudulent suggestion, or the conceal- ment of a materia! fact, made by or with the knowledge and consent of any of the persons incorporated." 6 The power to declare a forfeiture of corporate franchises was originally, in England, vested in the courts of law, and was exercised in a proceeding brought by the attorney-general in the name of the sovereign. The Court of Chancery never assumed jurisdiction in such cases until it was conferred by an act of Parliament. It declined to exercise jurisdiction un- til the power was conferred by statute to sequestrate eorpo- 5. General Corporation Law. § 130 FOEFEITUEE OF FBANCHISB. 647 rate property. The courts of this country have followed the English system.® 553. Action by attorney-general by leave of court; grounds for for- feiture. "Upon leave being granted, as prescribed in the next section (General Cor- poration Law, § 132), the attorney -general may bring an action against a cor- poration created by or under the laws of the state, to procure a judgment, vacating the charter or annulling the existence of the corporation, upon the ground that it has, either 1. Offended against any provision of an act, by or under which it was created, altered or renewed, or an act amending the same, and applicable to the corpora- tion; or 2.. Violated any provision of law, whereby it has forfeited its charter, or be- come liable to be dissolved, by the abuse of its powers; or, 3. Forfeited its privileges or franchises, by a failure to exercise its powers ; or, 4. Done or omitted any act, which amounts to a surrender of its corporate rights, privileges, and franchises; or, 5. Exercised a privilege or franchise, not conferred upon it by law." 7 The mere insolvency, not shown to be continued, or a sus- pension of business, not shown to have been without reason- able cause, does not amount to a surrender of corporate rights.^ But the charters of business corporations imply and require that they shall perform the business for which they were instituted, and a substantial suspension of business after its commencement, like an entire omission to begin busi- ness, is a violation of a charter.® But the mere fact that a railroad corporation has failed to operate its road for five days does not authorize the bringing of an action to fprfeit its charter." Suffering an act to be. done which destroys the end and object for which the corporation was created must be 6. Herring v. N. Y., L. E. & W. E. solve a corporation which has become Co., 105 N. y. 340, 390, 12 N. E. 763; insolvent or discontinued its business. Decker v. Gardner, 124 N. Y. 334, 20 See also, Fiero on Particular Actions N. E. 814. and Proceedings, Vol. 1, p. 794 et seq, Jn Hagmayer v. Alten, 36 Misc. 59, 7. General Corporation Law, § 131. 72 N. Y. Supp. 623, the court distin- 8. People v. Bank of Hudson, 6 Cow. guishes between the provisions of the 217; Moran v. Lydecker, 37 Hun 582; code, now of the General Corporation Attorney General v. Bank of Niagara, Law, in actions seeking to" enforce the 1 Hopk. Ch. 354. forfeiture or annulment of the char- 9. Matter of Jackson ' Marine Ins. ter or franchise of the corporation for Co., 4 Sandf. Ch, 559. certain specified' offences, and those 10. People v. Atlantic Avenue R which control actions brought to dis- f!o., 125 N^. Y. 513, 36 N. E. 632. 648 . COEPOEATIONS. regarded as equivalent to a surrender of its rights." The franchise of a corporation may be forfeited where the corpo- ration is a combination inimical to trade and commerce, and so unlawful.^^ The attorney-general is authorized to bring an action against a railroad company to vacate its charter for any violation of law of which it is guilty, and a refusal to obey a statute to give transfers in certain cases would doubt- less bring the corporation within the scope of the statute.^* The failure of a corporation organized under the General Manufacturing Act (Chap. 140, Laws of 1848), to make and file an annual report, as required by the act, has been held to be a ground of forfeiture under the statute." Where a corpo- ration already in existence is granted additional franchises, the court has jurisdiction, under the statute, to annul the additional franchises in a proper case.^^ The forfeiture of rights, which have been lawfully used and enjoyed cannot be inquired of collaterally, hence it is not available as a ground for enjoining the work of a corporation at the suit of a property owner injured thereby.^^ So the fact that a rail- road corporation removes its tracks from and abandons for a certain period a part of its road does not determine or for- feit its franchise. The people alone can take advantage of such an abandonment as a cause of forfeiture.^^ Proceedings to dissolve a corporation, instituted by its board of directors, are not a bar to an action by the people to dissolve it because of a forfeiture of its charter.^* 11. Briggs V. Penniman, 8 Cow. 387. the riglits of the public or to redress 18 Am. Dec. 454; Slee v. Bloom, 19 its wrongs, accordingly an individual Johns. 456, 10 Am. Dec. 273. can not maintain an action to restrain 12. People V. Milk Exchange. 145 a street surface railroad corporation N. Y. 267, 39 N. E. 1062. from charging fare in excess of the 13. People ex rel. Lehmaier v. Inter- rate permitted by law. The proper urban Ry. Co., 177 N. Y. 2ffB, 69 N. E. remedy is for the attorney general to 596. vacate or annul the charter of the cor 14. People V. Buffalo S. & C. Co., poratiou. McNulty v. Brooklyn 131 N. Y. 140, 29 N. E. 947. Heights R. Co., 31 Misc. 674, 66 N. Y. 15. People v. Broadway R. Co. of Supp. 5T. Brooklyn, 56 Hun 45, 9 N. Y. Supp. 6, 16. Patten v. N. Y. Elevated R. Co., revd. on other grounds 126 N. Y. 29, 3 Abb. N. C. 306. 26 N. E. 961. 17, Tielford v. Coney Island R. Co., The legislature has made the attor- 6 App. Div. 204, 40 N. Y. Supp. 1150. ney general the medium to redress the 18. People v. Seneca Lake Grape & wrongs of the people, and does not Wine Co., 52 Hun 174, 5 N. Y. Supp. permit any one individually to enfone 136. FORFEITURE OF FRANCHISE. 649 554. Construction and application of statute. The functions of a corporation may be suspended, and so far as accomplisMng that for which it was created is con- cerned, it may becolne dormant; but in the absence of some express statutory provision its life continues until either its charter period has expired or the court has decreed a disso- lution.^ Section 131 of the General Corporation Law fur- nishes no rule of liability, but simply points out the remedy to enforce duties or punish misconduct elsewhere and otherwise determined to. he such, and fixes the classes of cases in which, if liability do"es; exist, such an action may be brought.^" There is no conflict between this section and section 101 of the G-en- eral Corporation Law, and an action by the attorney-general to dissolve, a corporation, on the ground that it has suspended business, can only be brought after the lapse of a year as provided by section 101.^ An action by the people under this section is for the purpose of annulling the corporate charter and to terminate the corporate life, rather than to declare a franchise or aportionthiereofi forfeited. Hence, an action by the attorney-general on behalf of the people to declare the franchise of a street railroad, or the portion thereof granted by the municipal authorities, forfeited for abandonment and nonuser, even where the consent of the court has been previ- ously obtained, is not authorized by this section,^ for the fran- chises mentioiied in subdivision three of this section, refer to corporate franchises and not to special franchises.^ The 19. Geneva Mineral Spring Co. v. keep the glass puttied in the frame, its Coursey, 45 App. Div. 268, •61 N. Y. corporate existence may he annulled in Supp. 98. an action iby the attorney general, pui- 20. People v. Atlantic Ave. R. Co.. suant to this section, upon the ground 125 N. Y. 513, 26 N. E. 6&2. that said corporation is doing an in- It is not a legal ground of forfeiture surance business contrary to the sta- of a corporate charter that the cor- tute. People v. Standard Plate Glass poration has exacted more than ten & Salvage Co., 174 App. Div. 501, 156 hours labor a day from its emplpjtees.. N. Y, Supp. 1013. in violation of the statute. People v. 1. People v. Atlantic Ave. R. Co., 57 Atlantic Avenue R. Co., 57 Hun 378. Hun 378, 10 N. Y. Supp. 907, affd. 125 10 N. Y. Supp. 907, affd. 125 N. Y. 513. N. Y. 513, 26 N. B. 622. 26 N. E. 513. 2. People v. Bleecker Street and Ful- Where a business corporation agrees ton Perry R. Co:; 140 App. Div. 611, to care for plate glass for a fixed term 125 N. Y. Supp. 1045, affd. 201 N. Y. for a consideration, and in the event 594, 95 N. E. 1136. that the glass is broken agrees to re- 3. People v. Bleecker St. & Fulton place the same, and further agrees ti, P. R. Co., 67 Misc. 577, 124 N. Y. Supp. 650 CORPORATIONS. remedy to restrain and punish corporations for illegal con- duct in the exercise of privileges or franchises not conferred by law, is by an action by the attorney-general to suspend their functions or annul their charters, and it is onlj'^ when some injury has been inflicted on the person, or some indi- vidual right of property has been invaded, destroyed or prejudiced by the action of a corporation that an action by the individual is maintainable.* An action against a corpo- ration to obtain an adjudication that its corporate powers have ceased, brought under section 36 of the General Corpo- ration Law, which provides that if a corporation " shall not organize and commence the transaction of its business, or undertake the discharge of its corporate duties within two years from the date of its incorporation, its corporate powers shall cease," may be maintained under section 131 of the General Corporation Law, by the attorney-general.^ When a corporation has been legally organized its existence may continue after an event which would be a sufficient cause for its dissolution by the court; and when dissolved for violating the laws under which it exists, the rights of the creditors, who have become such since the time when it had, by some act of commission or omission, forfeited its right to exist, cannot be ignored, and the assets, which have been seized by the court, must be distributed among the creditors, in the absence of statutory directions, according to the principles of equity.^ Article seven (sees. 130-136) of the General Cor- poration Law does not apply to a religious corporation ; or to a municipal or other political corporation, created by the con- stitution, or by or under the laws of this state ; or to any cor- poration which the regents of the university have power to dissolve, except upon the application of the regents, or of the trustees of such a corporation; and in aid of its liquidation under such dissolution.'' 665. When forfeiture clause self executing. The legislature has undoubted power to provide in an act of incorporation that corporate existence shaJl cease by the 782, affd. 140 App. Div. 611, 125 N. Y. Water Co., 51 App. IHv. 1*5, 64 N. Y. Supp. 1045, affd. 201 N. Y. 594. 05 Supp. 532. N. E. 1136. 6. Weldi v. I. & T. N. Bank, 13.' 4. Thomas v. M. M. P. Union, 121 N. Y. 177, 188, aS N. E. 269. N. Y. 45. 24 N. E. 24. 7. General Corporation Law, § 300, 5. People ex rel. Hearst v. Ramapo FOEFEITUBE OF FRANCHISE. 651 mere failure of the corporation to perforin certain acts im- posed by its charter. The question as to whether a forfeiture clause is or is not self-executing, depends wholly upon the language employed by the legislature. If an act of incorpo- ration shows the legislative intent to make the continued ex- istence of a corporation depend upon its compliance with the requirements of its charter, in case of non-compliance, its powers, rights and franchises are forfeited and terminated.' The forfeiture clause in a corporate franchise has been held to be self- executing which provided, that on the happening of the contingency its corporate existence and powers shall cease,^ and when the words of forfeiture were, ' ' this act and all the powers, rights and franchises herein and hereby granted shall be deemed forfeited and terminated."^" It re- quires, however, strong and unmistakable language, such as that of the cases referred to, to authorize the court to hold that it was the intention of the legislature to dispense with judicial proceedings on the intervention of the attorney-gen- eral. Accordingly the words ' ' all rights and privileges granted hereby shall be null and void" do not render a forfeiture clause in a charter self -executing ; but the meaning of " hull and void " in such a connection is that the corporate existence shall be ' ' voidable, ' ' i. e., that in case of default the corpora- tion may be dissolved through appropriate legal proceedings by the attorney-general.^^ Again if the statute provides that in case of a default the corporation shall be adjudged to have surrendered its rights and to be dissolved, the company re- mains in esse until judicially dissolved.^^ 556. Forfeiture for non-user. "If any corporation, except a railroad, turnpike, plank-road or bridge, cor- poration, shall not organize and commence the transaction of its business or undertake the discharge of its corporate duties within two years from the date of its incorporation, its corporate powers shall cease." 13 The general principle is not disputed that a corporation, by omitting to perform a duty imposed by its charter or to com- ply with its provisions does not ipso facto lose its corporate 8. Brooklyn Steam Transit Co. v. 11. N. Y. & Long Island Bridge Go. City of Brooklyn, 78 N. Y. 524. v. Smith, 148 N. Y. 540, 42 K E. 1088. 9. In re Brooklyn W. & N. E. Co., 12. People v. Manhattan Co., 9 Wend. 72 N. Y. 245. 351; Towar v. Hale, 46 Barb. 361. 10. Brooklyn Steaim Transit Co. v. 13. General Corporation Law, § 36. City of Brooklyn, 78 N. Y. 624. 652 CORPOEATIONS. character or cease to be a coi^poration, but simply exposes it- self to the hazard of being deprived of its corporate char- acter and franchises by the judgment of the conrt in an action instituted for that purpose by the attorney-general in behalf of the people: but it cannot be denied that tlie legislature has the power to provide that a corporation may lose its corpo- rate existence without the intervention of the courts by any omission of duty or violation of its charter or default as to limitations imposed." The provisions of the statute apply to a corporation whether incorporated under tlie general statute or by special act. The statute is self -executing and no action or judicial proceeding is necessary to declare or complete the loss of corporate powers by a corporation which has not com- menced the transaction of business or undertaken the dis- charge of its corporate duties within two years after the date of its incox'poration.^^ A provisi on in the charter of a corpo- ration that certain persons named should be appointed ex- aminers to open books for subscriptions to the capitaV stock of the company " at such times and places as they or a ma- jority of them shall determine " will not extend the period limited by tlie statute for the commencement of business.^'^ , A full and complete user of every right and privilege granted to a corporation need not be shown in order, to avoid a forfeiture or expiration of its charter. A very slight user may be suffi- cient.-'^'' 14. Brooklyn Steam Transit Co. a der a special act, claiming under its City of Brooklyn, 78 N. Y. 524. charter all the general powers of a Enforcement of forfeiture. — ^A for- trust company, which has neither or- feiture of the franchises of a corpora- ganized and commenced the transac- tion, unless there be special provision tion of business nor undertaken the by statute, can only be enforced by discharge of its corporate duties for the sovereign powsr to which the cor- fifteen years from the date of its in- poration owes its life, in soiJfe pro- corporation, has forfeited its charter ceeding instituted in behalf of the under the provisions of section 36 of sovereignty. Denike v. N. Y. and E. the General Corporation Law, and a Lime & Cement Co., 80 N. Y. 599. judgment on the pleadings in favor of 15. People V. Stilwell, 157 App. Div. the people in an action of quo war 839, 142 N. Y. Supp. 881; Matter of ranto bi-ought against the oflScers and Northern Adirondack Power Co. (opin- directors of sa-id corporation should be Ion of Pub. Shvv. Coiiiiu., 3(1 T)ist. affirmed. People- v. Stilwell, 157 App. 1916), 11 St. Dept. Rep. 41«. Div. 839. 142 N. Y. Supp. 881. Forfeiture of charter for failure to 16. People v. Stilwell, 157 App. Div. organize or commence business. — A 839, 142 N. Y. Sapp. 881. corporation incorporated in 1895. im- 17. Rept. of Atty. Genl. .(19P7), 261. FORFEITUEE OF FRANCHISE. 653 557. Forfeiture of charter of corporations for maintaining nuisance generated in another state. " Any corporation organized under the laws of this or any other state whicli shall so conduct its business, without the state, by the emission or discharge of" dust, smoke, gas, steam or offensive, iioisonic ov noxious odors ov fumes, so as to unreasonably injure or endanger the health or safety in this state of any considerable number of the people of this state, shall be deemed guilty of a nuisance and the charter of such corporation, if incorporated by or under any law of this state shall be deemed forfeited in the manner prescribed in this sec- tion, or its certificate of authority to do business in this state, if incorporated or formed under the laws of any other state, shall be deemed revoked and annulled in the manner prescribed in this section: and in either case shall not be revived, except as prescribed in the next section. Complaints may be made to the state commissioner of health by any person, association or corporation aggrieved, by petition or complaint in writing, setting forth any act or thing done or omitted to be done claimed to constitute a nuisance within the pro- visions of this section. Upon the presentation of such a complaint, the state commissioner of health shall cause a copy thereof to be served upon the cor- poration complained of, in the manner provided by law for the service of a summons, accompanied by a notice, directed to such corporation, requiring that the matters complained of be abated, or that the charges be answered in writing within a time to be specified by such commissioner. If the charges contained in Kuch complaint be not thus satisfied and it shall appear to such commissioner of health that there are reasonable grounds therefor, he shall cause such charges to be investigated in .such manner and by such means as he shall deem proper and fix a time for a hearing upon such complaint and cause notice thereof to be forwarded to the complainant and the corporation complained of. If the state (•ommissioner of health, or his successor, after such notice to siich corporation, and an opportunity for a hearing being given to it, shall find that such cor poration is so conducting its husiiies.v 17. Moe v. McNally Co., 138 App. with temporary injunction, Form Xn t)iv. 480, 133 N. Y'. Supp. 71. 281. Order appointing temporary r'- 18. General Corporation Law, § 311. reiver, Form No. 382. 19. Rules of Civil Practice, Rule 14. See ante, Chapter XXV. 179, pt. KECEIVERS. 665 immediate lU^bui sement shall be deposited and no deposits or investments of such trust funds shall be made elsewhere, except upon the order of the eourl upon due notice given to the attorney ■gpneral."20 .Receiver of Fro ferty of Corporation. 578. Appointment. " A receiver of the property of a corporation can be appointed only by the court, and in one of the following eases : 1. An action, brought as prescribed in articles fifth, sixth or sevenWi of thi? chapter. 2. An action brought for the foreclosure of a mortgage upon the property, of which the receiver is appointed, where the mortgage debt, or the interest thereupon, ihas remained unpaid, at least thirty days after it. was payable, and after payment thereof was duly demanded of the proper oflScer of the cor- poration and wher& either the income of the property is specifically mortgaged or the property itself is probably insuMcient to pay the mortgage debt. 3. An action brought by the attorney-general, or by a stockholder, to preserve the assets of a corporation, haiving no oflScer empowered to hold the same. 4. A special proceeding for the voluntary dissolution of a corporation. 5. Upon the application of the regents of the university, in aid of the liquida- tion of a . corporation whose dissolution they contemplate or have . decreed ; or upon the application of the trustees of such a corporation, with notice to the regents. Where the receiver is appointed in an action, otherwise than by or pursuant to a final judgment, notice of the application for his appointment must be given to the proper officer of the corporation.] There is a manifest distinction between a receiver of the property of a corporation and a receiver of the corporation. The power to appoint a receiver of the property of a corpora- tion is inherent in the supreme court,^ while a court of equity has no jurisdiction to appoint a receiver for a corporation, except as conferred by statute.^ 579. Beceivers in actions under sections 90-9 la of General Corporation Law. Section. 306 of the General Corporation Law relates to all sections provided for by sections 90 and 91-a thereof, and the right of the court to appoint a receiver under section 306 carries with it, by necessary implication, the right to enjoin 20. General Corporation Law,. § 313. Supreme, Coun«il, 61 App. Div. 405. 1. General Corporation Law, § 306. 70 N. Y. Supp. 637, 2. HegBwisch v. Silver, 140 N. Y. 3. Matter of Atlas Iron Construe 414, 35 N. E. 658; People v. Erie Rail tion Co.,. 38 N. Y. Supp. 172, 72 Sf . way Co.. 36 How. Pr. 139; Popper v. Rep. 801. 666 COBPOBATIONS. the officers and directors from interfering with the property, or doing any acts which shall in any manner interfere with the receiver.^ So a receiver may be appointed in an action against a corporation and an officer thereof, to compel such director to make restitution to the corporation for alleged violations of trust.^ And in an action brought by the attor- ney-general against a corporation and its directors for neg- lect and waste of the funds of the corporation.^ Likewise where several of the directors of a corporation and others confederating with them, are guilty of a waste of corporate assets, wrongdoing and mismanagement, a receiver of the property of the corporation may be appointed before trial, and the receivership may be continued after the trial to carry the judgment into effect." But a receiver should not be ap- pointed in an action by president of a domestic corporation, in his own right as a stockholder, against the corporation, its secretary and treasurer and one of the stockholders thereof based on no other charge of fraud or mismanagement than the fact that the secretary and treasurer took all the books and papers from the safe and secreted the same.^ In an ac- tion under section 90 of the General Corporation Law, the court has power, under section 306, to appoint a receiver of the corporation, and, by its judgment, to compel the default- ing trustee to account to such receiver for the property of the corporation which the trustee has misappropriated or lost by his breach of duty.^ 680. Foreclosure actions. In a proper case a receiver of the property should be ap- pointed upon the foreclosure of a paramount mortgage given by a corporation, although a receiver has previously been ap- pointed of the property of such corporation in an action in- stituted for the foreclosure of a junior mortgage. The order appointing such a vefeiA'tfi^ should not direct the first receiver 4. Goss V. Warp Twiating-In Ma- 8. Fallon v. W. S. Directory Co., 86 chine Co., 133 App. Div. 123, 117 K. Y. App. Div. 29, 83 N. Y. Supp. 359. Supp. 328. 9. Gildersleeve v. Lestpr, 68 Hun 532, 5. Piza V. Butler, 90 Hun 354, 35 33 N. Y. Supp. 1026. N. Y. Supp. 721. Creditor at large is not entitled to 6. People V. Hasbrouck, 57 Misc. 130, appoint a receiver of property of cor- 107 N. Y. Supp. 357. poration. Lehigh Coal & Navigation 7. Halpin v. Mutual Brewing Co., fl' Co. v. Central R., 43 Hun 546, 7 St. Hun 330, 36 N. Y. Supp. 151. Rep^ 370. RECEIVBRS. 667 to pay over to the new receiver the income and money col- lected by him, but that question should be left for adjudi- cation in a proper proceeding to recover them.^" 581. Action to preserve assets of corporation having no officer to hold same. To " hold " the assets, as used in subdivision 3 of this sec- tion, 306 of the General Corporation Law, means to preserve the same.^ Although the language of section 306 of the Gen- eral Corporation Law providing that a receiver of the prop- erty of a corporation may be appointed in an action by the attorney-general, or by a stockholder, to preserve the assets of a corporation, having no officer empowered to hold the same, it is broad enough to cover any case in which a corpo- ration is without officers. It was never designed to permit the officers of a corporation to abandon their posts of diity and abdicate their official functions for the express purpose of shifting their burdens to the shoulders of the courts. When the stock, effects and property of a corporation are not suffi- cient to pay all of its just demands or to afford a reasonable security to those who deal with it, or if for any other reason the interests of the stockholders require it, the officers of the corporation may ask for its dissolution and for the appoint- ment of a receiver under Article IX of the General Corpora- tion Law, in which case the officers are not required to resign, but the action is instituted in their official capacity.^ A re- 10. Holland Trust Co. v. Consoli-. tion, such resignations are neither dated Gas & Electric Co.. Sft Hun *54, legal nor effective. In Smith v. Ranzig 32 N. Y. Supp. 830. (64 How. Pr. 320), Mr. Justice , Pratt 11. Ehret v. Eingler & Co., 70 Misc. at Special Term held that the direc- 627, 632, 129 N. Y. Supp. 546, revd; on tors of a corporation may lawfully other- grounds 144 App. Dlv. 480, 13!) resign when it is evident that , it is N, Y. Supp. 551. going from bad to worse, and when 12. Yorkville Bank v. Zeltner Brew- such action is necessary to secure a ing Co., 80 App. Div, 578, 80 N. Y fair and equal distribution of the eor- Supp. 839; Zeltner v. Zeltner Brew- porate propei'ty among creditors. It ing Co., 174 N. Y. 347, 66 N. E. 810, is to be noted that although that de- holding that where all the oflftcers (ex- cision was madp^ in 1883, it contains cept the secretary) and all the diree- no reference or allusion to subdivision tors of an insolvent corporation re- 3 of section 1810, of the Code of Civil sign for the express purpose of insti- Procedure, which was first enacted in tuting an action to procure the-.ap- chapter 151, Laws of 1870, and that pointment of a receiver of the eorpo- when it was made, and until 1889. ration under subdivision 3 of this sec- there was no provision for the appoint 668 CORPORATIONS. ceiver of the property of a corporation should not be ap- pointed under the section on the ground that there are no offi- cers of the corporation entitled to hold its assets merely because a majority of the directors have been ousted by order of the court, if the remaining directors are prima facie qualified to act in that they are apparently duly elected and one of them is given by the by-laws all the powers of the president who was ousted.^^ A receiver of the property appointed by a court in the exercise of its equitable juris- diction as a so-called common-law receiver pendente lite of the property of a foreign corporation to prevent the unlawful disposition and waste of its property, is not a receiver ap- pointed under the provisions of subdivision 3 of the section where the action in which the receiver is appointed is not brought to preserve the assets of the corporation having no officers empowered to hold its property and where it is shown that an injunction and an accounting are sought against them. This subdivision does not interfere with the inherent power of the Supreme Court to appoint a receiver of the property of a corporation as distinguished from a receiver of the corpo- ration itself." Permanent Receivers Generally. 582. In general. " Unless otherwise provided the provisions of this article (Art. XI of the General Corporation Law relating to the powers, duties and liabilities of receivers) shall apply only to permanent receivers appointed pursuant to section one hundred and six (action for sequestration and action for dissolution) or section one hundred and ninety-one (proceedings for voluntary dissolution) of this chapter."l5 ment of a temporary receiver in an unless otherwise provided in specific action for the voluntary dissolution of sections it is made applicable to re a corporation. (L. 1889, chftp. 314.) ceivers appointed under art. 6 relat- That case is, therefore, not an au- ing to actions for sequestration, ai thority applicable to the present state tions for dissolution and actions to en of the law. force the individual liability of officer- 13. Ehret v. Ringler Co., 144 App. and members of' corporations and art. Div. 480, 129 N. Y. Supp. 551. 9 relating to proceedings for the volun- 14. Howell v. German Theatre, 64 tary dissolution of a corporation. Th<' Misc. 110, 117 N. Y. Supp. 1124. article consists of the live matter in 15. General Corporation Law, § 230. §§ 66-89 of the Ke\iaed Statiites (pt. ConsolidatOrs' note. — This article re- 3, ch. 8, tit. 4, art. 3), the sections of lates to the powers, duties and liabili- the Revised Statutes relating to the ties of receivers of corporations and powers, duties and obligations of Arus- KBCEIVEBS. 669 The statutory provisions relating to permanent receivers are limited in their application to receivers appointed in ac- tions for sequestration, action for dissolution and actions to enforce individual liability of officer and member of corpo- ration, and in proceedings for the voluntary dissolution of a corporation. The statutory provisions in reference to re- ceivers are intended to regulate the conduct of receiverships of domestic corporations and not of the corporations of other states.^^ 583. Nature of receiver's office. "Permanent receivers shall be trustees of the property for the benefit of the oreditors of the corporation and of its stockholders,"lT tees of insolvent debtors (pt. a, ch. ?. tit. 1, art. 8) which were made appli oa.ble by reference in §§ 66 to 89 above referred to, provisions from the Code of Civil Procedure and finally pro- visions from independent statutes not found in the Revised Statutes or the Code of Civil Procedure relating to the subject of receivers. Tlie provisions of the Revised Statutes were made ap- plicable hy L. 1880, ch. 245, § 1, subd. 3, p. 368. Section 43 of the Revised Statutes ■being mado fipi)licable to permanent receivers appointed in ac- tions for sequestration, actions for dis; solution, etc., under § 1788 of the Code of Civil Procedure and §§ 66 ti. 89, both inclusive, being made appH- oable to receivers appointed in pro- ceedings for the voluntary dissolution of a corporation, under § 3429 of the Code of Civil Procedure. The provi .sions of the Code of Civil Procedun relating to receivers and of indepen- dent statutes have been incorporated according to their context and judicial construction making them applieahle. For convenience, the provisions relat ing to the powers, duties and liabilities of receivers of corporations have been placed in a separate article where by reference they have been made appli- cable to such afctions and proceedings ks they are now applicabh; to by law Section 230 is new. It makes the ])ri)- visions of this article applicable to re- ceivers appointed under § 106 or § 191 of this chapter. This merely carrie.- out tlje present law. Section 107 of this chapter was formerly a part of § 1788 of the Code of Civil Procedure which provided that a permanent le ceiver should have all the powers, duties and liabilities imposed upon a receiver appointed in proceedings for the voluntary dissolution of a corpo- ration. 16. Strauss v. Casey Machine & Supply Co.,' 68 Misc. 474. 124 N. Y. Supp. 32. 17. General iCorporation Law, § 331. ConaoIidatOTs' note. — This section covers the same ground as the following provision iii: Revised Statiites which latter provision therefore has been omitted : "All assignees and trustees, ap- pointed under any authority, conferred by any of the provisions of the pre- ceding articles of this title, in the sev- eral oases therein contemplated, ar, hereby . declared to. be trustees of the estate of the debtor, in relation to whose property they shall be appointed, for the benefit of his creditors; and shall be. vested .with all the powers and authority hereinafter specified, and shall be subject to the control, obliga- 670 COEPORATIONS. The receiver of a voluntarily dissolved corporation is,* by force of the statute, a trustee of the property of the corpora- tion for the benefit of all its creditors.^^ A permanent re- ceiver is the representative of the corporate body and in this state he is vested with the title to and is made trustee of the corporate property, and for the purpose of administering thereon and winding up the aft'airs of the corporation, he suc- ceeds to its powers and franchises and possesses generally all the powers and authority conferred by statute upon the assignees of insolvent debtors.^^ Furthermore he unites in himself, not only the rights of the corporation, but thiose of creditors ; he may, in the interest of creditors, assert a claim which he might be unable to do, as a representative solely of the corporation, and he may disaffirm dealings of the corpo- ration in fraud of the creditor 's rights.^" 584. Oath. " Before proceeding to the discharge of any of their duties, all such ' receivers shall take and subscribe an oath, that they will well and truly execute the trust by their appointment reposed in them, acgording to the best of their skill and understanding; •which oath shall be filed with the officer or court, that appointeii them."l 585. Bemoval; vacancy; renunciation. Permanent receivers may be removed by the court.^ And it is provided by statute that: " The attorney-general may, at any time he deems that the interests of the stockholders, creditors, policyholders, depositors or other beneficiaries interester) in the proper and- speedy distribution of the assets of any insolTent eoi'poration will be subserved thereby, make a motion in the supreme court at a special term thereof, in any judicial district: tions and responsibilities hereinafter Life Ins. Co., 7T N. Y. Z72; Pittsburgh declared, in respect to trustee^^" (E. S., Carbon Co. v. McMillan, 119 N. Y. ite, pt. 2, ch. 5, tit. 1, art. 8, § 1.) 23 N. E. 530. 18. Ludington v. Thompson, 153 j General Corporation Law, § 238. 2. General Corporation Law, § 273. N. Y. 499, 47 N. E. 903. A receiver is a trustee for the benefit _ ,-, ^ , , „, , ., ... , ., .. Consolidators' note. — The following of the creditors of the corporation as , ° well as its stockholders. Matter of Provision of the Revised Statutes has Coleman, 174 N. Y. 373, 383. 66 N. E. ^^^" omitted as superseded by this 983. section : 19. Decker v. Gardner, 184 N, Y. "^" or subr stantial repairs to' real property. It shair be his duty, without .unreason- able delay, to convert the debtor's personal property into money. He shall not sell any real property of 'the debtor without an order of the court. He is not to be allowed for the costs of any action brought by him against an insolvent from whom^ he is^- unable to collect his costs, unless such action is brought by permission of the court, or by Consent of all persons interested intiie funds in-his hands; By leave of 678 GOEPOEATIOTfS. duties are prescribed by that instrument.* He may maintain an action to determine the validity of bonds claimed to be secured by a mortgage on corporate property,* or to set aside and vacate a judgment against a corporation, on the ground that it was obtained without consideration, by collusion with: the officers of the corporation, and in fraud of creditors,^ but he can not impeach or disaffirm the lawful and authorized acta of the corporation.^ The receiver of a corporation can take an appeal from an arder, made in an action pending against the corporation at the time of their appointment, either in his own name or in the name of the corporation, and such an appeal taken by them in the name of the corporation is considered the appeal of the receiver in the name of the corporation.'' The receiver of an insolvent corporation is not bound to complete its contracts, but if he does so, without objection from any party in interest,, the cost of completion is properly charge- able to creditors who have a lien upon the proceeds of the contract.^ And without an order of the court he has no. power to issue notes or certificates which .are binding upon the trust estate, and purchasers of notes issued by a receiver as such without authority, who could have discovered by an exami- nation of the same that they did not purport to bfe issued by authority of the court, have no claim thereon against the trust estate.^ A receiver of a corporation authorized " to carry on and continue the business " is not individually liable for the court, he may sell desperate debts No. 296, Order, authorizing , receiver and other doubtful claims to personal to sell property, Form No. 297. property, at public auction, giving at 3. People v. St. Nicholas Bank, 151 least ten days' public notice of . the N. Y. 592, 45 N. E. 1129. time and place of suSh sale or by 4. Hubbell v. Syracuse Iron Works, like leave he may compromise and 42 Hun 182, 4 St. Rep. 69iO. settle auch as are unsafe or of doubt- S. Whittlesey v. Delaney, 73 N. Y. ful character. Rules of Civil Practice, 571. Rule 175. # 6. Hyde v. Lynde. 4 N. Y. 387. Forms: Petition for instructions as 7. People v. Troy Steel & Iron Co., to bringing suit, Form No. 288. Order 82 Hun 303, 31 N. Y. Supp. 337. permitting receiver to bring suit, 8. Matter of Chasmar & Co., 32 Misc. Form Na. 289. Petition for leave to 680, 50;N. Y. Supp. 1065. continue business, Form. No. 290. 9. Wessen v. Chapman, 77 Hun 144, Order authorizing continuance of busi- 28 N, Y. Supp. 431. nesB, Form No, 291. Order granting Receiver has no authority without leave to receiver .to , issue certificates, direction: of court to invest mpneys in Form No. 292. Petition for instruc- his hands. Attorney-General v. North tions as to sale of -real, estate, Form American Life Ins. Co.. .8? N. ,Y. 94 RECEIVEBS. 679 goods purchased for that purpose," provided that he discloses the character in which he assumes to act and the source of his authority." He is hot a representative 6f the corporation in such sense as to charge it with liability by reason of his im- proper conduct. He is simply the instrument employed by the court to take charge of the corpus of the estate pending a litigation.^2 But a receiver carrying on the business of the corporation is liable for injuries to employees.^^ A receiver is not liable on a judgment against the corporation, if ob- tained after its dissolution in a proceeding to which he was not a party." 592. Authority of singfle, several, and surviving receivers. "When one receiver, only, shall be appointed, all the provisions herein con- tained, in reference to several receivers shall apply to him."15 "When there are more receivers than one appointed, the debts and property of the corporation may be collected and received by any one of them; and when there are more than two receivers appointed, every power and authority con- ferred on the receivers may be exercised by any tiwo of them. ' ' W "The survivor or survivors of any receivers shall have all the powers and rights giyeii to receivers. AH property in . the h^nds of any receiver at the . time of his death, removal or incapacity, shall be delivered to the remaining .receiver or receivers, if there be any; or to the successor of the one so dying, removed or incapacitated ; who may demand and sue for the same. ' ' IT 593. Control by court. "The receivers shall be subject to the control of the court and may be com- pelled to account at any time. "18 10. Olpherts , v. Smith, 54 App. Diy. new corporation, cannot be compelled 514, 66 N. Y. Supp. 976, affd. 173 N. by a summary order made in the ac- Y. 593, 65 N. E. 1130. , tion in which he was appointed. If ll,-8ager. Manufacturing Co. v. the receiver ^desires to obtain the pos- Smitii, 45 App- Div. 358, 60 N. Y. session of such bopks, or of any other Supp. g,49, affd. 167 N. Y. 600, 6Q jN, property, claimed by the company E. 1120, which was in its possession, he must lis. Wesson v. Chapman, 77 Hun 144, institute some proceeding for their 38 N. Y. Supp. 431. recovery, to which the new corpora- 13. Graham v. Chapman, 11 jST. Y. tion must be made ?. party, t,p the end Supp. 318, 33 St., Rep. 349. _^ that there might be a determination Liability .of receiver for negligence of the question of ownership. Olmsted while, cojiducting a railroad company. v. Rochester & Pittsburgh R. Co., 46 G^rdot V. Barney, 63 N. Y. 381. Hun 553, 13 St. Rep. 651. 14. People V. Knickerbocker Life 15. General. Corporation Law, § 335. in^r Co., 106 N.Y., 619, 13 N. E. 447. 16, Ge^er^.t^ Corpora^;Lon .Law, § 336. The delivery qf 4jo9ks of the . com- 17. General CO|rporatipji Law, §, 337. pany to the rec^iyM, .\ifhich have been 18. :Gene,?-al Corporation ; La Wj § 376. sold to and are in the possession of a Consolidators' note. — The following 680 COEPORATIONS. The court has jurisdiction in personam over a receiver ap- pointed by it in a,n action to dissolve a domestic corporation, and may retain tlie prosecution of an action begun by him in another state/^ A receiver may from time to time apply to the court for instructions as to his duties,^" and should apply to the court for leave to sue and if he fails to do so he ought not as a general rule to be exempted from personal liability for costs.^ The power of the court to authorize or direct a per- manent receiver in dissolution proceedings to appear in pend- proviaions of the Revised Sta»tutes have been omitted as superseded by this section : "Such trustees shall be subject to the order of the supreme court, and of the court of common pleas Of tte county in which they were appointed, upon the application of any creditor, or of any debtor in respect to whom they were appointed, in relation to the execution of any of the powers and duties confided to them." (R. S., pt. >, ch: 5, tit. 1, art. 8, § 46, pt.) "Whenever any authority shall be exercised by a court of common pleas, or any officer, pursuant to any pro- visions of this title, the proceedings may be removed into the supreme court by certiorari, and there ex- amined and corrected. But no such certiorari shall issue, unless allowed by a justice of the supreme court, or a circuit judge nor shall it operate' as a, stay of proceedings, unless it shall be so directed in the order of allow- ancra~~.f^-rr, _,:„,„,,. — _ 682 CORPORATIONS. Bpeeial circumstances and in particular cases requiring the employment of ad- ditional counsel, and in such cases only upon special application to the court, showing such eireumstances by his petition or affidavit, and on notice to the party or person on whose behalf or application he was appointed. No al- lowance shall be made to any receiver • for ejcpenses paid or incurred in violation of this rule. "6 , 595. Who may be employed; Change of counsel. The general rule that a receiver should not employ the counsel of either party to a litigation in which he is ap- pointed,^ is subject to certain limitations. It is only when the, receiver is acting adversely to one of the parties, that it has ever been supposed there was any impropriety in employing the counsel of the other.'' Likewise while the employment by a receiver of his partner as counsel in legal matters relating to the receivership is not to be commended, yet, when it clear- ly appears that the receiver has not and is not to share in the compensation for such services, there is no law which pre- vents such employment and payment.* The employment by a receiver of a deputy attorney-general who resigned his offi- cial position in order to accept the retainer, is contrary to public policy and cannot be approved when the receiver was appointed on the application of the attorney-general and the employment of the counsel was opposed by a co-receiver.^ The right of a receiver of an insolvent corporation to substitute another attorney in the place of one already employed, is not absolute as in the, case of other clients. The court may in- quire into the reasons for the proposed change and determine how it will affect the interests of the beneficiaries for whom the receiver is acting. But the court must inquire into the facts, and should grant a sulDstitution of attorneys at the re- quest of the receiver, unless it is satisfied upon evidence be- fore it that the interests of the trust will be prejudiced by the change." 596. Compensation. A receiver cannot so contract as to prevent the court from allowing to counsel for his services such sum as it deems 5. Rules of Civil Practice, Rule. 180. 562, 55 N. Y. Supp.'SsV, affd. 158 N. 6. Ryckman v. Parkins, J Paige 543. Y. 7»0, 53 N. B. 11^2. 7. Smith V. New York Consolidated 9. People v. Brooklyn Bank, 125 Stage Co., 28 How. Pr. 377; Hynes v. App. Div. 354, 109 N. Y. Supp. 534. McDermott, etc., 14 Daly 104, 3 St. 10, People v. Bank of Staten Island, Rep. 582, 112 App, Div. 791, 99 N. Y, Supp. 486. 8. Matter of Simpson, 36 App. Div, RECEIVERS. 683 jiist." The court may, on tlie receiver's application, after an order directing.him to pay to the attorneys procuring its dii=- solution a certain sum for their services, make a further order directing that only part thereof be immediately paid.^^ Ser- vices rendered by an attorney to the corporation in disso- lution proceedings, before the appointment of a receiver, are a charge against the corporation and not aga.inst the receiver.- So, services rendered in criminal proceedings instituted against a third person, on a charge that he had committed perjury on the trial of certain claims against the receiver, are not a charge .against the receiver .^^ But conlpensatioii of counsel to a receiver, for services rendered after the latter 's resignation, in connection with a claim for fees and extra allowances, cannot be recovered from the estate, the receiver is individually liable therefor.^^ Possession, Title, Custody and Control of Property. 597. Receiver's title to property. ' ' Such receivers shall, from the time of their having filed the security re- quired by law, be vested with all the property, real or personal vested or' con- tingent, of the corporation. ' ' IB Tl^e receiver of a corporation is the officer of the court ap- pointing him, and his possession of the corporate property is 11. People v. Brooklyn Bank, 64 the preceding articles), as follows: Misc. 538, 556, 118 N. Y. Supp. 733. 1. In proceedings under the first 12. Matter of National Gramophone article of this title, from the first Corp., 87 App. Div. 76, 83 N. Y. Supp. publication of the notice to the non- ]^087_ resident, absconding or concealed 13. Matter of Little, 47 App. Biv. debtor: 22> 63 NY. Supp. S7. affd. 165 N. Y. 3. In proceedings under the second 643, 59 N. E. 1135. article, from the appointment of 14. People V. New York Building trustees: Loan Banking C!o., 11~ N. Y. Supp. 3. in proceeiJings under the third, 450. fifth, and sixth articles, from the 16. General Corporation Law, § 333, execution of the assignment, in these as amd. by L. 1909, ch. 340; and L. articles directed: 1913, ch. 766. 4 jn proceedings under the fourth Consolidators' note.-This section ^^^.^j^^ ^^^^ ^^^ assignment was relates to the same subject as the ^^^^^^^^^ j^^^ ^^^ time of its execu- following provision of the Revised i j u «: ^ f . . , , ,. , , J tion: when «xeeuted by an oflacer as Statutes which is not applicable and '. ,. , , , ., ,. . ,, ,, , , , ... , therein directed, from the time of the therefore has been oimttsd: "The trustees taking such oath, first publication of the notice in that shall be deemed vested with all the article required to be given to cred- estate, real and personal, of such itors." (R. S., pt. 2; chi 5,' tit. 1, art. debtor (except such as is exempted by 8, § 6.) 684 COKPOBATIONS. the possession of the pourt.-^^ A decree dissolving a corpora- tion and appointing a re(}eiyer vests in thq latter all property of the corporation." The general rule is that a receiver in proceedings to. dissolve a corporation is not entitled to the rights of a bona fide purchaser, as he gets no bfetter title than the party he represents.^*' The plain reading of the statute clearly is that the title to corporate property vests in the re- ceiver from the time the security is filed.^^ And so it has been held that a creditor of the corp or a,tion maj'' olDtain a lien by judgment or attachment, on thfe assets of the corporation, be tween the appointment and the filing of the bond' of the re- ceiver .2° On the other hand it is held that the appointment of a receiver is complete when the order appointing him has been entered, and when he files his bond, in order to take pos- session, it relates back to the time of his appointment.^ And no other court,, therefore, either federal or state, can obtain jurisdiction over the property after the filing and entry. of the order, even under process upon which possession was taken prior to the filing of the bond.^ And so the title of a re- ceiver is superior to a lien of judgment, obtained subsequent to his appointment.^ But since the appointment of a receiver relates back only to the date when his' appointment was made, and not to the day upon which the petition was filed in the 16. People V. American Ixjan & 191 App. Div.. 359,: 181 N. Y. Rupp. Trust Co., 177 N, Y. 467, 69 K E. 653. 1J05. ,,.,, 18. Matter, of Coleman, .174. N.,Y. 17. Attorney -General v. Guardian 373, 381, 66 N. E. 983. Mut. Life Ins. Co.. 77 N. Y. 273. 19. Mattea- of Lewis & Fowler Mfg. A receiver of a cenietery corpora- Co., ,89 Hun Si08, 34 N. Y. Supp. 983. tion, organized under the former 20. Chamberlain v. Rochester S. P. Membership Corporations Law (Laws V. Co., .7 Hun 557. of 1895, chap. 550), takes only such 1. Matter of Schuyler's .Steam Tow title to and powers over the OTOperty Boat Co., 136 N. Y. 169, 33 N. E. 633; as the corporation possesse* under Higgins v. Worthington, 90 Hun 436, the statute, and hence an order direct- 35 N. Y. Supp. 815; Matter of Hoag- ing said receiver to sell so much of land, Robinson Co., 36 Mige. 38, 78 N. the' lands which were acquired by the Y. Supp. 435. cemetery pursuant to section 50 of the 2. Matter of Schuyler^s Steam Tow former Meinbership Corporations Law Boat Co., 136 N. Y. 169^ 32 N. B. .683. as may: be liccesssiry to produce &ufR- 3. Attorney-General v. Atlantic Mut. eient moneys to satisfy a -judgment in Life Ins. Co., 100 N. Y. 379, 3 N. E. a judgment creditor's action ia un- 193; Attorncy^General v, Continental authorized and a compliance there- Life Ins. Co., 38 Hun 360, aild. 93 N. with would not vest a marketable title Y. 630; Dickey.v, Bates, 13 Misc. 489, in a purchaser. Matter of Chauncey. 35 IST. Y. Supp. 535. RECEIVEBS. 685 proceeding taken for the Voluntary dissolution of the corpora- tion, a creditor of the corporation who recovers judgment, issues aii execution and levies upon its' prbperty, after a petition has been filed for its voluntary dissolution, but before the appointment of a receiver of its property in such proceed- ings, is entitled to hold the property levied upon as. against the receiver.* And evfiry lien upon the property of a corporation resting upon valid agr^eenient or process befpre the appoint- ment of a receiver, the lienor being lawfully in possessioii, mu^t be preserved with the right of enf orcemeAt^ The prop- erty of a foreign corporation, actuaEy within this state, is liable to attachment in a suit brought by, a creditor here^ and the title acquired by a receiver Subsequently appointed in this state, is subject to aiiy lien that may have been acquired by an attaching creditor.® 598. Power of receivers to hold real property. "A receiver, appointed byj or pursuant to an order or a -judgBient, in an ac- tion in the supreme court or a couaty court, or in a special proceeding for the voluntary ■ dissolution of a corporation, may take and hold real property, upon such trusts and for. such purposes ' as the court directs,; subject to the direction of the court, from time to time, respecting the disposition thereof. ''7, : I . 599. Transfer of assets of corporation tp receiver. ''In all cases where receivers hav« been or shall be appoint^- for iny corpo- ration of this state other than an insijrance comptoy on applieation by the attorney-general, all property, real- and personal and all- securities of every kind and nature belonging to sUoh eoiporation, no matter where, located or by whom held, shall be transferred to, vested in and held by such receiver; pro- vided, however, that, such transfer. shEiir^^only be ^ade^ when directed by an ordei- of the supreme court, due notice of the application for sjieh order having ,been made' on the attorney-general and the custodian of' the' funds, securities , or property. " 8 • 4. Matter of 'Muehlfeld 4; Haynes ance ,<3q.4 13 Hun 637,', afFd. 74 N; Y. Piano Co.,: 13-. App., Div. 49%, 43 ISr. y. (145. . -.1 , :. ; Supp.: 8.0.2. But see Matter of- Berry, . 7.f^General, C!qrporation .La,w, § 343. 36 BarbT SB., i -i , .-. Consolidators' note.^This section is- 's^Wtter of' Biigiiamton' General' Se^ in its application an^" there- Electric Co., 143 N. .Y. 361, 38 N. E. f°^«'>^«,.^een, inserted in this article. „„„ It will be preserved also in the Code _,, ' .' . , ,. ■ , of Civil Procedure as it applies to f Title of receiver .is. subordinate to ,, ■ i.- j. ^.i, /■ ' '' other ^ subjects than corporation^, holder of property previously ' disposed •: ^ ' ^^^^ :C;3rporation Law, ' § ,i33. of under the direction of the 61,' '38 N. E. 297; Matter of Cole- ment and the pending appeal was given man, '174, N. Y. 373, 382, 66 N. E. to the bidders assenibled at the sal'e. 983; Attorney-General y. tJtica In- Matter of Colfeman, 174 N. Y. 373^' 66 surance Co., 2 Johns., Ch.S71; Attorney- N. E. 983. General V. Bank of Niagara, 1 Hopk. 17. Matter of Coleman, 174 N. Y. Ch. 354. " 373, 66 N. E. 983. 688 COBPOBATIONS. orders a sg,le subject to certain liensrdoes not have tlie effect of divesting tlie liens of existing judgments not referred to therein, and, until any particular judgment is satisfied from the moneys in the hands of the receiver^ it is the; right of the owner of the judgment to proceed to executipn and sell, sub- ject to the order of the court.^ * 604. Notice to debtors and creditors. "The receivers immediately upon their appointment, shall give notice thereof which shaU be published for three weeks in a newspaper printed in the cbunty where the principal place of conducting the business of such corporation shall have been situated; and therein shall require, 1. All persons indebted to such corporation, by and at a place therein to be specified, to render an account of all debts- and sums of money owing by them respectively, to such receivers and to pay the same, , , ^ . 2., All persons having in their possession any property or effects of such corpo- ration to deliver the same to the said' receivers by the day so appointed. 3. All the creditors of such- corporation to deliver their respective accounts ■and deinands'to the receivei's or oiie of them, by a day to be tlierein specified, not less than forty days from the fir-st publication of such notice; . , . . ■ 4; All persons holding any open or subsisting contracts o;£ such corporations,; to present the same in, writing and in detail "to such receivers, at the time ai?d place in such, notice, specified." 19 is. 'Matter of Ooleman, 174 N. Y. 373, 66 N. E. 9S3. holding that the owner of a, judgment, which is a lien uiwn the lands of an insolvent cor- poration which has passed into the hands of a. receiver, may proceed to execution and sell the realty subject to the order of the court, although his judgment was omitted from the list of liens enumerated in the final decree of . dissolution and subject to, which tho receiver was authorized to, and did, make sale of the realty. 19, General Corporation Law, § aSO. Consolidators' note.;— The following provision of the Revised Statutes re- lating to powers, duties and liabilities, of trustees of insolvent debtors are inapplicable and therefore ^ have been omitted: . , "In the case of an insolvent or im- prisoned debtor, such notice shall be published for at least three weelfs -in a newspaper printed in the county where application wa.i made and in the case of non-resident, absconding' or concealed debtors, it shall be pub- lished, for the sa,me time, in the news- papers in ;■ which the . notice of an attaeliinent . having issued, is directed to' be printed.*' (E. S., pt. '2,' ch. 5, tit. 1, art. 8, § 9.) "Held, that the provisions of '^ Revised Statutes, 469, sections 70 and 73, "to the effect that receiveirs im- mediately after their appoihtnient shall give a certain notice, do not apply to a temporary receiver." Nealis v. American Tube & Iron Co.,' 76 Hun aao, 37 N. Y. Supp. 733, affd- 150 N. Y. 43, 44 N. E. 944. Forms: Notice of motion for order to prove claims, Form No. 300., Peti- tion for order requiring creditors to prove claim. For^ No. 301. Order requiring creditors to prove claims. Form No. 303^ IS^otice to creditors to prp-y-e claims, Form No. 303. Receiv- er's notice to pay debts and present' claims. Form No. 304. ' ' BECEIVBBS. 689 605. Delivery of property and payment of debts to receiver. , "After the first publication of the, notice of the appointment of ' receivers, every person having possession, of a,ny property belonging to such corporation, and every person indebted to such corporatioUj shall, account and answer for .thft amount of such debt and for the value of such . property to the : said re- ceivers. "20 6,06. Penalty for concealing property from receiver. "Every person' indebted to such corporation, or having the possession or, custody of any property or thiiig- in action, belonging to it, who shall conceal the same, and not deliver a just and true account of such indebtedness,' or not deliver such property or thing in aetibn; to the receivers, or one of them, by the day for that, purpose appointed, shall forf eit , .double the amount of such, debt, or d.ouble the value ; of , such property so .concealed; whiph. penalties, may be recovered by the receivers. " i 607. Penalties recovered as assets. "All penalties. which shall be. recovered by any receivers, pursuant to the pro- visions of this article (General Coi-iporatioh Law, Article. XI), shall be deemed a part of the property of- the cdrporation, and shall be distributed as such among its creditors. " 2 i ^ •' ' ' 608. Kecovery of stock subscriptions. "If there shall be any. sum remaining due upon any share of stock subscribed in such corporation, the receiver, shall immediately proceed to recover the same, unless the person so indebted,; shall be wholly insolvent j; and for that purpose may commence , and prosecute any action or proceeding for the recovery of such sum, without the consent of any creditors of such corporation." 3 An action brought directly upon a stock subscription is one to recover a debt due the corporation and may be maintained by its, receivers 5 it is not an action to enforce the statutory liability of the stockholder, nor one to enforce contribution for the benefit of creditors,* and the mere fact that the wh6T(> 20. General Corporaiion Law, § 2.51. authorizing; the receivers of insolvent, 1. General Corporation Law, § 253. corporations to sue for and recover any Consolid.ators' note.— This provision sum remaining due upon any share of was contained in ch. 5 of t^e Revised its capital stock, is, merely a, cumulat- Statutes (pt. 2, tit. 1, art. «) and is tive remedy. And the rule is, , .the, made applicable 'by § 7S of ch. 8 of the same, whether the stock be, held by Revised Statiites'ljjt. 3, tit. '4, art. 3.) an original, stockholder, or by.aii.. 2. General Corporation Law, § 260. assignee. Mann y. Currie,. ,2;; Barb. 3. General' Corporation La*, § 244. 394.- , ,, ., 4. Myers v. Sturgis; 123 App. Div. A; receiver cannot enforce .stock-: 470, 108 N^ Y. Supp. 528, affd. 197 N. holder's liability , to creditpra under ,L. Y. 526, 90 N. E. 1162.- 1848, ch. ' 40, § 10.— Farnsworth .^i.. The provision of the Revised Statutes Wood, 91 N. Y. 308. 44 690 CORPOEATIONS. amount due from any particular stockholder, for his stock, may not ultimately be needed if all the other solvent stock- holders should pay their rateable proportions, according to the amount of their stock, willnot authorize the particular stockholder to enjoin the receiver from proceeding to enforce the payment of the balance due from such stockholder, in the first instance.^ An action brought by a corporation to recove^ a balance due on subscriptions to its capital stock may be con- tinued by a receiver subsequently appointed, in the name of the original party.^ And a receiver may counterclaim for un- paid subscriptions when sued by a subscriber for services rendered to the corporation.'' It seems that a suit by a re- ceiver to recover from stockholders their unpaid subscrip- tions to the stock of an insolvent corporation, must be brought against each stockholder separately.* The complaint in such an action need not allege the tender or delivery of the certi- ficate of stock to the subscriber,^ and the fact that the sub- scription was made in reliance upon false representations by the incorporators that the required capital- stock had been paid in, is no defense.^" However it has been held that a re- ceiver cannot maintain an action against one who was for- merly a stockholder to collect the amount unpaid upon the shares of stock 'sold and transferred by him, unless the corpo- ration itself could have maintained such an action if it had been brought prior to the time when the receiver was ap- pointed, for the receiver's position is no better than that of the corporation itself." A receiver of a non-resident bank commences an action against it in has the right to enforce against a equity for the appointment of a ri,- stockhoider in this state his statutory eeiver, and procures therein a final liability for the debts of the bank, judgment appointing a receiver, such; Howarth v. Angle, 39 App. Div. 151, receiver may, under chapter 403 of 57 N. Y. Supp. 187, affd. 163 N. Y. 1860,' commence separate actions 179, 56 N. E. 489. against each of the stockholdfers thereof 5. Pentz V. Hawley, 1 Barb. ChflSa. td recover any sum reihaining due 6. Phoenix Warehousing Co. v. Bad- u^i, hig shares of stock, and he is ger, 67 N. Y. 394. j^^;^ 'boujid to bring one action and make all the creditors an<}, stockholders parties thereto. 7. Van Sehaick v. Mackin, 139 Apji. niv. 335, 113 N. Y. Supp. 408. 8, Calkins v. Atkinson, S Lans. 12. In Van Wagenen v. Clark, 23 Hun 9' Kojilmetz v. Oalkins, 16 App. Div. 497, it was held, that where, after the 318, 44 N, Y. Supp. 1031. return unsatisfied of an execution, is- 10. Ruggles v. Brock, 6 Hun 164. sued upon a judgment recovered agtiiust 11. Billings v. Robinson, 88 Hun 123, a corporation, the judgment creditor affd. 94 N. Y. 415. RECEIVERS. 691 609. Recovery from officer, agent or employee of embezzled or with- held property. "Whenever any receiver of a domestic corporation, or of the property within this state of any foreign corporation, shall have been appointed and qualified, as provided in articles five, six, seven, nine, eleven or twelve of this chapter either before, upon, or after final judgment or order in the action or special proceeding in which such appointment was made, and shall, by his own verified jwtition, affidavit or other competent proof, show to the supreme court, at a special term thereof, held within the judicial district wherein such appointment was made, that he has good reason to believe that ony officer, stockholder, agent or employee of such corporation, or any other person whomsoever, has embezzled or concealed, or withholds or has in his possession or under his control, or has wrongfully disposed of, any property of such corporation which of right ought to be surrendered to the receiver thereof ; or that any person can testify concern- ing the embezzlement, concealment, withholding, possession, control or wrongful disposition of any such property, the court shall make an order, with or without notice, commanding sudh person or persons to appear at a time and place to be designated in the order, before the court or before a referee named by the court for that purpose, and to submit to an examination concerning such embezzlement, concealment, withholding, possession, control or wrongful disposition of such property; and at the time of making such order or at any time thereafter, the court may, in its discretion, enjoin and restrain the person or persons so ordered to appear and be examined from in any manner disposing of any property of such corporation which may be in the possession or under the control of the person so ordered to be eiamined, until the further order of the court in relation thereto. -No person so ordered -.toi appear: a,nd be examined shall be excused from answering any question on the ground that his answer might tend to convict him of a criminal offense ; but his testimony taken upon such examination shall not be used against him in any criminal action or proceeding. Any, person so ordered to appear and be exajmined shall be entitled to the same fees and mileage, to be paid at the time of serving the order, as are allowed by law to witnesses subpoenaed to attend and testify in an action in the supreme court, and shall be subject to the same penalties upon failure to appear and testify in obedience to such an order as are provided by law in the case of witnesses who fail to obey a subpoena to appear and tiastify in an action. Any person appearing for examination in obedience to such order shall be sworn by the court or referee to tell the truth, and -shall be- entitled, to be rep- resented on sucli examination by counsel, and may. be cross-examined, or may make any voluntary statement in :his own behalf concerning the subject of his examination which may seem to him desirable or pertinent thereto. The court before which such examination is taken, as well as the referee, if one be appointed for that purpose, shall have power to adjourn such examination from time to time, and may, rule upon any question' or objection arising in the course of svich examination, to the same extent thatmSght be done if the person so examined were testifying as a -witness in the trial of an action. When the examination of any person under such order shall be concluded, the testimony shall be signed and sworn to by the person so examined, and shall be filed in the office of the clerk of the county where the action is pending, or 692 coEPOBATioiirs. was tried) in which -the feceiiver was- appointed ; and, dt from such testinlony it shall appear to the satisfaction of the court that any person, so examined is wrongfully concealing or withholding, or has in his possession' or under his control, any property which of right belongs to such receiver, the court may make an order couimanding the person so examined forthwith to deliver the same to such receiver, who shall hold the same' subject to the further order of the court in relation thereto ; and otherwise, the court may, at the ettnelusion of anj^ such examination, make such final order in the premises as the interests of justice require."li ' ■ : A receiver appointed under the general equity jurisdictioii of the court, as a "receiver of the property of a corporation and not of the corporation itself^ and not under subdivision 3 of section 306 of the General Corporatioii Law, cannot in- voke section 240 of the General Corporation Law for the pur- pose of permitting the exanaina^ion of a third person concern- ing the property of a foreign corporation in an action against it to set aside alleged fraudulent transfers.^* The receiver of an insolvent corporation may enforce the liability of its trus- tees or directors to make good the loss occasioned' to the com- pany by their misapplication of its assets, either by an action at law for damages or by a suit in equity for an. accounting,^* and he may repudiate the Ulegal transfer of its securities by its officers and claim them as part of its fund.^® 610. Settlement of controversies by reference. "If any controversy shall arise between th» receivers a-hd any other person, in the settlement of any demands against suvho shall have exhibited their claims as creditors, and whose debts shall have been ascertained, as follows: 1. All debts due by such corporation to the United States, and all debts en- titled to a preference under the laws of the United States.. 2. AH debts timt may be owing by the corporation as guardian, executor, ad- ministrator or trustee; and if there be not sufficient to pay all deljts of the character above specified, then a distribution shall be made among them, in proportion to their amounts respectively. 3. Judgments actually obtained against such corporation, to the extent of the value of the real estate on which they shall respectively be liens. 9. General Corporation Law, § 358. 11. People v. Security Life Lisur- 10. General 'Corporation I;5a,w, § 359. ance and Annuity Co., 78 n! Y. 114, Where a marine insurance company 137. l)ecame a bankrupt after a geijeral But a receiver of an insolvent bank average loss had occurred, the loss was has no power to allow a set-off against a credit, and the receivers ca,n recover ^ debt owing to the bank, where the only the balance, due on a premium demand soiight to he set-off was as- note/ after, deducting the ampiint of ^^^^^ ^^ ^j^^ ^^^^^^ f„^ ^^^^ purpose the loss. Osgood' V. DeGrpot, 36 N. Y. ^^^^^ ^^^ receiver's appointment ; and . , , what the receiver cannot thiis do di- Mutual claims between bank and j. , , , . x- customers.-Ilights and dutiep of >e- r^'^lx- ^«"''°t ''^ ^l""*" ^^ ^^'^^ ."^ ™+'- ceivers of insolvent bank, in cases of fixation or waiver. Van Dyck v. Me- mutual qlaims, between the bank and Quade, 85 N. Y. 616. Decision under parties dealing with it, ,;See Matter 8 R. S. 469, §§ 68, 74 ; L. 1849, eli. of VanAllen, 37 Barb. 325. 2?6,. § .1,1. 698 COKPOKATIO:SS. 4. All other creditors of sucli corporation, in proportion to their respective de- mands, without giving any preference to debts due on specialties." 12 The distribution of corporate assets by. the receiver is dis- tribution by the court. A receiver in such case represents the corporation, its creditors, and its stockholders. ^ And, hence, the receiver's appearance in all matters relating to the liqui- dation of the corporate affairs must be deemed an appearance for all concerned, except when there is a conflict betweeii the receiver and those interested, in which event, of course, they appear for themselves." All claims against a fund in the hands of a receiver appointed on the dissolution of a corpora- tion must be valued and determined, and their status fixed as of the date of the commencement of the action for dissolution, and contingent claims cannot share in the distribution." The 12. General Corporation Law, § ^61. Consolidators' note. — The following provisions of the Revised Statutes re- lating to the duties of trustees of in- solvent debtors have been omitted as inapplicable : "They shall distribute the residue of the monies in their hands, among all those who shall have exhibited their claims as creditors, and whose debts shall have been ascertained, in propor- tion to their respective demands, and without giving any preference to debts due on specialties, as follows: "1. In the case of proceedings under the first article of the title, among those who were creditors at the time of issuing the first warrant of attach- ment: "3. In proceedings under the third and fifth articles of this title, among those who were creditors at the time of the execution of the assignment by the insolvent : "3. In proceedings under the fourth article, when an assignment was ex- ecuted by any oificer as therein di- rected among those who were creditors at the time of the first publication of notice to creditors to appear and de- termine whether they will unite in a petition; and when the assignment was voluntary among those who were creditors at the time of the execution thereof: '^4. In proceedings under the sixth article, among those creditors, at whose suit the debtor was imprisoned on ex- ecution at the time of his discbarge." K. S., pt; 3, ch. 5, tit. 1, art. 8, § 33. "If they shall have been appointed trustees under the first article of this title, they shall pay to every attach- ing ei-editor the amount of any recovery which may have been had tigainst him on any bond he may have executed for the purpose of retaining any property or any vessel, for the benefit of all the creditors, and his costs for defending any such suit." E. S., pt. 2, ch. 5, tit.l, art. 8, § 30. ' ' ' 13. Ped^e v. American Loan & Trust Co., 177 iSr.Y. 467. 69 N. E. 1105, hold- ing that creditor.1, who appear in the Court of Appeals by their attorneys, and who take an active part in wrest- ing the fund to be distributed among the unpreferred creditors from those not entitled to it, and in settling the basis of distribution, are entitled to costs of the appeal to the Court of Appeals payable out of the fund. 14. People V. Metropolitan Surety Co., 305 N. Y. 135, 98 N. E. 413; People V. Metropolitan Surety Co., 158 App. Div. 651, 144 N. Y. Supp. 335, hold- RECEIVERS. 699 state and city taxes are, subject to the general expenses of the receivership, to be paid in preference to the clairtts of the general creditors of the eorpdration.^^ The right of the gov- ernment to be preferred in the distribution of the assets of an insolvent corporation exists, under the authorities, where the preference is expressly given by statute,' and where, before the fund has come to the hands of the receiver or trustee, a warrant or some other legal process has been issued for the collection of the tax or debt, and the fund has come to his hands impressed with a lien in favor of the government in consequence of the proceedings for collection. But where there is no statute giving the preference, and no warrant or process has been issued for the collection of a tax on per- sonal property, there is no controlling authority for prefer- ring such a claim over specific prior liens in' favor of creditors obtained by levy under attachments or executions.^" Property taken by a receiver subject to attachment liens thereon, the lienor bein^ a party to the proceeding, is chargeable, in the first instance, with its proportion of the expenses necessary to protect the property or to change it into money' for the lienor's benefit,, but.not with state or city taxes due from the corporation." . A judgment rendered after the appointment ing tha.t, where up6n the presentation that reserved under the subletting of a claim against a receiver based constitutes a definitely established upon a surety tibnd given by the dis- claim against the corporation, -which solved corporation, conditioned that the the receiver is empowered to I'ecog- "Soldier's Additional Scrip" was valid, nize. People v. St. Nicholas Bank, 151 it does not appear whether it became N. Y. 592, 45 IJ. E. 1139. invalid before or after the commence- 15. Matter of Atlas Iron Const. Co.. ment of the action of dissolution, the 19 App. Div. 415, 46 N. Y. Supp. 467. matter should be remitted to the Court may order receiver to pay tax Special Term for further hearing. from gross earnings.-^Central Trust Payment, by receiver, of claim for Co. v. New York City & N. R. Co., rent to accrue for unexpired term, ire- 110 N. Y. 350, 18 N. E. 93. entry and reletting. — If premises 16. Wise v. Wise Co., 153 N. Y. 507, leased to a coi-poration are vacated be- 47 N. E. 788. fore the expiration of tlie term, on the 17. Matter of Atlas Iron Obnstruci appointment of a receiver in a statu- tion Co., 19 App. Biv. 415, 46 N. Y. tory proceeding for the' dissolution of Supp. 467. the corporation for insolvency, and the Claim for money loaned to corpora- lessor, in accordance with the terms of tion. — Where a corporation borrows the leas^i re-enters and relets to a money to secure the payment of which third party for the unexpired term, at collateral security is igiven, which sub- a less rental, the difference between ^equently proves to be inSiufilcient in the rent for tlie balance of the term amount to repay the loan, the fact reserved under the original lease and that the money borrowed hasi been par- 700 COEPOEATIOSrS. of a receiver, who received no rea] estate belonging to the corporation, is payable under the fourth subdivision of sec- tion 261 of the General Corporation Law and not under the third subdivision.^^ The officers of an insolvent cor- poration are not entitled to have their salaries paid in full, in preference to the debts of other creditors. They are only entitled to be paid their ratable proportion of the assets of the company as between them and other creditors.^' In the settlement of the affairs of insolvent corporations, while interest is . allowed as against the corporation itself or its stockholders if the assets are sufficient for the purpose, as between preferred and unpreferred creditors no interest is allowed after the law takes charge through the appointment of a receiver.^" But a receiver, refusing, upon an untenable ground, to pay a dividend to a creditor, is chargeable with in- terest.^ Where he -has paid out the fund in his hands in good tially expended by tlie borrower, for purposes for which the receiver of the corporation might have asked the court for leave to borrow , money upon re- ceivers' certificates^ is not sufficient to give a preference to the claim of such creditor over the claims of the liolders of bonds issued by, such corporation and; secui-ed by a trust mortgage given by such corporation upon its property. Farmers' L. & T. Co. v. Bankers' & M. Teleg. Co., 83 Hun 560, 31 N. Y. Supp. 1096, aflfd. 148 N. Y. 315, 42 N. E. 707. Application for moneys in hands of receiver. — ^A motion by a senior, at- tachment judgment creditor, addressed to the equity power of the Supreme Court as independent of the provisions of the code concerning restitution, for an order compelling a junior attach- ment creditor, as receiver of a cor- PQration, appointed in an fwition for dissolution, to restore, for application upon the senior attachment creditor's judgment, the proceeds of a sale of attached property of their common debtor, paid over by the sheriff to the junior attachment creditor, as such motion, should be made, on notice to the attorney general, in the action in which the receiver was appointed, and in the judicial district in which that action is pending. Gillig v. Treadwell Co., 151 N. Y, 552, 45 N. E. 1035. 18. Attorney General v. Guardian Mut. Life Ins. Co., 5 N. Y. Supp. 84. A judgment creditor of a lumber com- pany, whose assets have been, as a.l!eged, fraudulently transferred to another corporation, is not entitled to have all the property of the latter company taken out of the hands of a receiver, appointed in pi'oceedings for it5 voluntary dissolution, and to have such aepets^ applied by » newly-ap- pointed receiver to tlie payment of his judgment, where it appears that the latter corporation purchased some of its assets of parties other than the first-mentioned company, and there is nothing to .show what assets are and what assets are not equitably appli- tablq to the payment of the judgment. Sehulze >-. Sizer, 14 App. Div. 374,' i:\ N". Y. Supp. 463. 19. Matter of Croton Insurance Co.. 3 Barb. Ch. 642. 20. People v. American Loan & Trust Co., 173 N. Y. 371, 65 N. E. 300. 1. People V. Remington & Sons, 59 Hun 282, 307, 13 N.Y. Supp. 824^ affd. 136 N. Y. 54;, 37 N. E. 853. KECEIVEES. 701 faith and in obedience to orders of ,,tlip; court to parties not en- titled thereto, he cannot be compelled to. make restitntion,^ and likewise the payment of a claim as preferred, nnder a misdirection of the court is not voluntary rendering the re- ceiver liable therefor.^ After the discharge of a receiver of a corporation, the sole remedy of a creditor is to apply to the court to vacate its order so that its rights as a creditor naay be protected.* 620. Deduction of disbursements and commissions by receiver. "Out of the 'moneys: in their 'hands the receivers may first deduct all the necessai'y disbursements made by them in the discharge of their duty and such commissions a'^ may bfe allowed by law." 5 A receiver of a corporation, appointed in proceedings for its voluntary dissolution, should first pay from its assets the necessary expeiises of' administration, inehtdrag his fees as receiver.^ Damages for injuries to persons or property dur- ing the receivership, caused by the torts of, the receiver's agents and employees, are classed as operating expenses and are accorded the same priority of payment as belongs to other necessary expenses of the' receivership. Such claims are paid out of the net income, if that is sufficient, but in the evfent of a deficiency they will be paid out of the corpus. Such claims, therefore, have priority over mortgage debts, or other debis existing when the action was brought, in which 4he receiver was appointed.'' ■ , i :; ^ 621. Failure to iile claim before first dividend. "Every creditor who shall have neglected' to exhibit his demand before 'the first dividend, and who shiall deliver his account to the receivers before the second 2. Willis et al. v. Sharp, 124 N. Y. in section 255 and the insertion of the 406 26 N. E. 974. words, "did such commissions as may 3. People V.' i. Remington" & Sons. be' allowed by law'." Section 3330 of 80 Hun 48 14 N. Y! Supp. 441. the Cfede' of Civil Procedure has not 4. New york& Western ITmon Tele- been inserted in 'th& article for the gra,ph p^. y, Jewett),^'i^5 N^Y. ^^^^ reason that it provides for the ex- N. e! ioSS penses and comiilissions of i-eceivers 's.'^Genera.i Corporation Lawi ' § 255. not otherwise pi-ovided for: ' Consolidators' note.— ^he cpmmis- 6. Matter of Atlas Iron Constfuc- sjops of ^eceivers^ of corporations ' are tioil Co., 19 App. Div. 415, 46 'Ni Y. np longer' regulated >y this section of Supp. 46'7. ' ' ' the Revised Statutes, but by sections 7.' Robinson V. New York and jStateri ZXl a,nd 27S of "thla cWpter. Hence Island filectric Co., 99 App. Div. '509, the omission of the bracketed matter 9l"N. Y. Supp. I'SS; ' ' 702 CORPORATIONS. dividend, ehall receive the sum he would have been entitled to on the first divi- dend, before any distribution be made to the other creditors." s 622. Second dividend by receiver. " If the whole of the property of such corporation be not distributed on the first dividend, the receivers shall, within one year therea|^er. nial^e a second dividend of all the moneys in their hands, among the creditors entitled thereto ; of which, and that the same will be a final dividend, three weeks' notice shall be inserted' once in eaqh week in a newspaper printed in the county where the principal place of business of such corporation was situated. Such second dividend shall be made in all respects in tlie same manner as herein prescribed in relation to the first dividend, and no othet shall be made thereafter among the creditors of such corporation, except to the creditors hav- ing suits against it, or against the receivers, 'pending at the time of such second dividend, and except of the moneys which nlay be retained to pay such creditors, as herein provided." 9 633. Distribution of surplus after second dividend. " If after the second dividend is pjade, there shall remain any surplus in the hands of the receivers, they shall distribute the same among the stockholdefa of. such corporation, in proportion to the respective- amounts paid in T>y there, severally, on their shares of stock." 10 8. General Corporation Law, § 263. Consolidators' note. — The following provision of the Revised Sta,tutes . has been omitted as superseded by .this sectioij: "Any creditor who shall have ne- glected to deliver to the trustees an account of his demand, before the first, second, third, or other dividend, and who shall deliver his account to thiem before the second, or other subsequent dividend, .shall receive the sum ho would have been entitled to, on any former dividend, before any distribu- tion Ije made . to other . creditors." R. S., pt. 3i.ch. 5, tit..,l, art. i, ip 41. 9. General Corporation Law, § a63. Consolidators' note. — The following provision of the Revised: Statutes has been omitted because superseded by this section,: "If the whole of sjich debtor's estate be not distributed, on the first divi- dend, the trustees shall, within one year thereafter, make a second divi- dend of all the -monies . bielonging to the estate of the debtor, then in their hands,' .among the creditors entitled thejet(^, as herein before specified; and in the same manner from year to year. sc) long as any monies fcelonging.to the estate of such debtor shall remain in the hands of the trttstees, they shall make a: dividend thereof among the creditors entitled thereto." . R, S,, :-pt> 3, ch. 5, tit. 1, art. 8, S 40. 10. General Corporation Law, ;■§ 364. ConsoUdatars' note.— The following provision of the Revised Statutes has been omitted as superseded by this sec- tion : "If after settling the estate of any debtor, and after discharging his debts^ entitled, to a dividend, any surplus shall remain in the ha,nd8 of his trus- tees, the same shall be paid to such debtor or his legal representatives." R. S., pt. 3, ch. 5, tit. 1, art. ■ 8, § 43. The following provision has been omitted as inapplicable : Every debtor who shall be dis- charged under the third, fourth or fifth articles of this title, shall be allowed the sum of ' five per cent, on RECEIVERS. 703 This is a clear and simple recognitiori of the principle that every stockhoixJer has a qijasi lien upon, or an interest in, all the assets, of the corporation, for the value of his distributive share of. such assets, after, the payment of the corporate in- dehtediess. Hp is entitled to have a sale of assets for cash or its .equivalent, and cannot he compelled; to submit to an ex- ch9,nge of his lien on the assets for a lien upon, or interest in, other securities.^^ 624. Disposition of moneys retained by receiver for suits. " When any suit pending at the time of the second dividend shall b« termi- nated, they shall apply the moneys retained in their hands for that purpose, to the payment of the amount recovered, and their necessary charges and expenses; and if ! nothing shall have been recovered, they shall distribute such moneys, after deducting their expenses and costs; among the creditors and stockholders of the corporation, in the same manner as 'herein directed in respect to a second dividend." 12 . , 625. Unclaimed dividend. "If any dividend that^shall have been declared^ shall rgmain , unclaimed by the person entitled thereto for one year after, the saine ivas declared, the re- ceivers shall consider it as relinquished, 8,nd shall distrifcuto it,- on any subse- quent dividend, among the other creditors." 13 . , 626. Failure to file claim before second dividend. " After such second dividend shall have been made, the receivers shall not be answerable to any creditor of such corporation, or to any_^peison_ having claims a^ftiiist such corporation, by Virtue of any open or sub^lstiiig engage- ment, unless the demands of such creditor shall have been exhibited, and the engagements 'tipon which such claims a,re fourided, shall have been' presented'' to the' said receivers, in detail arid in writing,' before br at the time specified by them in their notifce Of a Second dividend." 14 ' ' The |3laintiff in an action against the cprporatipn pending at the'time of the appointjment of a receiver may, at, any.tjme^ before the. entry of a final decree, lexcluding all creditors who the net produce.of all his.i^state, that ance,;sl>all not exceed in the whole, ;the shah be received by the assigi;ee, to sum qf . five hundred dollars." R. S., be paid by him to, them, in case such pt. 2, ch. 5, tit. .1,, art. 8, § 44. net produce, after such ,!ttU9wanee , 11. People v. , Anglo-American Sav- madf^'. shajl be. suflSeient to , pay , the ings and Loan A.3so.ciation, 60 App. creditors of such^deb^pr, entitled ^to, a Div. 389, .403, 69 N. Y. Supp. 1054. ; dividend, the. sum of, seventy Cftnts on 12. Giqnerjil Corporation Law, §,365. the dollar, on the amount of.tftejr debts 13. general Corporation Law, •§. 866. respectively, as the same shall. , have 14. General Corporation Law, § 267. been ascertained; but thjB s^id allow- 704 COKPOEATIONS. have not presented their claims, be jpermitted to come in, prove his elaim, and participate equitably in the distribution of the fund still in the hands of the receiver. But where in such case the receiver had no actual notice of the petitioner's claiin before making the second dividend, and h^s reserved no fund applicable specifically to the payment thereof, it iS error to require him to pay to the petitioner his proportion of such dividend.^" Accounting. 627. In general. " Areeeiver sliall apply within one year after qualifying as such for a final settlement of Ms accounts and an order for distribution, or shall apply to the court upon notice to the attorney -general for an extension of tinted setting forth the reasons why he is unable to icloae his accounts, which order may be gi'aiited in the discretion of the court. The attorney-general or any creditor, or any party interested, may apply for an order that the receiver show cause why an accounting and distribution shall not be had at any time after the expiration of one year after the receiver qualifies; and it shall be the duty of the attorney- general after the expiration of eighteen months from the time tbe receiver enters upon his duties, in case he has not applied for a final settlement of his accounts, to apply for sufeh ah order on notice to such receiver. In' case of such application by a pariy other than the receiver the court shall direct the receiver to take steps to account with all convenient speed. The receiver is not required or au- thorized to file any account, except as herein provided, except by special order of the court." 16 •■ ■^■:^^ -.:-■■■.;.:■. :' ■ .t!::'i> 15. Smith V. Manhattan Insurance toiiiity in which they reside, or .witli Co., 4 Hun 187. a clerk of the supreme court, an ac: 16. General Corporation Law, ,,§268. count in writing of aJJ their , proceed- Consolidators' note- — ^TWs section jngs, in the premises ;statingi supersedes the provisions of the Re- , "1, Their .disbursements, commis- vised Statutes given below since it sipns a^d the dividends, made by, them: provides that the "receiver is not re- "2. The names and residences of the quired or authorized to file any ac- creditpjrs to whom dividends were made, count except as herein provided except and the names of tjiose actijaily re- by speciar order of the couirt." ceiving them: '^Within three months after th* time ' "3. The property, monies and effects herein prescribed for making a second of the debtor remaining in their hands, dividend, the receivers shall render a and thfe" vstlue and situation of such full and accurate accoimt of all their property: ■ ;• : proceedings to the court of chancery, "And such trtistees majr at aiiy timis on oath, which shall be' referred -to a be Compelled by a rule of the Supreme master to examine and report thereon." Cotirt', or of the Court of Comthdn R. S., pt. 3', eh. 8, tit. 4, art. '3, § 8^: Pleas of the county in Vhici they I'e- "Within ten days aftei- iaiiy dividend side, to render suSh afccoiiJit On bath, made by any trustees, ■they shall ren- on the application of the debtor^ ' or '6f dfer oh oath, and file with the clerk of any creditor." ' E. 8'.; pt. 8, cli. '5,' tit. the court of common pleas of the 1, art. 8, § 45. " KEOEIVERS. 70.5 A de facto receiver cannot avail himself of an irregular or yoid appointment, under which he has acted.'procuredby his connivance, and thus escape an accounting for the moneys which came into his hands." An accounting by a temporary receiver who is made permanent receiver, to himself as per- manent receiver is unnecessary, and an adjudication made upon .such an accounting, on notice to the attorney-general alone, is not binding upon creditors who had not appeared in the proceedings and who received no notice of the account- ing; such creditors are, on the accounting of the permanent receiver, entitled to require him to account for everything re- ceived hj him in his capacity as temporary receiver .^^ If no assets have come into the possession of a receiver appointed in sequestration proceedings he will not be required to ac- count.^' G28. Notice of final accounting. i , ' ' Previous to rendering such account the receivers shall insert a notice of their intention to present the same, once in eaoh week, for three weeks, in a newspaper, of the county in which notices of dividends are herein required to be inserted, specifying the time and place at which such account will be rendered. Said receivers shall also give notice to the sureties on their official bonds, as provided in section two hundred and twenty-seven of this chapter." 20 629. Notice to sureties. " A receiver who, having executed and filed a bond as provided for in section two hundred and twenty-five Or section two hundred and twenty-six of' this chapter (General Corporation Law), before presenting his accounts as receiver, must ^ve! notice to the surety or sureties on his official bond, of his intention to present his accounts, not less than eight days before the day set for the hearing on said ax;counting. The same notice must be given to such .surety or sureties where the accounting is ordered; on the petition of a person or persons other than the receiver, and in no case shall the receiver's accounts be passed, settled or allowed, unless the said notice provided for in this section shall have first: been given to,, the surety or sureties on the official bond of such receiver."! Motion to compel receiver to pay Supp. SSS, 38 St. Rep. 947, affd. 133 over moneys to a third person should N". Y. 97. 30 N. E. 652^ be made in the action in which the re- 20. General Corporation Law, § 269, ceiver was appointed. Gkilster v. Syra- as amd. by L. 1909, ch. 240. euse Savings Bank, 29 Hun 594. 1. General Corporation Law, §' 227, 17. CMahoney v. Belmont, 62 N. Y. as added by L. 1909, ch. 240. 133. ^ ' ■ Application.— This section applies to 18. Matter of Simonds Manufactur- both temporary and permanent re- ing Co., 39; App. Div. 576, 57 N. Y. /ceivei;s. ''' ■; ; Supp. 776. ' Sureties on bond given by a de fafcto 19. Wheatland v. Pryor, 14 N. Y. receiver are estop-ped from insisting ^5 ■ ■"" ■ '' 706 COBPOKATIONS. An action is not maintainable upon a receiver's bond until proceedings for an accounting are had against bim.^ But even wben a re.ceiver's accounts have been passed upon by the, court an action will not lie upon his bond if , viewed simply as a statutory obligation, unless it appears that the surety was given notice of such accounting, as required by the statute ; if "the surety did not receive such notice the complaint should be dismissed, but not upon the merits.^ Where the receiver has misappropriated property, the surety may be liable inde- pendently of the account.^ 630. Hearing on final accounting. "Upon the coming in of 'Such report, tlie court ehall hear the allegations of all concerned therein, and sliall allow or disallow such account, and decree the same to be final and conclusive upon all the creditors of such corporationj , upon all persons who have claims against it, upon any open or subsisting engagement, and upon all the stockholders of such corporation." 6 :, , ,:-, ,, ,, - .;t 631. Reference on final accounting. " The referee to whom such account sliall be referred, shall hear and examine the proofs, vouchers and documents offered for or against fluph account, and ■shall repdrt thereon fully to :the court." 6 Before a referee is appointed to pass upon the accounts of a receiver of a corporation, the receiver should present to, and file with the court, a full and definite account, vei-ified by his oath, itemizing with particularity the various claims made by him, and the reference should relate specifically to the claims therein contained.'' Exceptants to the report of a referee appointed to take and state the accounts of a receiver cannot question the validity of the order under which the re- ceiver w,as appointed, and the sole question is whether the payments, for which the receiver asks credit, \vere, proper.^ that their principal was not appointed 6. General Corporation Law, § 271. a receiver. TIjpmpson v. Denner, 16 The court has power to order a, com- App. Div. 160,.,i4 N. Y,, Supp. 723. pulsory reference of any controversy 2. French v. Dauchy, 134 N. Y. 543, betweei the receiver of an insolvent 31 N. E. 1041; Qoe v. Patterson, 182 corporation and a debtor in respect to ,App. Div. 76, 106 N. Y. Supp. fi59. ^^^ ^^^^ Crosby v. Day, 81 N. Y. 3. Stvatton v. City Trjist, Safe Pe- . , ■ -■" - posit &,'S. Co., 86 App.'jbiv.' ,551, 83 „' , „, ,.' „ „' . N. Y. Supp. 780. ^- P^"Pl^ ''• Columbia Car Spring 4. Stratton v. City Trust, SateDe- ^o., 12 Hun 585. posit & Surety Co., 69 App. Div. 322, 8. Hardt v. Levy, 20 App. Div.:,400, 74 N, Y. Supp. 670. 46 N. Y. Supp. 815, affd. 155 N. Y. 660, 5. General Corporation Law, § 270. 49 N. E. 1097. BEGEIVEBS. 707 632. Further accounting. "Sueh receivers shall also account from time to time in the same manner, and with the like effect, for all moneys which Shall come to their hands after' the rendering 6i such account, and for all moneys which shall have been retained' by: them for any qf the purposes hereijibef ore specified, and shall pay into pourt . all unclaimed dividends." 9 Commissions and Expenses of Receiver. 633. Voluntary dissolution. " A receiver appointed pursuant to article nine (General Corporation La>v) is entitled, in addition to his necessary expenses, to commissions upon the sums received and disbursed by him as the court by which or the judge by whom he iB appointed allows, as follows: On the first twenty thousand dollars not ex- ceeding five per centum;, on the next eighty thousand dollars, not exceeding two and one-half per centum; and on the remainder, not exceeding one per centum; but in case the commissions of a receiver so computed shall not amount to one hundred dollars, said court or judge may in his or its discretion allow said receiver such a sum not exceeding one hundred dollars for his commissions as shall be commensurate with the services rendered by said receiver. "10 A permanent., receiver, appointed in proceedings for the voluntary dissolution of a corporation, is entitled to comrnis- sions upon the moneys actually received and disbursed by him by order of the court without deduction for moneys paid out to persons claiming an interest' in the fund, or in settlement of claims a^aijQst him as receiver, or in satisfaction of liens iipon misdirection of the court is not voluntary, rendering the re- the property of the corporation.". Commissions are not to be 9. General Corporation Law, § 372. The fallowing provision, of the Re- 10. General Corporation Law, § 377. vised Statutes is omitted as embraced Consolidators' note. — Section 3.330 of within. the lan^guage of § 76 of the-Re- the'Co,de of , Civil iPrq?^^iire„has j pot , vised Statutes.. .,j been consolid?ited in this chapter' for "And a commission at the rate of 5 the reason that it provides for the ex- per cent, on the whole si*m which shall p^nsey and commissions Of receivers ■ "liavG come into their hands'."') R. Si. except as.otherwise specially prescribed : ; pt. 2^-ch. 5, tit-. 1, art; 8?§';29.i; by statute. - - ,. :< 11. Matter of Lititlei, 47 App. Div. - The: following provision of the Re- gg Rg jj. V. Supp; 271, affd; 165 ,N. T. vised St£|,tui;es was expressly Tep,ealed, g^g SON. E. 1135. by ch. 349 of I..,, 1906; . ,. , inhere ap order appointing anciUaiy '■'Such, receivers shall, in addition to . i, ' ' ' '.. r" '^ • ; 1 ' ,. , ,;, ', ..j^, ,, receivers of a corporation .is unau- thcir actual disbursements, be eiintled ^ ' '. , .,, ., ' ' , ',."', i, . . . ,, i 1, 11 thonzed the court cannot direct that to such commissions as the court shall allow, not exceeding the surfl- allowed t^ey he paid out of ,the property of by law to executors or administra- the corporation, without its consent, tors." R. S., pt. 3, ch. 8, tit. 4, art. Moe v. McNally Co., 138 App. Div;^|80, 3, § 76. '^' 123'N. Y.Supp. 71. 708 COEPOKAXIONS. computed simply upon the cash which actually comes into the hands of the temporary receiver, appointed under section 182 of the General Corporation Law, but he may be entitled, in an extreme case, to two and one-half per cent of the value of the property coming into his hands for receiving and pro- tecting the same, such amount to be determined and allowed by the court>^ The expenses of an application by directors of a corporation, which has issued first mortgage bonds, for a voluntary dissolution and for the appointment of a receiver in order to protect the corporate property, may properly be made a charge to be first paid by the receiver out of the funds in his hands, although he was not appointed in an action brought by the bondholders or their trustee.^^ 634. Except in voluntary dissolution. " A receiver o-f a corporation, except a receiver appointed in proceedings for its voluntary dissolution, is entitled, in addition to his necessary expenses, to such commissions, not exceeding two and one-half per centum upon the sums recieived and disbursed by Mm, as the court liy which or the judge by whom he is a-ppointed allows, hut except upon a final accounting such , a receiver shall not receive on account of hifl services for any one year a greater amount than twelve thousand dollars, nor for any period, less than a year more than at that rate. Upon final accounting, the court may make an additional allowance to such receiver, not exceeding two and one-half per centum upon the sums re- ceived and disbursed by him, if the court is satisfied that he has performed services that fairly entitle him to 'such additional allowance. Wlicod more tlian one receiver shall he appointed, the compensation herein provided shall be divided between said receivers." U The commissions are to be computed upon the value of the entire property that comes into the receiver's hands and is distributed by him by order of the court,, whether to the creditors of the insolvent estate or to the beneficiaries under • a will or trust instrument or by a settlement or compromise between parties.^^ Tfie provisions of this section apply only to receivers of insolvent corporations, and a receiver ap- pointed in a suit to foreclose a mortgage executed by a corpo- ration is not entitled to fees thereunder. Allowance of com- missions to such a receiver is governed by sections 1547, 1549, 12. Matter of Smith Co., 31 App. N. Y. Supp. 1111. Div. 39, 53 N. Y. Supp. 877. 14. General Corporation Law, § 278. 13. Matter of New Paltz & Wallkill 15. Peo.ple y, Brooklyn Bank, 64 Val. R. Co.. 37 Misc., 451, 59 N. Y. Misc. 53S. 118 K Y. Supp. 722. Supp. 347, affd. 42 App. Div. 632, 59 BECEIVERS. 709 of the Civil Practice Act." Commissions are paid to a receiver on the theory that he had possession of and paid out or dis- tributed the property of the corporation and so where he does not take possession or control of the property but allows the business to prppeed as before his appointment under the man- agement of parties in interest who receive and disburso the fund with his assent and approval, he is not entitled to a per- centage on such moneys." Likewise a receiver is' not entitled to commissions where he was never entitled to receive money and the order directing payment to him was erroneous, and was, reversed by the court on appeal.^^ The court has no power to allow a receiver compensation in addition to the amount allowed by statute, and the amount cannot be in- creased under the guise of extra compensation.^' A receiver is entitled to have his commissions calculated and allowed upon the final settlement and disposition of his account.^" Full commissions are not allowed to a second receiver upon funds collected and turned over to him by his jbredecessor, one-half of the percentage on moneys in the hands of the first receiver should be allowed to each.^ The receiver of an insur- ance company is entitled to commissions on proceeds of securities deposited with the Superintendent of Insurance to secure policies.^ 16. U. S. Trust Co. v. N. Y., W. S. 31 N. Y. Supp. 237, 50 St. Rep. 460. . & B. R. Co., 101 N. Y. 478, 5 N. E. 20. Matter of iSecwity Life Ins. & 316. Annuity 'Co., 31 Hun 96. 17. Matter of Woven Tape Skirt Co., 1. Attorney General \. Continental 85 N. Y. 506. L. Ins. Co., 33 Hun 233. 18. Pittsfield National Bank v. Bayne, 2. Attorney General v. North Ameri'- 140 N. Y. 331, 35 N. E. 630. can Life Ins. Co., 89 N. Y. 94. 19. Matter of Orient Mut. Ins. Co.. - 710 CORPOEATIONS. CIIAPTEE XXX. Action by People for Usurpation of Corporate Office, Franchise or Right. 635. Action by attorney-general against usurper of office or franchise. 636. Joinder of all persons claiming right. 637. Final judgment in action for usurping office or franchise. 638. Fine in action for usurping office or franchise. 639. Action by attorney-general for unlawful exercise of corporate rights. 640. Injunction in action for unlawful exercise of corporate rights. 641. Immunity of witnesses in action for unlawful exercise of corporate rights. 643. Costs against corporation or usurpers of franchise of corporation. 643. Action triable by jury. 635. Action by attorney-general against usurper of office or franchise. "The attorney-general may maintain an action, upon his own information or upon the complaint of a private person, against a person who usurps, intrudes into or unlawfully holds or exercises within the state a franchise or a public office, civil or military, or an office in a domestic corporation." 3 Authority for an action by the attorney-general to declare the forfeiture of a corporate franchise, as distinguished from an annulment of the corporate charter, is found in this sec- tion, which authorizes such action against a person who usurps, intrudes into, or unlawfully holds or exercises a fran- chise, within the state, and the word ' ' person ' ' as used there- in includes a corporation.* 636. Joinder of all persons claiming right. " Where two or more persons claim to be entitled to the same office or f ran chise, the attorney-general may bring the action against all to determine their respective rights thereto." 6 637. Final judgment in action for usurping office or franchise. " In any action, brought as prescribed in this article, where a defendant is adjudged to be guilty of usurping or intruding into or unlawfully holding or exercising an office, franchise ' or privilege, final judgment must be rendered, ousting and excluding him therefrom, and in favor of the people or the relator, as the case requires, for the costs of the action."* 3. Civil Practice Act, § 1308. Supp. 1045, affd. 301 N. Y. 84. 4. People V. Bleecker Street & F. P. 6. Civil Practice Act, § 1309. R. Co., 140 App. Div. 611, 135 N. Y. 6. Civil Practice Act, § 1315. ACTION BY PEOPLE FOB USURPATION. 711 638. Fine in action for usurping office or franchise. " As a part of the final judgment in an action for usurping or intruding into or unlawfully holding or exercising an office, franchise or ' privilege, the court, in its discretion, also may award that the defendant, or, where there are two or more defendants that one or more'of them, pay to the people a fine not ex- ceeding two thousand dollars. The judgment for the fine may be docketed and execution may be issued thereupon in favor of the people, as if it had been rendered in an action to recover the fine." 7 639. Action by attorney-general for unlawful exercise of corporate rights. " The attorney-general may maintain an action upon his own information or upon the complaint of a private person, 1. Against one or more persons -who act as a corporation within the state with- out being duly incorporated; or exercises within the state any corporate rights, privileges or franchises not granted to them by the law of the state. 2. Against a foreign corporation which exercises within tho state any corporate rights, privileges or franchises not granted to it by the law of this state; or which within the state has violated any provision of law, or, contrary to law, has done or omitted any act or has exercised a privilege or franchise not con- ferred upon it by the law of this state, where, in a similar case, a domestic cor- poration in accordance with section one hundred and thirty-one of the general corporation law, would be liable to an action to vacate its charter and to annul its existence; or which exercises within the state any corporate rights, privi- leges or franchises in a manner contrary to the public policy of the state."? The attorney-general cannot maintain an action in the name of the people against a corporation, either under the Civil Practice Act or as, a matter of. common law, to restrain the commission of a nuisance in a city street by a corporation, where local officials have authority to protect the street. The Civil Practice Act, sec. 1217, subd. 1 , contemplates an action against individuals and not against corporations.' But it has been held that an action against persons attempting to act as a corporation after the expiration of the charter is against the persons, and the corporation is not a proper party." It is not 7. Civil Practice Act, §' 1216.' porated gas light company, a contrac- 8. Civil Practice Act, § 1S17. tor with it and one of its officers, to Use of gas pipes after municijtal per- restrain the laying of gas pipes in » mit has expired; when action by at- street in the city of Brooklyn, which torney general under section 1217 of was based on the ground that the cor- the Civil Practice Act^ does not lie. porate power of the company had People V. Consolidated Gas Co., 130 ceased because of failure on its part App. Div. 686,. 115 N. Y, Supp. S93., , to commence its, business within the .9. People. V. Equity Gas Light Co. period prescribed by law, and that the et al., 141 N. Y. 232, holding that an work would be an injury to the high- action, brought by. tjie attorney .. gen- ^^way and a nuisance. eral in the name of the people, was 10. People v. Albany & S. R. Co., 57 not maintainable against an incor- N. Y. IQl, 712 CORPOKATIONS. necessary for the attorney-general to obtain the leave of the court to bring an action under this section against persons assuming to act as a corporation within this state without being duly incorporated." 640. Injunction in action for unlawful exercise of corporate rights. " J u an action brought as prescribed in section twelve hundred and seventeen of this act, the final .iudgment in iavor of the plaintiff must )jprpetually restrain the defendant or defendants from the commission or continuance of the act or acts complained of. A tempurniy injunction to restrain the commis.sion or con- tinuance thereof may be granted upon proof, by affidavit, that the defendant or defendants have violated any of the provisions of such section. The provisions of statute or rule relating generally to injunctions as provisional remedies in actions apply to such a temporary injunction and the proceedings thereupon." 32 641. Immunity of witnesses in action for unlawful exercise of corpo- rate rights. " In the trial of an action brought as prescribed in section twelve hundred and seventeen of this act, n party or a witness is not excused from answering a question on the ground that such answer will tend to incriminate him; but sucli answer cannot be used as evidence against the person so answering, in a criminal a< tioii or criminal proceeding." 13 642. Costs against corporation or usurpers of franchise of corporation. " Where final judgment in an action brought in behalf of the people, pursuant to this article, is rendered against a corporation or person claiming to be a cor- poration, the court may direct the costs to be collected by execution against any of the persons claiming to be a corporation; or by warrant of attachment or other process against the person of . any director or other officer of the corporation."' 14 643. Action triable by jury. " An action brought as prescribed in this article is triable, of course and of right, by a jul-y in like mangier as if it were an action in which the complaint demands judgment for a sum of money only, and without procuring an order of the court defining the issues." IB An action in the nature of a quo warranto, brought by the attorney-general in the name of the people of the state, to try the title to a corporate office to which there are several claim- ants, is one of legal, not equitable, cognizance, and the issues 11. People V. Boston, H. T. & W. R. 13. Civil Practice Act, § 1219. Co., 27 Hun 528. 14. Civil Practice Act. § 1230. 12. Civil Practice Act, § 1218. 15. Civil Practice Act. § 1221. ACTION BY PEOPLE FOR USURPATION. 713 therein are strictly legal ones. The trial of such issues, there- fore, by a jury is the constitutional right of the parties. If, with such a cause of action, other equitable causes of action are united, all must be tried by a jury, unless a jury trial is waived.^ ■ - ■ 16. People V. Albany & Susquehanna R. Co., 57. N. Y. 161. 714 COBPOKATIONS. CHAPTER XXXI. CoEPOBATE Liability foe Toets and Cbimes «44. Corporate liability for tort. 645. Criminal liability generally. 646. Particular crimes. 647. Punishment of corporation. 644. Corporate liability for tort. A corporation is liable to the same extent, and under the same circumstances, as a natural person, for the consequences of its wrongful acts or omissions, and for the negligence of its agents, while engaged in the business of their agency." It may, in a legal sense, be guilty of a fraud, and the rule that one who has been induced by the fraud of another, under the guise of a contract, to part with his property, may, upon discovery of the fraud, rescind the contract and recover the property, un- less it has come to the possession of a bona fide holder, applies as well when a corporation as when a natural person is the wrong-doer.^^ A corporation is liable not only for torts com- mitted by its officers and agents when acting within the actual or implied scope of their employment, but, by ratification it may become responsible for such acts when committed in ex- cess of their authority.^^ And an action for malicious prose- cution may in a proper ease be maintained against a corpo- ration.^" An action for libel, which has abated because of the 17. New York & ISTe-n' Haven E. Co. whether skillful or not, if they are V. Schuyler, 34 N. Y. 30. guilty of any malpractice, lie will have Liability for the tort of apparent a responsible party to answer therefor agent. — ^A corporation, which is the in damages. Hannon v. Siegel-Cooper proprietor of a department store and Co., 167 N. Y. 844, 60 N. E. .597. holds itself out as practising ^entistry 18. Cragie v. Hadley, 99 N. Y. 131, in one of the departments apparently i n. E. 537. in charge of its agents, is estopped jg. Kharas v. Collier, Inc., 171 App. from denying their agency and its lia- ^iv. 388, 157 N. Y. Supp 410 bility for their malpractice, although ^0. Willard v. Holmes, Booth & in fact they may be carrying on the ^^^ ^^ ^ ^^ ^ ^ practice on their own account, where ...... i s ii i. i i Schwarting v. Van Wie N. Y. Tirocerv a patient who is ignorant of that fact = .nj^civ is operated upon by them unskillfully, ^o., 60 App. Div. 475, 69 N. Y. Supp. since he has a, right to rely upon the 9'^8; Schwarting v. Van Wie N. Y. presumption that they are skillful Grocery Co., 69 App. Div. 882, 74 N. Y practitioners and also on the fact that Supp. 747. CORPORATE LIABILITY TOE TORTS AND CRIMES. 715 dissolution of the corporate defendant, may be continued and revived against the former directors of the defunct corpo- ration, in order to reach the assets of the corporation in their hands, held by them as the trustees under section 35 of the General Corporation Law for the benefit of the stockholders.^ 645. Criminal liability generally. Some of the earlier writers on the common law held that a corporation could not commit a crime.^ Lord Chief Justice Holt^ is s^aid to have held that " a corporation is not indict- able, but the particular members of it are." In modern times, however, the courts and text writers quite universally have reached an opposite conclusipn. A corporation may be in- dicted either for nonfeasance or misfeasance, the obvious and general limitations upon this liability being in the former case that it shall be capable of doing the act for non-performance of which it is ^charged, and that in the second case the act for, the performance of which it is charged, shall not be one of which performance is clearly and totally beyond its authorized powers. The instances in which it has been held that a corporation might be liable criminally simply because it did or did not perform some act, and where no element of in- tent was supposed to be involved, are so familiar that any ex- tended reference to them is entirely unnecessary. At times courts have halted somewhat at the suggestion that a corpo- ration CQijld commit a crime whereof the element of intent was an essential ingredient. .But this doctrine, again with certain limitations, may now be regarded as established, and there is nothing therein which is either unjust or illo.gical. Of course, it has be.en fully recognized that there are, many crimes so in- 1. Shayne. V. Evening Post Publish- tei- contained in the letter as will sup- ing Co., 168 N. Y. 70, 61 N. E. 115. port an action of libel against the cor- Publication of libel. — ^The fact that poration. Owen v. Ogilvie Publishing a letter, having reference to the busi- Co., 32 App. Div. 465, 53 N. Y. Stipp.- ness of a cprporatioh and containing 1033. libelous, matter, ia dictated by the 2. People v. Rochester Railway & manager of the corporation to a steno- Light Co., 195 N: Y. 102, 88 N. E. 32. grapher employed by it, who writes it Blackstone in his CominentarieB. out in shorthand,, typewrites it and book 1, page 476, stated: "A corpora- mails it, both serviint- of tlie corpora- tion cannot commit trea,soli or felony, tion being epgaged in the performance or other crime, in its corporate capac- of duties which their respective em- ity; though its members may, in their ploynients require, does not constitute distinct individual capacities." such a publication , of the libelous mat- 3. Anonymous, 13' Modern 559. 716 COKPOBATIONS. volving ijersonal, malicious intent and acts ultra vires that a corporation manifestly could not commit them. But a corpo ration, generally speaking, is liable in civil proceedings for the conduct of the agents through whom it conducts its busi- ness so long as they act within the scope of their authority, real or apparent, and it is but a step further in the same di- rection to hold that in many instances it may be charged crim- inally with the unlawful purposes and motives of such agents while so acting in its behalf.^ 646^ Particular' crimes. Upon both principle and authority, a corporation may be indicted and convicted for conspiracy and similar crimes of which specific intent is the necessary and controlling element.^ A corporation may in many instances be charged criminally with the unlawful purposes and motives of agents through whom it conducts its business, while they are acting in its be- half, so long as they act within the scope of their authority, real or apparent, but it cannot be indicted for the crime of manslaughter.'^' A corporation may be indicted for and con- victed of criminal libel, the evil intent of its agents who write and print the libel being attributable to it.' 647. Punishment of corporation. The corporation plays so large a part in commercial life that it is a serious defect in our laws that no provision is made for imposing any substantial punishment for crimes by corpo- rations. Fines may of course be imposed, but the result is in- evitably that the consumer pays the fine and the corporation takes a profit out of its infraction of law. Since it is in prac- tice difficult to get at " the man higher up " the punishment of individual agents falls on underlings and has small detev- 4. People V. Woodbury Devmafologi- deceit, for false imprisonment, for lal Institute, 193 N. Y. 454, 85 N. E. malicious prosecution, for nuisance and f>97^ People V. Rochester Railway & for libel." Benedict v. Guardian Trust Liglit Co., 195 N. y! 103, 88 N. E. 23. Co., 58 App. Div. 303, 303, 68 N. Y. 5. People V. Dunbar Contracting Co., Supp. 1083. 165 App. Div. 59, 151 N. Y. Supp. 164, 6. People v. Roclies'ter Ry. & L. Co., and cases cited. 195 N. Y. 103, 88 N. E. 33. In National Bank v. Graham (100 Indictment against corporation must U. S. 699), Mr. Justice Swayne, in con- state true corporate name. McGarry v. sidering the liability of corporations People, 45 N. Y. 153. for wrongs, says that "it may be sued 7. People v. Star Co., 135 App. Div. for assault and battery, for fraud and 517, 130 N". Y. Supp. 498. coBPORATE liabilit;:^ fob tobts and crimes. 717 rent effect on the management. In theory, of course disso- lution is capital punishment applied to a corporation, but its working in practiqe frequently is. formal merely. There is no particular reason, except that it has never been done, why a corporation should not be imprisoned for crime, its charter, property and business being taken into custody for the period of the sentence. Most corporations thus impounded could be made to earn a fair sum for the government during the period of the sentence. Such a sentence may seem severe, but it is trifling compared with the sentences imposed on individuals. In many instances at the end of five or ten years the value of the corporate property would be wholly destroyed. True enough ; niahy individuals die while serving a, prison sentence. Stockholders innocent of wrongdoing and unable to prevc the act which led to conviction of the corporation would lose their investment. Quite so ; but the pleas of the innocent de- pendents of individual criminals fall on dteaf ears. The cor- poration is almost a necessary instrument of honest business. But it has been so far developed into an entity, it affords so many loopholes for the escape from liability of its constituent individuals, that unless it is subjected to a , crimiiial liability which is not to be scoffed at, it "w^iU become a menace to our economic life.* 8. Law notes, September, 1921 (editorial). 718 COKPOKATIONS. CHAPTEE XXXII. FOBEIGN COBPOKATIONS. Status and Powers Generally. 648. Definition and status. 649. Acquisition and transfer of real property. 650. Mortgage on real property. 651. Assignment for benefit of creditors. Corporation Hooter. 652. Duty to keep stock books and inspection thereof generally. 553. Limitation on duty to keep stock books. 654. Right of stockholders to inspect books. 655. Mandamus to compel inspection. 656. Penalty for failure to allow inspection. 657. Eefusal to transfer stock on books. 658. Books and copies thereof as evidence. Ofpcern, P'irpctors utid HtocTcholdent. 659. Liabilities generally. 660. Making unauthorized dividends. 661. Enforcement of stockholder's liability. 662. Suit against officers or directors for official misconduct. 663. Judicial suspension or removal. 664. Attachment of Unpaid Subscription to stock. Becewars. (jtij. Appointment of receiver within this state. 666. Foreign receiver. 667. Distribution of assets. Heimcorporation of Foreign Moneyed Corporations. 668. In general. 669. Papers to be filed. 670. When reincorporation effected and effect thereof. Restrictions on Siriht to do Biisiness WHhim. State. 671. In general. 672. Restrictions interfering with interstate, commerce. 673. Certificate of authority to do business. 674. Proof required to secure certificate: Designation of person on wlioni process may be served. 675. Surrender of authority. 676. Revocation of certificate of authority to do business in this state. 677. Effect of failure to procure certificate on right to maintain action. 678. Actions not affected by failure to prooure certificate. FOREIGN CORPORATIONS. 719 679. License fee. 580. Basis of computing license fee. 581. Effect of failure to pay license fee. 683. Criminal liability of agents acting for certain foreign corporations not au- thorized to do business in this state. 683. What amounts to doing business generally. 684. Incidental contracts. 885. Shipment of goods to this state upon orders of traveling agents and cus- tomers. 686. Consigning goods to commission merchant. 687. Transacting insurance business within this state. 688. Employment of capital within state. Actions hy Foreign Corporations. 689. In general. 690. Pleadings: Security for costs. 691. When authority to do business must be alleged. 693. Actions on contracts not made in state. 693. Failure to pay license fee as defense. 694. Suits in Federal courts. SOS. Representative action by resident stockholders. Actions Afiainst Fm-ii/ni Ci'iporii1uiii.-<. 696., Action by resident. 597. Action by non-'i-esident or foreign corporation: 698. Constitutionality of statute i-egulati'ng action by non-resident. 699. Action by non-resident for breach of contract made within state. 700. Action by non-resident on cause arising within state. 701. Action by non-resident when foreign corporation doing business in state, 7i03. Continuation of action- after dissolution of defendant. 703. Actions concerning internal management. 704. Issuance of attachment. . 705. Pleadi;ig,: Limitati9n ,qf actions 5 trial; examinatipn befof-e trial. , 706. jyiai^ner; of Raising jurisdictional questions. 707. Judgment by. default; enforcement of judgment; supplementary, procee'diiig.'i , 7d8. Requisites of injunction. ■ " " ' Service of Process. 709. Personal service within state gene'rally. 71'C>. Service by p"ublicatioii or' without state. 711. Service on president or other officer. 712. Designation of petaon on whom service may be made. 713. Service on secretary of state. 714. Service on cashier, director or managing agent generally. tl'5. Who is managing agent. 716. What constitutes doing business for jurisdictional purposes. 717. Designation ' of «taite supcriiitendent of Jnsuranc^v by. foreign insurance cor- poration. ■ 718. Manner of service on superintendent ofrinsurance. ; 'i',-- 726- COEPOBATIOSrS. Action iy People for Wrongful Vs-urpation of Corporate Franchise or Bight. 719. Action by attorney-general. 720. Final judgment: Injunction. 721. Immunity of witnesses. 722. Costs. 723. Right to trial by jury. otatus and Powers Generally. 648. Definitions and status. The Greneral Corporation Law defines a foreign corporation thus: - ^ f.:|| "A 'domestic corporation' is a corporation incorporfited by or Vuider tho laws of the state or colony of New York. Every corporation which is not a domestic corporation is a foreign corporation, except as provided by the Code of Civil Procedure (Civil Practice Act) for the purpose of construing such code." 9 For jurisdictional pui-poses and for other purposes of the Civil Practice Act, a foreign corporation is defined therein as follows : "A 'domestic corporation' is a corporation created by or under the. laws of the state, or located in the state, and created by or under the laws of the United States, or by or pursuant to the laws in force in the colony of New York before the nineteenth day of April in the year seventeen hundred and seventy-five. Every other corporation is a ' foreign corporation.' "JO Although, as a general proposition, a corporation must dwell in the state under whose laws it was created, its exist- ence as an artificial person naay be acknowledged and recog- nized in other states,^^ its residence in one state creates no insuperable objection to its power of contracting in aiibther.^- And so while the domicile of a corporation, is in the legal jur- isdiction of its origin, and it is in its nature incapable of mi- gration, its cha;rter may confer powers without territorial limitation, and these^ay be exercised elsewhere, if they are in conflict with no restrictions of local law.^^ Since a corpora- 9. General Corporation Lawj § 3, porate act out of the jurisdiction creat- subd. 5. ing the corporation, which will bind 10. Civil Practice Act, § 7, subdi 7. those who do not participate in it. 11. Christian Union v. Yount. 101 Ormsby v. Vermont Copper Mining Co., U. S. 352. .. ; 56 N. Y. 633. 12. Runyan v. The Lessee of Coster; 1^ Merrick v. Van Santvoord, 34 14 Pet. (U. S.) 122. N. Y. 208. Neither the stockholders nor the di- A corporate franchise granted by one rectors of a corporation can do a cor- state cannot be revoked or annulled by FOKBIGN COKPORATIONS. 721 tion can have no existence a^ide from the law wMeh cr^eates it, nmch of the statute law of th^ corporate domicile may be said to accompany it into the foreign jurisdiction and: enter into, influence and control its transactions," and its existence and powers are at all times subject to the law oft its creation and of its domicile and, additionally, to our laws relating to it, and the terms laid down by our legislature as conditions of allowing it to transact business here.-^^ And the .transactions of a corporation of a foreign state doing business in this state are dependent upon our statute law and generally,- in the absence of a statutory rule, upon the rule of comity. The rea- sons for extending the rule of comity between the States are constantly increasing and it should when jpracticable be ex- tended and not curtailed.^^ The, fact that the incorporators of a corporation,. regTilarly organized in and under the laws of another sta;te,are^ citizens of this state and that it has its principal office and conducts its business here do not affect the validity of its organization, or exclude it from recognition by the courts oJf;this staite." the eour:ta of another; and especially not in a proceeding to which the cor- pbratioh is not ia, party. Merrick v. Van Santrobrd, 34 N. Y. 208. 14. Martyne v. American Union Fire Ins. Co., 216 N. Y. 183, 110 N. E. 502. 15. iSinnott v. Hanan, 214 N. Y: 454, 108 N. E. 8-58. Residence of oflScers. — ^When there are no restraints in the corporate char- ter, in respect to the residence of its oflScers, or the place where its busi- ness should be conducted; no such re- strictions can be imposed by the tri- bunals of anothe* state', without the sanction of the law making power. Merrick v. Van Santvoord, 34 N. Y. 208. The provisions of the statutes of an-' other state, relating to the creation and dissolution 'of business corpora^ tions orgiinized and doing business un- der the laws of that state, are -entitled to recognition and enforcement by the courtsof this state. Sinnott v. Hanan. 214 N. Y. 454, 108 NV'E. 858. Where the laws of the state- under 46 which a foreign corporation was or- ganized provide for the continuance of its existence after the expiration of ■the term of its charter for the pur- pose of collecting debts or claims dup to it, its continued existence for that •purpose must be recognized, by the courts of this state. O'Reilly, Skelly & Fogarty Co. v. Greene, 17 Misc. 302. 40 N. Y. Supp. 360, affd. 18 Misc. ,423. 41 N. Y. Supp. 1056. 16. Martyne v. American Union Fire Ins. Co., 216 N. Y. 188, llO N. E. 502. Dissolved domestic corpoTation"— for- eign judgmejit — comity between states. — ^While a statute of another state, continuing dissolved insurance and other corporations for a certain period for 'the purpose of prosecuting suits by or against them, may render valid and eflfective a judgment obtained in such state against a corporation of this state after its dissolution here, so far as its property within such other state where it had been doing business is concerned, this 'state is p not required by comity, and will mot. give to such 722 COKPORATIONS. 649. Acquisition and transfer of real property. It is not the public policy of this state to prevent foreign corporations from acquiring and holding real property here, if required for the transaction of any lawful business.^^ And our statutes provide that : " Any foreign corporation doing business in this state and created under the laws of the United States, or of any state or territory thereof, or of any foreign state or nation which borders the United States of America and which by its laws confers similar privileges on corporations created by the laws of the state of New York, may acquire and hold such real property in this state as may be necessary for its corporate purposes in the transaction of its business in thia state, and convey the same by deed or otherwise in the same manner as a domestic corporation." 19 " Any foreign corporation may purchase at a sale upon the foreclosure of any mortgage held by it, or, upon any judgment or decree for debts due it, or, upon any settlement to secure such debts, any real property within this state covered by or subject to such mortgage, judgment, decree or settlement, and may take by devise any real property situated within this state and hold the same for not exceeding five years from the date of such purchase, or from the time when the right to the possession thereof vests in such devisee, and cpnvey it by deed or otherwise in the same manner as a domestic corporation." 20 Under the Greneral Coi-poration Law every foreign stock coi*poration that has filed the necessary papers, and procured the certificate of the secretary of state required by the act is accorded the same right to transact business here as domestic foreign judgment the effect of reach- by its terms, i« to be performed here, ing the corporate assets held by a re- and is legal under the laws of the state, oeiver in this state as a fund for the prohibitions in its charter, wliich. would distribution, after the dissolution of render the contract illegal jn tlie state the corporation here, when the receiver where the corporation was organized, has not been made a party to the . do not render it illegal here; their only foreign suit so as to be bound by the effect here is as restrictions upon the judgment therein. Rodgers r. Adriatic corporate power. Ellsworth v. St. I/., Fireilns. Co., 148 N. Y. 34, 4a N. E. A, & T. H, R. Co., 98 N. Y. 553. 515. * 17. Lancaster v. Amsterdam Imp. Right of a domestic trust company Co., 140 N. Y. 576, 35 N. E. 964. ■ to vote on stock of a foreign corpora- 18. Lancaster v. Amsterdam Imp. tion, held for foreign stockholders, not Co., 140 N. Y.j 576, 35 N, E. 964. decided where the foreign law is in 1^. General Corporation Law, § 20 doubt. Lewisohn Bros. v. Anaconda as amd. by L. 1910, ch. 68. Copper Mi«. Co., 2fi iliac. 613, .")6 N. Y. Foreign corporation, entitled to re- Stipp. 807, mainder if qualified to takp by statute Validity of contract. — Where a rail- before happening of contingency. Rich- road company, incorporated in and un- ai;ds v. Hartshorne, 110 App. X>Xv. 650, (ler the laws of another state,, sitters 97 Jsf. Y. Supp. 754. into a contract in this state, which. 20. General Corporation Law, § 21, FOREIGN CORPORATIONS. 723 corporations, and the right thus given, so far as it relates to the purchase and sale of lands, is not limited by the provisions of sections 20 and 21 of the General Corporation Law> The provision of the statute that any foreign corporation may take by devise any real property situated within this state and convey it by deed or otherwise' in the same manner as a domestic corporation, does not require a foreign religious corporation to obtain permission of the court before convey- ing its real property in this state as is required of a domestic corporation.^ 650. Mortgage on real property. The state may prescribe the mode and manner in which a foreign corporation doing business in this state shall convey by deed or mortgage its real property situate within the state, and prescribe the preliminary action, if any, to be taken by such corporation through its directors and stockholders be- fore executing such a mortgage or the subsequent action to be taken by them, if any, in order to validate it. But the fail- ure of a foreign corporation to obtain a certificate to do busi- ness in this state does not invalidate a mortgage upon its property. And section 6 of the Stock Corporation Law re- quiring consent of stockholders to a 'mortlgage of corporate property does not apply to foreigh corporations owning prop- erty in this state.^ ' '' ' ' 1. Ijaiiea,ater' v. Amsterdam Imp. cers (>f the corporation. Davidson v. Co., 140 N. Y. 576, 577, 35 N. E. 964, Caimabis Maaufagttiring^ CtJ., 113 App. holding that a person who has con- Div. 664, 99 N. Y. Supp. 1018. traeted for the purchase of land from 2. Muck \. Hitchcock, 212 N. Y. 283, ii, foreign corporation, having power to; .106, If. E. 75. ' ^■\-. purchase and sell land for any pur- 3. In re HefTron Co., 216 Fed. 642. pose,' may : not raise the jqueetion that An instrument, executed by an in- the vendor, in the transaction in ques- solvent foreign corporation, virhich ac- tion, has exceeded its authority, cording to the lavr of the domicile. A foreign corporation which, though duly proved on the trial, is a trust ostensibly organized as a manufactur- mortgage upon chattels, is, even if ing corporation, has dealt chiefly in valid under the lex domicilii, invalid real estate, will be compelled specifi- as to chattels vvithin this state and oaily to perform a written contract to ineffectual to withdraw them from sell' real estate which was maile in the attachment by domestic creditors of name of the corporation, signed by the the foreigh corporation, where it per- tiresident . and secretary, and' sealed' mits the corporation to keep posses- with the corporate seal, when' the ven- sion of the property arid continue its dee has paid a deposit' thereon which' business, to buy, manufacture and sell was accepted and retained by the offl-' "in the us'ual course of trade," re- 724 , . COBPOEATIONS. 651. Assignment foj benefit of creditors. A foreign corporation has power to make, ^ general assign- ment, for the benefit of creditors un,der the laws, of this state^ provided the assignment is also valid under the law of the domicile of the corporation: And when neither statutenor by-law regulating the subject is showri, the pdwer.of a fpreig-n corporation to make, a general assignment resides in , its di- rectors,, A resplutipn by the bo^ard of directors, of an ingol- vent foreign corporation, "that the company execute a, gen- eral assignment," without specifically deputing any que to act, has been held to authorize its president to make an assign- ment for the company. But thejpresident of a foreign corpo- I'atioii, authorizied by the directors to rn,al^e a general assign- ment for the company for the beuetit of its creditors, Jias no power tp. select himself as assignee, in the a,bsence of express authority to th^t ejffect. Still if he does select himself without such authority, his action is not thereby rendered absolutely void, but voidable at the election of the company, and it is not availajble to hostile third parties, such as jtidgment creditors, expept to, make, use of it upon aii application, to the proper authority, for the removal of the assignee as a person rTnfi,t to discharge the duties of the trust.^. An assignment, for the benefit of creditors, of property situated in this state, ex- ecuted herein by a foreign corpora,tipu' doin,g business here, is subject to the provisions of the Debtor a^nd Creditor Law, including section 28 thereof, which provides that prefei*ences contained in a general assig-nment, shall be valid only to the extent of one-third in value of the assigned estate.^ CorporOftiQn liooks. , 652. Duty to keep stock books and inspection thereof generally. " Every foreign stock corporation having ah office for the transaction of busi- ne.ss in this state; except moiieyeil and railroad corporations, shall keep therein quires all creditors before .they can shall be taken to be a pai-t of the in- take any benefit therefr<)m to come iiVj,,. atruHient, so , far, as designating the under it and accept its terms, and if ,,, persons to whom the residue of the their debt^ become due before the morj^i proceeds, realized upon the sale of the gage to so extend the time, of .payment property, .after the payment of tlie ex- tha,t they ,cannot be enforced until penses, taxes, etc., shall be distributed, after the, mojigago matures. ,a period Bearing y. MoKinnon,, Dash &, Hard- of ninety days. ,?ind provides. .|fiitho\i1i j >ya,re Co., 165 IST. Y. 7S,,58 N. K. 773. specifying the time, that .the . corpora - 4. Rogers v. Pell, 154 N. Y. 518, 49 tiqn shall furnish the trustee with a. N. E. 75. schedule of||ihe. na,in,e9,,of the creditors , 5. Matter ,of Halsted, 42 App. T)i\. and ^}ie amount of it.lx^ir claims, whicl}. 101. 58 N. Y. Supp. 898, FOBEIGN OORPOEAXIONS. 725 a, book to be ' known as a stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of resideneey the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the. amount paid thei'eon. Such stock book shall be open daily, during business hoiirs, for inspection by any judgment creditor of such corporation; by any officer of this state authorized by law to investigate the affairs of any such corporation; by any person who shall have been stockholder of record in auoh corporation for at least six months immediately preceding hi? demajid; by any person holding stock of such corporation to an amount equal to five .per centum of all of its outstanding shares; or by any person thereunto in writing authorized by the holders of stock of sucli corporation to an amount equal to five per centum of all of its outstanding shares. Persons so entitled to inspect stock books may make extracts therefrom. If • any suoli foreign stock corporation has in this state a transfer agent, whether such agent shall be a corporation or a natural person, such, stock book may be deposited in the office of such agent and shall he open to inspection at all times during the usual hours of transacting busi- ness, to any stockholder, judgment creditor or officer of the state authorized by law to investigate the affairs of such corporation. For aiiy refusal to allow such book to be inspected, such corporation and the officer or agent so refusing shall each forfeit the sum of fifty dollars to be recovered by the person to whom such refusal was made. It shall be u defense to any action for penalties under this section that the person suing therefor has within two years sold or offered for sale any list of stockholders of such corporation or of any other corporation or has aided or abetted any person in procuring any stock list for any such purpose. Nothing herein impairs the power of the courts to compel by man- damus or judgment the production for examination by any stockholder of the stock books of a corporation." 6 This section is not unconstitutional on the theory that it is in restraint of interstate commerce.'' The provision that every foreign corporation having an office for the transaction of business in this state shall keep a stock book, is mandatory and is not complied with by the keeping of a book which does not contain the street and number of the stockholders living in cities and in. which the word " unknown " is inserted in the column provided for the amount paid on the stock.^ All offi- cers or agents of the corporation whose positions are such that 6. Stock Corporation Law, § 33. as stockholders have no application to it. amd. by L. 1916, ch. 137. Matter of Sage, 70 N. Y. 330. A corporation organized under L. 7. Hovey v. De Long Hook & Eye 1869, ch. 917, by consolidation of vari- Co., 147 App. Div. 881, 133 N. Y. Supp. ous foreign and domestic railroad com- 35, revd. on other grounds 311 N. Y. panies, is a domestic, not a foreign 430, 105 N. E. 667. See also, Pelle- corporation, and therefore it was held treau v. Greene Consol. Gold Mining that the provisions of L. 1843, ch. 165, Co., 49 Misc. 333, 97 N. Y. Supp. 391. to compel transfer agents of foreign 8. Tay v. Coughlin-iSandford S. Co., corporations to exhibit lists of their 47 Misc. 687, 94 >T. Y. Supp. 638. 726 COBPOBAXIONS. it is within their power to comply with the statute are bound to do so, but a sales agent having no power to procure the stock book or allow it to be inspected, is not within the pur- view of the statute.^ 653. Limitation on duty to keep stock books. A foreign corporation must be deemed to have an office for the transaction of business in this state, within the meaning of section 33 of the Stock Corporation Law, where it pays rent for the office, has a person permanently in charge there- of, deposits money from it and pays dividends thereat.^" But the maintenance by a foreign corporation of a transfer agent in this state merely for the convenience of its stockholders and to facilitate the sale of its stock does not constitute the mainte- nance of an office for the transaction of business within the meaning of the statute, and he is not liable for the penalty prescribed by statute for a refusal to permit an inspection of the stock book.^^ Nor is the office of its transfer agent in any sense the office of the corporation for the transaction of busi- ness where the transfer agent is employed merely to deliver stock certificates executed in blank to persons who should sur- render an equivalent amount of old certificates properly in- dorsed, the actual transfer of the stock being made at the home office of the corporation.^^ So also the maintenance of an office in thi.«i state for the convenience merely of its travel- 9. Hovey v. Eiawald, 139 App. Div. acter was in the foreign state. Greene 433, 124 N. Y. Supp. 130. v. Shain, 23 Misc. 730. 4.9 N. Y. Supp, When person in office other than 1061. officer not liable for refusal to permit 10. People .ex rel. Singer v. Knicker-' inspection of hooks. — Wliere a foreign bocker Trust Co.. 38 Misc. 446, 77 N. corporation, having an office but' no Y; Supp. lOOO. transfer agent in this state, has failed An office of the stock transfer agents to eomplyi with the provisions of the of a foreign corporation maintained in Stock Corporption Law requiri% it to the, city of Ne.w Yprk ig one "fojr the keep in its office a stock book for tlie transaction of business in this state" inspection, of stockholders, a, person, in and there the corporation must deposit the office but not shown to have been and exhibit the book and may be com- an officer of the corporation, cannot pelled to dp so by mandamus. People be made liable, for the statutory ex rel. Miles v. Mont. & Boston C. Co,, penalty imposed upon a refusal to show 40 Misc. 282, 81 N. Y. Supp. 974. the stock book, by proof that he an- 11. Wadsworth v. Equitable Trust swered a demand for it by saying to Co., 153 App. Div. 737, 138 N. Y. Supp. the stockholder that the book was not 842. in the office, that it could not be shown 12 Althaus y. Guaranty Trust Co., and that the only book of that char- 78 Misc. 181, 137 N. Y. Supp. 945. FOREIGN COBPOBATIONS. 727 ing salesmen, does not amount to the maintenance of an office for tike transaction of business.^^ 654. Eight of stockholders to inspect books. A stockholder has an absolute right to inspect the books of the corporation and the statute imposes an absolute duty upon the corporation and the custodian of the stock-book to permit such inspection, and this right includes the right to take memoranda from the books in the course of his examination in order to assist Ms recollection. No statement or proof of any particular intent can be required of the person demand- ing the inspection. He must be a stockholder and must pre- fer his request during business hours ; that is all. If it ap- pear in good faith that the book was at that time in actual use for other corporate purposes he could be required of course to wait a reasonable time until such use terminated." But compliance with the statutory requirement as to the keep- ing of such book for the inspection of stockholders is excused, where the stock-book is taken from its possession under a subpoena duces tecum. And the fact that the corporation had in its possession a list of persons who had piirchased stock subsequently to the seizure of its stock-book by the govern- ment, which it. failed to exhibit to plaintiff, did not subject the corporation to an action for a penalty.^^ A stockholder is not bound to accept the offers of an officer to allow hini to inspect the stock-book at some place other than the office of the com- pany, and cannot be required to go elsewhere for that pur- pose.^^ The provision that the stock-book shall be Open to inspection during " the usual hour^ of, transacting business," does not mean the hours of business, which any particular in- dividual may establish for himself, but, with the exception of banking bouses, means the \vliole day down to the hours of rest in the evening, or at least the hours which are custom- arily, devoted to business in the particular cpmmimity wliere the transaction occurs." The corporation cannot justify a 13. Hovey v. De Long Hook & Eye 56 Misc. 508, 107 N. Y. Supp. 191. Co., 211 N. Y. 430, 105'N. E. 667. 15. Otto v. Franklin'.? Incorporated, 14. Henry v. Babcoek & Wilcox Co., 90 Misc. 311, 153 N. Y. Supp. 107. 196 N. Y. 303, 89 N". E. 943; Hollaman 16. Eecknagel' v. Empire Self-Light- V. El. Arco Mines Co., 137 App. Div. ing Oil Lamp Co., 34 Misc.' 193, 53 863, 133 N. Y. Supp. 852; Fay v. N. Y. Siipp. 635. fioiighlin-Sandford S. Co., 47 Misc. 687, 17. Cox v. Island Mining Co., 65 94 N. Y. Supp. 628; Altliaus v. Gii-oux, App. Div. 508, 73 K Y. Supp. 69, mod. 728, ■ CORPOKATIONS, failure to allow an inspection by failing to keep a book in the state so that it can comply with the obligation imposed on. it to allow the inspection. It is bound to keep the book here and allow each stockholder to inspect it,?^^. But the officers of a for- eigTi stock corporation, not a moneyed or railroad corporation, having an office in this state, are not liable to th^ penalty pre- scribed by section 33 of the Stock Corporation Law for a fail- ure to permit a stockholder to inspect the stock-book of the corporation, if it appears that the stock-book was not within the state at the time the demand for an inspection was made, or at any time, except for a brief period on the reorganization of the company.^' A stockholder of a foreign stock corpora- tion, having an office for the transaction of business in this state, but which does not keep therein the stock-book required by law, is entitled to inspect books kept by its transfer agent and by its registrar of transfers of stock in their offices in this state containing some or all of the information required to be shown by a stock-book when kept, as these books may be deemed to have been prepared by the foreign corporation. He may also inspect any papers officially in the possession of the assistant secretary and treasurer of the corporation in its New York office and which contain similar information.^" And the fact that a book kept on deposit while the transfer agent as a stock-book, did not contain every particular item which the statute requires to be recorded in the stock-book, will not ex- cuse the transfer agent from complying with the stockhold- er's request to inspect such book.^ 655. Mandamus to compel inspection. There is no express provision of law authorizing a writ of mandamus to enforce the provisions of the statute providing for the inspection of books, and the granting of such writ lies in the sound discretion of the court. Even though the statute entitles a stockholder o4 a foreign corporation to make ex- tracts from its stock-book, a peremptory writ of mandamus 175 N. Y. 328, 67 N. E. 586, holding 18. Hovey t. Elawald, 139 App. Div. that a demand made upon the presi- 433, 124 N. Y. Supp, 130. (lent of the corporation at a quarter- 19. Kellner v. Shelley, 178 App. Div. past three o'clock in the afternoon. 657, 165 N. Y. Supp. 833. while he was still iu the oflSce and at 20. People ex rel. Singer v. Knicker- a time when he made the excuse that bocker Trust Co.. 38 Misc. 446, 77 N. he was too busy to comply with the Y. Supp. 1000. demand, is sufficient to support an ac- l.Tyng v. Corporation Trust Co., tion. 104 App. Div. 486, 93 N. Y. Supp. 92.8. FOEBIGlSr COKPOBATIONS. 729 to compel the corporation to grant that right will be denied when it affirmatively appears that the applicant desires to make the extracts for an ulterior purpose in no way connected with his interest in the corporation or its management. Thus, it will be denied where he desires a complete list of the stock- holders merely to send out circulars offering to sell stock of other corporations^ and offering to negotiate loans to stock- holders upon their stock as collateral security.^ Upon the hearing of a motion for a writ of peremptory mandamus com- pelling the transfer agents of a foreign corporation to allow stockholders of the company; to inspect the transfer hooks and list of stockholders, the court may, when desiring fuller information before proceeding, order a reference to take proof of the facts and circumstances alleged in the affidavits presented by the respondents, and direct that the persons making the same appear before the referee for examination.' And when on an application for a mandamus to compel the alleged transfer agent to exhibit to a stockholder the transfer book, and list of stockholders, a question of fact is raised as to whether the defendant is the transfer agent of the corpo- ration, an alternative writ of mandamus should be granted for the purpose of determining such question of fact.* If the foreign corporation does not come within the provisions of section 33 of the Stock Corporation Law, the courts of this state have no jurisdiction to grant, upon an application by a stockholder not made in an action at law or in equity, a writ of mandamus to compel an inspection by him of the books and records of such corporation, the right to such inspection is enforceable only by the courts of the statein which the corporation has its legal existence.^ 2. People ex rel. Althause v. Giroux him to inspect such of their books and Consolidated M. Co., 122 App. Div. 617, papers as are within the jurisdiction li07 N. Y. Supp. 188. of this state. Matter of Croshy. i?, When mandamus denied.— Where two App. Div. 618, 59 N. Y. Supp. 340. foreign corporations. • operating in S. People ex rel. Del Mar v. St. Mexico, are manager! by the same offi- Louis & S. F. Ry. Co., 44 Hun 552, 7 cers, a foreign stockholder in both com- St. Rep. 415. paniea will not be granted a peremp- 4. People ex rel. Daniels v. Craw- tory mandamus, in a special proceed- ford, 68 Hun 547, 22 N. Y. Supp. 1025. ing brought by him in the state .of 5. Matter of Rappleye, 43 App. Dir. New York to ascertain the value of 84; 59 N. Y. Supp. 338; Mitchell v. certain of their stock? and bonds which Northern Security Oil & Transp. Co.. h« has pledged to a third party, re- 44 Misc. 514^ 90 N. Y. Supp. 60, affd. quiring both corporations to permit 90 App. Div. 624, 91 N. Y. Supp. 1104.. 730 COKPOEATIONS. 656. Penalty for failure to allow inspection. A party suing for penalties can recover but for one vio- lation or one default prior to the commencement of the action. So the refusal of the secretary of a corporation to permit a stockholder at his request to examine the stock^book, followed the next day by a similar demand and refusal, and the presi- dent 's refusal of the same request the day following, con- stitute but one demand and but one refusal on one occasion and riot three demands and three refusals, and renders each officer and the corporation liable to but one penalty under sec- tion 33 of the Stock Corporation Law, imposing a penalty upon each officer of a corporation who refuses to exhibit the stock-book, and also a like penalty upon the corporation.® It is essential to a recovery that the plaintiff prove that the de- fendant is a stock corporation having an office for the trans- action of business, or a transfer agent in this state ; that it is not a moneyed or railroad corporation and that plaintiff is a stockholder therein.'' He makes out a prima facie ease when he shows that he went, during business hours, to the office of the company where its stock-book is required by law to bie kept and made a demand upon the person apparently in charge that an inspection be permitted; he is not required to prove, in the first instance, that such person bore any particu- lar relation to the company.^ A complaint in an action to re- cover the penalty which does not state that defendant is a " stock " corporation and is not a " moneyed or railroad " 6. Cox V. Paul, 175 N. Y. 338, 67 edged its receipt and requested the N. E. 586. stockholders' addresses; and where 7. Hollister v. De Forest Wireless such facts appear in an action begun Tel. Co.. 47 Misc. 674. 94 N. Y. Supp. by him to recover the penalty, for a 504. refusal to allow him to inspect the 8. PcUetreau v. Greene Consolidated stock book, commenced before a. re- Gold Mining Co., 49 Misc. S33, 97 N. quest for the stockholders' addresses Y. Supp. 391. # ~ was received, no cause of action is es- Proof of refusal to allow inspection, tablished. Fuller v. O'Connor, 61 Misc. — ^Where a corporation had ceased 279, 113 N. Y. Supp. 684. business, given up its oiTices and de- A "refusal" to permit a stockholder posited its books in a corner of a stock inspection is sufSciently made out brokerage office where plaintiff, a stock- where the transfer agents or those in holder, made a demand in writing and charge of that office have for a month orally of two of the corporation "offl- met, with evasive answers only, the cers for an inspection of the stock stockholder's repeated demands for an book, and the same night or the fol- inspection. People ex rel. Miles v. lowing morning a list of stockholders Mont. & Boston C. Co., 40 Misc. 883, was mailed to plaintiff who acknowl- 81 N. Y. Supp. 974. FOEEIGK CORPORATIONS. 731 corporation, is fatally defective and the deficiencies are not such as can be cured by judgment.^ 657. Refusal to transfer stock on books. The assignee of transferable shares of stock of a foreign corporation which were duly issued to a stockholder, is their owner both in law and equity and all that remains to be done is to register a perfected right. If the corporation, or the offi- cers thereof, refuse to make the transfer upon the books of the company and issue new certificates to the owner, he has a choice of remedies. He may treat the refusal to transfer the shares as a conversion and sue the corporation for their value ; he may assert his ownership of the shares irrespective of the registry and sue for the dividends upon them,^" or he may maintain an action to compel the specific performance of the contract, expressed in the certificate, to transfer the stock upon the books ,of the. corporation, and thereby place himself in possession of the evidence of title.^^ 658. Books and copies thereof as evidence. "Where a party ' wishes to proVe an Act or transaction of a foreign corpora- tion, the book or books of the corporation may be used for that purpose, aa pres'ujnptive evidence, whethei' any or all of the parties are or are not members of the. corporation." J 2 - '■ 9. Seydel v. Corporation L. Co., 46 right, title and interest in or against Misc. 576,. 92 N". Y. Supp. 335. the stock," and while retaining the 10. Travis v. Knox Terpezone Co., certificates refusted to make the trans- 815 N. Y. 359, 109 N. E. 250. ' fer. The plaintiff asked that he be 11. Ernst V. Elmira Municipal Imp. adjudged to be the owner of the shares ; Co., 34 Misc. 583, 54 N. Y. Supp. 116. that the corporation and its officers be In Travis v. Knox Terpezone Co., directed to make the transfer and to 215 N. Y. 259, 109 N. E. 250, Issue new certificates, and for other wherein it appeared that a for- relief. To this complaint the defend- eign corporation having an office- ants demurred. It was held, that the for the regular transaction of business primary purpose of the action, was to in this state issued transferable cer- compel the- transfer, of stock on the tificatea of its stock to a person who ^^^^^^ ^f t^e defendant corporation and assigned them to the plaintiff, a resi- q^^ delivery of new certificates; that dent of this state; that the plaintiff ^j^^ ^^^^^^ ^^ ^^.^ .^^^^ ^^^^ .^^.^_ surrendered them to the vice-president ^ -^^^^ ^^^ defendants are sub- and the duly registered transfer: agent . ^v ^ .^, , , . ..™ „ ,, i- ,. 1 ,i„j™.q ject to our process; and that plaintiff of the corporation, who acknowledged ■■ ; "^ ' , . ^^ ,, the receipt of the certificates and stated .^^ ^entitled to the aid of our ;courts to that they would be transferred as re- protect his ownership and perfect his quested, aiid that later_,the corpora- rpunifflents of title. '-' tion gave notice that it "claimed sOme 12. Civil Practice Act, § 373. 732 CORPOEATIONS. " 1. If an original book of a foreign corporation is not produced, at thp trial, as prescribed' in the last sectioii, a copy thereof or of an entry therein, verified as prescribed in this section, may be used with like effect as the original book; provided that the party intending to use the copy gives the adverse party at least ten days' notice of his intention, specifying briefly. the nature of the evi dence proposed to be given. 2. The copy must be verified by the deposition, taken as ]jrescribed by law, or the oral testimony taken at the trial, of the person who made it or of a person who has examined and compared it with the original book, or the entry therein. 3. The witness must testify that the copy produced is correct; thai lie made it, or compared it with the original; and that he then knew that the original book so copied, or containing the entry, was the book of the corporation; or that it was then acknowledged to him to be -such, by an officer or receiver of Che corporation, or a person having the custody thereof, naming the person who made the acknowledgement; and .he must specify where and in whose custody the original was then kept. i. This section does not apply where the foreign corporation is a party to tlie action and seeks to prove its own act or transaction in its own behalf." 13 Original books of a foreign corporation which have been in the CTistody of its proper officer are admissible to prove its corporate acts or transactions in an action against a trans- feree of stock for unpaid calls, without first proving the cor- rectness of each entry by the person making it, and are pre- sumptive evidence for that purpose under section 373 of the Civil Practice Act, providing that where a party wishes to prove an act or transaction of a foreign corporation, the book or books of the corporation may be used for that purpose as presumptive evidence, whether any or all of the parties are or are not members of the corporation, and under section 374 thereof making provision for the use of a copy of such books." Officers, Directors and Stockholders. 659. Liabilities generally. "Except as otherwise provided in this chapter the officers, directors and stock- holders of a, foreign stock cor^ration transacting business in this state, except moneyed and railroad Corporations, shall be liable under the provisions of this chapter, in the same manner and to the same extent as the officers, directors, and stockholders of a domestic corporation, for: 1. The making of unauthorized dividends; 2. Unlawful loans to stockholders; 3. Making false certificates, reports or public notices; 4. An illegal transfer of the stock and property of such corporation, when it is insolvent or its insolvency is threatened; IS. Civil Practice Act, § 374. 14. Sigua Iron Co. v. Brown, 171 N^. Y. 488, 64 N. E. 194. FOREIGN COKPOKATIONS. 733 5. The failure to file an annual report. . ,:: Such liabilities may be enforced in the courts of this state, in the same manner as similar liabilities imposed by law upon the offioera, directors and stockholders of domestic corporations." IB The provisions of this section are applicable to foreign cor- porations only that are doing business within this state.^^ The courts of this state have no jurisdiction of actions to enforce the liability of officers of a foreign corporation in the nature of a pena,lfy under the foreign statute." 15. Stock Corporation Law, § 70. An action upon an unsatisfied judg- ment, obtained against a foreign cor- poration for injury to property caused by its negligence, cannot l?e maintained against the president of the corpora- tion personally, upon a complaint al- leging that process in the action in which the judgment was obtained was served upon him as. president of such corporation, and that fas such officer he caused the suit to be defended, and was personally cognizant of all the steps in the litigation; that, at the time of the injuries to plaintiffs' prop- erty and during the action in which such judgment was obtained, the cor- poration was a myth and did not exist, because the organization required by the law under which the corporation was organzied wag not kept up, and that during such time its president was the real owner and in possession of the property, and the real party en- gaged in the business of the corpora- tion; since thes defendant did not njalte himself personally liable by defending the action in which the judgment was obtained as president of the corpora- tion, nor can he be personally charged with the payment of a judgment re- covered in an action against it to which he was not a party, whwe he is not charged with any personal negli- gence' resulting in the. injuries consti- tuting the basis of the judgment siled upon in the present action; and hence he cannot b^ compelled to try that question iti a court of equity upon a complaint which does not charge it. Tilley v. Coykendall. 172 N. Y. 587, 65 N. E. 574. 16. See Stock Corporation Law, § .70. General assignment, with prefer- ences, by a foreign corporation which does not transact business within the state of New York, does not contra- vene the statutory law of the state of IS'ew York, prohibiting transfers of property by an insolvent corporation with an intent to give a "preference to particular creditors, nor is it repug- nant to its general policy. Matter of Hulbert Bros, & Co., 38 App. Div. 333, 57 N. Y. Supp. 38, revd. on other grounds 160 N. Y. 9, 54 N. E. 571. Cases decided prior to enactment of section 70 of Stock Corporation Law, holding section 66 not applicable to foreign • corporations. Cot^ts v. Dojj- nell, 9.4 If. Y. 168; Vanderpoel v. Gor- man, 140 N. Y. 563, 35 N. E. 932; Hill V. Knickerbocker Electric L. & P. Co., 63 Hun 633, 18 N. Y: Supp. 813; Lane V. Wieelvyright, 69 Hun 180, 33 N. Y. Supp.'5i76, affd. 143 N. Y. 634, 37 N. B. 836; Standard Nat. Bank v. Garfield Nat. Bank, 56 App. Div. 43, 67 N. Y. Supp." 47:3; Worthington y. Pfister Bookbinding Co., 3 Misc.. 418, 33 N. Y. Supp. a95. 17. Hutchinson v. Stadler, 85 App. Div.-434,:83 N. Y. . Supp. -509 ; Bird v. Hayden, 3 Abb. Pr.. >r. S. 61, 24 Super, a. (1. Rob.). 3 83 i 734 . yoEPOBAXioNS. 660. Making unauthorized dividends. The legislature lias the power not only to maike the wi'bng- ful act of directors of a foreign corporajtion doing business in this state in declaring a dividend except from the surplus or the net proj&ts from its business an offense- against our laws, but to give the right of action therefor to the *corporation it- self.^^ Section 70 of the Stock Corporation Law makes no attempt to regulate foreign corporations while they keep within their domicile. It is aimed against them only while they elect to live within this state. The duty which it imposes arises only when they come here,, and ends the moment that they leave. Such a statute, however phrased, is in effect a condition on which the right to do business within the state depends.^^ If the corporation is kept out of the state, the di- rectors may declare dividends as they please. If they elect to keep it here, they must not lead it into paths of ruin. In these days, when countless corporation?, organized on paper in neighboring states, live and move and have their being in New York, a sound public policy demands that our legislature be invested with this measure of control. If the control is irk- some, it may he, avoided by leaving the state. Eveil if the pro- hibited act is:done in the home state, it, may be so liound up in its results with the business in this state that it cannot be, viewed here with indifference. A prohibition which lasts while business within the state continues, and may be escaped when business vrithin the state is stopped, is, in effect, a con- dition imposed on the right to do business, and nothing more. It is one of the. terms to which, submission is required while the right is enjoyed. The legislature meant by seqtibn 70 of the Stock Corporation Law to extend to foreign corporations transacting businieBS in this state the prohibitions in respect of dividends that earlier sections of the same statute had aU ready, laid on domestic corporations and to establish an of- fense again.st our laws, 4ot merely to declare that there should be a remedy here for an offense against the hpme laws.-" But 18. German-American Coffee Co. v. American Coffee Co., v. Diehl. 216 N Diehl, 216 N. Y. 57, 109 N. E. 875; Y. 57, 109 N. E. :875. 19. St. Clair v. Cox, 106 U. S. 350; 20. German- American Coffee Co. y. Horn Silver Mining Co. v. New York, Diehl. 216 N. Y. 57, 109 N. E. 875. 143 U. S. 305; Orient Ins. Co. v.,Dagg3. Tie statutes, of this state allow the 173 U. S. 557; People v. Fire Assn. of recovery, from directors Y. Supp. «a4. . 53 N E 1108. ^' Southworth v. Morgan. 305 N. Y. A receiver of an Iowa banking cor- 8«3, 98 if. B. 490. 47 738 COEPOEATIONS, action in New York brought, to enforce a- stockholder's lia- biUty.i« ..,; ., • 662. Suit against officers or directors for official misconduct. An action by a stockholder to compel an accounting and the restoration, by parties within the jurisdiction of the court, of property wrongfully taken and withheld and to restore it to a foreign corporation is within the jurisdiction of the courts of this state.^i And the courts of this state have jurisdiction to compel the officers or directors of a foreign corporation, over whom jurisdiction has been acquired by the service of process, to account to the corporation for property of the cor- poration in. their hands or which theyhave misapplied. So a director of a foreign corporation may maintain in our courts under section 9.0 of the General =Oorporation Law, an action against the president, also a director, of the corporation, to compel the latter to account for his official conduct as such president and director in the managenient and disposition of the funds and property of the corporation committed to his eJiarge, and to compel him to pay to the corporation the money and the value of ^ the property which he appropriated to his own. use or which he lost or wasted by a violation of his duty. Jn ^uch an action the: court may, in a proper case, enjoin an individual defendant, over whose property it has acquired jurisdiction, from disposing of the property of the corpora- tion in his hands until final judgment, or may appoint a re- ceiver of the property of the corporation in this state pending final judgment. The authority to grant such an injunction or to appoint such a'receiiver can, however, only be exercised' when necessary to' protect the corporation or its stockholders against an unl3,wful disposition of the property of the corpo 10. United Statea Vinegar Oo. v. company- .is in the hands of the per- Schlegel, 67 Hun 356, 33 tif. Y. Supp. sons hy whom the acts complained of 40'?, affd. 143 N. Y.'537, 38 N. E. 729. were comnutted. Where,.the acts com- .11. Ernst V. Rutherford Springs Gas plained of have .been fully executed, Co., 38 App. Div. 38S, ,56 N. Y. Supp. the .charges of miaconduet are denied, 403. . j^jjij j^]j j.gjjgf ug^jj be, granted by a An action may be maintained by money judgment, and it does not resident stockholders of a foreign cor- appear that the defendants are in- poration, although they hold only a solvent, an injunction pendente lite, small portirin of the stock; to prevent in such a case, is not necessary and waste and recover for the corporation should not be granted. N^ph. v. Hall, stock or property improperly given 11 Misc. 468, 32 N. Y. Supp. 701. away, where the management , of the FOREIGK CORPQRATIONS. 739 ration during the pendency .qf the fiction. But the judgment can affect only property located in this state and property of the corporation in the possession of its officers or agents who are in this state and over whom the court has acquired juris- diction.^^ But a non-resident plaintiff cannot maintain a suit in the courts of this state against a ^foreign corporation for an accounting in relation to a partnership for the develop- ment of mines in a foreign territory. This is true although moneys of the company are alleged to have heen on deposit in this state, no relief against the particular fund being asked.^^ 663. Judicial suspension or removal. " A trustee, directoi', or other officer of a corporation shall not be suspended or removed from office, by a court or judge. Otherwise than by the' final judgment of a conlpetgllt court, in an action brought by the attorney-general, as prescribed in section ninety of thial chapter (General Corporation Law)." 14 This section is made applicable to foreign corporations by a provision in the General Corporation Law that: " The last three sections apply to an action or special proceeding against * * * a corporation created hj or under the laws of another state, ' government, or country, or a trustee, director, or other officer thereof, where the corporation does business within the state, or has, within the state, a business agency or a fiscal agencyi or an a'geney for the transfer of its stock." 15 664. Attachment of unpaid subscription to stock. "Under a. warrant of ajttach^ent against a foreign corporation, other , than a corjtoration created, by or under the laws of. the TJJriited States, the sherirf may levy jipon the sum remaining unpaid upon a subscription' to the capital stock of the corporation, made by a person within the county^, or upon one or more shares of stock therein, held by such a person, or transferred by him, for the ipurpo^e of avoiding payment th^eof." 16 , . Certificates of stock in a foreign corporation, owned by a ilon-resident and indorsed in blank, but deposited in this state for .the purJ)oses of sale, are personal property within the meaning of the provisions of the Civil Practice Act relating to the levy of a, Warrant of attachment, arid after being at- tacheci in 'an action againk-' the owner,- in which a judgment Was ' obtained, it is the duty of the sheri-ff' to Sell the same under eJCecuti oh." ^ . ', : 12. Acken v. Coughlin, 103 App. Div. 15. General Corporation Law, § 308. 1, 92 N.. Y. Supp. 700. 16. Civil Practice Act, § 914. 13. Johnson v. Victoria Chief Copper 17. People ex rel. Wynn v. Grifen- Mining & S. Co.. 150 App. Div. .653. hagen, 167. App. Div. 572, 15,a N. Y. 135 N. Y. iSupp. 1070. Supp.. 679. .• , ; 14. General Corporation Law, § 307. 740 CORPORATIONS. Receivers. 665. Appointment of receiver within this state. "A receiver of. the property of a corporation can be appointed only by the court, and in one of the following cases : . . 1. An action, brought as prescribed in articles fifth, sixth or seventh of this chapter. 2. An action brought for the foreclosure of a mortgage upon the property, of which tlie receiver is appoiiited, where the mortgage debt, or the interfest there- upon, has remained unpaid, at least thirty days after it was payable, -and after payment thereof was duly demanded of the proper officer of the corporation and where either the income of the property is specifically mortgaged, or the prop- erty itself is probably insufficient to pay the mortgage debt. 3. An action brought by the , attorney-general, or by a stockholder, to pre- serve the assets of a corporation, having no officer empowered to hold the same. 4. A special proceeding for the voluntary dissolution of a corporation. 5. Upon the application of the regents of the university, in aid of the liquida- tion of a corporation whose dissolution they contemplate or have decreed; or upon the application of the trustees of such a corporation, with notice to the regents. Where the receiver is appointed in the action, otherwise than by or pursuant to a final judgment, notice of the application for his appointment must be given to the proper offlcpv of the corporation. ' ' IS This section is made applicable to foreign corporations by section 308 of the General Corporation Law. While the courts of this state will, under certain circumstances, appoint a re- ceiver of a foreign corporation when necessary for the pro- tection of the stockholders or creditors of the corporation,^' they will not appoint a receiver simply because of general allegations of misconduct on the part of the directors or offi- cers thereof.^" The courts of this state have power, on the ijp- plication of stockholders of an insolvent foreign corporation doing business and having assets in this state, but no officers empowered to hold such assets, to appoint a receiver of such corporation for, the purpose of preserving the assets within their jurisdiction fof th.e protection of domestic creditors; a receiver so appointed represents the domestic creditors o^qily ol; the corporation.^, And the courts have junsdiction to ap- point a receiver of the property and assets of a foreign cor- poration in order to preserve them from unlawful disposition 18. Creneral Ckjrporation Law, S 306. 20. Phillips v. Sonora Copper Co., 19. Eedmond v. Hoge, S Hun 171, 90 App. Div. 140, 86 N. Y. Supp. 800. .5 T. & 0. 386; Phillips V. Sonora, I.Hall v. Holland House Co., 13 Copper Co.. 90 App. Div. 140, 86 N. Y. Misc. .55, 33 N. Y. Supp. 50. < Supp. 200. I .' FOREIGN GOBPOBATIONS. 741 and waste/ and to protect the interests of domestic creditors/ and stockliolders.* But the courts of tMs state have no .juris- diction to appoint a receiver of a foreign corporation in an iaction to sequestrate its property with a view to distribution pursuant to' section 100 of the General Corporation Law;'^ A receiver may be appointed in this state of the property there- in of a foreign corporation, notwithstanding the appointment of a receiver in the foreign state, and sections 3Q6 and 308 of the General Corporation, Law do not affect the inherent power of: the court/ So a non-resident stockholder of an insolvent foreign corporation, of which a receiver ha.s been appointed itt the state: of its domicile, and which has never obtained the certificate authorizing it to transact business in the state, may, under sections 306; and 308 of the General Corporation Law. maintain an action to procure the appointment of an auxiliarv 2. Logan v, McCall Pub. Co., 140 N. Y. 447, 35 N. E. 655; Eensens v. Manufacturing and Selling Co., 99 App. Div. 214, 90 K. Y. Supp. 1010; MeHarg v. GommQnwealtJi Finance Corporation, 195 App. Div. 863. 3. Horton v. McNally Co., 155 App. Div. 332, 323, 140 N. Y. Supp. .357; Mitchell V. Banco de Londres y Mexico. 193 App. Div. 730, 183 N. Y.: Supp. 446, holding that a general . creditor , of a foreign insolvent corporation v^hich is in ! the hands : of a receiver or; liqui- dator appointed in a foreign state may institute proceedings in this state in behalf of himself, and other creditors similarly situated, to have a receiver appointed of the assets of the foreign corporation located here, but where a corporatiQn:..is.; insolvent and_ in the hands" of a receiver or liquidator appointed in: a foreign .state, a creditor in this state, whether his claim is re- duced to; judgment or not. must reeog- liizg- the ins^otlvency proceeding in the foreign state, and he can gain no preference over any other creditors of the corporation upon the assets oif ; the insolvent corporation which may be located in this, state. 4. Murray v. Vanderbilt, 39 Barb. 140; McHargv. Commonwealth. Finance Corporation, 195 App. Div. 862. . 5. Di-eyfus & Co. v. Seale & Co., 18 Misc. 5.51, 41 N. Y. Supp. 875, revd. on other grounds, 37 App. Div. 351, 55 N. Y. Supp; nil; Burgoyne v. East- ern & W. Ry, Co., 13 N. Y. Supp. 537. Appointment of receiver; — -The Su- preme Court of the State of New York "will not interfere with the property of , puch a corporation at the instance of a judgment, creditor thereof by the appointment of a permanent receiver (^f the property and effeetp of the cor- poratiipn, in t^he ,abs,enc«!.of proof that the eorporatiqn has fraudulently dis- poned of its property in the, State, of New, Yprk (in v?hich ease ii; w;puid seem, that the,, fraudulent transferees would be, necessary parties) or i^h^t the corporation , has. : property , \y;ithin this ptate to which the receivership jnight, attach, and that eqviitable,. in- tervention is necessary. Dreyfus & Co. v. Seale & Co<, ,37 ,App. Div. 351, 55 N. Y. Supp. nil. 8. Popper V. Supreme Council, 51 App, Div. 405, 70 N. Y. Supp; ?3,7. 742 CORPORATIONS. receiver of its property in this state.'' An auxiliary receiver of a foreign corporation appointed in this state is merely the custodian of the property within the state for the purpose of preserving the assets in order that creditors may reach them without being compelled to go to a foreign jurisdiction to prove their claims, and has only the powers conferred by the order appointing him.f 666. Foreign Eeeeiver. The title of the receiver of a foreign corporation appointed in another state is subject to the right of the courts of this state to control the corporate assets in this state for the bene- fit of domestic creditors.^ But the principle of comity re- quires the courts of this state to give to a foreign receiver of the assets of an insolvent foreign corporation the primary rights over the assets of the corporation situate in this state, and a local receiver appointed by our courts should be given only such power as is necessary to the protection of domestic creditors.^" A receiver or trustee of the effects of an insolvent corporation of another state, appointed under the laws of 7. Walter v. MoAlister Co., 31 Misc. 747, 48 N. Y. Supp. 86. 8. Buckley v. Harrison, 10 Misc. 683, 31 N. Y. Supp. 999. Accounting by ancillary receiver. — The failure of an ancillary receiver of the assets of a foreign corporation in this state to obtain an order of the court authorizing him as ancillary receiver to turn over the funds which came into his hands under his appoint- ment by the court in this state to himself as receiver under the appoint- ment of the court in the foreign state cannot be permitted to jpsult in a surcharge of his accounts, where he shows that he has in fact disbursed the moneys properly and Without prejudice to citizens of this state. In such case, the order of the court in the foreign state approving his account which he rendered there for the assets which came into his hands in both jurisdictions will pro- tect him in this state. Strauss i . Casey Machine & 'Supply Co., 68 Misc. 474, 124 N". Y. iSupp. -33. ' ? Where, pending an action against a foreign corporation, receivers are ap- pointed in the United States District Court in the foreign state, and subse- quently- are appointed by the United States District Court in this state, as ancillary receivers of all the property of the corporation in such district, and are in possession of all the prop- erty and assets of the corporation, the. judgment creditor is not entitled to an order in supplementary proceed- ings for the examination of the judg- ment debtor through its president and treasurer. Jones v. Standard Plunger Elevator Co., 167 App. Div. 178, ISS N. Y. Supp. 910, affd. 215 ST. Y; 692, 109 N. e; 1080. 9. Hammond v. National Life Asso- ciation, 58 App. Div. ■ 453, 89 N. Y. Supp. 585; Courtright v. Vreeland, 64 Misc. 46. 117 N. Y. Supp. 952. 10. American & British Mfg. Co. v. International P. Co., 173 App. Div. 319, 159 X. Y. Supp. 582. FOREIGN CORPORATIONS. 743 such state, with power to take possession of and sell all the effects of such corporation, has the power to sell and assign a debt due to the corporation, from a citizen of this state, and such sale and assignment give to the purchaser the equitable right of action, as against the debtor, in the courts of this state>^ And a foreign trustee, receiver or liquidator may, in a proper case, sue in our courts a stockholder resideht here for his proportionate liability as such stockholder.^^ The status of a receiver of a foreign corporation, appointed a re- ceiver of its assets within the state of New York, depends solely on the order of our court. And so while he can claim no paramount right over a domestic attachment merely be- cause his foreign receivership was prior in time, he will, upon the principle of comity, be permitted to attack.the attachment where he alleges it to be void in its inception.^^ A receiver of an insolvent corporation of another state, resident therein and appointed, by the court of that state having full juris- diction, in a suit for, the winding, up of the affairs of the cor- poration, with power, so far as could be conferred by such ap pointment, to demand, sue for, collect, receive and take into his possession all the property, effects and choses in action of the corporation, cannot maintain an action in this state a.gainst the corpoi'ation as sole defendant for the sole pur- pose of procuring the appointment in this st^te of an ancillary receiver, on the fact that the corporation has property within this state that requires administration, since he possesses all the powers which an ancillary receiver would have.^^ 667. Distribution of assets. AVTiile courts of this state have no right to favor domestic creditors in the distribution of the assets of an insolvent foreign corporation , withi^ its jurisdiction, before seijding out of the state its agisets for which a trustee has been ap- pointed at its domicile, they may guard against discrimination by the trustee against domestic creditors and shareholders hj requiring a bond conditioned that they shall be entitled to the same dividend as other creditors and shareholders throughout 11. :Hoyt V. Thompson, a, N. Y. 330. 407, affd. ,58 App. Div. 453, 69 N. Y. 12. Royal Trust Co. v. Harding, 155 Supp. 585. App. Div. 104, 140 N. Y. Supp. 9.:. 14; Mabon v. Ongiley Electric Co., 13. Hammondv. National Life ASBO- 1.56 N. Y. rl96: : elation, 31 Misc. 182. 65 N. Y. Supp. 744 COBPOBATIONS. the country, without any deduction on account of a special fund deposited in the state for their benefit.^^ Reincorporation of Foreign Moneyed Corporations. 668. In general. "Any moneyed corporation duly organized by or under the laws of any statf of the United States, and having an office or doing business in this state, may file, if a, banking corporation or authorized to make loans upon pledges or de- posits, in the office of the Superintendent of banks, and if an insurance corpora- tion in the office of the superintendent of insurance, the documents described in section eighteen of this ohapter, and such documents shall be recorded as original certificates of incorporation are required; by law to be recorded. The fees for filing and recording such documents, together with the tax, if any, required by law to be paid before the incorporation of a domestic company of the same class. must be paid before filing." 18 : ^ 669. Papers to be filed. " The documents to be filed by any such corporation shall include, 1. A copy of its charter, certificate of incorporation, or other document con- stituting it a body corporate, with such amendments, if any, as are desired by the corporation or are: required by the laws of; -New York,. authenticated as an original certificate of incorporation is required to be authenticated ; 3. A declaration of its desire to become a corporation of this state and of., it.- Bubmission to the laws of this state; duly executed by the authority of the body in which its corporate powers are vested. 3. A certificate of the aupeiririteiid^nt of that department in' which these papevK are filed that the charter, certificate of incorporation or other constituent docvi ment, with its proposed amendments, if any, as filed, is in all respects consistent with the laws of: this state relating to domestic corporations of the same class : that the corporation applicant has complied with all conditions imposed by its laws upon domestic corporations of the same class beginning business in this fltate, with the exception of any provisions concerning the residence of a ma- jority of the corpora:tors, trustees, or directors of such corporation; that its name is not the same with the name of any domestic corporation, nor likely to be confounded with any such name, and that it has paid all fees and taxes due from it to the state, including the tax, if any, imposed by this state upon the original incorporation of a company of the same class." 17 670. When reincorporation effected and effect thereof. "From the date of filing these documents the corporation shall become anfl be a corporation of this state, and shall be subject to all the laws of this stato applicable to corporations of the same class; but its existence and powers as such corporation shall terminate if it shall fail at any time for one month to 15. People V. Granite State Provi- 16. General Corporation Law. §17. dent Association, 161 N. T. 492. 5.5 17. General Corporation T.aw. §18. N. E. 1053. FOREIGN OOEPORATIONS. 745 maiutain an office within the state at -which an authorized officer or agent shall be present at all reasonable business hours, prepared to exhibit the books of the company to the proper authorities of this state and to receive service of pro- cess; or if it ishall fail within two years to terminate its corporate existence derived from any other state, by surrender of its charter or by dissolution." is Restrictions on Right to do Business Within State. 671. In general, A foreign corporation seeking to do business in this state must obey its laws and conform to its public policy .^^ And the state, having the absolute power of excluding foreign cor- porations, may impose such conditions upon permitting such corporations to do business within its limits as it may judge expedient. An individual member of the corporation cannot, nor can the corporation itself, call in question the validity of any exaction which the state may require for the grant of its privileges. It does not lie in any foreign corporation to com- plain that it is subjected to the same law with domestic corpo- rations.^" And the right of the people of a state to prescribe generally by its constitution and laws the terms updn which a foreign corporation shall be allowed to carry on its business in the state, has been settled by the Supreme Court of the United States.^ Independent of any constitutional question, a foreign corporation owing no debt to this state for its cor- porate existence, having its place of business in and conduct- ing its business from another state, except as it may use in- cidental and very limited agencies in this state for the sale of its goods, might and would properly be exempted from regu- lations, restrictions and burdens which with entire justice would be imposed on a foreign corporation coming into our state and taking advantage of its protection and laws for the 18. General Corporation Law, § 19. 189 App. Div. 689, 179 N. Y. Supp, 83. 19. People V. Formosa, 131 N. Y. There can be no question as to the 478, 30 N, E. 492. power of the state to impose restric- Public policy does not forbid the tions upon the operations of foreign transaction of lawful business in this eorporations within its borders. Stone state by a corporation formed in ^ p^^ ^^^ ^ p ^ ^ ^^ ^^^ j^ another state by citizens of this state ^ ^^^ ^^ ^ ^ ^^^ for the purpose of transacting busi- '_ a' -^^ « ,, ness here. Demarest v. Flack, las N. ^- ^P^^. ^^S- Co. v. Ferguson, 113 Y. 205 28 N. E. 645. ^- ^- '^^''' '''*™^ -^^"^ °^ Augusta v. 20. Horn Silver Mining Co. v. New ^F^e, 13 Pet. (U. S.) 519; Paul .v. York) 143 U. S. 305; Sukosky v. Phila- A^rginia, 8 Wall. (IJ, S.) 158; Ducat delphia & Reading Coal & Iron Co., v. Chicago, 10 Wall.. (U. S.) 410. 746 CORPOEATIONS. purpose of here prosecuting its business under the same gen eral methods and perhaps to the same degree as in the state where it iwas organized. IJnder such latter circumstances it ought to be made to bear some burdens as a recompense for the advantages enjoyed by it.^ If the policy of a state or ter- ritory does not permit the business of a foreign corporation in its limits, or allov/ such corporation to acquire or hold real property, it must be expressed in some affirmative way; it cannot be inferred from the fact that its legislature has made no provision for the formation of similar corporations, or allows corporations to be formed only by general law.^ 672. Restrictions interfering with interstate commerce. The only limitation upon the power of a state to exclude a foreign corporation from doing business within its limits, or to exact conditions for allowing the corporation to do business or hire offices there, arises where the corporation is in the em- ploy of the federal government, or where its business is strictly commerce, interstate or foreign.* No state can validly enact a law which burdens such comrnerce because it is a mat- ter within the regulatory power of congress, and a failure of congress to act on the subject in any respect is equivalent to a declaration on its part that such commerce shall be- abso-; lutely free in that respect, hence section 15 of the General Corporation Law and section 181 of the Tax Law do not apply to corporations engaged in interstate or foreign^ commerce because if they did, they would burden interstate commerce and be void,! and consequently our courts construe those sec-: tions as not applicable to interstate or foreign commerce.^ 2. Hovey v. De Long HOok &: Bye Ltd.," v. Spirella Co., Inc., 103 Misc.' Co., 211 N. Y. 430, 105 N. E. 667.' • 170', 173 N. Y. Supp. 636. 3. Cowell V. Colorado Springs Com- This state cannot prohibit a foreign pany, 100 U. S. -55. ' ' corporation from selling -within the 4. Pembina Oonsolidated Silver Min- gtate merchandise to be manufactured ing & Milling Co. v. Pennsylvatia, 123 without the state; nor can it impose U. S. 181; Touza,v. Susquehanna Qoal ,„,„ditio„, ,^hich qperate directly upon Co., 220 N, Y. 239, 115 N. E. 915; . , x , •, / ' ^ International Text Book Co. v. lone, ■■ 220 N. Y. 313', 115 N. E. 914; Pub-, ''''' '^ '^^'"^ *° '''^' corporation the licker Commercial Alcohol Co. v. "gl^t to maintain an action upon such Roberts, 114 Misc. 551, 187 N. Y. ^ contract of sale until the corpora- Supp. 178. *'°" '^^ procured the certificate re- 5. Norfolk and Western Railroad ferred to in section 13. Hargrav,es Company v. Pennsylvania, 136 U. S. Mills v. Harden, 23 Misc. 663, 666, 56 114, 118; Erie Beach Amusements, N. Y.' Supp. 937. FOEEIGN CORPORATIONS. 747 Accordingly a foreign corporation, engaged in the business of giving instruction by correspondence, which has no place of business within this state but agents only, 'whose sole duty is to solicit applications for membership which must be sent to the home office for acceptance, no contracts being closed here and no instruction given in this state, the subscribers receiv- ing their instruction from text books, papers and letters sent from the home office, is engaged in interstate commerce and: is not within the purview of section 15 of the General Corpo- ration Law5 Likewise a foreign corporation has a legal right to enter this state and maintain herein an office for the trans- action of business in interstate commerce, and the fact that it never procured the certificate required by section 15 of the General Corporation Law and never paid any license tax as required by section 181 of the Tax Law, does not preclude a recovery upon a contract made in the state relating to inter- state commerceJ 673. Certificate of authority to do business. " No foreign stock corporation other than a moneyed corporation, shall do business in this state without having first procured from the secretary of state a certificate that it has complied with all the requirements of law to authorize- it to do business in this- state, and that the business of the corporation to be carried on in this state is such as may be lawiully carried on by a corporation incorporated under the laws of this state for such or similar business, or if more than one kind of business, by two or more corporations so incorporated for suoh kinds of business respectively: The secretary of tstate' shall' deliver such certi-' fiCate to every such eorporation so Complying with the requii:emonts of; law.< No foreign stock corporation doing business in this state shall maintain any action in this istarfie upon any contract made by it in this state, uiiless prior to the making of suoh contract it shall have procured such certificate. This pro-- hibitioji shall also apply to any assignee of such foreign stock corporation and to any person claiming under such assignee or such foreign stock corporation or under either of them. No certificate of authority, shall be granted to any foreign corporation having the same name as an existing domestic corporation, or a name so nearly resembling it as to be calculated to deceive, nor to any foreign corporation, other than a moneyed or insurance corporation, with the word 'trust,' ■ 'bank/ '.banking,?i 'insurance,' 'assurance,' 'indemnity,' 'guarantee,' 'guarimty,' 'title,' 'casualty,' 'surety,' 'fidelity,'.'bonding,' 'savings,' 'investment.'- 'loan,' or 'benefit,' as a part of its name." 8 • It is the policy of the state, no matter what the penalty is 6. International Text Book Co.. v. N. Y. Supp. 6a6. Tone, 230 N. Y. 313. ' 8. General Corporation Law, § 15, 7. Brie Beach Amusements, ^ Ltd., X^. as amd. by L. 1917, ch. 594. Spirella Co., Inc., 105 Misc. 170, 173 = ■ •'-?: 748 CORPORATIONS. for disobedience of that policy, to keep foreign corporations from doing business here without a license." The purpose of section 15 of the General Corporation Law requiring a for- eign corporation to secure a certificate of authority, is to regu- late and control the business of foreign stock corporations in this state, for the protection of the citizens ofthe state against any unlawful business of a foreign stock corporation and, if they are doing business in this state, to render them equally accessible to process with domestic corporations ; compliance with the statute is a condition precedent to the right of a for- eign stock corporation to do business in the state, and the penalty for failure to comply with the statute is the prohi- bition to maintain any action in this state upon any contract made by it within the state." A foreign corporation which has obtained a certificate to do business in this state is en- titled to the equal protection of our laws.^^ Where a foreign corporation has sought and obtained the privilege of carrying on its btisiness here under rogulatlons fixed by tiie statutes of this state, and has established a permanent general agency, 9. A state ofScer should not enter into a contract with a foreign corpora- tion not licensed to do business in this state. When a foreign corporation not licensed to do business in this state has deposited witli its proposal for the construction of a state highway, a certain check under its special agree- ment with the state, the State Com- missioner of Highways may retain the deposit as the agreement is valid. (Opinion of Atty.-6en., 1917), 10 State Dept. Rep. 498. A foreign insurance corporation cannot enter into an agreement guar- anteeing the performance of a con- tract unless it is then authorized by the Superintendent of Insurance of this state to do business herein. American Fidelity Co. v. Leahy, 189 App. Div. 243. 178 N. Y. Supp. 511. 10. Portland Co. v. Hall & Grant Omstruction Co., lai App. Div. 779, 106 N. Y. Supp. '649; Bradford Co. v. Dunn, 188 App. Div. 4sSi, 176 N. Y. Supp. 834. The act of 1892, only prohibited actions upon contracts made by foreign stock corporations in this state after its passage, until they should have procured the necessary certificate, and had no application to actions upon contracts made by other parties and assigned to such corporations. O'Reilly, Skelly & Fogarty Co. v. Greene, 18 Misc. 433, 41 N. Y. Supp.. 1056. The amendment of 1901 which ex- tended such prohibition to any assignee of such corporation and to any person claiming under either of them, is not applicable to a contract of such cor- poration made in 1900, as to hold otherwise would result in violating the constitutional provisions protecting contract obligations from impairment. McNamara v. Keene, 49 Misc. 458, 98 N. Y. Supp. 860i For a further dis- cussion of the force and effect of sec- tion 15 of the General Corporation Law, see post, par. 677. 11. People ex rel. Browning, King & Co. v. Stover, 145 App. Div. 259, 363, 130 N. Y. Supp. 92, affd. 203 N. Y. 613, 96 N. E. 1136 FOREIGN COKPOBATIONS. 749 and conducts its business here as a distinct organization in the same manner as domestic corporations; as to the business transacted here the corporation is to be regarded as doiniciled and subject to the same obligations and liabilities as domestic institutions.^^ The secretary of state may deny the appli- cation of a foreign corporation under section 15 of the Gen- eral Corporation Law for a certificate authorizing it to do business within this state, where its name does not clearly indicate that it is a corporation and it is unwilling to use in this state such "an affix or prefix" as will indicate the neces- sary distinction.^^ 674. Proof reqiiired to secure certificate; designation of person on whom process may be served. " Before granting such certificate the secretary of state shall require every such foreign corporation to file in his office a sworn copy in the English language of its charter or certificate of incorporation and a statement under its corporate seal, and the signature of its president, vice-president or other acting head, par- ticularly setting forth the husineas or objects of the corporation which it is engaged in carrying on or which it proposes to carry on within the state, and a place within the state which is to he its principal place of business, an'd designating a person upon whom process against the corporation may be served within the state. The person so designated must have an office or place of business at the place where such corporation is to have its principal place of business within the state and such designation must specify such office or place of business of the said person so designated, and if it is within a city the street and street number if any, or other suitable designa,tion of the particula;r locality. Sudi designation shall be accompanied with the written consent of the person designated and shall continue in force until revoked by an instrument in writing designating in like manner some other person upon whom process against the corporation may be served in this state or until the filing in the same office of a written revocation of said consent executed by the person so designated. It the person so designated dies or removes from the place where the corporation has. its principal place of business within the state, or files such revocation of his consent, and the corporatoin does not within thirty days; after such death or removal or revocationt of consent designate in like manner another person ■upon whom process against it may be served within the state, the secretary ot state may revoke the authority of the corporation to do business within the state, and process against the corporation in an aiction upon any liability in- 12. Martine v. International Life entitle it to the benefit of the pro- Insurance i Society, 53 N. Y. 339. visions of section ; 6. of the General 13. People . ex rel. lUnited Verde Corporation Law, where it has in no. Copper Company. ! V. Hugo, ; 181 App. sense succeeded, to the franchises of Div. 149, 168 N. Y. Supp.: 558, holding the other corporation and has not sup- that a corporation is not the reorgan- ;planted or taken, the place ,gf the old ized successor of another foreign i cor- corporation. ; poration of the pame name, so as to 750 COEPORATIONS. curred within tliis atate before such revocation, may, after such death or removal, or revocation of consent, and before another designation is made, be served upon the secretary of state. At the time of such service the plaintiff sliall pay to the secretary of state tvro dollars, to be included in his taxable costs and dis- bursements, and the secretary of state shall forthwith mail a copy of such notice to sucJi corporation if Jts address, or the address_ of any officer thereof, is known to him. The secretary of state may require the execution of any audi designation, revocation or consent, to be authenticated as he deems proper and he may refuse to file it without such authentication." 14 675. Surrender of authority. " A foreign corporation having authority under section sixteen, of this chapter to do business in this state, may surrender such authority by filing in the office of the secretary of state, a certificate under its corporate seal and the signature of its president, vice-president, or other acting head, setting forth: 1. The name of the corporation and the state under whose laws it is formed. 2. The darte on which it received authority to do business in this state. 3. Revoking its designation of the person upon whom process against the cor- poration may be served in this state. 4. That it surrenders its authority to do business in this state and that, as evidence of such surrender, it returns to the secretary of stal;e, for cancellation, its certificate of authority to do business in this state, or that such certificate has been lost or destroyed. Proof of execution in the form prescribed by section three hundred and nine of the real property law shall be attached. The certificate of authority shall bo attached to the certificate of surrender, unless such certificate of authority has been lost or destroyed, in which event, there shall be attached an affidavit of the president, vice-president, secretary, or other officer of the corporation, to the effect that such certificatp has been lost or destroyed, as the case may be. On the filing of such certificate, the secretary of state shall make a note of the filing thereof on his index of corporations and thereupon the authority of the corporation to do business within this state shall cease and determine, and no such corporation doing business in this state after the filing of such certificate of surrender of authority shall maintain any action in this state upon any contract made by it in this state subsequent to the filing of such certificate of surrender of authority. The filing of siieh certificate shall not, however, affect any aetion pending at the time of such surrender, or affect any action in the state upon any contract made by the corporation in this state before the filing of the certificate of surrenier »f authority. Process against the corporation in an action upon, any liability incurred within this state before the filing Tof such certificate of surrender of authority may, after the filing thereof, be served upon the secretary of state. At the time of such service, the plaintiff shall pay to 14. Gieneral Corporation Law, § 16. designate in its certificate filed in this The "principal office" of a. foreign state under the General Corporation corporation, at ' which a Hotioe of Law, and parol evdienee is admissible claim ' for petsonal- injuries may be to show where its principal office is. served under the Labor Law, is not Mason & Hanger Co. v. Sharon, 31 synonymous with its principal?' place Fed. 861. of business which it is required to FORBIGJT CORPORATIONS. 751 the secretary of-, state, two dollars to be included in his taxable costs and dis- bursements, and the secretary of state shall forthwith mail a copy of such process to such corporation, if its, address or the address of any officer thereof, is known to him." 15 676. Revocation of certificate of authority to do business in this state. ■ " If the person so designated (by a foreign corporation on whom process may be served) dies or removes from the place where the corporation has its principal place of business within the state, or files suoh revocation of his consent, and the corporation does not within thirty days after such death or removal or revocation of consent designate in like manner another person upon whom pro- cess against it may be served within the state, the secretary of state may re- voke the authority of the corporation to do business within the state." 16 The secretary of state is thus vested with discretionary power to revoke a certificate of airthority in case of the actual removal from home of the person designated." And so where a person, designated by a foreign corporation pursuant to this section upon whom service of process may be made, has been absent from home for a period of over thirty days, tlie secre- tary of state may revoke the certificate of such foreign corpo- ration, if it appear that the person designated has departed with an intent to evade the statute.^^ But there seems to be no authority conferred upon the, secretary of state to revoke a! certificate issued to a foreign Corporation to' do business in this state except for failure to desigiiate a per son, named in certain contingencies upon whom process may be served. Nor is it necessary that a^ special act of the legislature be passed to annul the right of such a corporation to transact business in this state under the qertificate issued to it. by the secretary of state, Since a;ii' actio-n is authorized in behalf of the state tp. redress violation^ ^ of our , statutes by a foreign, coxpora- tion having no right to do business within this state, except by license, from, it which it, may grant or revoke at will, it. may well be argued that when the legislature authorized an action to be brought on account of such violation, the court may, on proof of showing willful, systematic, and continuous vio- lations of our laws anniii or declare a forfeiture of the right of the corporation to do business here, following and adopt- ihg, by analogy, the remedy prescribed in an, action against, a 15. General €orporation"Eaw', § l'6a, 17. Rept of Atty.-Genl. (1908), as added by LJ 1918, eh. 193. ■ p. .166. , , le.'Gemer&l Oorfioratioii Law, § 16,. ,18. Bept. of Atty-Gen}., (1908), pt. ! • , -r:. 7 z , , ■ . •.■ p. 1«6. 762 COBPOEATIONS. domestic corporation for violation of its corporate rights or any provision of law, whereby it has forfeited its charter, or Ibecome liable to be dissolved, by the abuse of its powers.^'' The certificate of authority of a foreign corporation may be revoked for creating a nuisance outside the state by the emis- sion of smoke, etc., so as to endanger the health and safety of residents,^" but the certificate may be thereafter revived on giving a satisfactory guaranty that the nuisance will be dis- continued.^ 677. Effect of failure to procure certificate on right to maintain action. The general policy of the statute is to forbid an appeal to the courts in an affirmative action by any foreign corporation which has not obtained a certificate of authority as prescribed by section 15 of the General Corporation Law or which, after thirteen months, has not paid the tax as provided by section 181 of the Tax Law.^ The penalty imposed upon a foreign corporation for doing business within the State of New York without first obtaining a certificate from the secretary of state is regulated solely by section 15 of the General Corporation Law, while the penalty imposed upon such a corporation for a failure to pay the license tax is regulated by section 181 of the Tax Law, which supersedes, if it does not actually jrepeal, chapter 240. of the Laws of 1895.^ The only penalty which is prescribed by the General Corporation Law for a disregard of section 15 is contained in the same section^ viz., that no such corporation " shallmaintain any action in this state upon any contract niade by it in this state, unless prior to the making of such contract it shall have procured such certificate. ' ' The latter provision does not wholly invalidate a contract the only infirmity in which is the disability on the part of a foreign 19. Pebple V. American ' Ice Co., 135 eoVer upon a policy of fire' insurance App. Div. 180, 130 N. Y. Supp^*!. see executed within the stat*. for a loss post, pars. 719-723. occasioned by the destruction of its 20. General Corporation Law, ^ 200, property within the state by fire as added by L. 1917. ch. 292. cannot be maintained, vnless prior to 1. General Corporation Law, § 201, . , , . , , , , , , . ' , ,, the mal|C|mg 01 the contract of insurance as added by L. 1917, ch. 292. -^ , •■ j ^,' ' . , , .„ Z.Howden & Co. of America. Inc.. '* """^ ^'""^''^ the , required pertiii- y. American Condenser & Engineering '=**«• S'"^*^ ^*y Company -y. Howey, Corporation, 194 App. DiV. 164. ' "» N. Y. 240, 83 N. JJ. 26. An action by a foreign stock cor- 3. Alsiug Co. y. New Englaud Quartz poration engaged in the business of Cto., 6& App. Div. 473, 73 N. Y. Supp. manufacturing within the state, to re- 347, affd. 174 N. Y. 536, 66 N. E. llin. FOREIGN COEPOHATIONS. 75S corporation to sue thereon in this state. It remains a valid and effective instrument in all other respects. The statute im- poses only on a foreign corporation, which has not complied with these provisions, the penalty of being unable to maintain any action upon a contract made by it ; such penalty is not im posed upon the other party to the contract.^ And so money paid to a foreign corporation upon a contract for the sale of lands in this state may not b& recovered back on the sole ground that the corporation has not complied with section 15 of the General Corporation Law and obtained the certificate permitting it to carry on business in this state.^ It seems that a foreign coi'poration sued in this state may litigate any ques- tion raised by the pleading^, although it has not alleged or proved its authority to make the contract in question.^ Hence the statute does not prevent a foreign corporation, doing busi- ness in this state without having procured the necessary cer- tificate, from recovering in a suit brought agaitist it here upon a counterclaim growing out of the transaction upon which the plaintiff sued.'' It is not sufficient since the amendment of 1901 that the foreign corporation procured the required cer- tificate prior to the commencement of the action on the con- tract.^ A remedy by attachment is a step in an action, and the 4. Gaul V. Kiel & Arthe Co., 199 5. Mahar v. Harrington Park Villa N. Y. 473, 93 N. E. 1069; Mahar v. Sites, 204 N. Y. 231, 97 N. E: 587. Harrington Park Villa Sites,' 204 N. 6. Jones v. Wells Fargo Express Co., Y. 231, 97 N. E. 587 : Bradford Co. v. 83 Misc.- 508, 145 N. Y. Supp. 601. Dunn, 188 App. Div. 4.54. 176 N. Y. 7. Alsing Co. : t; New England Quartz Supp. 834. Co.. 66 App. ■Div..473, 73 N. Y. Supp. A foreign corporation may not be 347, affd. 174 N. Y. 536, 66 H. E. restrained from doitig any business in 1110; Howden & Co. of America, Inc., this state on the ground that it: has v. American Condenser & Engineering not obtained a certificate authorizing OorpDra^;ioin,: 194 App. Div. -164; Car- it to transact such .business, as rer rier Engineering Corporation v. Inter- quired by *he General Corporation national M-fg: Co., 104 Misc; 191, 171 Law. Motor Boat Pub. Co. v. Motor N. Y. Supp. '641. Boating 'Co^j 57 Misc. 108, 107 N. Y. 8. South Amboy Terra CottaOo. v. Supp. 468. ■ '■'• Poerschke, 4.5 Misc. 358, 90 K Y. • Sureties for the rent iof^a: room Supp. 333. lekSed to a. student by a foreign in- The amendment of 1901 superseded corporated college cannot' escape lia- Neuchatel ^.sphalte Co. v. The Mayor, bility 'because the college is -hot 155 N. Y. 373, '49 N. E. 1043,: holding registered! in this state. President & that a corporation, on obtaining the Fellows of Harvard College V. TCem,pner, certificate, prescribed as a condition 131 App/ ©iv. 848. 116 N. Y. Supp. precedent to doing business in this 43Y state, could enforce a contract mads 48 754 COKPOKATIONS. provisions of the statute applies to the remedies to which, but for the prohibition of such statute, a party would be entitled. Hence, the papers upon which a foreign corporation doing business in this state, in relation to a transaction arising here, procures an attachment, must show, for the purposes of the attachment, that the corporation has complied with the provisions of the statute, and if such fact does not appear in the papers upon which the warrant of attachment was granted, the omission of such allegation therefrom is legal cause for vacating the warrant.^ The filing of a claim by a foreign corporation, doing business within this state, with the Court of Claims constitutes an attempt to "main- tain an action in this state" within the meaning of section 15 of the General Corporation Law, and if it has not procured a certificate of authority its claim will be dismissed." General Corporation Law, § 15, is not a revenue regulation, and the failure to procure such a certificate is available to an individual in an action brought against him by a foreign cor- poration, notwithstanding that it appears that the foreign cor- poration had duly paid its license fee to the State Treasurer and that its failure to procure the certificate under section 15 of the General Corporation Law was the result of inadver- tence.^^ The fact that a foreign corporation has paid its by it after the passage of the law was made within the State of New and before procuring the certificate. York, an averment that the statutory tinder section 15^ as it existed prior eertificatfi was obtained is not neoes- to the amendment made by Chapter sary to support the attachment; nor 538 of the Laws of 1901, » foreign is it necessary that the moving papers stock corporation, upon obtaining the should allege compliance by the plain - necessa-ry certifioatej could enforce a tiff's assignor with the provisions of contract made in the course of busi- section 181 of the Tax Law requiring ness transacted by it in the State of foreign corporations to pay a license New York after the passage of the fee, for the reason that the said, sec- law and before procuring such oertifi- tion of the Tax Law does not assume cate. Lewis Publishing Co. v. Lenz, to prohibit the maintenance of an 86 App. Div. 451, 83 N. Y. Supp. 841; action by the assignee of a foreign Lewis Publishing Co. v. Palmer, 84 N. corporation. Box Board & L. Co. v. Y. Supp. 141. Vineennes Paper Co., 4i5 Misc.- 1, ^O 9. Sawyer Lumber Co. v. Bussell, N; Y. Supp. 836, affd. 98. App. Diy. 84 Hun 114, 31 N. Y., Supp. 1107. 623, 90 N. Y. Supp. 1089. If the papers used on an application ! 10. Bridge's Sons,: inc., v. State of for an attachment made in an action New York, 188 App. Div. ;500, 177 N. on contract brought by an assignee of Y. Supp. 3, affd. 231 N. Y. 24. a foreign corporation do not disclose 11. Emmerich Co. v. Sloane; 108 the fact that the contract snied upon App. Div. 330, 95 N. Y. Supp. 1129. FOREIGN CORPORATIONS. 755 license fee required by section 181 of the Tax Law, does iiot obviate the necessity of securing a certificate nor overcome the effect on an action caused by a failure to secure it.^^ 678. Actions not affected by failure to procure certificate. The provisions of section 15 of the General Corporation Law prohibiting actions in this state by foreign stock corporations doing business here without being licensed to do so relate only to actions upon contracts made in this state/^ and do not apply to actions for tort." Hence, the failure of a foreign corpora- tion to procure a certificate does not prevent it from main- taining an action of replevin,^^ or a judgment creditors' action to set aside alleged fraudulent transfers and conveyances.^^ A foreign corporation may maintain a suit to enjoin the use of its trade name by another upon the grounds that such use con- stitutes unfair competition, although at the time of bringing action it was not Hcensed to do business in this state pursuant to section 15 of the General Corporation Law and has not paid the tax required by section 181 of the Tax Law. This, because such suit is not an action upon a contract, nor is it to obtain relief by reason of any business transacted by the corporation in this state." Likewise, a foreign corporation doing business in this state may maintain a suit in equity to enjoin the use of its corporate name by a New York corporation.^* A foreign corporation, not authorized to transact business in the state of New York, may file a mechanic's lien against the owner of Btjt see Parmeleei Co. v. Haas; 171 N. 157 N. Y. Supp. 723, 191 St. Eep.: 723. Y. 579, 64 N. B. UO; Ihinbartoii Flax 14. Bischoflf v. Automobile Touring Spinning Co. v. Greenwdch . & J. ) Ry. Co., 97 App. Div; 17, 89 K Y. Supp. Co., 87. App. Div. 21-, 83 N. Y. Supp. 594;- Oommonwealtli Mortgage Co. V. 10'54. . ; Sargeni & Co., Inc., 104' Misc. 558, 172 • 12. Emmerich Co. v. Sloane, 46 N. Y. Supp. 594. Misc. 513, 95 N. Y.i Supp.j 39, affd. 108 15. Amei-iean Typefounders Co. v. App. Div. 330, 95 N. Y. Supp.i 1129. Conner, 6 Misc.' 391. 26 N. Y. Supp. 13. Xovelty Manufacturing Co. v. 743 Connell, 88 Hun 254, 34,,N., Y. Supp. jg. gcWitz Brewing Co; v. Ester, 86 717; Batchelder & Lincoln Co. v. Hun 22, 33 N. Y. Supp. 143, affd. 157 .Knopf, 54 App. Div. 329, 66 N. Y. ^ ^ ^^^^ .3 ^^ ^ ^^^^ .: Supp. 513; Eelipse Silk Mfg. Co. ^. ,- „ ,-„ ,„ ,. ,, ... „ HiUer, 145 App. Div. 568, 129 N. Y. .", ''■ ^°«^^^ ^""-^M^^* Machine , Co. Supp. 879; Bremer v. Ring, 146 App. ^- ^oevel, 167 App. Div. 5f8„ 153 N Kv. 724, 131 N.Y. Supp. 487;, Mc. '^- §"PP- 35, ■ Dowell v. Starobin Eleetrica-l Supprly ; 1 18.* United .States, L. & B;., , Co; .of Co., Inc., 104 Misc. 59«, 172 N. Y. Maine y. U. S. L. & H. Co. of New Supp., 221;. Strauss Putz. (Co.. V. Axson, York, 181 Fed. ,182. 756 COBPOEATIONS. a house in this state in whose construction its goods have been used, where it appears that the goods were delivered by it, within the state, to a domestic corporation, which in turn fur- nished them to the owner. ^^ 679. license fee. " Every foreign corporation, except banking corporations, fire^ marine, casualty and life insurance companies, co-operative fraternal insurance companies, and bnilding and loan associations, doing business in this state, shall pay to the state treasurer, for the use of the state, a license fee of one-eighth of one per centum for the privilege of exercising its corporate franchises or carrying on its business in such corporate or organized capacity in this state, to he computed upon the basis of the capital stock employed by it within this state, during the first year of carrying on its business in this state; which first payment shall not be less than ten dollars; and if any year thereafter any such corporation shall employ more than eight thousand dollars of its capital stock within this state on which a license fee has not been paid then a license fee at the rate of one-eighth of one per centum shall be due and payable upon any such increase. The measure of the ainount of capital stock ejnployed in this state shall be such a portion of the issued capital stock as the gross assets employed in any busi- ness within this state bear to the gross assets whevciVi^'i employed in business. The issued capital stock of any corporation issuing shares without designated monetary value shall pay for the use of the state a, license. fee of six; cents on each such share einplpyed.in this state, as hereinbefore ; provided. For purposes of taxation, the capital of a corporation invested in the stock of another cor- poration shall be deemed to be assets Jocated where the physical property repre- sented by such stock is located. The amount of capital upon which such license fees shall be paid shall be fixed by the state tax commission, which shall have the same authority to examine the books and records in this, state of such foreign corporations, and the employees thereof as it has in the case of domestic cor- porations, and the comptroller, or on and after July first, nineteen hundred and twenty-one, the state tax commission, shall have the same power to issue a warrant for the collection of such license fees, as now exist with regard to domestic corporations. No action shall be maintained or recovery had in any of the courts in this state by such foreign corporation after thirteen months froin the time of beginning such business within the state, without obtaining a receipt for the payment of the license fee upon the capital stock employed by it within this state during the first year of carrying on its business in this state." 20 19. New York Architectural Terra- 240, is an act to provide for licensing Cotta Co. V. Williams, 103 App. Div. foreign stock corporations. This sub- 1, 92 N. Y. Supp. 808, affd. 184 N. Y. ject is treated in ' § 181 of the Tax 579, 77 N. E. 1192; Matter of Simonda Law,' but the Tax Law did hot repeal Furnace Co., 30 Misc. 209, 61 N. Y. the statute of 1895. Section 181 of Supp. 974. the Tax Law has hern amended from 20. Tax Law, § 181, as amd. 'by L. time to tirap, the laft amendment 1910, ch. 340, L. 1915, ch. 317; L' 1917, having been made by L. 1906, ch. 474; eh. 4B0, and L. 1921, ch. 705. but neither in 'the -original section nor Consolidators' note.-^L. 1895, ch. in the amendment has there been in- FOREIGN COBPOBATIONS. 757 If a corporation has not done business for twelve months, the tax is payable between twelve and thirteen months after it shall have commenced to employ capital within the state.^ 680. Basis of computing license fee. A foreign corporation should be assessed for the purpose of the license fee upon the capital employed by it within the state, and not upon the amount of its capitalization.^ As the organization and license tax imposed on corporations by sec- tions. 180 and 181 had an origin and purpose distinct from that of the franchise tax imposed by section 182, the sections im- posing the two taxes should be treated as though they had re- mained separate statutes and had not been brought together in the statutory revision.^ For the purpose of fixing the license and franchise tax to be paid by a foreign corporation, the comptroller may include the value of certain patents under which the corporation is engaged in manufacturing, and in payment for which it has issued a portion of its capital stock ; in determining such value, the comptroller is .iustified in con- serted the provision contained in the Siipp. 849. For a discussion of the statute of 1895 as to How the cotnp- eifeet of the failure of a foreign cor- troller was to fix the amount of the poration to pay its license fee, see capital stock employed '_ where he dis- post, par. 681. agreed with the report made by the 8. People ex rel. Nesmith & Con- foreign oprporatiqn. This provision stantine Co. v. Miller, 105 App. Div. seems to he found nowhere except in 336, 94 N. Y. Supp. 193. the act of 1895. While there might Basis of license fee.— Where a foreign be some question as to whether or rorporation with a capital stock of $2,- npt the entire act ,of 1895 has been 000,000, all of which has been, issued, superseded by § 181, in the absence of employs, all of its capital amounting any provision relating to the method to $340,000, in, this state, th.B comp-:.. for iixing the amount of the capital troller should compute the amount, of stock of a foreign corporation under the license fee on the $240,000 of the provisipfts of ? 181,' where the capital employed in the state, and, not comptroller disagrees with the cor- upon the,, $3iO00,000 of its authorized poration, it has heW deemed wise to capital stock.. People ex rel. ConspliT incorporate it as a part of § ISl, as dated Ginseng Co. v. Kelsey, 105 App. embracing statutory law of a general Div. 175, 93, N, Y. Sijpp. 369, affd, 182 nature that has not been expressly N,. Y. 526, 74, N. E..,1123. ;, ^ repealed or superseded by subsequent 3., People ex; , relj, Klliptt-Fishor Co. legislation on the. same subject. r, Sohmer, 14$ ApP- Div. 514, . 132 N. 1. People ex rel. Dutilh-Smith Co. Y.,Supp. 783, affd. 206 N,. Y, 634, 99 v. Miller, 90 App., Div,, 545,, 85 N. Y. IST. ]E, 1115. ' 758 CORPORATIONS. eluding that they were worth the par value of the stock issuer! in payment therefor.*, ; 681. Effect of failure to pay license fee. The requirement that a foreign corporation pay a license fee is a revenue regTilation for the benetit of the state which the latter has the right to waive. It seems, therefore, that the failure of a foreign corporation to pay the license fee within the time required by the statute is not available as a defense to an individual in an action brought against him by such for- eign corporation if thereafter, and before the commencement of the action, the fee is paid to, and accepted by the state. ^ But the assignee of a foreign corporation which has done busi- ness in this state without paying a license fee, cannot sue here.^ Section 181 of the Tax Law, providing for a license tax on foreign corporations and that "no action shall be maintained or recovery had in any of the courts of this state by such foreign corporation after thirteen months from the time of beginning such business within the state, without ob- taining a receipt from the comptroller for the payment of the license fee " provided for therein, does not prohibit a foreign corporation from interposing a counterclaim in an action against it and recovering tliereon though under the circum- stances it could not have maintained an original action there- on. The purpose of the insertion in the statute of the words " or recovery had " by chapter 240 of the Laws of 1895 was to prohibit the recovery of a judgment in an a(3tion which had been lawfully brought prior to the expiration of the thirteen qionths, if after^ the expiration of such time the tax were not paid.'' Upon an application by a foreign corporation doing 4. People ex rel. Automatic Vending which has not paid the license fee in Co. V. Kelsey, 101 App. Div. 335, 91 question, where the defendant merely N'. Y. Supp. 9'55, affd. 181 N. Y. 513, introduces inconclusive testimony 73 N. E. 1130. ^ tending to show that the foreign cor- 5. Dunbarton Flax Spinning Co. v. poration was doing business within Greenwich & Johnsonville E.y. Co., 87 ^his state at the time of the trial of App. Div. 21, 83 N. Y. Supp. 1054; ^^^ ^^^.^^^ ^^^^ ^^^^^ ^^ p^^^j .^ ^^.^ Emmerich Co. v. Sloane, 108 App. Div. ^ ^^ ^^ ' ^^ 330, 95 N. Y. Supp. 1129. ^ i' ■ f 6. Kinney v. Reid Ice Cream Co., 57 App. Div. 206, 68 N. Y. Supp. 325. But it has been held that the statute ''• Howden & Co. of America, Inc., cannot be successfully invoked as a v. American Condenser & Engineering defense to an action brought by the Corporation, 194 App. Div. 164, affd. assignee of a foreign corporation 231 N. Y. 119 (mein.). V. Childs, 26 Misc. 419, 56 N. Y. Supp. 192. FOREIGN COEPOEATIONS. 759 business in this state for an order of arrest the moving papers need not show affirmatively, for the purpose of the order of arrest, that the corporation has complied with the provisions of section 181 of the- Tax Law, imposing certain restrictions upon its right to do business in this state.^ 682. Criminal liability of agents acting for certain foreign corporations not authorized to do business in this state. ' Any person, or corporation, who : 1. Acta as agent or representative of any mortgage, loan or investment cor- poration or building and inutual loan corporation or association or co-operative savings and loan association organized outside of this state, while such mort- gage, loan or investment corporation or building and mutual loan corporation or association or .co-operative savings and loan association shall not be authorized under a license of the superintendent of banks to do business in this state; or, 2. Acts as agent or representative in this state of a, foreign corporation, other than a moneyed corporation, with the words 'trust,' 'bank,' 'banking,' 'insur- ance,' 'assurance,' 'indemnity,' 'guarantee,' 'guaranty,' 'savings,' 'investment,' 'loan,' 'benefit,' or any other words or terms indicating, representing or holding out such company to be a moneyed corporation as a part of its name or cor- porate title, or who, in connection with such corpora;tion or otherwise, shall put forth, any sign coritaihing said name, or who shall advertise'or publish the said company as doing business lih this state, directly or indirectly, through agents or otherwise, while suoh company shall not be authorized under a. certificate procured from the secretary of state pursuant to section fifteen of the general corporation law to do business in this state. Is guilty of a misdemeanor. ' ' 9 683. What amounts to doing business generally. To be " doing business in this state " by a foreign corpo- ration implies corporate continuity of conduct in that respect ; such as might be evidenced by the investment of capital here, with the maintenance of an office for the transaction of its business, and those incidental circumstances, which attest the corporate intent to avail itself of the privilege to carry on a business. In short, it should appear, that the corporation and its officers intended to establish a continuous business here and not one of a temporary character." Doing, business, 8. Parmele Co. v. Haas, 171 N. Y. 155 .N. Y. Supp. 651; McDoweir. v. 579, 64 N. E. Ua. Stavobin Electri 807. 5. Penn Collieries Go. v. McKeever, 93 App. Div. 303, 87 N. Y. Supp. 869, affd. 183 N. Y. 98, 75 N. E. 935. 6. BurroWs Co. v. Caplin, 127 App. Div. 317, 111 N. Y. Supp. 498. 7. Vaughn Machihfe Oo. v. 'Light- house, 64 App' Div. 138, 71 N. Y. Supp. 799; AcOrn Brass Mfg. Co. v. Rutenberg, 147 App. Div. 533; 132 N. Y. Supp. 600. A non-reaident manufacturing cor- poration selling goods, on orders, sent to its factory in another state, from the State of New York is not "carry- ing on its business" in the latter state.- Harvard Co. v. Wicht, 99 App. Div. '507. 91 N: Y. Supp. 4S. 764 COBPOBATIONS. because it consigns its manufactured products to a commis- sion merchant doing business here, authorizing him to sell, receive the proceeds and remit the same. Under such circum- stances it is the commission merchant who does business here^ not the foreign corporation.^ 687. Transacting insurance business within this state. A foreign insurance company which has neither an office nor an agency within the state and does not solicit business here cannot be said to have transacted business here.^ So if residents of this state, in letters addressed to a fire insurance company in a foreign state, in effect propose and solicit a renewal policy and the company, in the foreign state receives their solicitation^ accepts their proposals and mails to them, the policy, there results not the transaction of business in this state but the consummation in the foreign state of a contract which was lawful here, and therefore, an action to recover an assessment levied in accordance with the policy and the lavrs of the foreign state cannot be successfully defended upon* the Where residents of this state ordered a cash register from a foreign cor- poration, the order being given here, and the purehaser paid twenty -five dollars on account, which was -to he refunded in this state if the corpora- tion did not accept the contract, the balance of the purchase' price to be paid here, the contract was nne "made in this state." American Case & Register Co. v. Griswold, 143 App. Div. 807, 138 N. Y. Supp. 206. 8, Brookford Mills r. Bald^^^n, 154 App. Div. 553, 139 N. Y. Supp. 195 ; Bertha Zinc & Mineral Co. v. ^iite, 7 Misc. 133, 37 N. Y. Supp. 343. Shipment direct to purchaser on commission merchant's order. — Proof that New York city commission mer- chants took from a dealer there an order for goods, forwarded it to a foreign corporation in Boston. Mass., and that the latter sent the goods direct to the dealer, does not show that the foreign corporation was "doing business" in the State of New York. Waller v, Eothfield, 36 . Misc. 177, 73 N. Y. Supp. 141. Division of profits between corpora- tion and commission merchant. — The plaintiff, a Michigan corporation en- gaged in buying and selling fruit, under an arrangement with defendant, a commission man find fruit !<3ealer at Buffalo, N. Y.) bought peaches in Michigan and shipped them to defend- ant .at cost price in Michigan, each shipment be:ing accompanied by a draft for the amount which defendant was to pay; and defendapt was to sell the peaches and any profit waK to be equally divided between the parties. In an action toi recover the balance alleged to be due, held., that. whatever the legal effect of the agree- ment between the parties was. their dealings, did not constitute , a "doing of business" within this state. Brown Soed Co. V. ■Riqhardson. Sn Misc. .'517 103 N. Y. Supp.:34.^. 9. Stone v. Tenn Van.. Ti; P. & B- R- C/o.. 197 N". Y. 270, 90 N. E. 843. FOREIGN GOKPOEATIONS. 765 ground that the insurance company had not obtained the proper certificate and' permission to transact business in this state." 688. Employment of capital within state, A foreign corporation holding and renting real estate trans- ferred to it by a number of cotenants who hold all its capital stock has capital employed within the State of New Tork.^^ A foreign corporation, whose entiie assets are invested in the stock of a domestic corporation, and whose sole income is de- rived from the dividends which it receives upon the stock oi the- domestic corporation held by it, is not engaged in doing business in. this atate..^^ So ailso a foreign corporation whose sole business consists in selling under a contract of agency, the goods of another corporation in foreign countries, using its prinpipal office in this state for receipt and transmission of orders, does not employ capital within this state.^^ Actions hy Foreign Corporations. 689. In general. "An action may be mamtained by a foreign eorpoj;ation, in liks manner, anu subject to the same regulations, a S; where the action is brought by a domestic corporation, except as otherwise, specially prescribed by law. But a foreign cor- 10. Huntington v. Sheehan, 306 N. collection of i-enf s therefrom, from Y. 486 lOO N. E. 4l. which it derives a net income devoted 11. People ex rel. Wall & H. St. E. ' to dividends, it is engaged in carrying Co. V. Miller, 181 N. Y. : 338, holding, on .business, by tlie active use of tha,t where the charter of . a corpora- capital and is, therefore, -sub.iect to tion, organized under the laws of the the license and franchise tax imposed State- of New Jersey - for the im- on foreign corporations doing busi- mediate object of taking title> to land ness within the state by sectiona 18] in the city of New York, on which .i? and 182 of tbe Tax Law, situated a valuable :Qffice building, i;he A foreign corporation maintaining incorporators being the^ persons who an established location and an agent owned the building a,s tenants .in in New York city and keepljig fimd,s common, is broatj enough to authorize in said city to, eiiable its agent to unlimited dealing in real estate of carry on rhia operations, is "dqing every description anywhere within the business within the state."; Southern United States, arid in persraal prop- -Cotton Oil Co. v. ■V\^«inple,-44 Fed.^,34. erty of . every name arid nature, 12. People ex rel. Edison ];,, jfc P. although the Corporation liaS no sur- Co. v.;Kelaey, 101 App., D.iv. 305, 91 plus but has all of its capital invested N. Y, :Supp, 709. in. the property and employed in tlie 13. People ex rel. Dul^jlh-Smith k care, management and renting of tl. „«, ^r. XT -.r 15. See post, par. '697. Mfg. Co., 58 App. Div. 371, 68 N: Y. „ ^ ^ ', '^ 16 See ante, par. 677, Supp. 1004. • 'r An action, brought by a fbreign cor- ^7. Flynn v. White, 133 App. Div. poration to enjoin the defendants ^80> ^^^ N- Y. Supp. 860. from representing themselves as 18. Bard v, Poole, 12 N. Y. 495. officers thereof, and from interfering 18a. Mutual Benefit Life Ins. Co. v. with its business or property, which Davis, 13 N. Y. 569. involves the determination as to the 19. Steam Navigation Company v. validity of an election at which it is Weed, 17 Barb. 378. FOREIGN COEPORATIONS. 76.7 to susttiinits rigljt to sue or enforce the contracts The fact that promoters : engaged. in organizing a corporation in an- other &tate deceived the authorities of that state as. to their real purpose in forming the corporation, and so procured them to file the necessary papers and take the necessary steps to gyve the organization a corporate existence, is no defense to an action brought by the corporation in this state upon an in- debtedness to the corporation.^ A corporation organized under the laws of another state but owned principally by alien enemies is not precluded from access to our courts during a war.^ Foreign corporations, suing in this state, are not im- mune from examination b^fo^e trial.^ An actipn.by a foreign corporation may be continued in its name after the appoint- ment of an ancillary receiver in this state, under sections 82 and 83 of the Civil. Practice Act, providing that an action does nqt abate by any event if the cause of action survives or con- tinues, and that in. case of a transfer of interest or devolution of liability, the action may be continued by or against the original party, unless the court directs the person to whom the interest is transferred, or upon whom the liability is de- volyed, to be substituted in the action or joined with the orig- inal party, as the case requires.* > ' 690. Pleadings ; security for costs. An officer of a, foreign corporation may bring an action in this state in his own name on behalf of his company.^ In an action by a domestic corpora;ti on it is not necessary to allege 20. Marine and 5'ire Ins. ,,Banl^ of iiig,a, motion to stay the corporation Georgia v. .Tauncey, 1 Barb. 4-86. from further prosecuting an action in l.'U./S. Vinegar Co.. v. Schlegel, i43 our courts macle on, the ground that N. yV337,"38 N. E. 729. '•']' plaintiff is'an alien eiiemy will be a^- 2. Schulz, 'Jr., Co. v. Rairhes '&, Oo:, firmed. The disability 'of alien enemifes 100i:MisC;.697, 166 N.; Y. Supp. Saf?, ' jg ^^^ a prohibition ' against' dealings holding, that where,. though a majority .-.^itj,.^!, ^f the enemy nationality but of the shares of the capital stock of .^ ^ prohibition against those who re- a, corporation, -organized ui,#r the ^.^^ .^^ ..^^ -^.^.^^^^ .^ ^^^ - laws of the State of. Neyf Jersey are owned by a .German corporation ajid » : -J,':, ^i. ^ • r^ i ^o,, a- „'.,,.„ ,, „- 3. Bluthenthal v. Crowley, 138 App. German resident m Germany, three of ■ i . j> ■• re the four directors, including the man- Pi^- MS, 123 N. Y. S.upp. 520.. aging director who is . employed, and 4. Slgua Iron Co. v. Brown, 171 N. paid by the German corporation to Y. 488, «4 N. E. 194. look after its interests here, are resi- 5. Myers v., Machado, 6 Abb. Pr. dents in this country, an order. deny- 198, 14 How. Pr. 149. 768 gobpokatiojjts. the mode of incorporation or the title and date of the act.^ But it is otherwise as to a foreign plaintiff J The verification of pleadings by a foreign corporation may be made by its agent or attorney.* " The defendant in an action brought in a Court of record may require security for coats to be given: "^ A. Where the plaintiff, Svhen the action whs eommencfMl; either -nns » * « 2. A foreign corporation; ♦ » ♦ 8. In a case speoiiied in this section, if there are two oi- move plaintiffs, tlio defendant cannot require security for costs to be given unless he is entitled to require it of all the plaintiffs." 9 So a foreign corporation, bringing an action in this state, must give security for costs,^" even though it has a place of business within the State." But an omission to file such security is merely an irregularity.^^ Additional security may be required under certain circumstance specified in the Civil Practice Act. The Act provides that : ; , " At any time after the allowance of an undertaking given as security for costs, or after notice of the payment into court made pursuant to such an order, the court or a judge thereof, upon satisfactory proof, by affidavit, that tlie sum specified in the undertaking or the amount of such payment is insuflRcient, or that one or more of the sureties have died or become insolvent, or that his or their circumstances have become so precarious that there is reason to apprehend that the undertaking is insufficient for the security of the defendant, must make an order requiring the plaintiff to give on adilitioiial nndcrtfikini; m make an additional payment into court. The provisions of law relating to the original order for security of costs, requisites of undertaking, justification, allowance and payment apply to such an ovder arid to the undertaking given or payment made pursuant thereto." 13 Under section 1524 of the Civil Practice Act, an application to compel a foreign corporation to give security fpr costs may be made " at any time," and hence an application should not be denied on the ground of laches because the order therein was not made imtil neai-ly six months after the commence- ment of the action." • Foreign corporations other than rail- 6. Shoe and Leather Bank v. Brown, 11. Huber Co. v. Warren, 39 Misc. 9 Abb. Pr. 218, 18 How. Pr. 308, 588, 61 N. Y. Supp. 347. 7. Copnectieut Bank v. Smith,, 9 12. Piersse & Brooks Paper Works v. Abb. Pr. 168, 17 How. Pr. df. Willet, 14 Abb. Pi-. 119. 8. Rules of Civil Practice, Rule 99. IS. Civil Praftiee Act. § 1538, as re- 9. Civil Practice Act, § 1.522, pt., as numjbered by L. 1931, ch. 199. remimbered by L. 1981, cli. 19fl. 14. HungaTian, General Ci-edit Bank 10. Bank of Michigan v. Jessup,' 19 v. Titus, 175 Ajip. T)iV. 507, 161 N'. Y. Wend. 10. ' Supp. 1078. ' rOEEIGN COEPOBATIONS. 769 road : corporations, are not deemed residents of this State though they are authorized to transact business herein.^ Thus if a foreign corporation brings a transitory action against a resident, the county of the latter 's residence is the proper county .^^ When a foreign corporation has appeared iii an ac- tion commenloed here, it is as much within, and subject to, the jurisdiction of the court, as if it was a corporation xmder the laws of this state," and it cajinot thereafter deny its incor- poration.^^ A certificate under the seal of another state is prima facie evidence of incorporation, although not exempli- fied, as required by section 906 of thelJ. S. Revised Statutes.^* 691. Wlien authority to do business must be alleged. Before the obtaining of a certificate becomes a material fact in connection with ah action, two things must concur, the cor- poration must be a foreign stock corporation, other than a moneyed corporation, doing business in this state, and the contract which is the basis of the action must have been made within the state. If the existence of these conditions prece- dent appears upon the^fac?^ of the complaint, then such com- plaint, is mo tion,able unless it contains a further allegation that it is authorised to do business in this state.^" Likewise if 15. Shepard & Morse Lumb^er Co. y. Div. 358, 66 N. Y. Supp. 560. Burleigh, 27 App. Div. 99, 50 N. Y. 17. D»rt v. Farmers' Bank, 27 Barb. Supp. 135; Remington & Sherman Co. 337. V. Niagara' County Nat. Bank, 54 App. 18. Koot v. Oreat Western Railway Div. 358, && N. Y. Supp. 660; Inter- Co., 1 T. & C. 10,. 65 Barb. 619. affd. natt Life ASsur. Co. >. Sweetland, 14 55 N. Y. 636. Abb: Pr. 240. 19. United States Vinegar Co. v. 16. Mills V. Starin, 119 App. Div. Fochrenbach, 74 Hun 435, 26 N. Y. 336, 104 N. Y. Supp. 230; New Haven Supp. 632, affd. 148 N. Y. 58, 42 N. Clock Co, V. Hubbard, 16 N. Y. Supp. E. 403. laS, 40 St. Rep. 654; Internat. Life 20. Wood & Selick v. Ball, 190 N. Y. Assur. Co. V. Sweetland, 14 Abb. Pr. 317, 83 N: E. 21; (overruling all cases .240; D'Oliver Mfg. Co. v. Boss> 3 holding to the' contrary) Welsbach Current Ct. Dec. 35.' Co. v. Norwich Gas & Electric Co., 96 . Defendant corporation.— Where the App, Div. 52, 89 N. Y.Supp. 284, affd. plaintiff is a foreign corporation and 180 N. Y. 533, 72 N. E. 1152; Union the defendant a domestic corporation, Trust Go. v. Sickels, 125 App. Div. 105, a^'tranaitfliry action is. triable as a 109 N. Y. Suppt. 262; Manufacturers' matter of right at the defendant's Commercial Co. v. Blitz, 131 App. residence,, whifeh is ! the county where Div. 17, 115 N. Y. Supp. 402; Acorn its principal •J>lace of busihess is Brass Mfg. Co. v. Rutenberg, 147 App. located. Eefeington & Sherman Co. v. Div. '533, 138 N.i Y. Supp. 600; Friok Niagara County Nat. Bk.j 54 App. Company v. Pultz, 162 App. Div. 209, 49 ,770 ,€OEPOBATI()NS. it appears affirmatively from the .complaint that the foreign corporation has failed to procure the necessaryi certificate the complaint is insufficient for lack of capacity to sue.^ The statute is applicable to a receiver of a foreign corporation which had never obtained a certificate authorizing it to do business in this state who completed a contract which had pre- viously been made by the corporation, and so a complaint in an action by assignees of the receiver to recover the agreed price should be: dismissed, because of the failure of the corpo- ration to obtain a certificate.^ Proof of compliance with this section must be made by the plaintiff and in that respect it differs from proof of non-compliance with section 181 of the Tax Law, providing for a license tax on foreign corporations which is a matter of defense and must be pleaded and proved by the defendant,^ But a foreigu corpora tipn has a perfect right to sue in the courts of this state on a contract made with a citizen of the State of New York either within or without the state, provided it has not located in the Sta;te of New York for 147 N. Y. Supp. 73a; AngldUe Com- puting Scale Co. v. Gladstone, 164 App. Div. 370; 149 N. Y, Supp. 807; Bast iCoast Goal Co. v. HolEna, 183 App. Div. 67, 170 X. Y. Supp. 576; Pittsburg. H'ate Glass Co. v. Eavitch, 58 Mise. 191, 108 N.Y. Supp. 1103; Warner Instrument Co. v. Sweet, 65 Misc. 57, 119 N. Y. Supp. 166; Staf- ford Manufacturing Co. v. Newman, 75 Misc. 636, 133 ^. Y. Supp. 1073; Talmage's Sons Co. v. American Dry Dock Co., 93 Misc. 535, 157 N. Y. Supp. 445; American Can Company v. Grassi Contr. Co., 103 Misc. 330; 168 N. Y. Supp. 689. ■''■■> !.. Transacting business within state. — Where it appears upon the ^ce of. the complaint that a foreign corporation employs in this state a. district man- ager to' take 'charge, of' its 'ordinary and usual business of . selling i - por- traits without limitation as ; to r- terri- tory, it is to be assumed, in the absence of allegations to the contrary, that the corporation transacts busi- ness here and, is doing business .within this state. Chicago Crayon Go. v. Slattery, 68 Misc. 148, 133 N. Y. 0upp. 987. " ' In an action by a foreign insurance company brought in this state to 'I'e- cover premiums received by its agent, operating ' under § 137 of the Insur- ance Law, the defendants are e,stopped frop 'ciaiming that plaintiff was not authorized, to do business in thip state. .Pajctors .Fire Insurance Cc. v. Whilden, 93 Misc. 558, 156 N. Y. Supp. 3?a. . .,:. „, .. ,■, .'■ .. , 1. 'Enjmerich Go. v. Sloane, 108_ App. Div. 1330, 95 N. Y. Supp. 1189. ■ 2. Meyers, V. Spangenberg & McLean Co., 65 Misc. 47'5, laO.N. .Y. Supp. 174. 3f! Wood feSfllick V. Ball, 190 N. Y. 317, 83 N. E. 31; City Trust Co. v. Wilson. Mfg. Co., 58 App,. Div. 371, 68 N. Y. Supp. 1004; Portland C6. v. Hall & Grant Construction Oo., 123 App. Div. 49'5, 108. N. Y. ,Supp. 831; Manufacturers' Commercial Go. v. Blitz, 131 App. Div. 17, 115 N. Y. Supp. 403.. But see Boynton Furnace Co.< V. iCFrolm,. 141 App. Div. 773, 136 N. Y. .Suppi:.695i. FOREIGN COEPOBATIONS. 771 the purpose of doipg, bi:js,iness within the state, and its com- plaint states a good cause oljaction and is not motionable un- less, it appears on its face 'that the foreign corporation was doing business in this state, that it made the contract sued upon in this state,* and that it is a foreign stock corporation.^ And when the complaint does not disclose the essential facts necessary to bring a corporation within section 15 ol the Gen- eral Corporation Law, that is, that it is a foreign stock corpo- ration transacting, business within this state and suing on a contract made herein, then its failure to comply with that sec- tion constitutes an affirmative defense which must be alleged and, proved by the party asserting; it.* And the defense that .it had not obtained a ; >eertifi(;ate of authority may be alleged in an amended answer^ althoaigh known to the defend- ant a,t the time thp^ original answer w'as served.'' A presump- tion (Joes not arise, that a foreign corporation is doing busi- ness in this stai;e. from the^jmeretfaet, that it sues on a contract made here.^ But it has been held thajt-where a plaintiff, suing upon a contract made in this state, alleges that it is a foreign corporation, there is a presumption that it isa foreign stock corporation and within^th^. prohibition contained in section 15 of !th'e General Corporation Law? An allegation in ah action by a foreign corpora.tion that the plaintiff " was then and still is duly authorized to do Jsusiness in the State of New York " sufficiently alleges plaintiff's compliance with, s^etion, 15 of the General Corporation Law.!^ The defense of f^^ilure to 4. Eclipse .Silk Manufacturing -Co. llS?,; International . Society v. Dennis, Vj Hiller, 145 App. r>iv. 568, 129 N. Y. 70 App. Div. 337, 78 N. ,Y. Supp. 497; Supp. 879; Frick Company v. Bultz, St. Albans Beef Co. v., Aldridge,^ 112 162 App. Div. 309, 147 N. Y. Supp. App. Div. 803, 99 N... Y. Supp. 398; 732; Barney, & Smith Oar Co, v. B. Steiger- Truflk, and Bag Qo. v. .Whari)- W. Bliss Co., 100 Misc. 31, 164 N. Y. pliffe,.,62 Misc. ,14, 1J4 N. Y. Supp. Supp. 800. . , , ,, 463. ,. 5. South Bay Co. v. Howey, 113 App. 7. Bradford. .Co. y. Dunn, 188 App. DiV.. 383, 98 N. Y. Supp, 909, revd. on r>iv.. 454, 176 N. Y, Supp. §^4. j other grounds, 190 N. Y. 340, 83 N. 8. Lukens Iron & Steel Co. y. Payne, fe. 26. 13 App. Div. 11, 43,N. ^. Supp.- 376; 6. Portland Co. v. Hall & Grant Singer Mfg. . Co. v. Granite Spring Construction Co., 131 App. Div. 779, Water,; Co., 66 Misc. 595, 123 N. Y. 106 N. Y. Supp. 649. Supp. 1088. Affirmative defence. — New York 9. Portland Co. v. Hall & Grant Architectural Terra-'Cotta Co. v. Wil- Const, Cp,„,123, App. Div. 495, 108. N. .Hams', 10» App. Div. 1, 93 N. Y> Supp. Y. Supp.. 831, ;. ,, . 808, affd. 184 N. Y. 579, 77 X. E. 10. United Building Material Co, v. 772 ■ COBPOEATIONS. comply with the statute need not be taken- by motion addressed to the pleading or answer, but is available on a motion for a nonsuit after the evidence is in."^ A complaint in an action on a promissory note which does not allege that the plaintiff is doing business in this state is not insufficient, although the note set forth is payable at a bank in this state, Avhere there is no allegation of the time and place of its delivery, the con- sideration, or where the transaction out of which it arose took place.^^ If a complaint by a foreign corporation for goods sold is silent as to the place of sale it is to be presumed that the sale was made and completed in the foreign state, and hence an allegation that the plaintiff was duly authorized to do business in this state is not required.^^ An action by a foreign corporation upon a promissory note dated in the city of New York must be deemed to be brought upon a contract made in this state." It is improper to admit evidence that the plaintiff is doing business in this state where the issue is not raised by the pleadings.^ 692. Actions on contracts hot made in state. A foreign corporation may maintain an action on con1;racts not made in this state, although it has not procured a, certifi- cate of authority to do business here.^^ So a foreign corpora- tion may sue in this state on a note made in another state, al- though it has not complied with soction 15 of the General Cor- poration Law so as to be entitled to do business here." Odeli; «)7 Misc. 584, 123 N. Y. Supp. 15.- Singer Sewing Machine' Co. v. Kl3, afftl. 141 App. DiV. 921, 125 N. Foster. 75 Misc. 64i: 13.^ N. t. Supp. Y. Supp. 1148. ' 1072. 11. Wood & Selick v. Ball, 114 App. 16. Atlantic Construction Go. v. Div. 743. 100 K. Y. Supp. 119, affd. Kreusler, 40 App. Div. 268, 57 N. Y. 19iO N. Y. 217, 83 N.E. 21, superseding Supp. 983; Batclielder & Lincoln Co. Wright & Co. V. Faullvntf, 52 Misc. v. Knopf, 54 App. Div. 329, 66 N. Y. TOO, 101 N. Y. Suj^p: 807. Supp. 513; International Text-Book 12. Alpha Portland C. Co', v. Schrat- q^ ^ Connelly, 67 Misc. ,49, 124 N. Y. wieser T C. Co., 14fr App, Div. 571, g^pp g^g ^^^ ^^^ ^p-; D^'gg^^ 131 N. Y. Supp. 143. ^25 jj Y, Supp, 1125, affd, 206 N. Y. " 13, Aiken. Lambert & Co. \. Haskms 37 Misc. 629. 59 N. Y. Supp. 486, affd. 48 App. Div, 638. 63 N, Y, Supp. .,-,^4 Oo„ 40 App, Div. 215, 57 N. Y.. Supp. 14. MMiiufiMtmers!' Commercial Co. "O^^ Great Northern Moulding O). V. Blitz. 131 App. Div. 17, 115 N. Y. '*■ Bonewrir,: 138 Apip.- Div.' 831, 113 Supp, 402, N V. Supp. 60. ■ ' ' .188, 99 N. ,E. 732. 17. f'rptf. E. 915. lO: Delaware, L. & W. E. Co. v. 7. Watson v. Boston Woven Cordage New York, S. & W. R. Co., 13 Mise. Co., 75 Hun 115, 26 y. Y. Supp. 1101. 230, 33 N. Y. Supp 1081. FOREIGN CORPORATIONS. 779 state.^ A complaint in' an action by one foreign ccitp'oration against another for breach of contract of sale, which does not allege that the contract was made in this state or to be per- formed in this state, or that the defendant was doing business here as required by section 47 of the General Corporation Law, does not give the court jurisdiction of the subjei't of the action.^^ 700. Action by non-resident on cause arising within state. A non-resident may maintain an action for the breach of a contract within, this state, no matter where the contract was made.^^ So a foreign corporation may sue another foreign corporation on a check made payable at a bank in this state." And it may maintain an action to (5ompel the specific perform- ance of a contract, made in this state to convey lands situated in another state, since the object of the action does not affect the title to real property ydthin another state within the meaning of the statute." 701. Action by non-resident when foreign corporation doing bnsiness in state. Under section 47 of the General Corporation Law a foreign corporation doing business in this state may be sued here by a non-resident or another foreign corporation notwithstand- ing the cause of action did not arise in this state or the con- tract sued on was not made here.^^ But the provision of the 11. sterling Manufacturing Co. v. Xa.tional Surety Co., 94 Misc. &04, 149 N. Y; Snpp. 979. , 12, East Coast Oil Co. v. Toltec 5{Iexican Oil Co., 183 App> Kv. 76, 170. N. Y. Supp. 583,. 13. Shelby Steel Tube Co. v.. Burgess Gun Co., 8 App. Div. 444, 40 N. Y. Supp. 871; Rosenblatt v. Jersey Novelty Co., 45 Misc. 59, 90 N. Y. Supp. 816. 14. Hibernia National Bank v. LacomV, 84 N. Y. SST; Kline v. Imperial Coal & Coke Co., 66 Misc. 616, 122 N. Y. Supp. 311. But an action on a .iudgment of a court of anotlief state is 'not a cause of' action' irisihg'' in t1iis state and the courts of this state will not liear the action when it is between two foreign corporations. AHglo-Amer. Provision Co. V. Davis Provision Co., 169 N. Y. .SOfi. 62 N. E. 587, aflfd. 191 U. S. 373. 15. Wrightsville Hardware Co. v. Assets Realization Co., 159 App. I>iv. 849, 144 N. Y. Supp. 991. But see Odm'berland, etc., Co. v. Hoffman Sieam Coal Co.; 30 Barb. 159,' 20 How. Pr. 63, holding that one foreign corpoi-atioii eanhbi; maintain an action in the N^ew York courts against another foreign corporation respecting' lands in another state. ' 16. Kowalchek v. Buch Run Coal Co., 173 App. biv. 653, 1«0 N. Y. Supp. 98; Persich V. Philadel-phia & R. Coal & Iron Co., 182 App! Div. 391, 169 N. Y. Supp. 388. 780 COB^KATipiirS.: statute th^t an action." may be maintained " in this state, where a foreign corporation is doing > business within this state, although both parties aire residents of fthe foreign state, is not to be , construed as mandatory upoH the court, which should exercise its discretion under the sp'ecial circumstances of each case, and entertain or refuse to entertain thie action in the exercise of that discretion." The provision of the statute that an actiqu; against a foreign corporation may be main- tained by , another foreign corporation, . ^he^re, -the corpora- tion is doing business within this state, applies only to the de- fendant and does not give fhe court jurisdiction. where, the plaintiff only isdoijig ]business within this state.^^ The, courts of this state, prior to the express authorization of , the statute> had no jurisdiction of an action by a non-resident arising in another state against foreign corporations doing busi- ness within this state, and the amendment Which gave the courts jurisdiction did not have a retroactive effect so as to confer jurisdiction of an: action of which the court did not have jurisdiction when the same was commenced,^^.>or of actions accruijig before, the , stajtute was enacted,f for the statute^ does not affect procedure only, but creates a remedy, which did not previously exist and hence a new legal right.^ 17. Waiaikoski y. Pluladelpliia & R. effect, , Graat v. Greene Consolidated Coal & Iron Co., 173 App. Div. 538, Copper Co., 169 App. Div. 206, 154 N. 159 .N. Y., Supp. 906; Bagdon V. Phila- Y. Supp. 596. delphia & R, C. & R. Co., 178 App. go. Morrison v. Baltimore & Ohio Div. 663. 165 N. Y. .Supp. 910. ^ ^o., 177 App. Div. 613, 164 N. Y. 18. United .States Asphajt Refining , holding that . non-resident Co. V. .Compton National D'Escompte , . , .~ De .Paris,, 166 App. Div. 64, 151 N.' Y. P''''"*'*^ '*""°* «"^ "^ ^-"^^^g" ™"ro*d Supp. 604. corporation in our courts to recover 19. Fairclpugli v, Southern Pa(;ifie ^"f ^^^ hTeach of an alleged contract Co., 171 App. Div. 496, 157 N-.'^t. Supp. I made in the foreign .jurisdiction to 863. employ the plaintiff permanently in The amendment is not retroactive to consideration of his refraining from: the, extent of being applicable to a suing the defendant for negligence judgment enteijed before said amend- which caused^ personal .injuries in the ment took effect. Thus, said amend- foreign state, . if the alleged contract ment is not effective to overturn a and the breach thereof were made judgment, , dismissing ,tlie complaint p,f, prior to the enactment of the statute. a non-resident for lack of jurisdiction 1. Morrison v. Baltimore & O. R. of such, actipi}, -which judgment was Co., 177 App. Div. 613. 164 N, Y. entered before the amendment took Supp. 258, FOREIGN GOEtORATIONS. fSl 702. Continuation of action aftfer dissolution of defendant. . An action brought against a, foreign corporatj.pn, .wjiich is subsequently dissolved and 3,: liquidator appointed under the laws of the foreign statOj who thereby becomes vested with all the powers of the existing trustees, ca,nnot.be continued against such trustees, under section 84 of the Civil Practice Act, as beihg the " representative or successor, in interest of the corporation, "where it is not alleged that there is in this state, or that they j^ave in their possession, any property of the corporation.^ 703. Actions concerning internal management. Grenerally speaking, foreign corporations are not, so far at least as their internal affairs are concerned, subject to regu- lation by the courts of this state. The question of menibership in a foreign corporation relates to the internal affairs of the corporation and is subject to regulation only by the courts of the state or country to which the corporation owes its exist- ence. When a forei^ corporation accepts a license to do business in this state or does some act which subjects itself to the jurisdiction of this state, it may be treated as a domestic corporation to the extent of rendering it subject to the writ of mandamus. Where, however, it has not been authorized to do business in this state and has done no act to subject it to the jurisdiction of this state, its action in reference to its in- ternal affairs may not be controlled by the writ of mandamus. This is the. rule of the common law which has. not been changed in this state by statute.^. And, so regardless of sec.tions 46 and 47 of the General Corporation Law, the courts of this s-tate will not regulate the interual management of a foreign corpo- ration. Questions arising out of such internal management are of lp.cal administration and should be relegated to the courts pf the state or country under the laws of which the corpora- tion was organized.* So the courts of this state will not set aside an election of officers of a foreign corporation or re- strain their official action.^ However, it has been held that our 2. Wamsley v. Horton & Co.,. 12 Div. 5^6, 73 N. Y. Supp. 403; De App. Div. 312, 42 N. Y. Supp. 767, Raismes v. United 'States Lithograph afEd, ,153, N. Y. 687, 48 N. E. 1107. Co., 161 App. Div. 781, 146 N. Y. Supp. 3. People ex rel. Solomon y. Brother- 813; Ives v. SmitK, 3 N. Y. Supp. 645, hood of Painters, etc., 218 N. Y. ^115, 19 St. llep. 556,' affd. 8 N. Y. Supp. 112 N. E. 753. 4^, 28 St. Rep. 917. 4. Hatlenborg v. Greene, 66 App. 5. Travis v. Knox Tefpezoiie Co., 782 . COKPOSATIONS. courts will entertain jurisdiction of an action brought^ by a stockholder of a foreign corporation residing in this state to enjoin an illegal issue of stock by the corporation, where all the directors of the corporation reside here, its principal office is located in this state, and all the meetings of directors are held here though the annual meetings of the stockhold- ers are held outside the state.^ A stockholder of a foreign corporation, who is also its secretary and treasurer, may, al- though a non-resident, maintain an action in the state of New York to preserve and sequester the corporate assets, almost all of which are in this state, by virtue of subdivision 3 of section 306 of the General Corporation Law which authorizes the maintenance of an action by a stockholder to preserve the assets of ,a corporation having no officers empowered to hold the same.'' 704. Issuance of attachment. "To entitle the plaintiff to such a warrant (of attachment), he must show that a cause Of 'action specifioil in thf last section frivil Practice Act, § 902) exists- against the defendant, and, if the action is to recover damages for breach of contract, that the plaintiff is entitled to recover a stated sum, over and above all counterclaims known to him. He must also show that the defendant 1. Is either a foreign corporation or not a resident of the state."! ■, Section 46 and 47 of the General Corporation Law, which provides that an action against a foreign corporation may be maintained, by a resident of New York or hy a domestic cor- poration for any cause of action, but that an action against a foreign corporation may be maintained, by another foreign corporation ' or by a hon-residerit, only in certain cases speci- fied therein, is an enlargement, not a restriction, of the, juris- diction of the Supreme. Court where attachment proceedings 315 N. Y. 259, 109 N. E. 250; Butler courts of this state may, where the v; Standaa-d Milk Flour Co., 146 App. one having the option has elected not Div. 735, 131 N. Y. Supp. 40(1, holding to purchase, enjoin the attorney from that where t-he majority .of, the -.stopk, exercising any of the privileges of -a of a .foreign corporation was placed in stockholder as respects the shares escrow in the hands of an attorney ,,^,^ ^^ ^^^^^^ to be held by him for delivery to a , , -, X. i , 6. Kraft v. Griffoii Co.. 82 Apu person who had an option to purchase ^ •• "^ -^rt'- within one year, and the attorney ../s Div. 29, 81 N. Y. Supp. 438! charged, with fraudulently insej-ting a 7. MariNabb v. Porter Air -Lighter provision in the contract whereby ]ie Co., 44 Apip. T>iv. 102. SO N. Y. Supp. was authorized to Jipld tlie stoc^ until 6^4. the expiration of three years, tVie 8. Civil Practice Act, § 903, -pt. POEEIGJSr GOBPOEATIONS. 783 are attempted to be taken against a foreign corporation." Thu property of a foreign corporation which has been duly author^ ized to do business in this state is, liable to attachment.^" ■ So a debt owing to a. foreign corporation may he attached in a suit brought by a resident of this state against the creditor corporation.^^ In an action brought in this state by one for- eign corporation against another foreign corporation for --i breach of contract an attachment is improperly issued under section 903 of the' Civil Practice Act unless it appears by affi- davit that the contract was made within the state, or relating to property situated within the state at the time of the making thereof, or that the cause of action arose within the state.^^ And when the action is on a promissory note it is necessary 9. Ooolidge v. American Realty Co., 91 App. Div, 14, 86 N. Y. Supp. 318. An attachment lies against a foreign corporation for the conversion of its own stock. — Condouris y. Imperial Turkish, etc., Co.; 3 Misc. 66,' 22 N. Y. Supp. 6*5:' ■ "■ -■ <"' Attachment after dissolution in foreign state. — July 7j,; 1899^ a, judg- . ment Oif a court lof competent juris- diction in the State of Connecticut was entered, disaplying a corporation organized under the law,a o*f that state- and appointing a receiver thereof. July 1'5,-i 1899, a creditor of the cor- poration, residing in the. Staie of New Yqrk, , brought' an action against' the cofporg^tion in that: ^t^%e to, re- cover his debt, and on the tw^ntyj niith day of July obtained k warrant of attachment against the corporation and finally obtained judgment in the action .by defa,ult. July 28, A899j an action was brought against the cor- poration in the State of New York which resulted in the appointment of an ancillary receiver of the corpora- tion (to , take possession of,, and ad- minister,., the, assets.-of i the corpora-, tion in the State :.0f Nevsr York... On a ..motion made , by the ancillary re- ceiver to vacate the warrant; of .^attachTi ment and the judgment obtained^ in the creditor's action, it was held that the ancillary receiver was iiot in a position -to raise the objection that the corporation ceased to exist when the judgment of , dissolution was entered in the; State of Connecticut and- that no action . could thereafter be brought . against it in the Sta,tQ ,.pf New Yoiflc, as if the . corporation • did not exist when the creditor's ac1;ion was brought, it certainly did not exist when the ■'action in which the ancillary receiver- was' appointed was begun: It seertis that' until steps'^ were -taken'- in :^the State of New: York to enforce the judgment of dissolution, the status lOf .the corporation ,in, that state was not taken away, and that the courts of ' the State 'of New York -had juris- diction to grant the Warrant of attachment and judgment. Ha;inmond v. National Life Assn., 58 App. Div. 453, 69 N. Y., Supj). 585. . ,.., . 10; Prentiss "^v." Greene, 193 App. Biv. 672, 184 N.. Y.iSupp. 538. ''* . 11. India Rubber Co. y. Katz; 65 App. Div. 349, 73 N. Y. Supp. 658. 18. -Smi^h ,v, .Union , Miilk; Co., f70 Hun, 348,, -24 N. Y. Supp. 79,;ftfld. 143 N,. Y. , 6a2, 37 N. -E. 827; Selser Bro,J;hers. Co. v.- Potter ,Prodruce Co., 77 Hun 313,- 28 N. Y, Supp. 428; People V. St. Nicholas Bank, 44 App. D|iv. 313, 60 N. Y. Supp. 719. 784 COEPOKAtlONS. for the plaintiffs to show either that they are residents of the state or that the cause of action arose mthin this' State;; the fact that som6 prior holder of the not^ was a resident of the state is immaterial.^^ The verified (iomplaint in the action cannot he ti-e'atfed as an affidavit, in order t(^ sustain the at- tachment, where there is no reference to the complaint in the warrant and no proof that it was ever presented to or con- sidered by the judge who granted the warrant.^* But if a veri- fied complaint and accompanying affidavits state positively, and not upon information and belief, that tie defendant was and still is a foreign corporation organized and existing imder the laws of a certain state and this fact is not controverted by the defendant, the papers are sufficient on their face to estab- lish the non-residence of the defendant for the, purpose of ob- taining a warrant of attachment.^^ Unless the jurisdictional facts appear in the papers upon which a warrant of attach- ment is granted against a foreign corporation, the attachment must be set aside ; it is the plain meaning of sections 816 and 903 of the Civil Practice Act that it must appear by affidavit, to the satisfaction of the judge granting the warrant of at- tachment, that a cause of action exists of which the court has jurisdiction.^® The statutes of this state in regard to the liquidation and dissolution of insurance corporations are simi- lar and in substantial accord with the statutes of Pennsyl- vania, and so under the principle of comity, as the. property of of an insolvent insurance company organized in that state which is there being liquidated by the insurance commissioner becomes impressed with a trust in favor of all its creditors, the property of such corporation in this state is not subject to an attachment by a creditor whereby he would obtain a prefer- ence." 705. Pleading; limitation of action; trial; examination before trial. The form of actions in this state against foreign corpora-, tions and the method of procedure are matters of practice 13. Coolidge v. American Realty Go., 16. Ladenburg v. Commercial' Bank, 91 App.' Div.' 14, 86 N; Y. Supp. 318. ' 87 Huii 3&9, 33 N. Y.'Supp. 831, affd. 14. People V. St. Nicholas "'Bank, 44' 146 N. Y. 406, 43 N. E. 543.' App. Div. 313, 60 N. Y. Supp. 719. 17. Martyiie v. American tJriion 15. Stiner v. Tennessee CJopper Co.,' Pi're Ins. Co., 216 N. Y. 183, 110 N. 176 App. Div. 209, 161 N. Y." Snpp.' E. S03. 986. •■ " ■ ' FOREIGN COKPdBATIONS. 785 which are fixed and governed by our laws.^^ Where a com- plaint alleges, a;niongt)ther things,' that the plaintiff is a resi- dent of the State of New York' and that the defetidant is a foreign corporation, and the answer admits that the defend- ant is a foreign; corporation, and then denies that it has any knowledge or information sufficient to form a belief as to the other allegations of the complaint, the- residence of the plain- tiff when the action was begun is. put in issue and becomes a question of fact.-^^ But a complaint in an action brought against a;foreign corporation, which does not disclose whether or not the plaintiff is a resident of the State :of New York, is not motionable upon the ground that the plaintiff has not legal capacity to maintain the action under section 47 of the Gen- eral Corporation Law, as that fact dqes not appear upon the face of the complaint.^" An a-llegatioU; in a complaint that the defendant is a corporation constitutes nopart of the cause of action,, but simply relates to the character or capacity of the defendant, and, therefore, a complaint, yfhich,. does not allege that the defendant is a corporation, although such might be inferred to be the fact from its name, is not motionable on the ground that it does not state facts constituting a cause of action.^ : ■ " In an action against a foreign or domestic corporation to recover damages for tie non-payment of a promissory iipte, or other evidence of debt, for the alisblute payment of money, iipoji demaiid, or at a pkrticular time, the answer must 'be verifled."2 : A foreign corporation which has strictly complied with the statute by designating a person in this state upon whom ser- vice of summons may be made, may interpose the defense of the statute of limitations.' But prior to the enactment of that provision it was held that a foreign corporation, sued in the state could not avail itself of that defense.* Where the venue 18. Sinnott v. Hanan, 314 N. Y. 454, N. Y. Supp. 717. , ,' - 108 N. E. 858. 1- A N. E. 54. 17. Meyer v. Consolidated Ice t!o., 18. General Corporatioii Law, § 305. FORKIQN COBPOEA.TIONS. 789 Service of Prooess. = 70&. Personal service within state generally. "Personal service of the summolia upon a foreigil corporation must be made byi delivering a «opy thereof, within the state, as follows : . : ^l.;;To the pres:id9nt, vice-president, treasurer, assistant treasurer,: secretary or assistant, secretary J, or, if the corporation lack either of those, officers, to .the, o^cei' performing .corresponding functions under another name. 2. To a person desighateii for the purpose as provided in section sixteen of the general corporation law. ' ' ;.:.!• ; 3. If such a designation be not in force; or if neither the person designatedy nor an pflicer speeiied in subdiyision first of this section, can be found with dUje diligence, to the cashier, a director or. a managing agent of .the corporatipn,! within the state,; .... 4. If the person designated as provided in section sixteen of the general corjo- ration law' dies Or removes from the place where the corporation has its princi- pal place of bubhies's' within the state 'and the corporation does not within thirty days after such death or removaldesigniate in like manner 'another person upon whom process against it may be 'served: within the state,; the summons in an action .against the corporation; upon any liaibility iiicsurr^di -^ithin this state, may be served, after, such ;death or removal, and before a^jothe^. designation is made,, upon the secretary of state. ''19 When a foreign corporation comes into this state, the legislature, by virtue of its control over the law of reme- dies, may define the agei^ts of the corporation on .whojja process may be served. If the persons named are true agents, and if their positions are such as to lead to a Just presumption that notice to them will be notice to the prin- cipal, the corporation must submit. It is not necessary to show that expriess authority to accept service was given to the defendant's agent. His appointment to act as ageftt within the stai;e carries with it implied authority to exer- cise the powers which under our laws attach to his posi- tion.^" This provision is constitutional since it is for the legis- lature to determine what shall be a sufficient service of process for the commencement of an action, subject only to the limi- tation that the service must be such as may reasonably be ex- pected to give notice to the party proceeded against;^ any ser- vice which would be sufficient as against a domestic corpora- tion may be authorized to commence an action against a for- eign corporation.^ The purpose of permitting service upon 19. Civil Practice Act, § 229. Co., 70 N. Y. 223; Pope v. Terre Haute 20. Tanza v. Susquehanna Coal Oq;, C. ,& M. Co., 87, N. Y. 137. 220 N. Y. 259, 115 N. E. 915. 2. Pope v. Terre Haute C. & M. Co., 1. Hiller v. Burlington & M. E. R. 87 N. Y. 137. 790 COEPOBATIONS. officers or agents of a foreign corporation doing business within this state is to secure the rights of citizens of the state doing business with the corporation upon the one hand, and upon the other to secure the service of process upon such per- sons as will be likely to bring home to the corporation the fact of the service in order that it may protect itself by a proper appearance and defense.^ Generally trustees of an insolvent corporation cannot be served,* but where a foreign, corporation has not been absolutely dissolved service may be made on its officers here.^ But service on the receiver of a foreign corpora- tion is not good where it does not appear that at the time of the service the persons served were connected in any way, either with the corporation or the receivers, or that the cor- poration had property in this state or that the receivers had designated a person upon whom service might be made.^ In a suit in a state court against a foreign corporation having no property within the state it is necessary in order to obtain a personal judgment against the corporation, that it, when ser- vice of process was made upon it, be doing business within the state and that service, within the state, be made upon an agent of the corporation duly authorized to accept serviced, 710. Service by publication or without state. "An order directing the service of a summons upon a defendant, by publication,' may be made in either of the following cases : ' ' 1. Where the defendant to be served is a foreign corporation ; or is a joint-stock' association or other unincorporated association having a president and treasurer neither of whom is a residentrOf this state; or being ^a domestic oorpora-tion, where after diligent effort service cannot be made within the state upon the president, or other head of the . coi-poration, the secretary or clerk to the corporation,, the cashier, the treasurer or a director or managing agent; or, being a natural persoii, is not a resident of the state; or where, after diligent inquiry, the de- fendant remains unknown to the plaintiff or : the plaintiff is unable to ascer- tain whether the defendant is or is not a resident of the state. *, * *" "The order must be founde^ upon a verified complaiot showing a sufficieat: cause of action against the def ejidant to be sei'ved or upon a verified complaint to recover h sum of money on].y and proof by affidavit that a warrant of at- 3. Eath V. Ohio iCterman Fire Ins. G. (lursky v. Blair, 164 App. Div. Co., 133 App. Div. 692, 117 N. Y. 612. 150 N. Y. Supp. 432. Supp. 383. 7. .Tohnston v. Mutual Reserve Life 4. Ogdensburgh & C. C. R. Co. v. Ins. Co.. 43 Misc. 251, 87 N. Y. Supp. Vermont & C. R. Co., 16 Abb. N. S. 438, affd.' 45:Misc. 316,: 90 N. y, Svtpp. 249, 6 T. & C. 489. affd. 4 Hun 712. 539, aflFd. 104 App. Div. 544, 550, 559, 5. Murray v. VRnderbilt, 39 Barb. 639, 93 N. Y. Supp. 1048. 1058. 1136. 140. FOREIGN COEPOiBATIONS. 791 tachment, granted in the action, has been levied upon property of the de- fendant within the state,, and proof by affidavit of the additional facts requiredi by this section ; and also^ where the application is made upon the ground that the defendant is a foreign corporation or not a resident of the state, or in a case specified in subdivision fiftlij sisrth, of eighth, that the plaintiff, with due diligence, has been or will be unable to make personal service of the sum- mons."^ "If service be made by publication, or without the state in lieu thereof, the summons, complaint and order and the papers on which the order was made must be filed with the clerk on or before the day of the. first publication or the day of puih personal service. A notice subscribed by the plaintiff's attorney and directed only to the defendant or defendants thus to be served, substantially in' the following form, the blanks being properly filled, must be subjoined to and published with the summons : ; . ' To : The foregoing summons is served upon you by publication pursuaiit to an order of ' (naming the judge and his official title), 'dated the day of , 19 , and filed with the complaint in the office of the clerk of at ' If service be made without the state under an order for publication of the summonsj a ''notice substantially in the above form must be served with the summons, except that the words 'without the state of New York' shall be sub- stituted for the words 'by publication.' If the aetion be brought to recover a judgment affecting the title to, or the possession, use or enjoyment of, real property, the notice shall also briefly state the object of the action and give a brief description of the" p'roperty. ' ' 9 , , The service of a summons in a siiit against a foreign corpo- ration personally on an officer of the defendant without the state, pursuant to an order for publication, is defective and does not vest the court with jurisdiction if at the: time of ser- vice the notice required by Rule 52 of the Rules of Civil Prac- tice is not also served. As such failure to serve the notice constitutes a jurisdictional defect and is hot a rhere irregular- ity, the court is without power to allow the notice to be subse- quently served nunc pro tunc.^" So also the service of an order of publication, together with the summoms and complaint, by depositing the papers, contained in a securely closed postpaid wrapper, in a letter-box other than in the post-office, is not goodi" 8- OiviKPraotice Act, § 233, pt., as izes the curing of teclinioal defects or amd, by L. 1921,' ch. 199. insufficiencies/ cannot be used to cure ' 9. Rules of Civil Practice, Rule 53. defects which go to the jurisdiction 10. Conklin a . Federal Trust Co., of the court. In orcler to cure defects 176 App. Div. 573, 163 N. Y. Supp. the court must first obtain jurisdic- 570, holding that section 768 of the tion of the cause. bode of Civil Procedure (see § ]05, 11. BermiM, Inc., v. American Fruit Civil Practice Act), which author- Distributing Co., California, 114 Misc. 792 OOEPOBAMONS. 711. Service on president or other officer. The courts of the state cannot acquire jurisdictioh of a for- eign corporation which is not doing business here, has no property here and no qualified agent on whom service may be made, by service of a summons on an officer of the corporation within the state, since such a service is violative of the due process of law clause of the Fourteenth Amendment of the Federal Constitution.^^ In other words under subdivision 1 of section 229 of the Civil Practice Act an pfiicer of a foreign cor- poration may. be served with a summons and complaint within this state only when the corporation is properly a .defendant; that is, when it is doing business within the state." The statute does not in express terms purport to authorize service upon a foreign corporation not doing business here simply because it might be possible to find one of its officers temporarily within the state. It provides generally for service upon a corporation which is " a defendant " and this language fairly can be in- terpreted as meaning that in a case where constitutionally and 345, 186 N. Y. Supp. 376, holding that where an order for the service of the summons directed that a copy of the summons and complaint and order of publication, contained, in a securely closed postpaid wrapper, he deposited in the post-office as required 'by section 440 of the Code of Civil Procedure (Eule 50 of the Rules of Civil Practice) but upon application for judgment the only proof of mailing was an affidavit stating that the papers were deposited in a depositary maintained by the United States government in a pri- vately owned building, the defect is jurisdictional and not merely an ir- regularity, and defendant's mgtion to vacate the judgment will be granted. 12. Riverside & D. R. Cotton Mills ■V. Memfee, 237 U. S. 189, 59 L. ed. OlO; Bagdon v. Phil. & Reading C. & I. Co., 217 N. Y. 43g, 111 N. E. 1075; Robert Dollar Co. v. Canadian Car, etc, 'Ooi.^ Ijtd., 220 N. Y. 270, 115 N. E. 711; Krahowski v. White Sulphur Springs, 174 App. Div, 440, 161 N. Y. Supp. 193; Berner v. Collier Co., 179 App. Div. 733, 107 N, Y. Supp. 39; Wollmau v. Newark Star Publish- ing Co., 190 App; Diy. 933, 179 N. Y. Supp. 899; Bogert & Hopper, Inc. v. Wilder Mfg. Co., 197 App. Div. 773; Magnolia Metal Co. v. Savannah Supply Co., 157 N. Y. Supp. 355, 191 St. Rep. 355. Prior to the decision of Riverside & D. R. eotton Mills v. Memfee, 337 U. S. 189, 59 L. ed. 910, .it was held that jurisdiction over a foreign corporation, which neither lias done nor is author- ized to do business in this state, might be obtained by service of summons upon its treasurer or other ofBcer resident of the foreign state, while passing through this state. Grant v. Cananea Con. Copper Co., .189 N. Y. 241, 82 N. E. 191 ; Miller v. Jones, 67 Hun 281, 22 N. Y. Supp. 86; Smith v. Western Pacific Ry. Co., 138 App. Div. 344, 122 N. Y. Supp, 888; Sadler v. Boston & Bolivia Rubber Co., 140 App. Div. 367, 123 N. Y. Supp. 405, afld 303 N. Y. 547, 95 N. E. 1139, 13. Sunrise Lumber Co., Inc., v Biery Lumber Co., 195 App. Div. 170, 185 N. Y. Supp. 711. FOREIGN CORPORATIONS. 793 legally a foreign corporation can be made a defendant in our courts the summons shall be served upon it in the maimer pro- vided. Thus considered the statute is not unconstitutional." The president of a corporation consolidated with another may be served with process after the consolidation and until a suc- cessor is elected.^^ But service uppn the president of a for^ eign corporation after his resignation is insuJEcient.^^ 712. Designation of person on whom service may be made. "Before granting such certificate (of authority to do business) the secretary; of state shall require every such foreign corporation to file in his office a sworn copy in the English language of its charter or certificate of incorporation and a statement under its corporate seal, and the signature of its president, vice- president or other acting head, particularly setting fortt the business or objects of the corporation which it is engaged in carrying on or which it proposes to carry on within the state, and a -place within the state which is to be it's princi- pal place of business, and designating a. person upqn whom process against the corporation may be served within the state. The person so designated must have aa office or place of business at the place, where such corporation is to have its principal place of busiiiess within the state and such designation must specify Bueh office or place of business of the said person so designa;ted, and if it is within a city the street and street number if any, or other suitable designation of the particular locality. Such designation shall be accompanied with the written consent of the person designated and shall continue in force until revoked by an instrument in writing designating in like maimer some other J)eT.son upon whom process against the corporation may be served in this state or until the filing in the same office of a written revocation of said consent executed by the per- son so designated. If the person so designated dies or removes ;£i-pm, the place where the corporation . has its principal place of business within the state, or flies such revocation of his consent, and the corporation does not within thirty days after such death or removal or revocation of consent designate in like manner another person upon whom process against it may be served within the state, the. secretary of state may revoke the authority of the corporation to, dp business within the state, and process .against the corporation in an, action upon any liability incurred within this state before such revocation, may, after such death or removal, or revocation of consent, and before another designation Is made, be served upon the secretary of state. At the time of such service the plaintiff shall pay to the secretary of state two dollars, to be included , in his taxable costs and disbursements, and the secretary of state shall forthwith mail a copy of such notice to such corporation if its address, or the address of any officer thereof, is known to him. The secretary of stat« may require the execution 14. Robert Dollar Co. v. Canadian R. Ck)., 39 App. Div. 336. 57 N. Y. Supp. Oar, etc., Co., T,td., 230 N. Y. 270, 115 111. N. E. 731; Rosenblaitt v. Bridgeport 16. Sturgis v. Crescent Jute Mfg. Metal Goods Mfg. Co., 105 Misc. 92, Co., 10 N. Y. Supp. 470.: 32 St. Eep. 17C? N. Y. Supp. 331. 848. 15. Buell V. Baltimore A 0. 8. W. 794 eOEPOKATIONS. of any such designation, revocation or consent, to be authenticated as he deems proper and he inay refuse, to file it -without such authentication." 17 The designation must state with reasonable certainty the principle place of business of the corporation within the state and the office of the person upon whom process may be served.^^ And if it does not designate the place where ser- vice^ can be made, and is not accompanied by the consent of the person designated, nor filed in the secretary of state's office it is invalid.^' But the fact that a designation fails to con- form to the statutes cannot be taken advantage of by the cor- poration for it is estopped from taking advantage of its own wrong.^" The designation of two persons in the alternative so' that process may be served upon either of them greatly facili- tates the service of papers upon a corporation and satisfies every requirement of the statute.^ A foreign corporation, ad- mitted to do business in this state, having designated a person upon whom service may be made, cannot limit the causes of action upon which it can be sued in the courts of this state.^ So also the agency of the designated person is not limited to actions which arise out of business transacted in this state, but where the plaintiff is a resident of this state the service of a summons upon such agent for a cause of action arising in another state is valid and is not an invasion of the rights of the corporation guaranteed by the Federal Constitution.^ "An exemplified copy of a designation of a person upon whom to make service filed by a foreign corporation as provided in section sixteen of the general 17. General Corporation Lavi, § 16, service upon said' person in sucli action pt. See also Civil Practice Act, § 2.89, was not atithorized, asstiming that subd. 4. our courts have jurisdiction of the 18. Rept. of Atty.-Genl., Feb. 2, 1912. action. 19. McClure v. Supreme Lodge, 41 3 ^s.gdmn v. Philadelphia and Read- App. Div. 131, 59 N. Y. Supp. 704. .^^ ,^^^ ^^^ j^^^ ,p^^ ^^^ j^ y ^33^ 20. Sukosky v. Philadelphia & Read- ^- ., _ ^\^„_ # 111 JN. hi. 1075. mg Coal & Iron Co., 189 App. Div. 689, 179 N. Y. Supp. 23. ^" ^"^ ^"^^""^ '" ^^'' ^^t« ^""^ ^' 1. Rept. of Atty.-Genl. (1909), 293. ^°*' ^W""^' ""'^"^^ ''^ the plain, 2. Sukosky V. Philadelphia & Read- ^^^ ™ Pennsylvania while an employee ing lOoal & Iron Co., 189 App. Di\ . °^ defendant foreign corporation, per- 689, 179 N. Y. Supp. S3, holding that sonal service of the summon^ within a foreign corporatio i is not entitled this state upon the person designated to have service mada apon the desig- by the defendant should not be sot nated person, in an action brbught aside. ' Smolik v. Pennsylvania & against it to recover for personal in- Reading Coal & Iron Co., 222 Fed. juries, set aside upon the gi'ound' that 148. " FOREIGN COEPOKATIONS. 795 corpoiatioii law, aoeompanied with a certifieate that it has not beeu revoked, is presumptive evidence of the execution thereof, and conclusive evidence of the authority of the officer executing it. " 4 ' 713. Service on secretary of state. "If the person so designated (on whom process may be served) dies or removes from the place where; the corporation has its principal place of busi- ness within the state, or files such revocation of his consent, and the corporation does not within thirty days after such death or removal or revocation of con- sent designate in like manner another person upon whom process E^gainst it may be served within the state, the secretary of state may , revoke the authority of, the corporation to do business within the state,, and process against the corpora- tion in an action upon any . liability incurred within this state before such revocation, may, after such death or removal, or revocation of consent and bef Ol'e another designation is made, be served ' upon the secretary of state. At the time of such service the plaintiff shall pay to the secretary' of state two dollars, to be included in his taxable costs and disburse- ments, and .the secretary of ; state shall forthwith mail ^ copy of such notice tfl such corporation if its address,, or the aijdress of any officer: thereof, is known to him. The s^tretary of state may require the execution of any such . designa- tion, revocation or consent, to be authenticated as ho deems proper and he may' refuse to file it without such authentication . " 5 Every state; has the undoubted right to provide for service of process upoii any; foreign corporation doing business therein, and to provde that in case of the company's faidure to appoint such agent; service, in proper eases, may be made upon an officer designated by law.^ But this power to desig- nate by statute the officer ;upon whom service in suits against foreign corporations may. be made relates to business and transactions within the jurisdiction of the state enacting the law. Otherwise, claims on contracts wherever made and suits for torts whenever committed might by virtue of such compul- sory statute be drawn to the jurisdiction of any state in which the foreign corporation might at any time be carrying on busi- ness. The^ manifest inconvenience and hardship arising from such extra-territorial extension of jiirisdiction, by virtue of the power to malal Co., of a new agent, where the resignation 220 N. .Y. .259, 115 N. E. 915; National had not been accepted an(r no new Furniture Oo, v, Spiegelman i&Co., ^gent appointed;: Rath v. Ohio Ger- Inc., 116 Misc. 53, 189 N. Y. ,Supp. 449; man Fire Ins. Co., 132 App. Div. 692. Cochran Box, etc. Co., Inc. v, Monroe 117 N. Y.iSupp. 3S2. Binder .Bpiard- Co., 197 Apji. Div, 321, 10. Jacobs V. Blair, 157 App. Dit. holding that, a foreign corporation ^ is 001, 142 N. Y. Supp. 897. doing business witliin, this state, and 11. Lgeb v. Star & Herald Co., bic. summons and complaint may be served 187 : App. Div. 175, 175 N. Y: Supp. on its managing agent herein i under 412, : , section 432 of the Code of Civil Pro- 12. Josephy V. Kansas City, etc. R. cedure, where ,.itn appears that the Co., 180 App. Div.j 313,,. 167 N. Y. agentrr.had desk room in a building in FOREIGN CORPORATIOJfS. 801 state insufficient to make out the transaction of business within the meaning of section 15 of the General Corporation Law and kindred statutes may yet be sufficient to bring a corporation within the state so as to render it amenable to process. Ac- cordingly it has been held that where a foreign corporation maintains an office in this state under the direction of a sales agent, with a number of salesmen, and with clerical assistants., and through these agencies systematically and regularly solicits and obtains orders which result in continuous ship- ments from Pennsylvania to New York, constitutes doing business within this state in such a sense and in such a degree as to subject the corporation doing them to the juris- diction of our courts.^* And the fact that a corporation is con- ducting the principal part of its business in the state of its in- corporation does not prevent it from so pi'osecuting its busi- ness in another state as to bring it within the character of a New York City and employed a steno- grapher to assist him, that the tele- phone was in the name of the defend- ant and that letterheads used by the agent contained the name of the de- fendant with its home address, and also a stateinent of the location of its New York office and that the said agent was its representative; that while the agent had no power to ex- tend cfedit or to collect or disburse money or to employ or discharge other agents, still he was engaged in doing a large amount of business arid nego- tiating important contracts on behalf of the defendant and for that purpose maintained an office within the state. In an action "by a non-resident against a foreign corporation to reiiover the purchase price of goods,' the con- tract will be deemed, for jurisdictional purposes, to have been made in NeW York where'it is shown that the pur- chase and sale of the goods mentioned was, negotiated by brokers in the city of New York and that tlie bougliiS' and sold notes were. sent to tfie rfespecthe parties and by tlieni confirmed and 're-^ turned to the brokers and by them 51 exchanged in the city of T^Tew York. Pottash V. Cleveland-Akron Bag Co., l37 App. JDiv. 7631 " - • 14. Tauza 'v. ^AsqUehanna iCoial Co., 330 N. ^. 2>5d, 11-5 N. 'B. 915. The defendant, a foreign corpora- tion, was transacting business in the state at the tiihe the summons in the action was served on its seei'etary and treasurer in New York City, where it appeared that at the ' time of service he with otber employees of the de- fendant was in attendance ' upon a. manufacturers' fair which -fcontinued for several weeks; thd,t thfe' defendant, represented by its secretary arid treas- ui-fet, oraiupied a rd<)m in an hotel, on the door of which was placed a sign beating defendant's name, and ex- hibited therein samples of merchandise for sale to jobbers who attended the fair; that said fecretary took such or- ders as he could 1 during the perio^ of; the fair, and that the main purpose of the defendant being represented was to take orders for its product. Bogert &' Hopper, Inc. v; Wilder Mfg. Co.. 197 App. Div. '771 ' '' 802 COBPOBATIONS. corporation doing business in the latter state>^ However the casual and occasional, soliciting of orders within the state does not constitute the doing of business within the state witldn the jurisdictional sense.^^ And the employment of attorneys to ap- pelar in litigations in the Federal courts is not such a doing business in this state as to subject the Corporation to juris- diction of our courts in an action for compensation for such legal services." The fact that defendant's name appeared on the door of an ofiSce on a certain street in the city of New York and also in the telephone directory does not constitute ' ' doing business ' ' within the state.^^ 717. Designation of state superintendent of insurance by foreign in surance corporation. "No foreign insurance corporation shall transact an^ business of iusui'anco in this state until it has executed and filed in the office of the superintendent of insurance a written appointment of the superintendent to be the true and lawful attorney of such corporation in and for this state, upon whom all lawful process in any action or proceeding against the corporation may be served with the 16. Pomeroy v. Eoeking: Valley Ey. Co., 318 N. Y. 530, 113 N. B. 504. 16. Sunrise Lumber Co., Inc. v. Biery Lumber Co., 195 App. Piv. 170, 185 N. y. Supp. 711. For a further discussion as to what constitutes doing business in this state, see ante, .pars. 683-688. In an action against a foreign, cor; poration the service of a summons and com,pIaint on the .president while Jie was temporarily stopping in , .tlfis state, .not on the business, of, ,tl^^, de- fendant, should be set aside^ ■nrjiere, ,it appears that the defendant had then in this state no agent to accept, ser- vice of process, no bank account here, held no directors' or other meetings here and had no property within the state, and the only basis for the eoTi- teiition that said defendant was doing business here was that, on one oc- casion,- the defendant's sales manager solicited and received an order . for goods from the plaintiff ; which iwas confirmed by letter from the. defend- ant's home office, and that the de- fendant maintained a fiscal agent hei'e for the purpose of selling its. corpo- rate stock, and at one time published here a notice of a declaration of divi- dend which wa.s dated at its homi» office. jSunrise Lumber Co., Inc. v. Biery Lumber Co.^ 195 App. Div. 170, 185 N. Y. Supp. 7*11. 17., WoUman v. Newark Star Pub- lishing Co., 191 App. Div. 881,. 180 N.,Y. Supp. 513., 18. Rosenblatt v. Bridgeport Metal Goods Mfg. Co!; 105 Misc. 93, 173. .N. Y. Supp. 331. A Canadian corporation which main- tained a. factory in this state and which organized a new corpora/tion here, retained all of the capital stock and assigned to it all of its contracts guaranteeing the completion thereof by the assignee ,was not doing, business in this state so as to ma,ke the ser- vice of a summons on the New York corporation binding on the Canadian company. Dollar Co. v. Canadian C. & F. Co., Ltd., 100 Misc. 664, 166 N. Y. Supp. 3^. rOEEIGN CORPORATIONS. 808 same effect as if it was a domestic corporation. Service upon such attorney sKair thereafter Ij'e deemed service upon the corporation," 19 :TMs provision is primarily designed for the protection of the citizens of the state, who acquire rights under policies of a foreign insurance company while they are citizens. It w^as not intended to permit a citizen to whom a policy has been assigned by a non-resident to sue in this state.^" The superin- tendent of insurance, appointed, as required by law, acts as agent of the corporation in that respect and not as an ofiicer of the state ; and the service upon him of a summons, in an ac- tion against a corporation so represented by him, is a valid service upon the defendant although made on a holiday.^ His designation does not prevent service pursuant to section 229 of the Civil Practice Act.^ A certificate of designation which satisfiies the superintendent of insurance is suflScient, although it does not give the individual name of that officer.^ 718. Manner of service onsaperintendent of insnrance. The superintendent of insurance may admit service,* or may designate a clerk or deputy upon whom service may be made.^' The designation of the superintendent of insurance is not ter- minated by his revocation of the license of the company to do business in this state.^ ' But where a foreign insurance com- pany has ceased to do business in this state and has revoked 19. Inauran'ce Law, § 30, as amd. by Hun 119, 31 N. Y. Supj*. 1056, aild. L. 1910; ch. 630. 138 N. Y. 365, 33 N. E. 1075. Contra, 00. Hunter v: Mut. Reserve' Life Appelibaum V; Star Fire Insurance Co., Ins. Co., 184 N. Y. 136, ,76- N. E. 1073,; ' 115 App. Div. li7, 100 N. Y. Supp. alfd. 218 U. iS. 573, L. ed. 1165. 747; Farmer v. National' Life' Ins. Co.. 1. Flynn v. Union Surety &i Guar- • 2S Abb. N. C 431. anty Co., 170 N. Y. 145, 63 N. E. 61. 5. South Pub. Co. v. Fire Assn., 67 2. Howard v. Prudential Ins. Co., 1 Hun 41^ 31 N. Y, Supp, 675, aff^. 137 App. Div. 135, 37 N. Y. Supp. 833; N. Y.' 610, Ss'N. E. 744. '' ^ ' Silver v. Western Assur. Co., 3 App. Service upon a deputy' at tfte office Div, 57a, 38'N. Y. Supp. 335; Fifer v. of the superintendent of insurance Prudeatial : Ins. Co., 5 App. Div. 623, mayV good, although the superintend- 38 N. Y. Supp. 1143. ent hag not specifloally designated any 3. Lafflin V. Traveller's Ins. Co., 121 person upon wh<)m' 'mich sei-vice Could N. Y.I 713, 34 iN. E. 934. be made. Quinn v. Royal Ins. Co., $1' Service of process on commissioner Hun 307, 80 N. Y. Supp. 714, revd. on of insurance of North Carolina. — ^Hun- other grounds, 156 N.^Y. 337. 50 N. E. ter V. Mutual Reserve Life , Ins. Co., &'63. . ' i ,. i 118 App. Div; 94, 103 N.,Y; Supp. TO. 6. Klein Bros. .& Co. v. German affd.- 193 N. Y, 85, 84 N.' E. 576, UniojiiFire^ Ins. Co., 66 Misc. 538, 13S 4. Farmer v. Nat. Life Assn., 67 N. Y. Supp. 1083. 804 CORPOBATIOjrS. the appointment, service upon the superintendent is a nullity unless the plaintiff shows that as to him the power of attor- ney was irrevocable.'' However, a life insurance company cannot withdraw and revoke its designation of a representa- tive, so as to prevent service of process in an action brought upon a contract of insurance by an assignee thereof, who lived in the state, although such contract was made with a non-resi- dent of the state, where the contract was transferred to such assignee in good faith, and not merely for the purpose of bringing an action thereon, several years before th.e company had attempted to cancel its power of attorney for the service of process; especially where the facts justify the inference that for several years such assignee, while living in the state, had paid dues to the company, and thereby maintained the validity of the contract of insurance.^ Action by People for Wrongful Usurpation of Corporate Franchise or Right. 719. Action by attorney-general. ' ' The attorney-general may maintain an action upon his own information or upon the complaint of a private person. '^ * * 2. Against a foreign corporation which exercises within the state any corpo- rate rights, privileges or franchises not granted to it by the law of , this state; or which within the state has violated any provision of law, or, contrary to law, has done or omitted any act or has exercised a privilege or franchise not conferred upon it by the law of this state, where, in a similar case, a domestic corporation in accordance with section one hundred aad' thirty-one of the general corporation law, would be liable to an action to vacate its charter and to annul its existence; or which exercises within the state any corporate rights, privileges or franchises in a manner contrary to the public policy of the state. "9 720. Final judgment ; injunction. "In an action biicraght aa#prC8oribed in section twelve hundred and seventeen of this act, the final judgment in favor of the plaintiff must perpetually restrain the defendant or defendants from the commission or continuance of the act or acts complained of. A temporary injunction to restrain the commission or Con- tinuance thereof may be granted upon proof, by afSdavit, that the defendant or defendants have violated any of the provisions of such sectioii. The provisions 7. Badger v. Helvetia Swiss Fire tern Home Ins. Co., 8 N. Y. Supp. 873, Tns. Co., 136 App. Div. 31. l^O N. Y. 39 St. Rep. 820. Supp. 161; People v. Oommercial Al- 8. Hunter v. Mutual Reserve Life lianee L. Ins. Co., 7 App. Div. 297, 40 Ins. Co., 193 N. Y. «5, 84 N. E. 576. N. Y. Supp. 269; Richardson v. Wes-' 9. Civil Practice Act, § 1317, pt. FOBEIGN CORPORATIONS. 805 of statute or rule relating generally to injunction as provisional remedies in actions apply to such a temporary injunction and the proceedings thereupon. ' ' lo 721. Immunity of witnesses. "In the trial of an action brbuglit as J)rescribed iii section twelve hundred and seventeen of this act, a party or a witness is not excused from ansvering a question on the ground that such answer will tend to incriminate him; but such answer caimot be used as evidence against the person so answering, in a criminal action or criminal proceeding. " ii ! 722. Costs. "Where final judgment in an action brought in behalf of the people, pursuant to this article, is rendered against a corporation or person claiming to be a corporation, the court may direct the costs to be collected by execution against any of the persons claiming to be a corporation; or by warrant of atta,ehment or' other process against the person of any director or other officer of the corpora- tion." 12 723. Right to trial by jury. "An action brought as prescribed in this article is triable, of course and of right, by a jury in like manner as if it were an action in which the complaint demands judgment for a sum of money only, and without procuring an order of the court defining the issues. " 13 , 10. Civil Practice Act, § 1318. 12. Civil Practice Act, § 1220. 11. Civil Practice A.ct, §, 1219. 13. Civil Practice Act, § 1321. 806 CORPORATIONS. CHAPTER XXXIII. TRAisrspoKTATioiir Corporations' Ferry Corporations. 724. Incorporation. 725. Paying in half of capital before commencing business. 726. Effect of failure to pay in capital stock. 727. Powers. 728. Must post schedule of rates. Freight Terminal Corporations. 729. Incorporation. 730. Deiinitions. 731. Classification of business and rates. 732. Subject to public service commission. 733. Powers and duties. 734. Subject to local law and ordinances. 735. Inconsistent acts not to affect corporation. Gas and Electric Light Corporations. 736. Incorporation. 737. Powers and Liabilities generally. 738. Consent of municipal authorities. 739. Construction of contracts and franchises with municipalities. 740. Liability of gas company for injuries from escaping gas. 741. Liability of gas company for destruction of shade trees and plants. 742. Liability of electric company for damages from wires. 743. Duty to supply gas and electric light on application; discrimination. 744. Penalty for refusal to supply gas or electricity. 745. Regulations and rates of gas and electric companies generally. 746. Bates fixed by legislature. 747. Eegulation of rates by public service commission. 748. Elements to be considered in fixing rates. 749. Eight of corporation to file schedule increasing rates. 750. Deposit of money may be required. 751. Rental not to be chared for meters. 752. Entering buildings for examination of meters, pipes, fittings, wires and works. 753. Refusal or neglect to pay rental. 754. Annulment of charter of gas company. Navigation Corporations. 755. .Formation of corporation. 756. Liability to passengers. 757. Navigation on additional waters. 758. Payment of capital stock. TBANSPOETATION CORPORATIONS. 807 759. Ferries unauthorized. 760. Bicycles as baggage on steamboats. 761. Attachment of goods in vessels. 762. Subsequent attachment against domestic vessel. 763. Claim of third person to attached domestic vessel. 764. Manner of appraisal of attached domestic vessel. 765. Undertaking on claim' to attached domestic vessel. 766. Discharge of attachment on domestic vessel. 767. Action on undertaking. 768. Valuation of foreign attached vessel on claim by third person. 769. Undertaking on claim to foreign attached vessel. 770. Discharge of attachment on foreign vessel. 771. Annulment of attachment on foreign vessel. 772. Sale of foreign attached vessel. 773. Sale of domestic or foreign attached vessel where claim not made. 774. Proceedings to discharge attachment. 775. Undertaking under junior attachment for release of foreign vessel. 776. Subsequent attachment of foreign vessel after release for failure to give undertaking. 777. Extension of time for undertaking to prevent release of foreign vessel. Pipe Line Corporations. 778. Incorporation. 779. Location of line. 780. Condemnation of real property. 781. Railroad, turnpike, plank-road and highway crossings. 782. Construction across and along canals, rivers and creeks. 783. Consent of local authorities to construction across, along or upon highway. 784. Construction through villages and cities. 785. Construction over Indian reservations. 786. Construction over state lands. 787. Powers additional to those conferred by General and Stock Corporation Laws. 788. Use of line to be public; storage; liable as common carriers; rates and charges. 789. Receipts for property; cancellation of vouchers; delivery of property. 790. Monthly statements. 791. Fences; farm crossings and use of line not inclosed. 792. Taxation of property. 793. Misconduct of officers and agents. Stage-Coach Corporations. 794. Incorporation. 795. Alteration or extension of route. 796. Powers. 797. Existing routes and extensions. 798. When stage-coach corporations common carriers within Public Service Com- mission Law. 799. When consent of local authorities required. 808 GQBPOBATIOSrS. Telegraph and Telephone Corporations. 800. Incorporation. 801. Construction of lines. 802. Extension of lines. 803. Condemnation of property. 804. Bights and Eemedies of abutting owners. 805. Construction of contracts for right of way. 806. Condition upon granting of telephone service. 807. Telephone rates; discrimination. 808. Transmission of dispatches. 809. Limiting liability. 810. Consolidation of corporations. 811. Special policemen. Tramway Corporations. 812. Incorporation. 813. Powers. 814. Eight to acquire land by condemnation. 815. Crossings. Turnpike, Flamk-Moad and Bridge Corporations. 816. Incorporation. 817. Location of office of corporation. 818. Proof of incorporation. S19. Extension of corporate existence. 820. Consolidation of corporations; sale of franchise. 821. Sale of rights, franchises and property to county. 822. When stockholders to be directors. 823. Acts of directors prohibited. 824. Kestrictions on location of road. . 825. Agreement for use of highway. 826. Application to board of supervisors. S27. Commissioner to lay out road. 828. Possession of and title to real estate. 829. Change of route; extensions and branches. 830. Use of turnpike road by plank road. 831. Width and construction of road. 832. Construction of bridges; obstruction of rafts prohibited. 833. Certificate of completion of road or bridge. 834. Gates, rates of toll, and Exemptions. 835. Location of gates and change thereof. S36. Mile-stones, guide-posts and hoist-gates. 837. Toll-gatherers. =, .,. 838. Penalty for running gate. 839. Inspectors. 840. Highwaj' labor upon line of plank road or turnpike. 841. Hauling logs and timber. 842. Encroachment of fences. 843. Penalty for fast driving over bridges. 844. Taxation and exemption. , TRANSPORTATION COBPOHATIONS, 809 845. Actions for penalties. 846. Surrender of road. ; , . 847. Dissolution of corporation ; road to be highway. 848. Town must pay for lands not originally highway. ■ WatenoorTcs Corpcyrdtions. 849. Incorpoi'ation. 850. Municipal ordinances. 851. Duty to supply water generally ; contracts with municipalities. 852. Rates. ■ 853. Powers. 854. Survey and map. 855. Condemnation of real property. ■■-■■'- ■■■... 856. Bight to contract with other cities, villages and towns; ainended certificate. Ferry Corporations. 734. Incorporation. "Three or more persons may become a corporation for conducting and manag- ing a ferry, by executing, acknowledging and filing a certificate, stating the name of the corporation, the places from and to iwhieh the ferry established or to be established shall run; the term not exceeding fifty years for which the corpo- ration is to exist, the amount and number of shares of its capital stock; the number of directors thereof, not less than three norinore than fifteen, and the names of the directors for the first year.'' 14 725. Faying in half of capital before commencing business. "No ferry corporation shall be authorized to commence business until at least one-half its capital shall have been actually paid, in, nor until affidavits of such payment, sworn to by a majority of the directors, shall have been filed, in each of the offices in which the certificate of incorporation is required to befiled."i5' 726. Effect of failure to pay in capital stock. * ' The capital stock of every such corporation shall all be paid in, one-half thereof within one year and the other half thereof within two years from its incorpora- tion, or such corporation shall be dissolved. ' ' 16 727. Powers. "In addition to the powers conferred by the general and stock corporation 14. Transportation Corporations Law, may, by reason of its power to prorate § 2.. a joint charge of ferriage and railroad Ferries, license and operation. — -See fare, obtain an advantage over Other Highway Law, §§ 370-S74. bidders. Robinson v. Gilroy, 10 Misc. Sale of ferry franchises by muni- 305, 30 N. Y. Supp. 4ll! cipal officers is not necessarily ren- 15. Transportation Corporations Law, dered illegal by the fact that a mini- § 3. ' mum rate of ferriage is not fixed by 16. Transportation Corporations Law, the terms of sale or the lease, and § 5. ' ,' " , , ,'| that thereby a connecting railroad ' ' 810 CORPORAnONS. laws, any such corporation shall have power to take by grant from any authority entitled by the laws of this state to make such grant, or , by assignment, the franchise or right to establish and maintain ferries, at the place specified; in the certificate of incorporation, and to hold and exercise such franchise or right and carry on the business appertaining thereto, subject to the rights of the mayor, aldermen and commonalty of the city of New York, or any other munici- pal corporation, or of the owner or owners of any legally existing ferry, or the vested rights of any other corporation whatever. In any case when an application is made to a county court without the city of New York for a grant the court is authorized to make such grant if a public necessity therefor is shoAvn. Whenever it is shown to such a county court upon an application for a grant that the tangible property of any corporatipn, organ- ized under this article, employed or to be employed in the exercise of said ferry franchise or right, is of the value of at least ten thousand dollars, said court may grant such franchise or right for a period not exceeding fifteen years. Any corporation organized under this article, now enjoying ^ grant from such county court for a shorter period shall be entitled to an exteiision of said grant for a period not exceeding fifteen years from the time of granting such exteiision, on application and due proof to the court that its tangible property, employed in the exercise of such ferry franchise or right, is of the value of at least ten thousand dollars. "17 The duty a ferry company owes to passengers, going on and off its boats, is simply to conduct its business with such care and skill as will make the entrance upon its boats safe for per- sons of ordinary prudence, and if a passerig6r is injured be- cause of failure to exercise such prudence the company is not liable.^* While strict diligence and a due regard for the value of human life do not constitute a ferryman an insurer of the safety of his passengers, yet ferrymen, by reason of the nature of the franchise they exercise, and the character of the service they render to the public, are held to extreme dili- gence and care, and to a stringent liability for any neglect or omission of duty:^^ 728. Must post schedule of rates. "Every corporation operating any ferry in this state, or between this state and any other state, and from fa' to a city of five hundred thousand inhabitants or over, shall post in a conspicuous and accessible place in each of its ferry- houses, in plain view of the passengers, a sohedule plainly printed in the English language, of the rates of ferriage charged and authorized by law to be charged for ferriage over such ferry: "20 - ■: ■ ■ !< ■ ' -^ ... 17. Transportation Corporations Law, 11^. N. E., 347.: § iy as amd. by L. 1915, ch. 351. 20. T^^ansportation Corporations Ija,\i\ 18. Race v. Union Ferry Co., 138 § '6. Regulatiop of toll ra,t6a by auper- N. Y. «44, 34 N. E. 280. visors, gee County Law, § 73. When 19. Meisle v. New York Central & schedules to be posted. See Highway. Hudson River R. Co., 219 N. Y. 317, Law, § 274. TKANSPOBTATION CORPORATIONS. 811 Freight Terminal Corporations. 729. Incorporation. ' ' Three or more persons may become a corporation for the supply, maintenance and -operation of freight terminal facilities — including docks, wharves, bulkheads, basins, tugs, floats, lighters and other shipping, and wharfage and lighterage for the receipt, delivery,- storage or handling of freight; terminal ways for initial or final local transport of freight received for shipment or delivery in or from the locality in which the business of such corporation shall be carried on ; terminal stations and stores for the retieipt, storage, handling, protection and preserva- tion of freight; terminal warehousing; freight collections, delivery and express service to and from terminal docks, terminal ways, terminal stations, terminal stores and warehouses of and for freight for transport, handling, storage, ware- housing, carriage, manufacture or use thereby, thereat or in such locality; terminal factory facilities, including room, power, heat, light and machinery for the use, manufacture, handling, display, sale and shipment of such supplies, ma- terials and products as at such locality shall or may be received or shipped as freight from or by any terminal wharf, way, station, store, warehouseman, manufacturer, or carrier doing business at such locality; and equipment for such docks, ways, stations, stores, warehouses, service and factories — ^by making, si'gning, acknowledging and filing a certificate stating the name of the corpora- tion — which shall include the words "freight terminal Company;" its objects as above set forth; the amount of its capital stock, not less than one million dollars if its principal place of business is to be in the borough of Manhattan, five hun- dred thousand dollars if in the borough of Brooklyn, two hundred and fifty thousand dollars if in either of the boroughs of the Bronx, Queens or Richmond, in the city of New York, and one hundred thousand dollars if in any other locality of the state ; the number of its directors, not less than three nor more than thirteen ; the names and places of residence of the directors for the first year ; and a statement of the place and the limits of the locality in which such corpo- ration shall do business. Provided, that nothing in this article shall be so construed as to permit any freight terminal company to engage, in manufacture or production except of supplies for its own use, including power, heat, light and equipment for such terminal docks, ways, stations, stores, warehouses and factories, and nothing herein- contained shall be deemed to include any right or privilege to carry on the business of generating, selling or distributing electricity for light, heat and power puVposes, nor shall the right, operation and use of such privileges be ex- tended beyond the streets or marginal streets bounding or occupied by the terminal docks, ways, stations, stores, warehouses and factories operated by any freight terminal company. No railroad corporation, and no -corporation or joint-stock association engaged in Carrying on what is known as an express busi- ness, Aall -either directly or indirectly, or through the medium of a holding com- pany 6r otherwise, purchase, acquire or hold any of the stocks or any bonds or other evidences of indebtedness issued by any corporation which is formed under the provisions of this article."! 1. Tfansporfcation Corporations Law, § 154, as added by L. 1911, ch. 778. 812 C0BP0EATI01irS.:i , , ; 730. Definitions. ,, ; , "Whenever used in this article unless otherwise expressl}' stated: (a) 'Local authority' means in the city of New York the board of estimate and appbrtioimieat of said city; and in every other case the local authority or au- thorities in control of the streets, roads, bridges, viaducts, highways, avenues, boulevards, driveways, parks, parkways, docks, bulkheads, wharves, piers, or other public grounds and waters, that under this article may be taken or used or affected. (b) '.Terminal docks' means any dock or docks, pier or piers, wharf or wharves, marginal, wharf, bulkhead or bulkheads, basin or basins, mooring place, anchorage or other place at which shipping of any sort may receive or discharge freight or be itself berthed, detained, protected or operated in connection with other terminal facilities. (c) 'Terminal basins' means basin or basins, harbor or Tiarbofs, graving of loading dock or docks that may be' provided by the ' inelosure,' natural or artificial, of water' for the flotatioli,' protection or handling of shipping or freight, or for transport service of any class. (d) '.Terminal ways' means a way or ways constructed or- operated under the provisions of this article for the transport of freight to, f roin, across or along any water-front or marginal wharf of the city or terminal stations or terminal stores adjacent, or in proximity thereto or any extension or extensions, branch or branches, approach or approaches, siding or sidings thereof, upon, lying upon, above, or below any street, avenue, road, highway, park or parkway, bridge, viaduct or pubUe place, or water front property in the city, including all equipment and : terminal facilities, of every kind used, operated or owned by or iji , con- nection ivith any such way so constructed or operated under this article, (e) 'Terminal stations' means a building or buildings, structure or struc- tures erected or acquired or occupied or used under the provisions of this article in connection with terminal ways for the receipt, handling, delivery or shipment of freight, including terminal stores and appurtenances and appliances neces- sary for the operation thereof, whether . such . buildings and other structures or portions thereof are used exclusively for terminal stations or terminal stores -or in part for warehousing, manufacturing or other purposes. (f) 'Terminal stores' means a building or buildings or space being a part of or adjacent to a terminal station for the temporary storage of freight while in the process of delivery, shipment or transport. (g) 'Terminal warehousing' means the storage, retention and protection of property either for other purposes than as an incident of delivery, shipn).ent or transport, or under contract for a longer period at any time than ten days from the making of the contract therefor, as carried on in premises physically connected with or adjacent to terminal railways, basins or stations. (h) 'Terminal factories' means the space used for manufacture and the storage incidental thereto of materials, supplies and products, together with such power, light, machinery, and other facilities therefor as may be isupplied in connection therewith in premises physically connected with or adjacent to terminal ways, basins or stations. (i) 'Terminal facilities' means any or all terminal way, or ways, terminal station or stations, marginal wharf, terminal basin or basins, terminal store or stores, water-front property, and transportation of property , therpon, . thereby, TRANSPOBTATION COBPOBATIONS. 813 thereto or therefrom by this article provided for or mentioned and equipment thereof and therefor. (j) 'Equipment' means elevators, conveyors and conveying apparatuses, hoists, chutes, float-bridges, transfer-bridges and appliances for lighting, heating or re- frigerating, roadbed, tracks, switches, cross-overs, spurs, signals, telpheris, oars, motors, engines and. rolling stock of all description; tugs, floats and lighters; power plant, substations and transformers, appliances for transmission of power by third rail, overhead wires or other means; telephone and telegraph vfires and other means of communication ; ^ together with all appurtenances and appliances appertaining thereto, connected therewith, or used in the operation thereof. (k) 'Street' includes avenue, road, alley, lane, highway, viaduct, bridge, tunnel, subway, park, parkway aixd every class of public road, square and place, except marginal wharf. (1) The term 'transportation' includes any service in connection with the re- ceipt, delivery, carriage, elevation, transfer in transit, sorting and handling of property transported, and also the handling of goods on or in terminal basins, terminal ways, terminal stations, terminal stores or waterfront property by mechanical appliances or other means. ' ' 2 731. Classification of business and rates "Subject to the regulation of the proper public service commission, such com- pany may establish a . classification of its business, and rates for each class thereof, as well as for any combination of two or more classes of such service and the further terms and conditions on which such freight terminal service shall be furnished. Up to the maximum capacity of its plant and facilities therefor, and without any discrimination whatever for any cause or on any pretext except such as may be prescribed by such classification or regulation, any such freight terminal company shall impartially serve all requiring its service within the locality described in its certificate of incorporation. As to all freight, goods or property entrusted to it for any service within the purposes of its incorporation as defined by this act — except terminal warehousing and provision for terminal factories — every such corporation shall be liable as a common carrier. No re- ceipt, certificate or order of any kind shall be made, accepted or issued by any such corporation for any commodity unless such commodity thereby represented is actuaJly in possession of such corporation at the time of making, issuance or acceptance thereof. "3 732. Subject to public service commission. '-'Every such freight terminal corporation shall be subject to the supervision, control, and regulation of the public service commission of the district wherein it does business to the same extent as are railroads and street railroads wholly or partly within said district so far aa the provisions of the public service com- mission act are applicable to the case and bvisiness of any such freight terminal company. Provided, however, that any freight terminal compalny, the limits of the locality 2. Transportation Corporations Law, 3. Transportation Corporations Law, § 153, as added by L. 1911, ch. 778. § l&S, as' added by L, 1911, ch. 778. 814 CSOEPOEATIONS. in which it is organized to do business include any portion of the eity of New York, shall be subject to the supervision, control and regulsltion of the public service commission of the first district. " i 733. Powers and duties. "Subject to the approval of the public service conhnission of the proper district : (a) Anj' freight terminal corporation may issue stocks, bonds, notes or other evidences of indebtedness, payable at periods of more than twelve months after the date thereof, when necessary for the acquisition of property, the construc- tion, completion, extension, improvement or equipment of its plant, or the improvement or maintenance of its service, or for the discharge or lawful .re- funding of its obligations, and may mortgage its property, ' privileges and franchises to secure its bonds, whether convertible into stock or otherwise, and increase Or decrease its capital stock : Provided, and not otherwise, tiat as to any such issue or increase, there shall have been secured from such public service oonimissipn an of deij, stating that, in the opinion of the commission, . the use of the capital, to be secured by the issue of such stock, bonds, notes or other evidences of indebtedness is reasonably required for the said purposes of the corporation, sjpeeif yjuig ■, the amount of the issue of each such evidencedi "indebtedness ^approving and author- izing, such issue. - ' ,■ (b)'A;fiy two o'r'' mord'' corporations organized uiider this article oi'aiy gen- eral or 'special la*' of the state ftir the putj'ote of carl'ymg on 'dhy filisiness in- cluded within that which a corporation organized under' this "'article' might carry on maiy consolidate themselves into a siiig;le corporattoli,' and aiiy '8drpb- ration organized tinder thi's' article inay, with the' like permission or approval, be merged with' any- Othei^'sufeh 'cbi'ijdration li'pon cornp'ly'ing with the pjo'visibns of the busiiBss corp'orations law 'relatillg to the consolidation! of "business corporations and the stock eorportitions law relating' to the merger of' stbck corporations. But no freight 'terihinal 'ooihp'afiy Or' anjr 'corporation with which such eoin'f)aiiy ■shall have' iDeeh' consolidated briricirgiB'd shall undertake any business not in'cluded in the objects fbr Which such freight ter'miiial' ' companies may be incorpdrated- as set forth in this article ; and no such freight terminal 'e'dinpany shall purchase, ■acquire 'Or hold the stocks, bonds or other evidences of indebtedness of 'any other corporation, domestic di" foreign, except by the express perrnission of the public service commission of the proper district. ■ ' j (c) Each such freight |erminal company shall have the right and is vested with the power and authority to acquire §u:ch ?eaf fc'§tate,- including' the right of way throngh any property, as may be liecessaryifor the purposes of its incorpo- ration, hereby declared to be a public, use, in the manner and f ornl prescribed by the general condemnation law of the state. Such permission or approval shall be given only after the public seivice commission's certificate of the public need for freight terminal accomodations to provide which such condemnation is asked. Provided that such right to acquire by condemnation shall not be used to acquire property devoted to public use for streets, ferrifes, terminals, or otherwise, and whether operated by the public 4. Transportation Corpomtions Law, § 156, as added by L. 1911, ch. 778. TBANSPOBTATION CORPORATIONS. 815 authorities or not, except by permission of and subject to such feoiiditiohs as may be imposed by the^ local autiibrity! Should the state' or anj'' lililnicipal corporation thereafter proceed to acquire such property or any part thereof by colidenlnation for ■ similar or other ipublio use, the public use in behalf of which the power to acquire by condenmation is hereby given any such freight t&i'minal company shall not be or be set up as an obstacle to such acquisition by condemnation by the state or other municipal corporation. - (d) Eacli such freight terminal coinpaiiy may acquire, use' and; enjoy the privilege to cross or otherwise use the streets adjacent to any terminal way or terminal station on such terms as the local authority inay impose. Provided thai this shall be by permission at any time revocable upon notice of a year or specified less time, and that no such privilege shall be permitted any such company except upon the certificate of the public service commission of the proper ■• -district . (1) that such privilege js needed for public use,, (2) that /the terms thereof are such as still to leave such street in the main available for ordinary s'tregt uses, and (3), that, with such privilege permitted, sricTi' street or place will be' of greater public 'servic'd for • or iii' substitution of street -ihsesthiain; if such privilege >werft'ndt permitted;; ■ also i that such privilege ishallij)^ revocable by the city pnly. with ;the,^approval jOf ; su,(3h public servicq commission and upon its certificate either tljiat (jl) .such privilege is no longer needed for public use, or (2) thai witH such ' privelege pefinitted siioh ' street 'or' place 'will not be of ^o' great service ' for 'or ifi '■ substitution ' of street ' use's as'- if such privilege were not permitted. " 5 i i i -.;; ■■ !i j^;; ■,,-!■ ,. i ■ '! i ,: ■="■"■■ ■ "' ■ ■.'''.'■■ ,,, !, )i! jfujiii :,:;:, J . .);■:(••> 734. Subject to local law and ordinances. ,. , ' . ''l5i construction and operation of 'its .plant and equij)ment and in the. trans- action of its business, any si^ch freight terminal eonipaiiy shall be subject to" all' regulaiibns as to construction,' jlre^' health and safety imp&sed by law, Idrdinance or' lobair'authority. " 6. ■ ■' 'i' 'j;:. . fi/j :!;• ,, ; 735. Inconsistent acts not to affect corporatiqn^ , ., "!",The; provisions ojf , any ^act.. aad parts t.pf, acts, including ■ the charter of Greater New York and the charier of any other ciiy'of the statei, whicli'are in- consistent with this act, and in so far only as they are inconsistent with this act. Shall liave no application to the rights, p'owers and obligatioils conferred or ereated by and under authority of this act or id any proceeding thereunder. " T' : Gas afid Electric Lig'hf Corporations- • i ^ 736, Incorporation. ;.i ■ • '.'SCIhree or more persons may Jjecppie a- corporation foi' manufacturing and supplying gas ior lighting, the streets and public and private buildings of' citie'sy villages and towns in this state, or ;for manufacturing and using electricity 6.^ Transportation Corporations Law, § 158, as added by L. tSll^ ch. im/ S 157, as added by L. 1911,' oh. '?78:' 7. Transportation'- Corporations liaw, 6. Transportation Corporatdoris Law,' § 159, as added by L. 1911', ch. 778. 816 COEPOBATIONS. for producing light, h.eat or power, and in lighting streets, avenues, public parks and places, and public and private buildings of cities, villages and towns within this state, or for two or more of such purposes, or for the purpose of boring, drill- ing, digging, mining, purchasing or otherwise acquiring natural gas, and convey- ing, selling or distributing the same, by making, signing, acknowledging and filing a certificate stating the name of the corporation, its objects, the amount of its capital stock, the term of its existence not to exceed fifty years, the number of shares of which the stock shall consist, the number of. directors not less than three nor more than thirteen, the names and places of residence of the directors for the first year, and the names of the towns, villages, cities and counties in which the operations of the corporation are to be carried on, and thereupon the persons who shall have signed the same, their associates and successors shall be a corporation by the name stated in the certificate. ' ' 8 A corporation is not limited to one of the purposes stated in the statute, but it may be organized for the purpose of manufacturing and supplying gas for lighting and for manu- facturing electricity for producing light, heat or power.* Since the amendment of this section by the Laws of 1920, chapter 540, a corporation organized for furnishing natural gas is properly organized under the Transportation Corpora- tions Law.^* Prior to that time it was held that such a corporation must be organized under the Business Corpora- tions Law." A corporation organized under the Transporta- tion Corporations Law, cannot escape burdens imposed ujwn it by said law though its certificate of incorporation is im- perfect.^^ A manufacturing corporation organized as such, but engaged in furnishing electric current for hire, is an ''electrical corporation," within the meaning of that term as used in section 74 of the Public Service Commission Law.^* 8. Transportaition Corporations Law, not amend its certificate of inoorpora- § 60, as amd. by Ii. 1930, ch. 540. tion so as to become a transportation 9. People ex rel. Municipal Gas Co. company. Matter of Oaytiga Power V. Rice, 138 N. Y. 151, 33 N. f. 846. Corporation (opinion of Public Service 10. Transportation Corporations Law, Commission, 2d Diat., W17), 13 State S 60, as amd. by L. 1930, ch. 540. ]^^ ^^ 3g2 11. Parnsworth v. Bovo Oil & Gua m -hi ix ^ ^ ^ ■„ Co., 216 N. Y. 40, 109 ,N. E. 860; Wil, '.*• ^^^^'\ "^ ^^^"^'^ ^°^'' ^'>'^' son V. Tennent. 32 Misc. 273, 65 N. Y. '■**'°" <°P'"'°° °^ ^"^''"^ Service Com- Supp. 852, affd. 61 App. Div. 100, 70 inission, 2d Mat., 1917), 13 State Dept. N. Y. Supp. 2, affd. 179 N. Y. 546, 71 ^^P- ^82. N. E. 1142. 13. Public Service Commission v. Likewise a corporation created under Rogers Co.,. 184 App. Div. 705, 172 the Business Corporations ILaw can- N. Y. Supp, 498. TEANSPOBTATION CORPORATIONS. 817 737, Powers and liabilities generally, "Every such corporation shall have the ioUowing additional powers: 1. If ineorporated for the purpose of supplying gas for light, to manufacture gas, and to acquire by purchase or otherwise natural gas and to sell and furnish such quantities of gas as may be required in each city, town and village named in its certificate of incorporation, for lighting the streets and public or private buildings or for other purposes ; and to lay conductors for conducting gas through the streets, lanes, alleys, squares aod highways, in each such city, village and town, with the consent of the municipal authorities thereof, and under such reasonable regulations as they may prescribe ; and such municipal authorities shall have power to exempt any such corporation from taxation on its personal property for a period not exceeding three years from the organization of the corpora- tion. Any corporation authorized under any general or special law of this state to manufacture and supply gas shall have the like powers and privileges. Every corporation having authority under any general or special law or under any charter or franchise, to lay down, erect or maintain wires, pipes,- conduits,, duets or other fixtures in, over or under the streets, highways and public places of any municipality for the purpose of furnishing or distributing natural gas, may acquire by purchase, manu:^acture. or otherwise, artificial gas with which to augment its supply of natural gas for the purpo^ of making sueh supply a,de- quate or to m^htain a proper and uniform pressure thereof. 2. If incorporated for the purpose of using electricity for light, heat or power, to carry on the business of lighting by electricity or., using it for heat or power in cities, towns and villages within this state, and the streets, avenues, public parks and places thereof, and pubjic and private, buildingsi therein,; and for the pur- poses of such business to generate and supply electricity; and to make, sell or lease all machines, instruments, apparatus and other equipments therefor,, and to lay, erect and construct suitable wires or other condu(!tors, with the necessary poles, pipes or other fixtures in, on, over and under the streets,., avenues, public parks and places of such cities,. to.wns or vill-ages, for conducting and distributing electricity, with the consent of the municipal authorities thereof, and in such manner and under such reasonable regulations, as they may prescribe,. Any electric light company in any town or village in this state having a con- tract with any town or incorporated village : for the lighting of streets, parks, squares or public buildings in any town or village, shall have the right and is hereby vested with the power and authority to apquire such real estate as may be necessary for the purposes of its incorporation, or acquire "the right of way through any property in the same manner as is now vested by law in water- works companies. Such real estate or right of way shall be acquired in the manner and form prescribed by. the genpral condemnation law of this state. 3. Subject, to the permission and approval of the proper publje service commis- sion, any two or more corporations organized , under this article or under any general or special law q£ the state for the purpose of carrying on any business which a corporation organized under this article might carry on, may con- solidate sueh corporations into a single corporation (by)^ and any such corpo- ration may with the like permission and approval be merged; with any other sueh corporation, upon complying with ; the provisions of the business corporations law relating to the consolidation. of business corporations (.), and the stock corpo- ration law relating to the merger of stock eorpoTations. I 4. Any corporation organized under this article or under any general or special 52 818 COBPOBATIONS. law of this state for the purpose of u^ig electricity for liglitj-heat or powef in cities, other than ,qf the first class, towns or yillages within this state, may have and acquire the following additional _powers, to wit: the power of supplying steam to consumers froin a central station or stations through pipes laid in the public streets of the cities, towns and villages rwithin this state, and for that purpose to lay, construct, and maintain suitable pipes and iconduits or other fix- tures in,, on and under the streets, avenues, publie "parks and places of sucli cities, towns or .villages, with the consent of the municipal authorities thereof, and under such reasonable regulations' as they may prescribe'. For the purpose of acquiring the powers above specified any such corporation may make, sign, acknowledge and file in thfe same manner as an original or amended certificate of incorporation, a certificate stating- that such corporation desires and intends to exercise the powers' hereinabove s^'sftified. Upon the making, signing, acknowledg- iiig and filinj^ such certificate,' such corporation sliall have and acquire for the pur- poses specified in ■ such certificate all the ' rights, privileges and powers, and be subject to all the restrictions of district steam cprporations, specified in sections twelve, thirteen and fourteen of the business corporations law. "W 14! Transportation Cbrfiorktidns Law, S -61, Subd. 1,'as ailid. byL. iflsa; 'ch. 540. ■--.:■■') ■- ■• Natural ^as camjianies; acquisition of lands, laying of pipes. — ^See li. 1889, cH.. 4-22. " ■ '- .Illuminating gas' in city of NeW^' York; Regulation of quality, pf esstife ' and price.^^L; 1906, eh. ISfs; Maintenance of telegi'a^ of other electric wires raises no presumption of graiut. — See Eeal Property L'a^*, § 2i61. Contracts for supply of gas' to cities of first class.^-See General City Law, S§ 130-132. ' -■ Lighting of viHages.^Sfe^' Village Law, §§ 240-247. ' ''- '' -■ ■ ■ - ■ Contracts for lighting towns. — See Town Law, §§ 85o-S63. Gas, standard of purity, power and pressure. — See General Business Law, §§ 320-323. ■ '■' -L. 1866, eh. 651, incorporating the' JiTew York Mutual Gas 'Light Go., ex- amined and construed. CBty of New ' York v. New York Mutual Gas -Light Co., ,207 N. Y.. 647, 100 N". E. 427; L. 1895, ch. 947, amending L. 1888, ch. 583, does not authorize department' of parks of city of Bi'ooklyn^ to per'-" mit electric light companies, lighting" jtarks and parkways,, to furnish elec- tricity to private consumers. People ex fel. Flatbush Gas Co. v. Color, 190 N. Y.' 268, 8'3 N. E. "l«. ' ' Nuisance, liability of a gas manu- Ifjtcturing corporation engaged in mak- ■'ing gas from naptha, for damages to owner'' of 'adjacent property, See ilosehheimer v. Standard Gas Light Co:, 36 App! Div. 1, 55 1^. Y. Supp. ■192!'-' • '■''•■" ''' ' "'" "/' ' ■■ Removal by municipality of electric wires, fixtures, etc., placed on house- tops with' the consent of the owners. See Electric Power Go. v/Mtayor,' 36 App.- Div. '383, .55 N. Y. Supp. 460. Lease by a gas company of all its property and franchises constiitJutes aii ''kbaiiddnmen't' of itS' diity to the pul)- lic, ' it being a 'qtiasi publi-c corpora- tion, 'and is'' ultrJl vires. Bath Gas •Light Co. V: iCIaffy; 26 k. t:' Supp. 387', W St. Eep! 426, 'atfd.' 151 N. Y. -24,' 45 N. "E.' 390. ' Taxpayers action to preveiit the eresctipn of poles and the stringing of wires along the highways and avenues in a park dismissed for failure to es- tablis'h waste or injury to- city ptdp- erfr^. ■■'■See' Sheeliy 'v'. Clausen, 26 Misc. 269, 5.5 N. Y. Supp: 1000, affd. 42 App. TBANSPOKTATION: COBPOBATIONS. 819 ' As seclions 60 and 61 of the^ Transportatioai Corporations Law empowers a gas company to run its mains through cities, villages and towns inamed in its charter, a village having granted such company a right to lay mains in its public streets cannot prevent it from laying other mains to supply adjoining municipalities aiamed in its charter.^ Likewise a village is not entitled to maintain a suit to restrain a gas company from using its franchise by laying new gas pipes in. the streets where; its- franchise is unconditional and the duty to continue to supply gas to the village is not absolute, merely beicause it suspended operations for ;a period of years owing to its in- ability: to compete with another ; company furnishing natural gas.^^ A , domestic corporation organized ^ to furnish light, heat and power and having a franchise, not exclusive, to oper- ate in a certain town is not entitled to a temporary injunction re;straining a similar corporation from invading its territory upon the ground, that it has iailed to get the consent of the Public Service Commission, for through its incorporation the defendant, has the same franchise rights as the plaintiff j ; al- though ,bj: not securing the consent jof the local; authorities and of the Public Service Oommissionj it hap failed to -comply fwith Div. 622, 59 K. Y. Supp. 1114; Sheeny .tidual, made at, public a,ueti9n by the V. McMillan, "26 Apip. Mv. '146, 49 N. 'receiver, vests iii the purchaser all the Y. Supp. 1088. ' '^'' ■■'' ^" '■'''•■ rights conferred by 'the original fran- ~ Complaint dn a taxpa^fflti'laetiofe.to' 'ehise.i, Matter, of Long Acre JDlectric .set^taside ;a gaslighting. .contract' for.' Lightj & Power Co., rl&S: N. -Y. -361, 80 {-rf^d and illegality , should not ^et; up N. E, 1101. ,, ;. . ,^ ; ,.' ■ each rins^mce of illegality or fraud p,s The words "electric ,plj|pit", as used ati. inSependent cause of aetiojtii , Van in this section .sliould be bonsidered in Ahdn v."tJWAton, 24 Misc' 23'0C'S3 N. connection with the defrnition 'thereof 'Y. Supp.' 'S26. "' ' ■' '■'* ■■ found in- subdivision 1.2 of section 2 : Equity will not perpetttally enjoin of: the i iPublic Service Commissioiis an electric lighting icphipjiny from Law. Oollder«. Light, Heat & Po-wer maintaining a d^m so .as. to «verflo\v , Co. ,v.. Oheonta , Light , ,^-. Power .Co, the piaintiff's land where it is the only (opinion of Public Service Oommis- lompany furbishing light tqj a .muni- sion, 3d Dist., 1917,), 12 State Dejpt. oipality and thp damages tor the pl^in- Rep. 189.. . tiff are .smail and recoverable at Uiw. , 15, Northern Wes,tche^ter Lighting Schwarzenbach v. Oneonta Light & Co. v. Village of O'ssining, 154 App. Power Co., 144. App., Div. 884, 129 N. Div. 7-89, 139 N. Y. .Saipp.; 373, gffd. Y. Supp. 384, jipod. 307 N., Y.:;§71,. 100 214 N. Y. 635, 108 N. B., 1103, N. E. 1134. ,. :;' 16. Village of Fredonia v, Eredonia The. sale of the franchise: of an Jnr Na,tui;al,,6as Light Company, 169 App. solvent electric, company to an indi- Div, '690, .155, N. Y. Supp. 213. 820 00BP0RATI02SrS. the conditions necessary to. the exercise of f its francMse/'' A manufacturing. corporation, organized under the Manufactur- ing Gorpoeralions Act of 1848; acts in violation of the common law, and of section 10 of the General Corporation Law, in do- ing electric lighting for hire. And the Public Service Com- mission has jurisdiction, under section 74 of the Public Ser- vice Ooniunission Law, to bring a proceeding to restrain it fromiUsiitg the streets and highways of a town for the trans- mission and distribution of electrical current for hire^ to per- sons, other than tenants, off its own premises.^* An electrical corporation which has no franchise in a municipality cannot begin construction of its plant therein for the sale and dis- tribution of electricity, without the consent and approval of the Commission, notwithstanding no pottion of its plant or distribution system is placed upon, along or across the public highways of the municipality.^* So also the consent of the Public Service Commission is essential to the extension of its Mnes by an electrical corporation into a municipality in which it has no franehisej even though such extensions are entirely upon private property.^" Furnishing light to a municipality is a public service, and an electric light company in any town or village in this state having contracts with towns or incor- porated villages for, the lighting of streets, though a private corporation, may acquire by condemnation lands to enable it to increase its power in order to furnish more electricity under such contracts.^ The abutting' owner of the fee in a highway in a town is not entitled to compensation for the ground in the highway in front of his premises occupied by the poles of an electric company duly organized under the Transportation Corporations Law, on which are suspended wires and lamps for lighting the highway, where the town authorities have determined the necessity for the lighting and, with the authority of the fegislature, have contracted with the 17. North Shore Electric Light & of Public Service Commission, 2d Power Co. v. Port Jeflferson Electric Dist., 1917), 12 State Dept. Eep. 189. Light Co., 151 App. Div. 63, 135 N. Y. 20. Colliers Light, Heat & Power Co. Supp. 824. V. Oneorita Eight & Power Co. (opinion 18. Public Service Commission v. of Public Service Commission; 2d Dist., Rogers Co., 184 App. Div. 705, 17S 1917)', 12 State Dept. Eej. 189. N. Y. Supp. 498. 1. Matter of East Canada Creek 19. CoUieHs Light, Hea* & Power Oo. Hectric Light & Power Co., 49 Misc. v. Oneonta Light & Power Co. (opinion 565, 99 N. Y. Supp. 109. TRANSPORTATION CORPORATIONS. 821 company to furnish it, under a contract which has not been assailed by any taxpayer.? 738. Consent of municipal aathprities. The town board and not the commissioner or superintendent of highways constitutes the "municipal authorities " whose consent is required to the construction of pole lines, conduits and other essentials tb a plant in the public streets within the meaning of subdivision 2 of section 61 of the Transportation Corporations Law.^ And in a city, the consent of the legisla- tive body thereof is required.* But corporations, dealing- in natural gas, organized under the Business Corporations Law, are required by Laws 1889, chap. 422, to seek the consent of the commissioner of highways, now thie town superintendent.® 739. Construction of contracts and franchises with municipalities. The granting of a permit by a city to a corporatian to lise the streets for a pur|)ose is a license merely, revocable at the pleasure of the city, unless it has been accepted and some sub- 3. Palmer v. Larchmont Electric 06., 15« N. Y. 331, 52 N. E. 1092. Abutting owner entitled to compen- sation for laying of gas mains in a' county Mgbwa.y. Bloomfield, etc.. Gas Light Oo.' V. Calkins, -^2 N. Y. 386. Electric light lamps, poles and wires constituting an unlawful obstruction in a highway. — The trustees of a vil- lage may maintain an action ill its name to Compel their removal. Vil- lage of Hemt>stead v. Ball Electric Co., 9 App. Div. 48, 41 N. Y. Supp. 134. 3^ Niagara, & Erie Power Co. v. Pub- lic' Service Commission, 171 App. Diy^ 361, 156 N; Y. Supp. 879:' ' Under L. 1848, ch. 37, § 18. the highway commissioners of a tbvpn were the "municipal authorities," whose. consent was required. People ex rel. New York & Richmond Gas Co. y. Cromwell, 89 App. Div! 391, 85 N. t. Supp. 87S.' 4t. Board of electrical control of New York City cannot give franchise to transportation Corporations to lay elec- tric cables in city subways — ^aole power' to grant such franchise is in board of aldermen. West Side Electric Co. v. Consolidated Tel. Co., 110 App. Div. 171, 96 N. Y. Supp. 609, affd. 187 N. Y., 58, 79 N. E. 892.,- = Under the provis^ions of the Greater New York charter (L. 1897, ch. 378), the consent that is required by section 61 of the Tranfiporbation GorpofatiOns Law to confer a franchise upOn a gas- lighting corporation can be given only by the municipal assembly, through appropriate ordinaiices. ' Ghee v. North- ern Union Gas Co., 158 N. Y. 5l0,^ 53 N. E. €92. '• •^- ■■' ' ■■' ■■ 5. Farnsworth v. Bovo Oil'& Gas Co., 316 N. Y. 40, 109 N. E. 860, holding that a corporation, organized under the Business Ooi'i)orations Law to deal 'in natural gas, wbich has obtained con- sent of the town board, on certain conditioils, to' lay pipes in streets, is estopped from denying the validity of ebntra/cts 'bii the ground of lack of power in the town board to grant the permission. 822 coRPORAa?ioNs. stantial part of the work contemplated by the permission and sufficient to create a right of property and thus form a con- sideration for the contract, has been performed.^ A contract rnade between a town board of improvement and a gas com-' pany which proposes to light the town is not illegaL because: it provides that the gas company shall be reimbursed by the town for any expenses incurred in making changes in the gas mains or pipes, rendered necessary by changes in the grades of streets made after the gas company has entered upon the performance of its contracts But a provision contained in such a contract that no other gas or electric light company shall have the consent of the town board of improvement to extend its mains or to lay its pipes or conductors within the town during the term of the agreement is void, as tending to create a monopoly.'' A grant by the authorities of a town to a gas light company, of power to lay conductors ' ' for con- ducting gas in and through the public streets and highways of said town," without any expressed limitation, is not to be deemed restricted to existing streets and highways, but is to be construed as extending to streets and highways as subse quently enlarged, changed or opened.^ The question whether 6. Matter of New York Electric to use the streets of said ward and Lines Co. v. Empire City Subway Co., was never duly authorized to carry on 201 N. Y. aSl, 94 N. E. 1056. its business therein, may, not be Franchise of electric company con- granted where the petitioner alleges strued.^-See Cataract Power and Con- no special damage and bases his claim duit Co. V. City of Buffalo, 131 App. for relief entirely on the fact that he Div. 485, 115 N. Y. Supp. 1045. is a resident and citizen of said A franchise to lay and maintain gas borough. An action brought on be- pipes and other machinery under- half of the people of the state througli ground, along or across any or all of their attorney-general against the elpc- the streets of a village, and which im- trie companies if a cause of action poses no obligation on the company to exists, is the proper and pr^tlcal furnish gas to any ope, is not for- remedy, as it is the right and duty felted by a failure ifor three years to of the attorney -general alone to bring so use the streets. Village of Fredonia an action against a person who usurps, V, Fredonia Natural, Gas L. , Co., 84 intrudes into or unlawfully holds or Misc.. 150, 14;5 N. Y. Supp. 830. exercises a franchise within the state. A peremptory writ of mandamus dir Matter of Clements, 191 App, Diy. 879, recting the president of the borough 181 N. Y. Supp. 330. of Brooklyn and the commissioner of 7. Parfitt v. Ferguson, 3 App. Div. water supply, gas and electricity to 176, 38 N. Y. Supp. 466, affd. 159 N. remove certain poles and overhead Y. Ill, 53 N. E. 707. wires from streets and avenues in a 8. People ex rel. Woo,dhaven Gas Co- certain ward, upon the anle ground that v. Deeban, 153 N. Y. 528, 47 N. E. the electric company has no franchise 787; Carroll v. Silver Creek Natural TEANSPOBTATION CGBPORATIONS. the pTibli(3 use requires the lighting of a country highway in a town is primarily within the' determination of the municipal authorities of the town, on contracting for the lighting of the highway by an electric company drg^nized under the Trans- portation Corporations Ijaw.^ A corporation furnishing elec- tricity to a city under a charter which does not make its fran- cTiise exclusive, cannot maintain an action to enjoin another competing corporation from furnishing electricity to the city upon the sole ground that the. act incorporating it is void, so that it lacks corporate existence, though it seems, that the cor- poration could have called upon the attorney-general to bring an action to prevent an illegal usurpation of corporate powers.^" There is a distinction between a contract made by a gas company to furnish a municipality itself with light and the terms and conditions upon which a municipality grants a franchise to furnish gas to its inhabitants. In the first in- stance the arrangement may be a contract pure and simple protected by the Constitution both federal and state from sub sequent abrogation even by the legislature unless such power be reserved. But the regulations regarding rates which municipalities may impose in granting licenses or permission to use its streets by public service corporations cannot be said to form contracts beyond .the inherent police po\vei' of the legislature to modify for the public welfare.^^ The right to Gas & Improvement Co., 153 App. Div. Town of Nortli Hempstead v. Public 63©, 139 N. Y. Supp. 161. Service Corporation, 331 N. Y. 447, 132 9. Palmer v. Larohmont Electric Co., N. E. 144, holding that where the Pub- 158 N. Y. 231, 52 N. E. 1092; Van lie Service Commission Law was in Sielen y. Jamaica Electric Light Co., force at the time a municipality gave 45:App. Div, 1, 61; N. Y. Supp. 810, its consent to a public servipe corpo- affd. 168 N. Y. 650, 61 .N. E. 1135, ration to maintain and operate its gas holding that a town may, in a proper mains within the town, the provisions case, grant a franchise authorizing a of the statute entered by implication corporation to erect poles in its high- into the terms of ^uch consent, formed ways ^nd string wireg thereon for the part of its obligation and were notice purpose of conveying electricity with j^ ^y^^ ^^^J^ that the consent was which, to light the highways and other coupled with the^ provision that the places.. g^g corporation was empowered to ab- 10. Geneva-Seneca Electric Co. v. ... j.- ^i ^ j.- , x j _, . _ rogate it as to the rates stipulated Economic Power & Construction Co., . . , , , .. . ..„„ , _. „.,„ .,„- T.T -.r o therein and was allowed by law to put 136 App. Div. 219, 120 N. Y. Supp. , , ; „„- into operation a new schedule of just 11. People ex rel. Village of Soutli and reasonable rates and charges to Glens Falls V. Public Service Commis be made for service on thirty days' sion, 22i5 N. Y. 216. 121 N. -E.-^777; notice to the, commission and publioa- 824 COEPOEATIONS. regulate the use of a franeMse by a gas or electric light com- pany is not exhausted by the regulations prescribed by the municipal authorities at the^ time of granting the consent which conferred the franchise/^ 740. liability of gas company for injuries from escaping gas. « A gas company is not an insurer against explosions of gas carried into buildings by its pipes, but is siniply bound in per- mitting the gas to be turned into a building to exercise thiat degree of care which the nature of the article it deals in and the consequences to be apprehended from an accident reason- ably call for.i^ So a gas company which undertakes to make tion for thirty days as required by order, of the commission. A public service corporation which has accepted and enjoyed the benefit of an exclusive right or easement over private property in aid of a franchise granted upon condition that it would render a certain service- at a certain rate of compeiisation for a definite period of time will not be permitted to repudiate the condition and still claim the benefit of the property rights, easements and franchise so granted. Village of Long Beach v. Long Beach Power Co., 104 Misc. 337, 171 W.Y. Supp. 824. A provision in a franchise to a gas company that consumers of gas in the municipality shall not be charged more than a certain fate per one thousand cubic feet, constitutes a contract for the benefit of said consumers and an action to enforce the same is main- tainable by any one of tliem, of by the municipality, as the trustee of an express trust. Village of Freeport v. Nassau & Suffolk Lighting Co., Ill Misc. 671, 181 N. Y. Supp. 830. 18. City of New York v. Woodhaven fjas Light Co., 181 App. Div. 188, 168 N. Y. Supp. iZ9, holding that uuder the provisions of the Greater New York charter, the commissioner of water supply, gas and electricity has full jurisdiction, charge and control of the transmission of gas by pipes and . conduits, which includes the locating of the pipes and prescribing the dimen- sions of the mains and filing maps and plans with the department, but he has no legislative authority to compel a gas company to pay inspectors ap- pointed by him as a condition of al- lowing it a permit to install conduits and pipes for the use and transmis- sion of gas. , 13. Hayes v. Cohoes Gas Light Co., 183 Ajip. Div. 183, 170 N. Y. Supp. 313; Bell v. Brooklyn Union Gas Co., 193 App. Div. 669, 184 N. Y. Supp. 807. Negligence question for jflry. — The negligence of a gas company which pefmitted the gas to be turned into a three-story building occupied by dif- ferent tenants, with pijies so arranged that each could be supplied through a separate meter, without any inspec- tion of the pipes, after plans had been submitted to it, and a meter had been provided by it upon application, after which it was the custom to permit any one to turn on the gas, is a ques- tion for the jtiry, where pipes in one of the rooms occupied by pbrsons who did not use gas and had not applied for a meter were uncapped and an ex- plosion occurred by the esckpe of gas thereifrom. Sclimeer v. Gas Light Co., 147 N. Y. 539, 43 N.' E. 303. TRANSPORTATION CORPORATIONS. 825 an additiQn^l connection on the presses of a consumer, whether for a direct compensation or for the indirect henefit that it would receive in" cpnsequence of the increased use of gas, assumes the obligation to provide, a skilled workman to perform the work and to use in ma,king the connection ordi- nary care and prudence commensurate with the work to be done and the dangers arising from the situation and conditions sur- rounding it, and for a failure thus to carefully perforin the work the gas company is liable for any injury sustained by the consumer therefrom.^* -liVTiile its liability ordinarily does not extend to the condition of the owner's piping or fixtures, if the gas company has knowledge that the pipes are leaking to a dangerous extent, it may be answerable for letting its gas flow through such unsafe and defective channels.^^ Likewise it is the duty of employees of a gas company, sent lo remedy a defective flow of gas through a house, to use proper care to see that occupants of the house have an opportuni ty to pro- tect theinselves against the results which follow from inter- fering wiih the flow of gas, which care is commensurate with the danger which might result to an occupant of the house if for any reason the gas should flow into it without being lighted.i« 14. German-Am. Ins. Co. of N, Y; v. Standard Gas Light Co, of N. Y., 67, -App. Div. 539, 73 N: Y. Siipp; 973, affd. 174, N. Y. 508, 66 N. E. 1109, holding that where the connection was made in a picture gallery, the waljs of which were covered with pictures hung upon a cotton flannel substance, and th^ workman, after unsuccessfully try- irig to discover this whereabouts of a leak in the pipe by his sense of smell, passed a lighted match along the pipe Wrifti the; .result that the. gas ignited at a point about two and one-half inches from the wall. whjire there was a small leak made by a sandhole iii the pipe, and the flame communicated to the cotton flannel on the wfill, the question whether, considering the lo cation of the pipe an4 the .material that surrounded it, the workman was negligent in using a lighted match to look for the leak, is one of .fact for the jury. In .Lannen v. Albany Gas Light Co., 44 N. Y. 459, where the de- fendant sent a workman to ascertain the location of and repair a leak in a gas pipe in the cellar of the build- ing in wliich the plaintiff resided, and caused an explosion . in the cellar, it was held tliat the question of the de- fendant's negligence was one lor the jury. -' 15. Bell V. Brooklyn Union Gas Co., 19,3 App. Div. 669, 184 N. Y. Supp. 807. 16. Beyer .y. Consplida/ted, ,6as, ,(^0., 44 App. Div,, 158, 60 N. Y. Supp. 6^8, holding , that . where the ..empJoyfiefS neglect to use such care, and as a.- re- sult a woman in the house who, . be- fore tbe arrival of tl)e employees, lighted a gas stove in her room and went to sleep, does not awake until she .has sustained serious injury from ga,s which eacape,s from the gas fto.v when the gas is turned on, the gas coinpany is liable for such injuries. 826 corpoeation's. 741. liability of gas company for destruction of shade trees and plants. A gas company,- lawfully occupying a street with, its mains and pipes, is bound to use its rights and to conduct its oper- ations so as not to inflict injury ujidn neighboring property.'^ And an owner of residential property abutting upon a city street, but owning no part of the bed thereof, has a, property right in shade trees, directly in front of but not on his prem- ises, sufficient to entitle him to recover the damag'es caused to his premises by the destruction of the trees by the negligence of a gas company, in permitting,' after notice, gas to escape from its pipes into the soil about the foots of the trees.^^ So also where plants are destrbybd by the gas escaping from street mains, and entering greenhouses upon private prop- erty, the owner thereof may' recover from the gas company owniiig such mains the damages caused by such escaping gas.^^ The rale of damages to be applied in an action to recover for the destruction of shade trees is the difference between the value of the land before and after 'the injury, and ill ^uch an action, evidence showing or tending to show that trees in the immediate vicinity lipon the 'Same street, although beyond the plaintiff's premises, were ' similarly and simultaneously af- fected, is competent upon the issue of whether escaping gas would account for the injury to the plaintiff's trees.^" 742. liability of electric company for damages from wires. An electric power company in the exercise of its lawful right to erect and maintain poles and wires for the express purpose of transmitting high voltage electric current, owes a common law duty to the public in constructing and maintain- ing the poles and wires, to exercise care commensurate with the danger to be apprehended.^ It has no right in stringing its 17. Evans v. Keystone Gas Co., 148 of erections whiich are not within the N. Y. 113, 42 N. E. 513. ordinary and usual purposes to which Liability of gas company §s nuisance real estate is applied; and tha* when- per se. — ^Bohan v. Port Jeryls Gaslight ever they create a special injury they Co., 1S3 N. Y. 18, 25 N. E. 246. are to be re^ard6d as a private nuia- 18. Donahue v. Keystone Gas Co., ance, for which an action will lie in 181 N. Y. 313, 73 N. E. 1108. respect to the special injury." 19. Armbruster v. Auburn Gaslight 20. Evans v. Keystone Gas Co., 148 Co., 18 App. Div. 447, 45 N. Y. Supp. N. Y. 112, 42 N. iE. 513. 158, affd. 162 N. Y- &55, 57 N. E. ll't>3. 1. Robertson v. Rockland Light & In Carhart v. Auburn Gas Light Com- Power Co., 187 App. Div. 720, 176 N, pany, 22 Barb. 312, it was said in the Y. Supp. 281. opinion of E. Darwin Smith, J., "That Where in an action to recover for gas works are to be placed in the class the death of a child who was killed TRANSPOBTATiON CORPORATIONS. 827 ■wires, to cut brianches of trees belonging to abutting owners, unless sucb course is demanded by an existing necessity w;bicli cannot be avoided by insulating the wires or by employing other practical means which may be more expensive and less convenient.^ A corporation organized to furnish electricity to a town and its inhabitants and to the inhabitants of an incor- porated village therein which has, for the purpose of support- ing its wires and pursuant to munifeipal authority with tlie approval of the Public Service Commission, erected poles on a public highway which crosses the right of way of a railroad, cannot be compelled to remove the wires upon the theory that the construction was without the consent of the railroad and without the payment of compensation^ to it where the poles Supporting the wires are not placed upon the railroad's right of way and the wires are of such a height as in no wise to in- terfere with the operation of the railroad.^ 743. Duty to supply gas and electric light on application; discrimina- tion. ' ' Upon the application, in writing, of the owner or occupant of any building or premises within one hundred' feet of any main laid down by any gas light corporation, or the wires of : any electric . light corporation, and: : payment by him of all money due from him to the corporation, the corporation shall supply gas or electric light £is may be required for lighting such building or premises, notwithstanding there be ' reiit of compensation in arrears for gas or electric light supplied, or for meter, wire, pipe or fittings, furnished to a former occupant thereof, unless such owner or occupant shall hive undertaken or agreed with the foriner occupant to pay or to exonerate him from the payment of such arrears, and shall refuse or neglect to pay the same; and if for the space of ten days aftbv subh application, and the deposit of a reasonable by touching a high voltage wire which recover treble damages for the toes- broke from the defendant's poles a;nd pass, under section 1668 of the Code hung down so as to touch the ground of Civil Procedure (now Real Prop, in a city street it appears that the ^^^^ § 5343^ y^^ corporation is dangerous condition existed for an hour ^^^^ ^^^^^^^^ ^^ y^^^^ ^^^ .^^^ ^^^^^^^ or more before the accident, the de- ,, . .1. x. -u j> j „ -u 1.1 , , , ,. ' , that they should find whether or not tendant's negligence was properly sub- mitted to the jury. Costello v. Buffalo '^'^ ""J^^' '^ any committed, was General Electric Co., 183 App. Diy. 48, "^^^^^ ""^ involuntary," where no claim 170 N. Y. Supp. 1006. ^'a® made in the answer or proof was 2. Van Siclen v. Jamaiica . Electric gi^e" upon the trial that the injury Light Co., 45 App. Div. 1, 61 N. Y. ^^s casual or involuntary or was com- Supp. aiO, affd. 1.68 N. Y. 6i50, 61 N. E. mitted by mistake. 1135, holdiWg that in an action by an S. New York Central E. Co. v'. = Mid- abutting owner, whose trees have been dleport Gas & Electric I>ight Co., 193 mutilated in stringing t'he wires, to App. Div. 373, 184 N. Y.'Supp. 321. 828 COBPOBATIONS. sum as provided, jn the next section, if required, the corporation shall refuse or neglect to supply gas or electric light as required, such corporation shall forfeit and pay to the applicant the sum of ten dollars, and the further sum of five dollars for every day thereafter during which such refusal or neglect shall continue; provided that no such corporation shall be required to lay service pipes or wires for the purpose of supplying gas or electric light to any applicant where the ground in which such pipe or vrire is required to be laid shall be frozen, or shall otherwise present serious obstacles to : laying the same ; nor unless the ap- plicant, if required, shall deposit in advance with the corporation a sum of money sufficient to pay the cost of his portion of the pipe or wire required to be laid, and the expense of laying such portion." 4 This section imposes an absolute obligation upon a gas com- pany to furnish service, subject to the conditions stated, Avith- in one hundred feet of its main, but beyond that distance the Public Service Coirmiission niay require service to be rendered upon reasonable conditions,^ Where a gas company at the re- quest of the owner of a building has installed a particular type of gas meter, it has performed its statutoiy duty under the statute, and since there is no particular kind of meter pre- scribed by statute, the company at the request of a tenant is not, required by law to change a prepa3mient meter theretofore installed by it for a blank meter, without the payment of the reasonable costs of the change.^ Although all, householders especially, should have the use of gas where street mains are 4. Transportation Coi:porations Law. which makes and sells electric current § 63. to furnish "break-down service" (or Constitutionality of L. 1905, ch. 737, current to be used in an emergency) creating conuaission to fix maximum to a consumer who maintains a private price to be charged fpr service by gas electrical plant for its own use and and electric light corporation, sus- for the use of its tenants and others tained. Village of Saratoga Springs so as to enable such consumer to sell V. Saratoga Gas, Electric Light & the "break-down service" to the other Power Co., 191 N. Y. 133, SS N. E. |)ersons in the vicinity who are not its 693. tenants, thus enabling the consumer to 5. (Public Service Commission, 2d compete with the public service cor- Distl, 1916), 10 State Dept. gep. 330; poration, where the corporation is will- People ex rel. Pavilion Nat. Gas Co. i„g to furnish break-down service for V. Public Service Comm., 178 Apji. Div. jjj^ benefit of =the consumer and its 937, 164 N. Y. Supp. »66, afifd. 223 X. , „ . t, , i xtu -.r . ' '^'^ ' tenants. People ex rel. Nfew York Y. 578, 119 N. E. 1070; „,. „ tv ,.,■ =, . ^ „ . . . . „ Edison Co. V. Public Service Commis- Extensions of gas mains for mofe iv T, J J f i XI, s""i. 191 App. Div. 237. 181 N. Y. than one hundred feet cannot be or- '^f dered under this section. 4 .State Dept. '"^^'PP- ^^9, aflFd. 330 N. Y. 574, i30 Rep. 36. '^'- E. 899,^ , Break-dovim service.— The Public Ser- 8. Public Service Oommiss.ion v. vi<;e Commission has no jurisdiction to Northern Union Gas Co., 168 App. Div. compel a public service corporation 731. 154 K Y. Supp, ,649, TRANSPORTATION CORPORATIONS. 829 laid, the gas compamy can only be compelled to do its utmost to give service to all entitled thereto without discrimination^ But the Public Service Commission has no jurisdiction under the statute, either express or implied, to restrict the amount of natural gas which shall be supplied by natural gas com- panies during a certain period of the year, based on the in- ability of said companies tp supply an appropriate amount of gas, not because of inadequacy of equipment or imperfection of methods employed in the manufacture, distribution or sup- ply of gas, but because nature is not sufficiently liberal in its supply and the wells are becoming dry: the Commission can- not destroy or interfere with contract rights and obligations existing between the gas companies and their customers.* The 7. Public Service , Ciommission v. Iro- quois Natural Gas Co., 108 Migc. 696, 178 N.T. Supp. 24. Compelling natural gas company to make connection. — Where tlie Public Service Commission has made an ord«v directing the respondent, a natural gas compa,ny, to connect or cause or per- mit to be connected its mains in cer- tain streets of the city of Buffalo, with buildings fronting thereon, an ap- plication under section 74; . of the Pub- lic Service Conynissiqns Law for a writ of mandamus to compel obedience to said order, based on the theory that the company has failed' or neglected t" make gas connection on proper demand by the owners of said building, will be granted, though the answer of the company alleges that it haa not now and wiill not have sufficient gas tn supply the customers already on it'; lines. Public Service Commission v,- Iroquois; Natural Gas Co., 108 Misc. 6^, 176 N. y. Supp.:34. Foreign natural gas corporation. — The relator,, a foreign, corporation en- gaged in the business of supplying natural gas to residents of the city of Jamestown, will not be compelled to furnish gas to additional consumers, where it appears that it has not been speeifloally authorized by any legislsi- tive grant from this state to do busi-: ness herein; that it laid its pipes pur- suant to a resolution of the then vil-, lage of Jamestown, which authorized it so to do, but which did not contain any provision for the termination of the privilege granted and did not by express provision obligate the relator to do or perform any particular thing thereunder, except to save the muni^ cipality harmless from damage in the Installation of its plant; thait in the distribution of its gas there 'is a mini- mum waste; that its supply of na/tural gas has so far decreased that it is in- adequate to supply further consumers and that if the relator should be com- pelled to d<> so the service it is trying to maintain -would be destroyed and its present consumers subjected to the hazard of the desti-uotion of life and property due to the intermittent flow of gas caused by Ipw pressure, and tjiat there is no other available source of supply. The relator, being a foreign corporation, does not come, under sec- tion 63 of the Transportation Corpora- tions Law. People ex rel. Peijnsyly^nia Gas Co. y. Public Service Commission, 196 App. Div. 514, 189. N. Y. Supp. 478i 8. People ex vel. Pavilion Natural Gas Co. V. Public Seryiop Commissipn, 188 App. Div, 3«, 176 N. Y. Supp. 163. 830 COEPOEATIONS. wire, the expense loi laying ■which the Transportation Corpo- rations Law permits the illuminating company to require the applicant to advance, is not the street or supply wire, but simply the service wire, viz.^ the wire i extending from the street supply wire to the applicant's premises.- Public ser- vice corporations are prohibited by section 65, subdivision 3, of the, Public Service Commission Law, from giving any un- due or unreasonable preference or advantage to. any person or locality, or to any particular description of service, or to subject any one, or any particular description of service, to undue or unreasonable prejudice or disadvantage. And the Public Service Commission has no power, in order to conserve . the supply of natural gas, to make an order discriminating in fa,vor of those who have gas connections and against those who have not, but need gas, nor has the gas company itself the right to make such discrimination.^" An electric lighting com- pany which uses the public streets and highways is a public service corporation and is subject generally to the rules which govern common carriers and may not discriminate between its customers.^^ , . 744. Penalty for refusal to supply gas or electricity. The penalty and forfeiture imposed on a gas company for failure to supply an applicant with gas, notwithstanding ar- rears are due from a former occupant of the building, contem- plates a continuation of the supply of gas after it has been begun and does not apply only where there has been a refusal 9. Moore y. Champlain Electric Co.. allege that such payments were made 88 Apip. Div. S89, 85 N. Y. Supp. 37. under a 'Speoifio! contract, and that • 10. Public Service Oommissitin T.Iro- prior to the action the plaintiff settled quois Natural Gas Co., 189' App.' 'Eiv. and adjustBd; all accounts with the do 545 ' 179 N. Y. Supp. 230. ' f endant and paid : the - same in full, 11. Armour Packing Co. v.^ Edison Such allegation does not set out an Electric niuminating Co. of Brooklyn, accord and satisfaction or a release of' 115 App. Div. 61, 100 N. Y. Supp..«)i5. the plaintiff, for- it fails to allege: that When allegation of payment of ^^ adjustment w^s made as to maJt- chargek for electric lighting does not ^^^.^ alleged in the complaint Which is set out accord and satisfaction.^When ^^^^^^^^ ^ ^^ ^^^^ discrimina- a plaintiff sues to recover sums paid ;;- v -■■'-' , , '^ , , , ^ , , . ,.^t;, . tion, the payments allegtid bemg merely to a defendant electric lighting com- "^ •' .° J ^. ■• ■ pany under « contract which unjustly P^-^* «« ^^^ plmntiffs cause of aptiou,^ discriminated against the plaintiff bv Armour Packing Co. v. Edison Ele?. requiring higher rates than those given Illuminating Co. of Brooklyn, 115 App. to other customers, it is no defense i." Div. 57, 100 N. Y. Supp. 609. TRANSPOKTATIQN CORPORATIONS. 881 to begin the, service,^^ An application in writing for the sup- ply of gas or ,e>]^ctl;icity for lighting purposes is essential to a recovery of the penalty imposed by the statute for a failure to supply gas! or electricity.^^ And a gas company by com- mencing to supply igas without the written application does not thereby waive the requirement so as to become liable for the penalty iapbn discontinuing the servide.^* A ^^ritteh appli- cation, maidie to a gas company by a tenant of offices from which the meter had been removed at the instance of the previ- ous tenant, to be supplied " with gais for lighting said ofBces ias ' heretofore supplied, by the return of the meteir to said offices as the same was placed on the first' of the present month," is sufficient to support an action to Recover the pen- alty imposed 'by the statute for a refusal; to' comply with such request.^® An electric illuminating company having a wire 12. Hoch V. Brooklyn Borough Gas Co., 117 App. Div. 882, 103- N. Y. Supp. 370. 13. Shelley v. Westchester Lighting Co., 119 App. Div. «1, 103 N; Y. Supp. 951; Reiser v. Edison Electric 111. Co., 76 Misc. ses, 137 N. Y. Supp. 145. 14., Shelley .V. Westchester Lighting , Co., 119 App. Div. 61, 103 N. Y. Supp. 951. 15, Bennett V, Eastchester Gas, Light Co.,'.,'54 App. ,piv., 74, 6« N. Y;. Supp. 29S'.'''' ' " " , .,„ A written, requisition upon, an elec- tric light and power company thajt it supjjy, an applicant, at his office 739 Tremont avenue. New York, "with elec- tric Ugiit and power at once," replied to by a written inquiry, "How much power and how many lights do you want?" not answered by the applipapt in writing, does not subject the com- pany to the penalties imposed by statute upon a refusal or n^glec^ to supply "electric light as required;", and 1)100! that ijhe, applicant or his agent may have at the time, or subse- quently, told a person, not shown , to be authorized to act in tlje niatter that he wanted two eleetrip lights a^d power to work an electric fan. does not; remedy the indefiniteness of the requisition, which , must by statute be in writing. Andrews v. North Riv. Elec. L. & Pow«r Co., 34 'Misc. 671, 53 N. Y. Supp. 810. One who on becoming a tenant in- formed an employee of a gas company, who palled at the premises, thfit she wished to be supplied with gas, and on being told by him that she would be supplied if- sh^' signed a blank order offered, by him,,,.„did so, leaving the btan,ks unfilled, with the exception, of the residence, and delivered ^hesame to the employee, and who was there- upon furnished with ga.s for two days, has made a sufficient written appli-- cation to the. company to bring her within that section of the Transpor-. tation Corporations Law which im- poses a penality , on gas companies which unlawfully; refuse to -supply gas. Hence, she may : recover the statutory penalty' when after such application arid aga/inst her protest the gas was shut. 'off solely ' because a prior tenant failed to pay for gas. Shelley v. Westchester Lighting Co., 1^9 App. Div. ■ 69i(), 134 N,' Y. Supp. ^484, affd. 204 N. Y. 641, 97 %-%. 1116. 832 CORPORATIONS. carrying a current too powerful to be used for house lighting within 100 feet of a dwelling, and which has no wire suitable for house lighting within 1,700 feet of such dwelling, does not incur the penalty imposed by the statute for refusing to light the dwelling by electricity upon the written request of the owner.^* The liability of a defendant under the statute, which being penal must be strictly construed, does not arise until defendant's neglect or refusal to comply therewith has con tinned ten days, and a recovery by plaintiff should be limited to the amount which accrued prior to the commencement of the action.^'' But only one action can be maintained to recover the penalties prescribed for a failure to supply gas, and a subse- quent action to recover penalties alleged to have accrued dur- ing a continuance of the default, in the absence of a new appli- cation and a new default, is not maintainable.^* Where in an action to recover from a gas company the penalty for cutting off an existing supply against the wish of the customer, plain- tiff proves the discontinuance of the service, the burden is on the company to justify its conduct, and so where a lighting company cuts off a gas supply on the claim that its customer has refused to pay an indebtedness for gas consumed, it is in- cumbent upon it to show the existence of the indebtedness and a refusal to pay in order to justify its act.^* A gas company in 16. MJobre v. Ohamplain Electric Co.. 255, holding that where it is conceded SS App. DiT. 389, 85 N. Y. Supp. 37. that the customer ieridefed a two- Limitation of 100 feet applies to any dollar bill in payment of the current j)art of the building. So held where gas account of one dollar and sixty particular oflRce was 113 feet from gas cents, and that the defendant refused main by reason of being on 7tli floor. to accept the same unless certain al- Jones V. Rochester Gas & Electric Co.. leged arrears, which had in fact been 7 App. Bir; 4&5, 39 N". Y. Supp. llOS. paid some time before, were also dis- 17. Reiser v. Edison Electric Illumi- charged, and, upon plaintiff's refusal nating Co., 76 Misc. 563, 137 N. Y. to do so, turned off the gas, it is not Supp. 145. '• necessary for the consumer to keep 18. Jones v. Rochester Gas & Elec- her tender good or to pay her money trie Co., 168 N. Y. 65, 60 N. E. 104-1. into court in order to hold the com- Successive xtenalties may be re- pany for the statutory penalty. It covered for a refusal to furnish gas— seems, that a tender of a two-dollar recovery for one building not ft bar to bill in payment of one dollar and sixty a recovery for another by same owner. cents is not good if the creditor takes Jones V. Rochester Gas & Electric Co.. the objection that it was required to 7 App. Div. 474, 39 N. Y. Supp. ItlO, make change, bvit where no such ob affd. 158 N. Y. 678, 52 >>'. E. 1134. jectioii is made the tender is sufficient 19. LeviHe v. Brooklyn Union Gas A complaint' alleging that plaintiff (;o., 146 App. Div. 464, 131 X. Y. Supp. on becoming a subscriber to defeiidant TBANSPOBTATION COBPOKATIONS. 833 an action to recover the penalty is not relieved from liability by the fact that the applicant obtained gas by an arrangement with one of his tenants who was a customer of the defendant, since under snch circumstances the gas cannot be considered as having been supplied by the defendant.^" Where plaintiff whose business requires the use of electric lights brings an action to; compel the defendant, an electric lighting company, to furnish him an electric current, and defendant seeks to escape from its statutory duty to furnish the current by allege' ing plaintiff's misconduct in fraudulently interfering with its meters, a temporary injunction should be granted on proper terms; since to deny it would give the defendant all the relief it demands upon its affirmative defense in advance of a trial upon the merits.^ A natural gas corporation is not subject to a penalty for failure to furnish gas.^ 745. Regulations and rates of gas and electric companies generally- An electric light corporation, may, condition its supply of current upon the safety of the customer's equipment and establish reasonable regulations for the purpose of assuring itself that the condition has been fulfilled, but the application by the customer and its acceptance by the corporation mak,e out the contract, which defines their respective rights and duties. And so where an electric light company, by a con- tract, undertook to supply electric current , for light and power, subject to the sole condition that the supply should npt biegin " until the equipment shall have been approved by the , constituted aiithorities , and by the company, " the company cannot refuse to give service on thf! ground that the applicant refused to furnish a fire underwriters' certificate, since ilie filed -wrdtli it a written application for ^vas supplying her "with gas when it gas to be supplied to lier apartment was cut off, an allegation that plain- and made tli'e deposit deinarided and tiflf's premises are within 100 feet of that without her consent defendant defendant's gas main was unhecessar*'. ' unlawfully shut off the g'as supply Hollander v. Westchester Lighting Co., thoixgh plaintidr had ' previously ten- 79 Misc. 646, 140 N. Y. Supp; '544.'- dered the full ambunt of h^r indebted 20. Jones v. Rochester Gas & Elee- iiess, which defendant refiised to re- trie Co., 168 N. Y. 65, 60 N. E. 1044. ceive, states a oaiise of action. It wa.s' 1. Schmitt v. Edison Electric Ilin mi -1 not necessary for plaintiff to allege na:.ting Co.. 58 Misc. 19. 110 N. Y.' or prove a tender of any alleged in- Supp. 44. ' ' ' debtedness, as the burden was on de- 2. Wilson v. Tennent, 32 Mise. 273, fe'ndant to justify its act in cutting 63 N. Y. Supp. 852, affd. 61 App. IMv:' off the gas supply. Defendant having l6Cf, 70 N. Y. Supp. 2. affd. 179 N. Y. accepted plaantiff as a customer arifl 346, 71 N. E. Il42. 53 834 COEPOEATIONS. demand therefore, under the contract is an illegal exaction.^, The. duty of an, electric company furnishing current for gen- eral purposes does not rest upon section; 62 of the Transpor- tation Corporations Law alone, whieh refers only to the fur- nishing electricity for lighting purposes, but upon its common law obligation as a public service corporation, which requires it to serve impartially every member of the community. Hence a provision in the contracts of a public service corporation furnishing- electric curi'ent that no other electric service will be permitted in connection with its equipment without its previous, written consent is in no sense . a reasonable regula- tion and is contrary to public policy and invalid.* A contract to pay for electric current " at the rate of ten cents for each horse-power hour, as measured at and by the meter ' ' fur- nished by the plaintiff, only requires the consumer to pay for the actual current consumed.^ A requirement by an electric illuniihating company, that all customers must pay at a cer- tain rate based upon meter measurement of actual consump- tion, with the proviso, however, that ' there shall be a fixed minimum payment of one dollar and fifty cents per month, is not unreasonable nor violative of the duties of such a corpo- ration, in the matter of furnishing light, as set forth in the TraiUsportation Corporations Law.^ 746. Rates fixed by legislature. The legislature intended to retain unto itself the power of fixing rates for gas exceeding those fixed as the greatest by statutes. In such retention of legislative power there is no violation of a constitutional provision. And when the legis- 3. Tismer v. New York, Edison Co., rent estimated by the plaintiff,, and 228 N. Y. 156, ; 136. N. E. 73.9. . that the deviations in the meter might 4. People ex rel. Perceval ,v. Public have bepii caused by vibration, it is Service Commission, 163 Ainp. Div. 705, ttiior to direct a, verdict for the plain- 148 N.Y. Svipp. 583. tiff. The amount of current actually 5. New York & Queens Elec. L. & used is a question for the jury. P. Go. V. Long Island Machine & Method of computing amount due to Marine Oonstr. Co., 133 App. Diy. 553, electric company, yhej-e meter has 108 N. Y. Supp. 176, holding that when failed to register. Huhm v. Richmond a plaintiff suing on such contract, has Light & Railroad Co. (opinion of Pub- proved that the meter installed by . it lie Service Oommission, 1st Dist., made too low a registry of the current 1917),, 13 State Dept. Rep, 168. consumed, but, the defepdant has 6. Gould v. Edison Electric lUumi- shown that its machinery was inoap- nating Co., 39 Misc. 341, 60 N. Y. able of consumiing the amount of cur- Supp. 559. TKANSPORTATION CQKPOEATIONS. 83p v latii;ire has, ftxed the, m.aximum rate which pubhc service cor- , porations may charge, the courts , have no power to inquire whether ,a charge not in excess of the statutory rate ,is exces- sive.' The legislature h^s not .vested , in the Public Service Commission the power to authorize a gas oi' an electric com- pany to change a higher, rate than that fixed by, statute as the maxinaum.^ But the rates fixed by statute are confiscatory where they are so low as, to preclude a fair return, and the courts may restrain their enforcement, for into every statute of this kind is to be read the implied condition that the rates shall remain in force at such times and at such only, as their enforcement will not work a denial of the right to a fair re- turn.' The courts >vill not declare portions of a statute fixing rates to be unconstitutional upon the ground that other com- panies, the rate of whose charges had not been fixed by statute, may resort to the Public Service Commission, while the plain- tiff, whose rate has been fixed, cannot do so, for the prohi- bition applies equally to all other companies similarly situated and the legislature may establish a rate for one locality with- out fixing a rate for other localities and may fix the rate as to some companies and provide a subordinate body to fix the rate as to .others, so long as there is no discrimination between the members of a class.^" Where, a statute fixes the price at which ' plaintiff, a gas company, may sell gas in the territory served by it, the plaintiff in an action to have the statute declared un- constitutional as to it on the ground that its enforcement would be confiscatory of ipjaintiff 's property without due pro- i. Brooklyn' Unipii Gas Co! v. dity " Ap|p. piv. 13J 180 N. Y. Supp.' 38. of New" York, 115 App. Div. 69. 100 There is no provision in the Trjins- N. Y. Supp. 635, ftffd.' 188 N. Y, 334. ' porlation Corporations Law or in tlie' 81 N. E. 141, holding that whfere a fjerieral Laws of the state, authoriz- gas company has furjlished a city with ing . tjie board of .trustees of an ineqr- gas at 'less than the maximum statu-, porated village to fix ra.te9 for gas or tory rate, and sues to recover the con- electricity in a franchise granted by tract pricp, the court. , will not grant such board, (Opinion of Pub., Serv. an inspection of the plaintiff's book.s epmm., 3d Diet., 1917), 14 State Depl. and plant in aid of allegations by the Rep. 417. defendant that the rate ' charged ' by ,9. llunicipal Gas Cp, of City of.Al- the 'plaintiff was excessive. bany v. Public, Service Commission, 225 8. People ex rel. Municipal Gas "Co. N. Y. 89, 121 N. E. 772; Bronx Gas & V. Public Service Commission. 224 N. Bleotric, Co,, v. Public Service Oomm.. Y. 156, 120 N. E. 132; Morrell v. 190 App. Div. 13, 180 N. Y. Supp. 38. Brooklyn Borough Gas Co., 331 ilSIs' Y. 10. Bronx Ga^: ,&: Electric Co. , v. 398, 133 N.E. 129; Bronx Gag & Elec- Public Service ,CpnM».i 190 App, :Div. trie Co. V. Public Service Coram.. 190 13, 18,0 N.. Y. Supp. 38. 836 CORPORATIOliJ'S. cess bf law, has the burden of establishing confiscation beyona a reasonable dbubt.^^ And the fact that it appears that during an abnormal period there was no adequate return upon the capital of plaintiff is an insufficient ground for declaring the statute unconstitutional.^^ There is nothing in the laws or in authorities to justify the Supreme Court in assuming power to fix the rate ; the Public Service Commission Law covers the whole question and the power of the court is at an end when it determines that an existing rate is or is not confiscatory.^^ 747. Regulation of rates by Public Service Commission. While under the statute the Public Service Commission has no power to prescribe a rate chargeable by public service cor- porations in excess of the rate fixed by statute, if the courts declare the statutory rate to be unconstitutional and void then there is no rate authorized by statute and the Public Service Commission may act under its delegated powers.^* And the legislature has conferred the power on the Public Service Commission to fix; the rates to be charged for gas and electric- ity in the absence of any statute fixing the price.^^ The trans- portation of oil or gas from state to state through the medium of pipe lines to be delivered by the seller in one state to the buyer in another is interstate commerce, and subject to the power of the nation. But a corporation transporting natural gas by pipe lines from one state to another is a public service corporation and its rates are subject to regulation by some agency of government, and where gas and water companies are expressly excepted from the act of Congress, regulating interstate commerce, there is no implied exclusion of, the police power of the state to impose reasonable regulations upon the business of such Public Service Corporation, al- though interstate in character. Therefore where a company engaged in the transportation of natural gas by pipe lines 11. Kings Oounity Uighting Co. v. Bronx G-as & Electric Oo., 113 Misc. iJewia, 110 Mise. 204, 180 TST. Y. Supp. 166, 184 N. Y: Supp. 658. ^'''O- 14. Morrell v. Erooldvii Borough 12. Kings Comity Lighting Co. v. (4as Co., S31 N. Y. 398, 132 >f E 1S9- Tjewis, 110 Misc. 204, 180 N. Y. Supp. p,„„„ n„ a, ^?^ ^ ■ r, „ ,,.' ' ^ '^ Bronx Gas & Eleetnc Co. v. Public .570 ' ,o TVT ,1 TD 1 , -D t. o Service Oomm., 190 App. Div. 13, 180 13. Morrell v. Bi-ooklyn Borough Gras if"- ^•', Co.. 231 N. Y. 398, 132 N: E. 129; ^- ^- ^"PP- ^^• Bronx Gas & Electric Co! v. Public 15. People ex rel. Village of South Service C'omm.. 190 App. Div. 13, 180 Glehs Falls v. Public Service Commis- K. Y. Supp. 38; ( Hy of New Yorl- ». siiMi. 225 N".' Y. 216, 12i N. E. 777. TKANSPOETATION COBPOKATIONS. 837 from another state to a city in this state occupies the streets of that city with its gas mains it is within the. purview of the statute providing that all charges made or demanded by pub- lic service corporations for gas or electricity shall be just and reasonable and not more than allowed by law or by order of the commission having jurisdiction.^^ A stipulation in a fran- chise granted by a municapility to a gas coinpany, fixing the maximum price which it will charge for gas furnished to the inhabitants is a contract, but it is subject to the police power of the state and may be modified for the public welfare and the rates increased by the Public Service Commission acting under its delegated power .^'^ A public serVice corporation may resort to a suit in equity to have determined that exist- ing statutory rates are confiscatory, since the reniedy at law would be entirely inadequate. By resort to an action in equity there is an avoidance of multiplicity of actions, the. saving of \yaste and, friction, the opportunity to analyze accounts so complex as to be unintelligible to juries^ and pxotectiqn against penalties and losses.^^ A naunicipality desiring to protect the interests of its resident consumers of gg,s and electric- ity and services in connection therewith, as a class, is limited to the exclusive reniedy provided for, by the Public Service Commission Law,, and has no right to, bring an action solely against electrical companies until it has exhausted its remedies by lodging its complaint with the Public Service Commission, which is fully empowered to grant relief in a proper case.^' ; : 16. Matter of Penusyl-v-ania Gr..s Oo. ' constitutionality of a, statute (tLaws of ■V. Public ,Sei'vice (Commission, 235 N. 1906,', eli. 125) whieJi .provides , iuter Y. 397, 123 N.' E., i2i50. alia that a .corporation ei!,gage(i ; in the 17. Public Service Comm. v. Pavilion business of selling or furnishing illu- Nat. Gas Co., 195 App. Div.. 534, 187 minating gas in the fourth, :ward' of the N. Y. Supp. 363-, Village of Warsaw borough v. Pavilion Nat. Gas Co., 195 App. Div. Brooklyn Borough Gas Co.. 189 App. 534, 187 N. Y. Supp. 363. Div. 63, 178 N. Y. Supp. 93. 8. Village of Warsaw v. Pavilion 6. Town of North Hempstead V. Pub- Natural Gas Co., 195 App. Div. 716, lio Sei-vice Corporation : of L^ngf Island, 1S7 N. Y. Siipp. 350; 840 COBPOEATIONS. has made an order directing a gas company to file a schedule of its rates and the forms of its contracts, obedience to said order maiy ,be enforced by an application under section 74 of the Public Service Commission Law.^ 750. Deposit of money may be required. "Every gas light and electric light corporation may require every person to whom such corporation shall supply^ gas or electric light for lighting any building, room or premises to deposit with such corporation a reasonable sum of money according to the number and size of lights used or required, or proposed to be used, for two calendar months, by such person, and the quantity of gas and electric light necessary to supply the same, as security for the payment of the gas and electric light rent or compensation for gas consumed, or rent of pipe or wire and fixtures, to become due to the corporation, but every corporation shall allow and pay to every such depositor legal interest on the sum deposited for the time his deposit shall remain with the corporation. "10 Interest on all deposits at the legal rate is required to be paid by gas corporations, and provision should be made for the payment or crediting of interest at reasonable intervals, and each company should seek to locate all depositors whose accoimts have been closed, in order that they may refund to them the balance of their deposits.^^ In an action against, a gas company to recover the penalty imposed, the burden of proving; that a deposit exacted by the gas company, in pur- suance of section 63 of the Transportation Corporations Law, authorizing the company to require from a person desiring to be supplied with gas the deposit of a " reasonable sum of money according to the number and size of lights used or re- 9. Matter of Public Service Commis- There is nothing in chapter 125 of aion V. Kings County Lighting Co., 105 the Laws of 1906 fixing the price of Misc. 6&5, 173 N. Y. Supp. 789. gas in the city of New York which 10. Trans. Oorp. L., § 63; in any way reijioals, modifies or affects Reasonable deposit. — Evidence that the sections of the Transportation f!or- five dollars was the lowest deposit re- porations Law, which provide that a quired by the gas company for fur- gas company may require a deposit as nishing gas in the city of Mount Ver- security for the payment of was. non, where the deposit was required. Hence, a consumer who refuses to make it not appearing that any objection such deposit on demand is not entitled had ever been made by any person, to an injunction restraining tlie corn- other than the plaintiff, to the reason- pany froon shutting oflf his supply. ableness of that amount, is sufficient Pollitz v. Consolidated Gas Co., 118 to authorize the jury to find that' the App. Div. 93, 103 N. Y. Supp. 1017; amount was reasona,ble. Bennett v. Bienenfeld v. Consolidated Gas Co., 119 Eaatchester Gas Ught Co., 40 App. App. Div. 855, 103 N. Y. Supp. 1116. Div. 169, 57 N. Y. Supp. 847. 11. 4 State Dept. Rep. 1. TKANSPOKTATIOBr CORPOEATIONS. 841 quired, or .proposed to be used for two calendar months by such person," was unreasionable in amount, is upon the plain- tilf.i? . _ 751. Rental not to be charged for meters. , "No gas light corporation in this state shall charge or collect ren,t on its gas meters, either in a direct or indirect mariner, and any persqii, party " or corporation violating this firovision shall be liable to a penalty of fifty doUarg f qr each offense, to be sued for and recovered in the corporate name of the city or , village where the, violation , occurs, in any court having, jurisdiction, , and when, , collected to be , paid iiito ,the, treasury of such city o,r villag,e and to constitute a part of the contingent or , general fund tliereof . "13 , This section is constitutional and a proper exercise by the legislature of its police powers: Where a 6orpiGration en-^ gaged' in the business of manufacturing and supplying gas to the public adopts the practice of rendering a " minimum gas or service bill " for each meter on its books, evidenefe that such minimum charge varied in proportion to the size of the meter justifies a finding that the charge was intended to cover the rental of the meter and not simply to cciverthe general ex penses of the company, independent of meter rental, in carry- ing the cxistomer On its books, collecting bills and reading his meter."' 752. Entering buildings for examination of meters, pipes, fittings, wires and works. "Any officer or other agent of any gas light or electric light corporation, for that purpose duly appointed and authorized by the corporation, may at all reason- able times, upon exhibiting a written authority, signed by the president and secretary of the, corporation,, enter any dwelling) store, building, room or plaee lighted with gas or dectric light supplied by such corporation, for the purpose of inspecting and examining the meters, pipes, fittings, wires and works for sup- plying or regulating the supply of gas or electric light and of ascertaining the quantity of gas or electric light consumed or supplied,; and if any person shall, at any time, directly or indirectly, prevent or hinder any such pfficei- or agent from so entering any such premises, or from making such inspection or examina- ation a;t any reasonable time, he shall, for every sjich oftense, forfeit to the corporation, twenty-five dollars. '' 15 It is a technical trespass for the employees of a lighting company to enter a cellar for the purpose of changing meters 12. Bennett v. Eastchester Gras Light 14. City of BuflFalo v. BtiflFalo Goa Co., 40 App. IMv. 169, 57 N. Y. Supp. Co., 81 App. Div. 505, 80 N. Y. SfOpp. 847. ' 1093; 13. Trans. Corp. L., § 6ft. 16. Trans. Corp. L., § 64. 842 CQEPOEATIOI^S. without the pennission of the tenant or complying with sec-' tioni 67 of the Transpoi'tation Corporations Law in default thereof. Where, however, the tenant moved out shortly after such technical trespass and thp evidence shows th^t the defendant's employees did not Ibreak in, he is entitled to nomi- nal damages only. ^* "Where a gas company, entitled under sec- tion 65 of the Transportation Corporations Law to enter upon a consumer's premises for the purpose of removing a gas meter therefrom, breaks open a cellar door in eflfecting Such entry, it becomes a trespasser ab initio, and the company is liable for the trespass, even though it gave no express di- rections to its servants to break open the door in order to ef- fect the removal, but the consumer is not entitled to rocov(3r punitive damages in the absence of any evidence that the gas company authorized Or ratified its servants' acts, or that the trespass was committed after the unfitness of the servants had become known to the gas company." 753. Refusal or neglect to pay rental. "If any person supplied with gaa or electric light; by any such corporation shall neglect or . refuse to pay the rent or remuneration due. for the same or for the wires, pipes or fittings let by the corporation, for supplying or using such gas or electric light or for ascertaining the quantity consumed or used as required by his contract with the corporation, or shall refuse or neglect, after being required so to do, to hiake tte deposit required', such corporation may prevent the gas or electric light from entering the premises of Such person ; and their officers, agents or workmen may enter into or xipon any such premises between the hours of eight o'clock in the forenoon and six o'clock in the afternoon, and separate and carry away any meter, pipe, fittings, wires or other property of the corporation, and may disconnect any meter, pipe, fittings, Wires or other works whether the property of the corporation or ■ not, from the mains, pipes or wires of the corporation. " 18 Under this section of the Transportation Corporations Law, a gas and electric light company may cut off the supply of a customer who neglects to pay; and that though the customer may have made a deposit, as security, as required by sec- tion 63.^® But where' a customer has deposited security as pro- vided in this section he may restrain the gas company from 16. Fortescue v. Kings County Light- Supp. 810. ing Co., 138 App. Div. 8a6, 112 N. Y. 18. Trans. Corp. L., | 65. ■ Supp. 1010. • ; ,, ,, 19, Hewsey v. Queens Borough Gas 17. Reed v. New York & Richmond i Electric Co., 47 Misc. 375, 93 N. Y. Gas Co., 93 App. Div. 453, 87 N. "Y. Supp. 1114. XBANSPORTATION OOBPOEATIONS. 843 shutting off his gas where hie has offered to pay for the gas cbnstiMiedait the rate fixed by the jiroper atithorities.^*' 754. Annulment of charter of gas company. On an application by the attorney-general for leave to bring an action to annul the chairter of a gas company, the court will consider the fact that no injury is shown to have been done to the people of the state at large' or to co'nsiiiners supplied by the company, and that no public purpose would be served by such action while serious results might flow from depriving the inhabitants of a city of gas and electricity for lighting purposes, even for a limited period.^ The attorney-general cannot, under section ] 208 of the Civil Practice Act, maintain an action in the name of the people : against a gas company seeking to have it adjudged that, since certain consents and grants to lay and maintain pipes in the streets of a city given by the municipal authorities ; haying expired by time limita- tion, there is a usurpation of the franchise. But assuming that an action against a cSorporation does Me, a gas company by continuing to use pipes laid in the city street by permission of the municipal authorities after the expiration of the period for which the consent was given, is not unlawfully holding or exercising a franchise.^ Navigation Corporations. 755. Formation of corporation. "Seven or more persons may Become a corporation, for thr purpose of build- ing for their own use, equipping, furnishing, fitting, purchasing, chartering, navi- gating or owning steain, sail or other lDoa;ts, ships, vessels of other property to be used in any lawful bmsiiiess, trade, commerce or navigation upon the ocean, or any: seas, sounds, lakes, rivers, canals or pther waterways, ■ aUd for the carriage, transportation or storing or lading, freight, mails, property or passengers thereon by making, signing, acknowledging and filing a certificate, stating the name of the corporation, the specific objects for which it. is formed, the waters to be navigated, in the case of vessels other thai! ocean steamers, the amount of its capital stock, which shall not be less than five thousand, nor. unless the corpo- ration is formed for ocean navigation, more than four million dollars, the term. of its existence, the number of shares of which the capital stock shall consist, the number of directors thereof, not less than five nor more than thirteen, the 20. Richman v. Ponaolidated Gas. Gas Co of New York, 134 App. Div. Co., 114 App. Div. 316, 100 N, Y. 401. 108 N. Y. Supp. 823. Supp. 81, a.m. 186 N,. Y. 309, 78 N. E. 2. People y. Consolidated Gas Go. of 871. , . N. Y.. 1.W App. Div. 636, 115 Siipp. 1. Attornev General V. Cdn«olidated 393. 844 COBPOEATIONS. names of the dii-ectors for the first year, and the name of the city, village of town and county Ibl. which its principal office is to be situated, the number of shares of stock which each subscriber of the certificate agrees to take, which must in the aggregate equal ten per centum of the capital and at least ten per centum of which must be paid in cash. Siich certificate shall have attached thereto as a part thereof, the affidavit of at least three of such directors, to the effect that tett per centum of such capital stock has been in good faith sub- scribed, ai*d at least ten per centum of such subscription has been, paid in cash- No railrpad corporation . sha|ll have, own or hold, any . stock in any such corpora- tion.'? 3 ■' ' ■ ' '>■ ■■ ■ ' " , , ' ' 756. .liability to passengers. , , , , ,i The rigid rule of the common law : which applies between innkeeper and guest as to responsibility for the guest's per- sonal, effects is properly applicable between a passenger steamboat company and passengers to whom it furnishes rooms and entertainment. But a distinction exists between the degree of responsibility resting upon a steamboat com- pany for the personal effects of a passenger occupying a state- room: and that 'resting tiipon a railroad company in respect to a passenger occupying a berth in a sleeping car.. A passenger steamboat company is liable as an insurer, and, hence, without proof of negligence on its part, to a passenger who has pro- cured and paid for a stateroom, for the loss from his state- room, without negligence on his part, of a sum of money rea- sonable and proper for him to carry upon his person for the expenses of his journey, left by him in his clothing upon re- tiring for the night.* A carrier which sells tickets over an- other line connecting with it and assumes to secure accommo- dations over that line^ is liable for a failure of such other line to furnish ptoper accommodations, notwithstanding a printed notice on the ticket that it acts as agent and is not responsible beyond its own line.^ 757. Navigation on additional waters. ' ' Anj' such corporation except one formed for ocean navigation desiring or in- tending to navigate boats, ships or vessels, upon any other waters, than those named in its original certificate, may from time to time file a further certificate, in the same manner as is prescribed by law for the filing of the original certifi- cate, in which shall be stated such additional waters upon which such corporation desires to navigate vessels, and thereafter such corporation may navigate its 3. Trans. Corp. L.. § 10, as amd. by C<)., 151 N. Y 163, 45 N. E. 3&9. , L. 1915, oh. 677. 5. Bussman v. Western Transit Co., 4. Adajns v. Xew Jersey Rtearaljoat 9 Misc. 410, 29 IST. Y. Supp. 1066. TBANSPOBTAIION GOBEOBATIONS. 845 vessels upon such waters, with the like effect as if .they had been named in the original certificate. ' ' 6 758. Payment of capital stock. ' ' One-half of the capital stock of every such corporation, shall be paid in within one year, from its incorporation, or the, corporation shall be dissolved, and the directors within thirty days after such payment shall make a certificate of the fact of such payment, which shall be signed and acknowledged by a majority of the directors, and verified by its president or vice-president and secretary or treasurer, and filed in the offices where the certificates of incorporation are filed. The dissolution of any such corporation for any cause shall, not take away or impair any remedy against it, its stockholders, or officers, for any liabilities in- curred previous to i^s dissolution. " 7 759. Ferries unauthorized. "This article shall not authorize the formation of any ferry corporation to ply between the city of New York and any other point. ' ' 8 760. Bicycles as bag^gage on steamboats. "It is hereby made the duty of the owners or lessees of any steamboat, or line of steamboats, except ferry boats navigating the Hudson river, or any other waters within the jurisdiction of this state, to receive and transport the bicycle of, any passenger as ordinary baggage. A check, of convenient size and form, plainly stamped with numbers, and furnished with a convenient strap, shall be affixed to such bicycle when so taken for transportation for a passenger by the agent or employee of such owners or lessees and a duplicate thereof given to the passenger or person delivering the same to him. Such bicycle shall be transported as baggage and subject to the same liabilities, and no such passenger shall be required to crate, cover or otherwise protect any such bicycle. Such bicycle shall be delivered without unnecessary delay, to the passenger, or any person acting in his behalf, at the place to which it was to b© transported, or at a regular inter- mediate stopping place, upon notice to such agent or employee of such owners or lessees, in whose charge such bicycle shall have been given; by such passenger, of not less than ten minutes, upon presentation of such duplicate checks to such agent or employee of such owners or lessees. The object and intent of this section is to compel the owners or lessees of any steamboat, or line of steamboats, navigating the waters of this state to furnish, without further charges other than the customary fare generally paid such owners or lessees as compensation for transporting any passenger and his ordinary baggage, the same facilities to passengers , going by boat, to or from any point or points in this' state, as is afforded those iwho go by railroad. Any person or persons, partnership or corporation violating the provisions of this section shall be guilty of a misdemeanor, and upon conviction thereof, shall be punished by a fine of not less than two hundred and fifty dollars, or by imprison- ment in a county jail for a period of not less than thirty days, or by both such fine and imprisonment. "9 6. Trans. Corp. t., § 11,' as amd. by L. 1918, ch. 238. L. 1915, ch. 677^ 8. Tranis. Corp. L., §"li ' ■ 7. Trans. Corp. L., § 12, as amd. by 9. Trans. Corp. L., § 14. 846 COKPOBATIONSi 761. Attachment of goods in vessels. •'The owner or master of a vessel on board of which goods of a defendant against whom a warrant of attachment is issued have been shipped for transpor- tation, without reshipment and transshipment in the state, to a port or place with- out the state, may transport and deliver them according to their destination, not- withstanding the warrant; unless the plaintiff, his agent or attorney, executes to the owner or the master of the vessel a written undertaking, with sufficient siire- ties, in a sum specified therein, to pay him all expenses, damages and charges, which may be incurred by him, or to which he may be subjected, for unloading the goods irom the vessel, and !for all necessary detention of .the vessel for that purpose. The undertaking must be approved, with respect to its form, the sum specified therein and the sufficiency of the sureties, by a judge or justice of the court, or the county judge of the county wherein the vessel is situated, br in the city and county of New York, by a justice of the.supreme court. This -section does not apply where the owner or master before the shipment of tjhie goods, had actual informatioil of 'the granting of the Warrant, or whei'e he, in any wise, has connived at or been privy to the shipirient' thereof for the piirpose of screening them from legal process or of hindeviiigr delaying, or defraufling creditors. " 10 763. Subsequent attachment against domestic vessel. ' ' Where a domestic vessel, or share or interest therein, has been attached, aiid .afterwards released,, * * , * another warrant, against tlie same defendant, , shall not be levied on the same property, by the sheriff of, the same or of any other county", until after the first warrant ,li£^s been vacated or annulled, "ll 763. Claim of third person to attached domestic vessel. "Where a vessel,r belonging to a port or place in the United, States,, or a share or interest ; therein, is attached, the :court.or judge, on th,e, application, .within .thirty: days, thereafter, of a person claiming title thereto, or of his agentj must appoint three indifferent persons to make a valuation thereof. "12 764. Manner of appraisal of attached domestic vessel. "A valuation of s, vessel, or 'Of a share, or interest therein, made as pre- scribed in this article, must be in writing,' and subscribed by the appraisers; each of whom must take and subscribe ah affidavit, ^annexed the'reto, to the effect, that the valuation iS, in all respects, just and fair, aiid that the Value of the vessel, share. Or interest, is truly stated therein, according to the' deponent's belief. The' valuation must be ilrimeiSately returned to the court O*- judge; and, after an undertaking is given, or after the expiration of the time to give an under- taking, as prescribed in the next section, it must Toe delivered to the sheriff. "13 765. Undertaking on claim to attached domestic vessel. "Witljin two days after the valuation is returned, tie' elaimaiit' or hla agent may execute an undertaking to the sheriff, with sufficient sureties, approved by the 10. Civil Practice Act, .§ 920. , Enforcement of liens on vessels. — 11. Oivil Practice Act, §' 961, ,pt,,' See Lien Law, §§ 85-107, 12. Civil Practice Act, § 928.. 13. Trans. Corp. L.. ? 66. TEANSPOBTATION CORPOBATIONS. 847 court or judge, who must justify in twice the appra-iseid v^luejto, the effect, that, in an action to be brought on the undertaking, the claimant will establish that he was the owner of the vessel, share, or interest, a,t the time of the levy ' thereupon; and that, in case of his failure to do soj he will pay , the , amount of the valuation, with interest from the date of the undertaking, to the sheriff; or, if the warrant is vacated or annulled, to the d^eudani,; otohis personal- repre- sentative. "1* 766. Discharge of attachment on domestic vessel. "Upon, such an i^dertaking being executed and .delivered to the sherifiE i the court or .judge mu^t make ,an order, directing the vessel or share tqi be di8i charged, from the attachment. Thereupon , the sheriff must discharge the same accordingly." 16. , , , , 767. Action on undertaking. "The court or judge, upon the application of either party, at any time before the warrant is vacated or annulled/ iaAJf diirect the Sheriff ^o commence an action upon the utidertakingj upon such terms and conditions, and under such regulations, between, him and the applicaJit, .as 'it or he deems justi If the warrant pf attachment ia. (vacated or annulled,' thet defendant in the attachment, his assignee or personal t^ieSemtative,' may commence and maintain: an action upon the undertaking, or, may be. substituted, in place of,. the sheriff; in an action pending thereupon. In such an action, the claimant may .show; in bar Of a recovery, that he was the owner of the vessel^ share, or interest, at the time when it was -attached. * If judgment -biS rendered against ?lini, '-ihe plaintitf-is'fen' titled to recover the: amount of the - valuation, with , interest from the date of the undertaking. V 16 ,.. .,-; , t :j,, - . , , ' . 768. Valuation of foreign attached vessel on claim by third person. '■'Where a foreign vessel; 'o*' a share or interest therein, is attached, it imi^i be valued, as jprescribed '.(for a domestic -vessel), tipon the' application of a person, who makes af&davit, to the effect that ' he is ' the o-wner thereof, or that ' he 'M the agdnt Of a person, naming him and his residence, whom he believes to' be the o-whSr of the vessel, share,, oi-' interest attached. Such notice of the application must be given to the' plaintiff, as the court or judge deems reasonable. " 17- 769. Undertaking on claim to foreign attached vessel. , "Within three days after the valuation is returned, the plaintiff must give, to' the ;persbn' in whose behalf the claim is made, an undertaking, with ■ sufficient sureties, approved by the court, or judge, who must justify in twice the;aj)- praised value, to the, effect ^hat they will::pay such 'damages as may be recovered against the sheriff, or the plaintiff in the attachment, within three months from the approval of the undertaking, if it appears therein for seizing the -^ess'el,- share, or int,erest,, in an action, brought that the, vessel, share, or interest belonged, at the time- of, attaching it, to the perso;n;ip^ho3e -behaJf the ,claim is made.',' 18,,,, 14. Civil Pi-aetice Act, § 930. 17. Civil Practice Act, § 934. 15. Civil Practice Act, § 931. - '' 18. Civil Practice' Act, § 935. 16. Civil Practice Act, §§ 932, 933. ; ■ 848 CORPOEATIOBTS. 770. Discharge of attachment on foreign vessel. ' ' tTnlees such an ttiidertakiiig is given, the court or judge must grant an order discharging the vessel^ share or interest so claimed, from the attachment; where- upon' the sheriff must discharge the same accordingly. "19 771. Annulment of attachment on foreign vessel. "If, after such an undertaking is given by the plaintiff, the warrant is vacated or annulled, or the attachment is discharged as to the vessel, share, or interest, the defendant or his agent is entitled to claim the same, or the pro- ceeds thereof, if it has been sold, only upon his shdwihg, to the satisfaction of the court or judge, that the undertaking has been discharged; or giving to the plaintiff an undertaking, with sufficient sureties, approved by the court or judge, who must justify in twice the appraised value, to the effect that they will in- demnify the plaintiff against all charges and expenses in consequence of the undertaking. "20 772. Sale of foreign attached vessel. "If the undertaking of the plaintiff is not discharged, or he is not indemni- fied, as prescribed in this article, within one month after the defendant becomes entitled to claim the vessel, share or interest, as so prescribed, it may be sold by the sheriff in whose custody it is, upon an order of the court or judge;" and the proceeds of the sale must be paid to the persons who executed the undertaking for their indemnity. ' ' 1 773. Sale of domestic or foreign attached vessel where claim not made. " If a claim is not made by or in behalf of an owner of a domestic vessel, or of a share or interest therein, within thirty days after it is attached/ or if the proper undertaking is not executed by the claimant; or if a claim is not made within that time by or in behalf of the owner of a foreign : vessel or of a share or interest therein; the vessisl, share or interest, may be sold by the sheriff, under an order of the court or judge, upon, the amplication of the plain- tiff, if, in the opinion of the court or judge, a sale is necessary. Where a share or interest in a vessel, foreign or domestic, is attached, if the proper claim to it is not made by or in behalf of an owner thereof within thirty days there- after, it may be sold by the sheriff, under an order of the court or judge, upon the application of a joint owner or his agent. "2 774. Proceedings to discharge attachment. Where a yessel or a share or interest therein is attached, application to discharge the attachment may be made as pro- vided in sections 952-956 of the Civil Practice Act.'' 775. Undertaking under junior attachment for release of foreign vessel. ' ' Where a foreign vessel, or a share oi- interest therein, has been attached and valuedj as prescribed in this act, .ind the plaiiitiff, iii the first warrant of attach- 19. Civil Practice Act, § 936. 2. Civil Practice Act, § 939. ao. Civil Practice Act, § 937. 3. Civil Practice Act, § 957. 1. Civil Practice Act, § 938. TBANSPOKTATION COBPOKATIONS. 841) ment fails to give an undertaking to prevent the release thereof, the court or judge may grant to the plaintiff in a second warrant, then in the sheriff's ihands for execution, an extension of not more than three days thereafter, within which to furnish an undertaking, in all respects like the one to be furnished by the first plaintiff. And if he furnishes it within that time, he has the same rights and privileges, and is subject to the same duties and liabilities, with respect to the vessel and its proceeds and the subsequent proceedings relating thereto, as if his was the first warrant. "4 776. Subsequent attachment of foreign vessel after release for failure to give undertaking. " If a foreign vessel, or a share or interest therein, has been attached, and after- wards released by reason of the failure of the plaintiff in the first or the second warrant to give an undertaking to prevent the release; it shall not be again at- tached under a warrant against the same defendant which has been delivered to the sheriff of the same county before the expiration of the time within which the undertaking should have been furnished. But it may be again attached under a subsequent warrant against the same defendant; in which case, the plaintiff therein, and the plaintiff in each warrant subsequently delivered to the sheriff, have the same rights and privileges; and are subject to the same duties and liabilities, with respect to the vessel and its proceeds and the subsequeat pro- ceedings relating thereto; as if the warrant under which it was attached was the first warrant. ' ' 5 777. Extension of time for undertaking to prevent release of foreign vessel. "A second extension of the time within which to furnish an undertaking to prevent the release of a foreign vessel, or a share or interest therein, shall not be granted. "6 Pipe Line Corporations. 778. Incorporation. "Twelve or more persons may become a corporation for constructing and operating for public use, except in the city of New Tork, lines of pipe' for con- veying or transporting therein petroleum, gas, liqiiids or any products or property, or for maintaining and operating any line of pipe already constructed and owned by any corporation, person or persons, except- in such city, : for the public use, by making, signing, acknowledging and filing a certificate stating the name of the corporation, the number of years it is to continue, the places from and to which it is to be constructed or maintained and operated, its length as near as may be, the name of each county through or into Which it is to be constructed; the amount of its capital stock, which shall not be less than fifteen hundred dollars for every mile of pipe' constructed or proposed to be constructed, and the number of shares of which it shall consist; the number of directors not less than 4. Civil Practice Act, § «'62. 6. Civil Practice, Act, § 966, pt. 5. Civil Practice Act, § 963. 54 850 >'. COBPOBATIONS. seven, and the names and plaees of residence of the directors for the first year, and the place of residence of each subscriber and the number of shares he agrees to take in such Qorporation, which must in the aggregate equal ten hundred and fifty dollars for every mile of pipe constructed or proposed to be constructed, and twenty-five per centum of which must be paid in cash. Such cer- tificate shall have indorsed thereon or appended thereto and as a part thereof, an affidavit made by at least three of the directors named therein that at least ten hundred and fifty dollars of stock for every mile of line proposed to be con- structed or maintained and operated has been in good faith subscribed, and twenty- five per centum paid , in money thpreon, and that it is intended in good faith to construct or to maintain and operate the line of pipe mentioned in such certificate, and that such corporation was not projected or formed with the in- tent or for the purpose of injuring any person or corporation, nor for the pur- pose of selling' Or conveying its franchise to siny person or corporation, nor for any fraudulent purpose: " 7 779. Location of line. •'Every sudi corporation shall before, commencing the construction of its pipe line in any county, or any proceeding, for the eondenmatipn of real property, plainly and distinctly mark and designate the line adopted and located by it by a line of stakes consecutively numbered and, equally distant, and not more thai twenty rods from each other, so that each line can be definitely known an^ ascertained in all places, and make a map and survey of the route so located and staked out, and shall indicate thereon plainly the points where such route crosses each parcel of land to which it has not acquired title by agreement, and shall cause such map and survey to be ee'rtifled by ' the president and engineer, and filed in the office of the clerk of the county into or through which the line so located and mapped passes, and shall give to the owner or occupant, if he is known or can be ascertained, of every pArcel of land through which such • route passes, the title to which has not been acquired by purchase, written notice of the filing of such map and survey, stating that such route passes over or across such owner's or occupant 's , lands, and tha,t the route thereof is indicated thereon by such line of stakes. Any occupant; or owner of such lands feeling aggrieved by the proposed location may, within fifteen days after the 'sefvice of such notice, give ten days' written notice to the corporation, by service upon the president, engineer, or any director thereof, and to the owner or occupant of any lands to be afEected by the alteration to be proposed by him, of the time and place of an application to be yiade by him to a special term of the . supreme court in the judicial district in. which the lands are situated for the appointment of eonunissioners to relocate such line. If upon the hearing the court shall consider that sufficient cause exists therefor, it shall appoint three disinterested persons commissioners to examine the route located and the proposed alteration thereof, and direct the mode of proceeding, who shall report to the court the facts relating thereto and their opiaion as to the proposed alteration, , and what, if any, alteration should be made in such line, and the court shall thereupon make such order as it shall deem proper in relation to such alteration, and determine the location of such line and fix and adjust the costs, fees and charges of the 7. Trans. Corp. L., § 40. , . TBANSPOBTATiON COBPOBATIONS. 851 commissioners, and the costs and charges of the proceedings, and direct by which party the same shall be paid, and may enfpi;ce payment thereof by proceedings as for a contempt; of court, for refusal to pay costs directed to be paid by an order of the court, and such order .shall be final as to the location of the line upon the lands entbraeed therein. Such corporation shall not commence the work of constructing or laying its line of pipe, ot institute proceedings for the con- demnation . of real property, in. any county, until after the expiration of fifteen days from the service by it of the notice herein required, nor until all applica- tions for a re-location of dtsline in such county, if any are made, have been finally determined. " 8 , 780. Condemnation of real property. • ' ' In case such corporation is unable to agree for the purchase of any real estate required (fo,r the .purposes of its, incorporation, and. its line of pipe^in the county in which such real estate is situated has been finally located,, it shall have the right to acquire title thereto by condemnation, but such corpdratiou shall not, locate or construct any line pf pipe through or under any buildings dooryard, lawn, garden or orchard, except by the consent of the owner thereof in wHtihg duly acknowledged, nor through any cemeteijy or burial ground, nor within bile hundred, .feet of any ,i)uildjng, except where such line is authorized by public of&cers to be laid, across or upon any public highway, or where the same is laid across or, upon any turnpike or planK-road, 1^6 pipes shall be laid for' the purpose .of carrying petroleum, ga,s or other products or ' property through ' or wnder any of ^ the, streets in the cities of this state, unless such ' corporation shall first obtain the consent of a majority of the property owners oii the streets which may be selec.ted for tie laying of pipes, and such pipe line shall be located with all reasonable care and prudence so as to avoid danger from the bursting ()f the pipes.',' 9 , 781. Railroad, turnpike plank road and highway crossings. "Whenever any line of pipe of ^any such corporation sh^U necessarily cross .any railroad, highway, turnpike or plank-road,' 'such line of pipe shall be made to cross' under such' railroadj highway, turnpike or' plank-road and with' the least injury thereto pfactickl^i'ei 'and unless the right 't'6 crbSs the same shall be 'ac- quired hy agreement,' compensation shall be ascertained and made to the owiers thereof, or to the public; in case of. highways, in the manner prescribed in the condemnation law, but no exclusive title or use shall be so siequired as against any railroad, t,umpike or plank-road corporation, ribi- as sigainst the rights of the people of this state in any public highway, but the fights acquired shall be a common use of the lands in such manner as to be of the least practical injury to such railroad, turnpike or plank-road, eonsisteiit with the use thereof by such pipe line corporation, nor shall any such corporation take or use any lands, fixtures Or erections bi any roal-rpad corporation, or haye the right to acquire by conderiinia- tion the title pr use, 'or right to run along jdr upon the lan^s pf any such corpo- ration, expept for thp purpose of' directly crossing the same when necessary.' ''10 8. Trans, Corp. L., § 41. ..,, ;i 10. Trans. Corp,; L,, § 43. 9. Trans. Corp, L., § 42. 852 - COKPOKATIONS. 782. Construction across and along canals, rivers and creeks. "No pipe line shall be constructed upon or across any of the' canals of this state, except by the consent of and in the manner and upon the terms prescribed by the superintendent of public works, unless constructed upon a fixed bridge across such cElnal, and with the consent of the person for whose benefit such bridge is constructed arid maintained, or upon such a bridge pver the canal, at the crossing of a public highway or street, with the consent of the public officers having the supervision thereof, or of the municipal authorities of any village or city within whose limits such bridge may be, nor shall the pipes of any such corporation be laid through or along the banks of any of the canals of this state, nor through or under any of its rivers or creeks, unless such pipes shall be encased so as to prevent leakage, in such manner as shall be approved by the superintendent of public works. ' ' 11 783. Consent of local authorities to construction across, along or upon highway. "No pipe line shall be constructed across, along or upon any public highway without the consent of the commissioners of highways of the town in which such highway is located, upon such terms as may be agreed upon with such commissioners. If such consent or the consent of the commissioners or municipal authorities required by the preceding section can not be obtained, application may be made to the appellate division of the supreme court of the department in which such highway or bridge is situated for an order permitting the corporation to construct its line across, alojig or upon such highway, or across or upon such bridge. The application shall be by duly verified petition and notice which shall be served upon the commissioners of highways of the town in which the highway is situated, or the municipal authorities of the village or city where such bridge is located, according to the practice or order of the court, or by an order to show cause, and the court upon the hearing of the application may grant an order permitting the line to be so constructed in such manner and upon such terms as it may direct." 12 784. Construction through villages and cities. "No pipe line shall be constructed into or through apy incorporated village or city in this state, unless authorized by a resolution prescribing the route, manner of construction and terms upon which granted, adopted at a regular meet- ing of the board of trustees of the village or the common council of the city by a two-thirds vote of such board or council, but such resolution shall not affect any private right. No pavement thall be removed in any city under the provisions of this article, unless done under the direction of the common council, nor until such corporation shall give a bond in such sum as the common council may require for the replacing of any pavements which shall have been removed. In ■Base any pavement shall have been removed and not properly relaid, the common council may bring suit iI^ any court of record, for the cost of relaying such pavement against any such corporation. No gas-houses shall be erected in any city under the provisions of this article, for supplying gas to the inhabitants, unless consent is first given by the corporate authorities of the city. ' ' 13 11. Trans. Corp. L., §. 44. 13. Trans. Corp. L., | 46. 12. Trans. Oorp. L., § 45. TRANSPORTATION CORPORATIONS. 853 785. Construction over Indian reservations. "Sueh corporation may contract with the chiefs of any nation of Indians over whose lands it may be necessary to construct its pipe line for the right to eoii- struct such pipe line upon such lands, but no such contract shall vest in the corporation the fee of such lands, nor the right to occupy the same for any pur- pose other than for the construction, operation and ma,intenance of such pipe line, nor shall such contract be valid or effectual until the' same has been rati- fied by the county court of the county in which the lands are situated. ' ' 14 786. Construction over state lands. ' ' The commissioners of the land oflice shall have power to gi'ant to any pipe liiie corporation any lands belonging to the people of this state which may be re- quired for the purposes of its incorporation on suCh ternis'aS niay be agreed on by them, or such corporation ihay acquire title thereto by condemnation, except that 1)6 pipe line corporation may condemn aiiy caBal lands abandoned pursuant to the provisions of article four of the public lands law, constituting chapter fifty of the laws Of ' nineteen htmdred and nine, ' as amended, until 'after they have been sold and conveyed in the manner provided by the public lands law. If any lands owned by any county, city or town be required by such corporation for such purpose^,' the county, city or town officers having charge of such lands may grant them to such corporation ifpon such term's and for such compensation r.s may be aigrfeed upon. "15 ' 787. Powers additional to those confetred by General and Stock Cor- poration Laws. "Every corporation formed under this article shall in addition to the powers conferred by the general and stock corporation laws have power: 1. To cause such examinations and surveys of its proposed line of pipe to be made as may be necessary to the selection of the most advantageous route, and for such purpose by its officers, agents or servants may enter upon the lands or waters of any person, upon, through or across which such corporation can con- struct its line of pipe, under the provisions of this article, subject however to liability for all actual damage which shall be done thereto. ,.■.,, .. 2. To take and hold such voluntary grants of real estate and other property, as shall be made to it to aid in the construction, maintenance, operation and accommodation of its . pipe line. 3. To lay out its pipe line route not exceeding twelve feet in width, but at the termination of such line and at all deceiving and discharging points and at all places where machinery may properly or must necessarily be set up for the operation of such pipe line it may take such additional width, and for such length as may be necessary. 4. To take and convey through pipes any property, sitbstajice or product capable of transportation therein by any, forcey power or mechanical agency, and to erect and maintain all necessary and convenient buildings, stations, fixtures and machinery for the purposes of its incorporation. 14. Trans. Cbrp. L., § 47. 15. Trans. Corp. L., § 48, as amd. by L. 1931. eh. 333. 854 CORPORATIONS. 5. To regulate the time and manner in which property sh?,!! be^ transported over its pipe lines, and the compensation to ,be paid therefor, but such compensation shall not exceed the sum or be above the rate of twenty-five cents per one hun- dred miles for the transportation of forty-two gallons of any product trans- ported on lines of one hundred miles in length or over, which shall be reckoned and adjusl^ed upon the quantity or numt)er of gallons delivered by such corpo- ration at the point to which it shall have undertaken to deliver the same. ' ' 16 788. Use of line to be public ; storage ; liable as common carriers ; rates and charges. ' ' The pipe lines of every such corporation shall be open for transportation to the public use, and all persons desiring to transport products through, such pipe line shall have the absolute right upon equal terms to such transportation in the order of application therefor, on complying with the general requirements of sOeh corporation, as to delivery for and payment of such transportation, , but no appli- cation for such transportation shall be valid beyond or for a greater quantity of products than the applicant shall then own and have ready for delivery for trans- portation to such corporation, and every such corporation shall provide suitable and necessary receptacles for receiving all such products for transportation, and for storage at the place of delivery until the same can reasonably be moved by the consignee, and shall be liable as common carriers therefor from the time the same is delivered for transportation until a reasonable time after the same has been transported to the place of consignment and ready for delivery to the consignee, which time shall be fixed by general regulation by the corporation^ and shall not be less than two days from and after the same shall be ready for de- livery and notice thereof given to such consignee, and all rates and charges of every descriptibii, for or on account of or in any manner connected with the transporta- tion of any products, shall be fixed by such corporation by general rules and regulations, which shall be applicable to all parties who shall transport any pro- duets through such pipe line, or deliver or contract to deliver products for trans- portation and shall be written or printed and exposed to public view and at all times open to public examination." 17 789. Receipts for property ; cancellation of vouchers ; delivery of prop- erty. "No receipt, certificate or order of any kind shall be made, accepted or issued by any pipe line corporation far any commodity unless the commodity represented by them is actually in possession of the corporation at the time of making, issuing or acceptance thereof. Whenever any such corporation shall have parted with the possession of any commodity and received therefor any ordei-, voucher, receipt or certificate, such order, voucher, receipt or certificate shall not be issued or used again, but shall be canceled with the word "canceled" stamped or printed legibly across the face thereof, and such canceled order, voucher, receipt or certificate, shall be filed and preseived by such corporation and a record of the same kept by the secretary thereof. No petroleum or other commodity received for transportation by such corporation shall be delivered to any person without 16. Trans. Corp. L„ § 49. 17. Trans. Corp. L., | 50. TKASSPOE.TATION GOEEOBATIONS. 855 the presentation and surrender of all Touchers; receipts, orders or certificates that have been issued or accepteid for the same. " is . 790. Monthly statements. "Every pipe line corporation shaUmake monthly a specific statement showing the amount of all commodities received, the amount delivered during the month, and the stock on hand on the last :day of each month of the year, and how much of such stock is represented by outstanding certificates; vouchers, receipts or orders, and how much in credit balances on the books of the corporation. Such statement shall be made on or before the tenth day of the succeeding months and verified by. the oath of the president and secretary that it is in all respects true and correct, and shall be filed within three, days thereafter in the county clerk's office in the county where the principal office of the corporation is located, and a true copy of the same posted in a conspicuous place in its principal office fcir at least thirty days thereafter. " 19 791. Fences; farm crossings and use of line not inclosed. ' ' It shall not be necessary for any such corporation to fence the lands acquired by it for the purpose of its incorporation. But, if not inclosed by a substantial fence, the owner of the adjoining lands from whom such lands were obtained, his heirs or assigns, may occupy and use such lands in any manner not injurious to the interests of the corporation and shall not be liable therefor, or for any trespass upon any such lands except for wilful or negligent injuries to the pipes,, fixtures, machinery or personal property of the corporation. If the corporation shall keep such lands inclosed it shall construct and provide all suitable and necessary crossings with gates for the use and convenience of any owners of lands adjoining the portion of its lands so inclosed^ and no claim shall be made by it against any owner of adjoining lands to make or contribute to the making or maintaining of any division fence between such adjoining lands and its lands, and if it shall neglect to keep , and maintain substantial fences along its lands the owners of adjoining lands may construct and maintain all farm or division fences, and all line fences crossed by such pipe line in the same manner as thpugh it had not acquired such lands for suqh pipe line, and it shall be liable for all injuries to such fences caused or done by, any of its officer? or agents, or any persons acting in their or its behalf, or by any laborer in its or their employ or in the employ of any of its contractors. "20 ■ ; 792. Taxation of property. "The real estate and personal property belonging to any pipe line corporation in this state, shall be assessed and taxed inthe several towns, villages and cities in the same manner as the real estate and personal property of railroad corporations are assessed and taxed, and such corporation jnay pay such taxes or commute therefore in: the same manner as railroad corporations." l 793. Misconduct of officers and agents. "Any officer, agent or manager of a pipe-line corporation who: ,; j, 1. Neglects or refuses to transport any product delivered for transportation, or 18. Trans. Corp. L., § 51. 20. Trans. Corp. L., § 53. 19. Trans. Corp. L., § 52. 1. Trans. Corp. L., § 54. 856 COEPOEATIONS. to accept and allow a delivery thereof in the order of applieation; according > to, the general rules of the corporation, as provided by law; or,. 2. Charges, accepts or agrees to accept for such receipt, transportation and delivery, a sum different from the amount fixed by such regulations; or, 3. Allows or pays, or agrees to allow or pay, or suffers to be allowed or paid or repaid, any draw-back, rebate or allowance, so that any perapn shall, by any de- vice, have or procure any transportation of products over such pipe-line at a less rate or charge than is fixed in such regulations, . Is guilty of a misdemeanor, punishable by a fine not exceeding one thousand dollars, or by imprisonment not exceeding six months, or by both. ' ' 2 Stage Coach Corporations. 794. Incorporation. ' ' Five or more persons may become a corporation for the purpose of establish- ing, maintaining and operating any stage or omnibus route or routes for public use in the conveyarice of persons and property or any stage route ot routes al- ready established for a like public use, by making, signing, acknowledging and filing a certificate which shall state the name of the corporation, the number of years it is to continue, the route or routes upon which it is intended to run- as near as practicable, the number of the directors thereof, not less than three nor more than five, the names of the directors for the first year, the amount of its capital stock, the place of residence of each subscriber thereto, and the number of shares of stock he agrees to take in such corporation. Any corpoiution here- tofore orgaiiized under any general or special act for the purpose of establishing and operating stage or omnibus routes for public use in the conveyance of per- sons and property anywhere in the state of New York shall have all the powers and be subject to the provisions of this article. "3 795. Alteration or extension of route. "The directors inay, by a vote of two-thirds of their number, at any time alter or extend the route or routes designated in the certificate of incorporation, upon making, acknowledging; and filing a certificate to that effect, in the offices where the original certificates of incorporation were filed. ' ' 4 796. Powers. "In addition to the powers conferred by the general and stock corporation laws, every such corporation shall have power: 1. To take and convey persons and property in stages and omnibuses, and to provide and run the necessary stages and omnibuses upon their route or routes for the public use and to receive compensation therefor. 2. To erect and maintain all necessary and convenient buildings, fixtures and machinery for the use and accommodation of their passengers and business. ' ' 5 A legislative franchise permitting a corporation to run a line of stages in designated streets and avenues in the city of 2. Penal Law, § 669. 4. Trans. Corp. L., § 21. 3. Trans. Corp. L., | 30, as amd, by 5. Trans. Corp. L., § 22. L. 1931, eh. 256, TRANSPOBTATIOK/ COBPOBATIONS. 857 New York, for the transportation of passengers and parcels for hire, does not, in the absence of express provisions to that effect, authorize the corporation to carry or maintain exte- rior advertisements on its stages.^ 797. Existing routes and extensions. ' ' Any corporation incorporated linder any law of this state heretofore enacted which owns and operates a lawfully established stage route which has been con- tinuously operated by such company or its predecessors in title to such route for five years last past in any city of the first class, is hereby authorized and em- powered to extend its existing routes at any time or times and to operate the same as extended with stages and omjiibuses propelled by electricity or any other motive power, in and upon any streets and highways of such city, without further or other authority, proceeding, or consent required under any act, general, public, private or local ; provided, however, that such extensions shall not become valid until they shall have been first approved by the public service commission which, on giving its approval, shall make a certificate of such extension or extensions of route as approved, which certificate shall be filed in the office of the secretary of state, and in the office of the clerk of the county in which such extension is located. Such company, on filing in said offices an acceptance of the extensions specified in such certificate and on operating such extensions, shall have the right to charge a fare .not exceeding ten cents per passenger for a continuous ride over the whole or any part of the routes owned or operated by it, and shall pay a license fee to the city in which it operates equal to the charge now in force for licensing similar stages and omnibuses, and shall also pay to the comp- troller or other chief fiscal officer of said city five per centum per annum of its gross receipts from the operation of said routes. ' ' 7 if, a coach company extends its route pursuant to the statute so as to include a public park, it subjects itself to the reason- able regulations of the municipality wherein it operates.^ All money received by a coach company from the leasing of space in its stages for advertising purposes are receipts from the operation of its routes, within the meaning of the statute, and hence, subject to the license fee therein provided upon: gross receipts' from such operation.® 6. An ordinance prohibiting the dis- York, 194 N. Y. 19, SB N. E. 824. play of advertisements upon wagons 7. Trans. Corp. L., § 23. and other vehicles, except business 8. People v. Shellenberg, 133 App. notices upon ordinary business wagons Div. 79, 117 N. Y. Supp. 830. engaged in the usual biisiness or work 9. City of New York v. Fiftli Avenuo of the owner and not used merely or Ooaeh Co., 9,5 Misc. ,S66, 158 N: Y. mainly for advertising, is valid. Fifth Supp. 750. Avenue Ooaeh Co. v. City of New 858 CORPORATIONS. 798. When stage coach corporations common carriers within Public Service Commission Law. "Any person ot any corporation who or which owns or operates any stage route in any city of one million inhabitants, or more, shall be deemed to be in- cluded within the meaning of the term 'common carrier' as used in the public service commissions law, and shall be subject to all the provisions of the said law applicable to common carriers. "10 , , \ "Any person or any corporation who or which owns or operates a stage route, bus line or motor vehicle line or route or vehicles described in the next suc- ceeding section of this act wholly or party upon and along any street, avenue or public place in any city shall be deemed to be included within the meaning of the tei-m 'common carrier' as used in the public service commissions law, and shall be required to obtain a certificate of convenience and necessity for the operation of the route or vehicles proposed to be operated, and shall be subject to all the provisions of the said law applicable to common carriers. ' ' U Bus lines, whether maintained and operated by a city or by private individuals or corporations, come within' the provi- sions of the Transportation Corporations Law which bring the owners and operators of a bus line within the definition of the term " common carriers " as used in that statute, and also come within section 53 of the Public Service Commission Law, which requires the obtaining of a certificate of public conve- nience and necessity.-'^ One who operates in a city a motor vehicle connected with a bus line, a stage route and a motor vehicle line or route, all of which are feeders, connections,; in- ducements, advertisers, solicitors, aids to and a part of his system of carrying passengers for hire from said city to points beyond the corporate limits, is a common carrier with- in said city within the meaning of the statute.^^ A license from the state or a municipality is construed not as a contract, but as a temporary permit to do what otherwise would be unlaw- 10. Trans. Corp. L., § 24, as added virtually parallel with certain of the by L. 1909, ch. 219. car lines operated by plaintiff, and the 11. Trans. Corp. L., §. 25, as added defendant admited that no certifioate by L. 1913, eh. 495, and amtnded by of public convenience had been ob- L. 1915, ch. 667. tained from the public service commis- 12. Brooklyn City Railroad Co. v. sion, that the right to operate said bus Whalen, 111 Misc. 348, 181 N. Y. Supp. lines was not granted after a public 208, holding that whei-e plaintiff, the hearing, and that none of the other re- owner and operator of a line of surface quirements of the Public Service Com- cars in the city of New York, prayed missions Law and of section 74 of the for an injunction to restrain the opera- Greater New York Charter had been tion of certain automobile bus lines followed, an injunction would be that wore being maintained in said city granted. by permission of its commissioner of 13. Public Service Commission v plant and structure?, by authority of Hurtgian, 91 Misc. 4.S2. 154 N. Y. Supp. its hoard of estimate and running 897. TEANSPORTATIOSr CORPORATIONS. 859 ful, and is not property in any legal or constitutional sense. Thus a municipal license permitting the licensee to operate a jitney bus line within the municipality does not create a vested ' right in the licensee so as to exempt him from the operation :,of the statute requiring persons operating such bus lines in cities to obtain a certificate of convenience and necessity from the. Public Service Commission and subjects such line to reasonable regulations imposed by the Commission.^* 799. When consent of local authorities required. ' ' No bus line, stage route nor motor vehicle line or route, nor any vehicle in connection therewith,, nor any vehicles carrying passengers at a rate of fare of fifteen; cents or less for each passenger within the limits of a city or in com- petition with another common carrier which is required by law to obtain the con- sent of th^ local authorities of said city to operate over the streets thereof shall be operated wholly or partly upon or along any street, ■ avenue or public place in any city, nor receive a certificate of public convenience and necessity until the owner or owners thereof shall have procured, after public notice and a hearing, the consent of the local authorities of said city, as defined by the railroad law, to such operation, upon such terms and conditions as sa,id local authorities may prescribe, which may include provisions covering description of route, rate of spcjed, compensation for wear and tear of pavement, improvements and bridges, safeguarding passengers and other person's using such streets, and no such opera- tion upon the streets of any such city shall be perinitted until the owner or operator of such vehicles or proposed line or route shall if required by such local authori- ties have executed and delivered a bond to such, city in an amount fixed by said local authorities and in the form prescribed by the chief law officer of said city with sureties satisfactory to the chief fiscal officer of said city, which bond may be required to provide adequate security for the prompt payment of any sum accruing to said city, and the performance of any other obligations, under the terms and conditions of such consent, as well as adequate security for the payment by such owner of any dangers occurring to, or judgments recoverable by, any person on account of the operation, of such line or route, or any fault in respect thereto. The town board of any town or the board of trustees of any village may adopt a resolution providing that the provisions of this section shall apply to such town or village, and thereafter no bus line, stage route, motor vehicle line or route shall be operated wholly or partly, upon or along any street or highway in such town or village, nor receive a certificate of public convenience and necessity until the owner or owners thereof shall haye pro- cured the consent of the local authorities of such town or village, in the same manner and subject to ' the same terms and conditions as is provided in this section for proeuiing the consent of the local authorities of the city; and for such purpose the town board of such towii, in the case of a town and the board of trustees of the village in the case of a village, shall be deemed the local authorities thereof. "1" ■ ' ' ■ 14, Public Service Commission v. 15. Trans, Corp. I,.. § 36, a? added Booth, 170 App, Div. 590, 1.56 N. Y. by L, 1915, ch, 667, and amd. by L. Supp. 140. 1919, oh. 307. 860 COBPOKATIONS. One who operates a bus line, over a route, partly in a city is deemed a " common earner " within the Public Service Com- mission Law, and he must obta^in a certificate ' ' for the oper- ation of the route or vehicles proposed to be operated " and must also under section 53 of the Public Service Commission Law obtain a certificate of public convenience and necessity before exercising a franchise granted by a municipality.^* Under this section one operating a horse-drawn vehicle along and upon city streets for the carriage of passengers at a charge of fifteen cents or less, regular tfips beiiag made morn- ing and evening, must procure the consent of the local authori- ties and also a certificate of public convenience and necessity, and the requirement of the statute may not be ignored on a showing that thp passengers are only the employees of a manufacturing plant who are a " mutual transportation club " each paying when he does ride a fare of five cents." The phrase " public convenience and necessity " as used in this section is to be taken as an entirety, and it is not neces- sary as a prerequisite to the granting of a certificate that the Public Service Commission should find that a proposed stage line is strictly a necessity as well as a convenience. Public convenience and necessity exist when the proposed facility will meet a reasonable want of the public and supply a need if existing facilities, while in a sense sufficient, do not ade- quately supply that need.^^ One who operates a niotOr vehicle line within a city without the consent of the municipal authori- ties and without procuring a certificate from the public, ser- vice commission as to the necessity and public convenience of such business violates the statute, and an injunction will be granted restraining him from operating his motor vehicles and carrying passengers ' for hire within the city.^^ Vio- lations of the provisions of sectipn 26 of the Transportation Corporations Law are^unishable as misdemeanors, not only under section 29 of the Penal Law but also under section 56(2) and section 58 of the Pubhc Service Commission Law.^" 16. Niagara Gorge Railroad Co. v. Hurtgan, 91 Migc. 432, 154 N. Y. Supp. Gaiaer, 109 Misc. 38, 178 N. Y. Supp..; 897; Public Service Comm. v. Mount 156. Vernon Taxioab Co., 101 Misc. 497, 168 17. Public Service- ConwnisSion- v. N. Y. Supp. 83. Fox, 96 Misc. 283, 160 N. Y. Supp. 59. 20. People ex rel. Weatherwas v. 18. Matter of Troy Auto Car Co., 11 Watt, 115 Misc. 130, 188 N. Y. Supp. St. Dept. Kep. 430. 559. : 19. Public Senice Comindssion v. TRANSPORTATION CORPORATIONS. 861 A mandamus proceeding to enforce a right in wMch the gen- eral public is interested, to wit, that the streets of a city shall remain unobstructed and unencumbered, may be maintained by a citizen and resident of the city.^ Telegraph and Telephone Corporations. 800. Incorporation. ' ' Seven, or more persons may become a corporation for the purpose of con- structing, owning, using and maintaining a line or lines of electric telegraph or telephone, wholly within or partly beyond the limits of this state, or for the purpose of owning any interest iu any such line or lines., or any grants therefor by executing, aeknpwledging and filing a certificate, stating the name of the cor- poration; its general route and the points to be connected; its capital stock; the number of shares into which it is to be divided; the term of its existence; the number of its directors not less than seven; the names and residences of the directors for the first year, and the post-office addresses of the subscribers and the number of shares which each agrees to take in such corporation. ' ' 2 An agreement by a telephone company reasonably to re- strict its corporate activities, but not to such an extent as un- duly to interfere with the rights of the public, is not invalid.^ 1. People ex rel. Weatherwax v. Watt, 115 Misc. 130, , 188 N. Y. Supp. 559, holding that where it is made to appear that in the city of Albany, for at least six weeks, more than 500 mo- tor vehicle lines of the character de- scribed in section 36 of the Transpor- tation Corporations Law, which in the interest of the .public welfare prohibits bus lines or any vehicles carrying pas- sengers at a rate of fare of fifteen cents or less for each ipassenger with- in the limits of the city, have been and are now being unmolestingly operated upon the . pilblie streets of the city with- out the consent of the local authorities and without a certificate of public necessity and couvenienice from the public service commission, as required by said section of the Transportation Corporations Law, and it further ap- pears the mayor of the city, one of wliose duties under section &i at the Second Class Cities Law is to see that the laws o| the state are executed, has openly and publicly announced his posi- tive refusal, to pe]?form such; duty, a writ of mandamus, upon the applica- tion of a citizen of the state who is also a resident of the city, will be granted requiring the said mayor to dii-ect the commissioner of public safety, who is neither a proper nor necessary party to the present proceed ing, to enforce by action of the police department of the city, the provisions of section 36 of the Transportation Corporations Law. In such case, neither a direction of the public ser- vice commission to its counsel to pro- ceed under section 48 or section 57 of the Public Service Commission Law. which means that each individual operating a jitney unlawfully must he proceeded against separately, or to conduct a summary proceeding in the Supreme Court to , have the unlawful act enjoined, can, in the extraordinary situation presented here, be deeijied an adequate remedy. 2. Trans. Corp. L., § 100. 3. Whitaker v. Kilby, 55 Misc. 337, 106 N". Y. Supp. 511, affd. 123 App. r>iv. 895, 106 N.. Y. Supp. .1149. 862' COKPOEATIONS. And although a municipal corporation which possesses only power to ' ' regulate ' ' the erection of telephone poles and wires cannot exact compensation as a consideration for a franchise, yet a corporation empowered to ' ' prevent ' ' the erection or operation of such system has authority to bind such company to pay a percentage of its grbss earnings to the city as a condition to the granting of a franchise, and such condition, having been accepted, is binding upon the com- pany.* "The provisions of this article shall apply to corporations ' for the generation and distribution of nlu'sie electrically; and siieh corpcirations shall possess the ■ powers and be subject to all the duties granted to or imposed upon telegraph and telephone companies thereby except that such corporations shall not have or exercise the right of condemnatioB. ' ' 5 801. Construction of lines. "Such corporation may erect, construct and maintain the necessary fixtures for its lines upon, over or under any of the public roads, streets and highways; and through, across or under any of the waters within the limits of this state, and upon, through or over any other land, subject to the right of the owners thereof to full compensation for the same. If any such corporation can not agree with such owner or owners upon the compensation to be paid therefor, such compensa- tion shall be ascert^iined ip the manner provided in the condemnation law. Aiiy company or oonipEpies organized and incorporated under the laws of this state for the purpose of owning, constructing, using and maintaining a line or lines of electric telegraph within this state or partly within and partly beyond the limits of this state, are hereby authorized, from time to time, to construct and lay lines of electrical conductors under ground in any city, village or town vrithin the limits of this state,, subject to ; all the provisions of law iii reference to such companies not inconsistent with this section; provided that sudK company shall, before laying any such line in any city, village or town of this staite, first obtain from the common council of cities, the trustees Of villages, or the commissioners of highways of towns, permission to use the streets within such city, village or town for the purposes herein set forth. Nothing herein contained shall be so construed as in any way to limit, alter, or affect the provisions or powers relating or granted to telegraph companies heretofore created by special act of the legisla- ture of this state, except in so far as to confer on any such company the right to lay electrical conductors umJer ground. "6 4. The Transportation Corporations N. Y. Supp. 297. Law does not either expressly or by 5 Trans. Corp. L., § 106. implication repeal the provision in the 6. Ti-ans. Corp. it;., § 102. charter of the city of Jamestown Maintenance of telegraph or other (Laws of 1886, eh. 84, tit. 3,. § 9, subd. electric wires raises no presumption 46) by which the common council is of grant. — See Real Property Law, empowered "to prevent" the setting out § 26], or stringing of telephone poles and Poles and wires on Indian reserva- wirfes. City of .Jamestown v. Home tions. — ^See Indian Law, § 90. 'J'elephone Co.. las App. Div. 1, 109 Right to erect additional telegrapU TKANSPOBTATIOK CORPORATIONS. 8.G3. This section; confers upon tiie corporation a franphise direct from, the state to use the public streets and. highways of the state for the erection and maintenance of its lines, and to take proceedings to condemn the right to place its poles and lines in a village street, the fee of which is in the abutting owners. But the right of a telephone company to use the public streets and highways for its purposes is subject to the reasonable control, siipervisibn and regulation by the authorities of the municipality in which such streets and highways are located, by virtue of and as a part of the general police power.' lines in city of New York, when con- sent of municipal authorities essential, right acquired by merger. See Matter of New York Independent Telephoiie Co., 133 App. DiT. 635, 11» N. Y. Supp. 290, affd. aOO N. Y. 527, 93 N. E. Iia6. Telephone wires attached to roof, trespass, proof of ownership. See Bunke v. New York Telephone Col, 110 App. Div. 241, 97 N. Y. Supp. 66, affd. 188 N. Y. 609„. 81 N. E. 1161. Erection of poles. — A telephone eampany, entitled by section 102 of the Transportation 'Corporations law to construct lines "over or under any of the public roads, streets and high- ways," is entitled to erect its poles on highways acquired by the city of New York in conneotion with water supply. State Line . Telephone Co. v. Ellison, 121 App! Div. 499, 106 N. Y. Supp. 130. The provisions of this section do not authorize a telephone company to erect ipoles in a city street without its consent and' in violation of an, ordin- ance- duly adopted to prevent the ob- struction of streets. City of Utica v. Utica Telephone Co., 24 App. Div. 361, 48 N. Y. 916. Telegraph companies cannot erect poles along the line of a railroad not authorized by L. 1853, ch. 471, § 2. New York and Northern R. R. Co. v. Central Union Telegraph CIo., 21 Hun 261. ; Liability of telephone and telegraph company for removal of wires of elec- tric power :Company. — See Electric Power Co. v. Metropolitan Telephone and Telegraph Co., 75 Hun 68,' 27" N. Y. Supp. 93, affd. 14'8 N. Y. 746, 43 N. E. 986. 7. New Union Telephone Co. v. Marsh, 96 App. Div. 123, 89 N. Y. Supp. 79. Semble, that the power to grant a franphise for the installation . of a telephone system in the city of Rochester is vested in the legislature, and that the power of the commoii council of that city in the premises is limited to the regulation, under its police power, of the manner in which the franchise may be exercised. Bar- hite V. Home ,Telephoj>e Co., 50 App. Div. 35, ,63 N. Y. Supp. 659. Placing, of wires under ground.^ The right conferred, upon a telephone company by the legislature to main- tain its Tfidres and appliances in the • public streets and highways of a city, is subject to the reasonable control, su- pervision and regulation of the city au- thorities, under,, and as a part of, the general police power. The city may re- quire the telephone company to place the wires so maintained by it, unless it would be impossible or impractiqable f9r the telephone company to obey the dequiiement, in a conduit, beneath the street. City of Rochester v. Bell Tele- phone Co., 53 App. Div! 6, 64 N. Y. Supp. 80i4. ,, , , The placing, pursuant to a resolu- tion of the common council of a city. 864 OaBPOBATIOKS. Authority to erect telegraph and telephone poles is not con- ferred by the Village Law; village authorities are permitted to regulate their erection only ; that is to say, the location of the poles and the streets to be occupied.^ Whatever the right of the telephone company under the statutes t© construct and maintain lines over and under public streets and highways, such company has no statutory right to construct conduits and subways through squares, parks and other public places not within the streets of the city without consent of the municipal authorities.^ The right forever to maintain a telephone line along a country highwaly is not established as against an abut- ting owner by proof of the company's peaceable superficial possession of its route for more than twenty years, as in such case no lapse of time raises a presumption of grant or pre- scription of any perpetual right.^" While a telephone com- pany incorporated under section 102 of the Transportation Corporations Law has the right under a straight franchise to maintain its wires across a public highway, it has not the ex- clusive right thereto and cannot obstruct the reasonable use of it for moving a building by one who, as required by sec- tion 53-a of the Highway Law, has obtained a permit to move the building along the highway." beneaAh the surface of a street, the fee 9. Rodhester Telephone Co. v. Ross, of which is in the abutting owners, of las App. Div. 7«, 109 N. Y. Supp. 381, a conduit for telephone wires owned by afifd. 195 N. Y. 4S9 88 N. E. 793. «. private corporatidtt, which have pre- s^^^^^^^ ^^^ ^f \^^ Transportation viouslv been mainitained on poles „ ^„„t:. _ t • ti • ^ Corporations Law jrives no nehts m erected in the street, does not consti- ,, , ,. , tute an additional burden upon the ^^^ •^''^^'' ^^^^' ™' "'^'^ P^^^^'^ P'-"?" street which will entitle the abutting ''^^' o^P^Wi*? places of the city, out- owners to a,dditiona.l oomp«nsation. ^"^« °^ *'ie highways; neithei' does it Castle V. Bell Telephbne OO., 49 App. deprive the city of its police power un- Div. 437, 63 N. Y. Supp. 483* der which it may determine whether, the Franchise granted upon condition lines are to run upon poles or in sub- that company upon notice would place ways. Wright v. Glen Telephone Co., its wires tulderground. American 48 Misc. 192, 9i5 N. Y. Supp. 101, aflfd. Rapid Tel. Co. v. Hess, 125 N. Y. 641, 313 App. Div. 745, 99 N. Y. Supp. 85. 36 N. E. 919. 10. Andrews v. Delhi & Stamford 8. Village of Carthage v. Central Telephone Co., 36 Mis5 Misc. 675, 11. New York Telephone Co. v. Ditt- os N. Y. Supp. 350. man, 96 Misc. 60, 159 N. Y. Supp. 635. TKANSPOEXATION OORPOKATIONS. 865 802. Extension of lines. "Any such corporation may construct, own, use and maintain any line 'of electric telegraph or telephone, not described in its original cettiiicate of in- corporation, whether' wholly 'within or wholly or partly beyond the limits of this state, and may join with any other corporation in constructing, leasing, owning, using and maintaining such line, or hold or own any interest therein, or become lessees thereof,, upon filing in, the same manner as the oj-iginal certificate is re- quired to be filed an amended certificate, executed and acknowledged by at least two-thirds of the directors of such corporation, describing the general route of such line or lines, and designating the extreine points connected thereby, alid upon procuring the written consent of the persons oWning at least two-thirds of the capital stock' of such corporation, arid such amended certificate shall not be filed until there is indorsed thereon or annexed ,thereto an affidavit made by at least three of the directors of the corporation that such cbrisent has been obtained, which Affidavit shall be filed with and be^ a part of such certificate. ' ' 12 803. Condemnation of property. Whetlier the use of the streets by la corporation is a public use, for which private' property is authorized to be taken, -will depend upon the object aimed at and' whether the plan has such an obvious or recognized character of public utility as to justify the exercise of the right of eminent domain. It must be for the benefit and advantage of all the public and which all have a right to freely enter upon, under terms common to all. Public use necessarily implies the right of use by the public.^^ No cbrporiation, foreign or domestic, may condemn property or may occupy the public highways, unless the right is conferred upon it by the legislature, and h statute claimed to graht the ti^ht riittst'be striatic*- construed.^* 'A petition in 12. Trans., Corp. L., § 101. der the Niew York practice, ,41 purpose 13. Holmes Electric Protective Oct. v. , fpr which ^he power of eminent domain Williams, 338 N. Y. 407, 137 N. E. 'may fitly be conferred. Such corpo'ra- 315, holding that a company inoorpor- .tionis now recognized as a publip aer- ated in 1883 under "The Telegraph rice ayment of all to a purchaser of the land. • Barter v. charges to the time of its restoration, Hudson River Telephone Co., 105 App. was indorsed "supersede? prior con- Div. 154, 93 N. Y, Supp. 993. tract," service to the patron may not 3. Oullen v. New York Telephone be discontinued because of a failure to Co., loe App. Div. 350, 94 N. Y. Supp. pay a balance due upon another oon- 290. tract which had terminated before the Contract in restraint of trade, making of the later Contract. Taylor agreement to use particular telophome v. New Y6rk Telephoiie Co., 97 Misc. line in consideration of installation of 160, 160 N. Y. Supp. 865. TRANSPOETATION COEPORATIONS. 869 807. Telephone rates ; disoriiuiiiatioii. . A grant to a telephone company, in a contract with city authorities, giving the compainy greater rights in the cori- strnetion, maintenance and operkti'bn of its lines within thiR city than it had acquired hy its incorporation under the Trans- portation Corporations Law is a sufficient consideration to uphold a covenant on the part of the company not to charge its, subscribers within the limits of the city, as then de^i^ed^ more than a certain amount per instrument per, year, and such covenant is binding upon the successor, of the company.* A public service corporation is not at liberty to grant extraor- dinary facilities to one man, and arbitrarily refuse them to another. What it grants to one, it must, in like conditions, when detriment would follow preference, grant impartially to all, within the limits of capacity, and a telegraph company cannot justify discrimination among customers by dividing contracts into new and old, and applying a different rate to each. The obligation of the law qualifies, and, in case of con- flict, overrides, tbe obligation of . the contract.^ The Inter- state Comme;rpeAct,^ imposes upon an interstate telegrapli line, tbe dtity of fairness and equality in the treatment of its customers. It must serve them at reasonable rates a3?,d with- out unjust discrimination.'' A telephone- company, with an ex- 4. Rochester Telephone Oo. t. Ross, erect pol^: and wires on such. lan^. 195 N. Y. 439i 88 N; E. 793. , But see Presidentj «tc. of Village of Walton v. Wright V. Glen Telephone' Co., 113^ App. Waltom People's Telephone Co. (Opin- Div. 745; 99 jY. Y. Supp. 85, holding ioa. of Publics Seryice .Comm., 2d Digt., that the power of a municipality oyer 1917), 13^ State Dept. Rep,_ 264. telephone companiea 'is. solely a police 5. Postal Tolegraph-Cable Co.. v. As- power and caraiot bo userl for. the pur- soSiated Press, 228 .3Sr.: Y. ,370, 127 iN. ■pose of ex^aetiiig benefits, for itself or E. 356, holding that: where the plain- citizens. A telephone company deri'VeS tiff and defendailt entered into eon- its pfower to construct lines from the tracts for the use of private wires by state and not from the municipality. the latter at a fixed rate,, and there- Henee, any agreemtent as to rates of after, and during the time of the con- service contained in the municipal tracts, the plaintiff reduced its rates franchise is without consideration and for lilce service, in an action to recover is not enf oreible. Nor is the corpora- compensation at the rates fixed by the tion estopped because it has complied contracts, the recovery ' should be •with terms of such franchise with which limited to the then prevailing rates, it was not legally required to comply. 6. Interstate ^Commerce Act, §, 1, Owners of land, whether individuals subd. 3, and §§ 2 and 3. or municipalities, .may! not exercise 7. Postal Telegraph-Cable vOo. v. As- pwwer to regulate telephone rates by a sociated Press, 2i28 N. Y. 370, 187 N. condition inserted in the permission to B. 2S6; 870 COBPOBATIONS. elusive right to use the streets of a city in order to cany on its business, may make a discount froin its usual charges for telephone service, in favor of the city itself, regularly incor- porated charitable institutions and regularly ordained clergy- men, without entitling all its other patrons to a like discount, for service of the same kind;^ 808. Transmission of dispatches. "Every such corporation shall receive dispatches from and for other telegraph or telephone lines or corporations, and from and for any individual! and on payment of the usual charges by individuals for transmitting dispatches as established , by the rules and regulations of such corporation, transmit the same with impartiality, and good faith and in the, order, in which they are received, and if it neglects or refuses so to do, it shall pay one hundred dollars for every such refusal or neglect to the person or persons sending or d9siring to send any such dispatch and entitled to have the same so traiismitted, but arrangements may l)e made Tvith the proprietors or publishers of newspapers for the transmission for publication of intelligence of general and public interest out of its regular order. "9 This section is penal and must be strictly construed. The penalty is only incurred by acts of partiality, bad faith or discrimination.^" The object of this section, making a corpo-. 8. Discrimination in rates by tele- to render service at reasonable rates. phone company. — Public service cor- See Sterne v. Metropolitan Telephone porationa, common carriers and others and Telegraph Oo., 19 App. Div. 316, engaged in serving the public cannot 46 N. Y. Supp. 110. make unreasonable and unjust dis- 9. Trans. Corp. L., § 103. criminations between their patrons. Free use of telegraphs and telephones The rule requires reasonable and im- by policemen and firemen. — See Gen partial charges to all, but the exoep- eral Municipal Law, §§ 206, 207. tion permits a reduction when special 10. Kevand v. New York Telephone facts make it reasonable and just. The Oo., 159 App. Div. 628, 145 N. Y. Supp. rate charged must not only be reason- 414, affd. 223 Ni. Y. 595, 118 N. E. able but uniform, so that all are treated 1064; Wichelman v. Western Union alike under like circumstances. There Telegraph Co., 30 Misc. 450, 6S N. Y. can be no favoritism or arbj^rary re- Supp. 491 ; Meyers v. Western Union duction in favor of a particular cus- Tel^raph C5o., 82. Misc. 266, 143 N. Y. tomer and no undue advantage to one Supp. 574. person through undue disadvantage to "The statute imposes the penalty another, but discriminations founded not for an error of judgment of one on reason and justice may be made. of defendant's operators, a defect- New York Telephone Oo. v. Siegel- ive instrument, or a misunderstand- Oooper Oo., 202 N". Y. 502, '96 N. E. ing a.s to whether a required charge for 109- a message has been paid, but solely for Examination before trial of officers the refusal to transmit dispatches with of telephone company and inspection impartiality, good faith and in order of its books, in an action to require it of their reception, after payment of the TBANSPOETATION COEPOKATIONS. 871 ration liable for a penalty foi- refusal or neglect to seiid mes- sages, is punishment, not damages, and it should hot be ex- tended by implication to cover an act not within its obvious meaning.^^ The word " impartiality," as used in the statute, requires impartiality of credit as well as impartiality in ser- vice. It requires that a public service corporation which makes a piractice of extending credit to one customer shall not arbitrarily and 'with preferential purpose refuse to extend like credit to other customers of like standing, and, w'here the financial standing of a proposed custonier is unquestioned, the usual charges as established by rules and regulations of such corporation;" Gifford V. Glen Telephone Co., 54 Misc. 468, 106 N. Y. Supp. 53^, Where a telegraph company's opera- tors are on a strike to the knowledge of a person offering a telegram for transmission, a refusal by the agent of the company to take the message ex- cept subject to delay and a refusa,! to promise to deliver it Tvithin an hour, does not subject the company to the statutory ' penalty. Petze v. Western Union Tel^raph Co., 138 .App. Div. 19i2, 113 N. Y. Supp. 516. Where plaintiff, from a pay station of the defendant telephone company, called up its central office and com- municated to the operator in charge the name of the party w>ith whom he desired to talk and then hung up the receiver and deposited .the proper toll charge, and the apei'ator, not being able to hear the coins registerj refused to connect plaintiff with the other party until he had paid the toll charge with the receiver off the hook, which was according to the established rule of the telephone company and the only way iby which the operator could know that the toll had been paid, the teli^- phone company is not liable for the penally imposed by section 103 of tlie Transportation Corporations Law (L. 1890, ch. &66 ) , since the penalty there- by imposed is limited to acts of partial- ity or bad faith or to a preference. Gifford V. Glen Telephone Co!, ,54 Misc. 4«8, 106 N. Y. Supp. 53. The provisions of section 103 do not authorize the court, upon the mere refusal of a telephone corporation operating a line in a village and exten- sively outside thereof, to place a tele- phone in the office of a village tele- phone company and estabjish connec tions therewith, to compel such action by a writ of peremptory mandamus; and the remedy of the party aggrieved is either by an action for the penalty or by one for damages. Such a refusal is not an absolute refusal to transmit the message. The contention that the refusal of the corporation constitutes a suspension of the exercise of its franchise is not tenable, as the refusal is only one to employ the franchise for the ibenefit of a particular person, and hence affords no ground of action. Matter of Baldwinsville Telephone Co., 24 Miiso. 231, 53 N. Y. Supp. 574. 11. Hence, where a controversy has arisen over a claim made by a tele- phone company against a subscriber for past seri-ices, and upon bis refusal to pay the company has, removed the instrument, the subscriber cannot main- lain an action undeiir said section to recover the penalty. Saltzburg v, Utica Home Telephone Co., 159 App. niv. 51, 144 N. Y. Supp. 309. The addressee of a dispatch cannot recover the peilialty imposed by sec- tion 103. Thompson v. Western Union Telegraph Co., 40 5Iise. '443, 82 N. V. Rtip[). r,75. ■ • 872 CORPORATIONS. refusal of credit, customarily extended to others, is arbitrary discrimination, and the outcome a yiolation of the statutory niandate of equality. J^nd a telegraph company presenting itself as a custonaer to another telegraph company is as niuch a part of thelgeneral public and entitled to the same privileges and rights under the rule as any, other ciistolher. Accordingly the public 'service commission may properly require a tele- graph company to receive dispatches from a competing com; pany and transmit, the same upon the sarne terms and sub- stantially the same way as it does from any other customer.^^ The exchisive remedy for the refusal of a telephone or tele- graph company to transmit or receive messages for any cor- poration or individual, as required by section 103 of the Transportaition Corporations Law, is by an aiction at laW to recover the, penalty imposed, by that section, ^nd a writ pf mandamus will not lie to compel the perforniiance of that duty. It seems that such section was not intended to change the common- law rule and to enable one telephone company to compel a rival telephone'company to install one of the latter 's telephones in the office of the former company .^^ T.lie penalty prescribed for refusing to transmit niessages received from and for other telephone companies and from and for indi- viduals who have paid the usual charges has no reference to the unjustified act of a telephone company in suspending tele phohfe service! to a subscriber upon the ground that he haid failed to pay the monthly telephone'charges, although he had proved that aU. .moneys due had, in fact been paid. The re^ lation of a subscriber to the telephone company is contractual and his remedy for the acts aforesaid is an action for breach of contract." The refusal of a telephone company to furnish service at reasonable rates is in the nature of a tort, and does not create a contract liability, hence, in an action to compel such a company to, furnish service: at reasonable rates, the grantee of the property of the defendant caraiot, after its dis- solution, be substituted as a defendant.^^ 809. Limiting liability. A tele.ffraph Company is not under the obligations of a coni- 12. People ox,,.rel. . Western Union Y, Siipp. 221. Telegraph Co. V. Public ,, Service Ctom- 14. Rose y, New York Telephone Co., mission, 230 N. Y. 95, 129 N. E. 220. 167 Aipip, Div, '591, 152 N. Y. Siipp. 827. 13f Pejople ex rel. Oneida Tolephone 15. Steirne v. jM'etropolitan T,6lrahone Co. V. Central Ne\y York Telephone and and Telegraph Co., 33 App. Div. 16^, Telegraiph Co., 41 App. Kt. 17, 58 N, 53 N. Y. Supp. 467. TRANSPORTATION eJOEPOKATIONS. 873 men carrier ; it does not insure tlie absolute and' abcuraie til'ansmission ■ of messages delivered Jbit,^'' and it has a riglit to make reasonable 'regulations for tlie transaction of its. busi- ness and to, protect: itself against liability wMcb; it ; might otherwise incur ,dne to the carelessness of its agents and misr takes and defa,ult§ incident tpthe tmn^^ction of its business.^'' So a telegraph company may, by cpntract, limit its liability foir mistakes, or delays in, the transmission and delivery, 6r non-delivery, of messages, caused by negligence of its servants, if the negligence is not gross, to the ahiount received for send- ing tbe despatch.^^ And the requirement contained on ihe blank oh which th^ m&s^age is jirritten that the sender cf a message shall order it repeated, and that in case he fails to do so the company will not be liable for mistakes, delays or 16.' Kiley v. Western' Uriioii Tele- graph Co., 109 N. Y. 231, 16 N. E. 75. 17. Breese et al. v. U. S. Telegraph Ooi., 48 N. Y. 133; New York Fruit Market v. Western Union Telegraiph Oo. 190 App. Div. ,60, 179 k. Y. Supp. 4S3. A stipulation in its blank against its own negligence does not relieve against gi-oss negligence. IMxon v. Westein Union Telegraph Co., 3 App. Div.'eo, 38 k'Y. Supp. 1056. " ' '' ' When a stipillation that a tele- graph messenger i.s the agent of the sen,der will not be enforced. Will v. Posital Telegraph Cable Co., 3 App. Div. 22,. 37 N. Y. Supp, 933. Implied obligations. — When a tele- graph conipariy receives without con- ditions, a 'messagei for ftransmdssion. among the other obligations iflipli'ed is the duty on its part to exeixSise due diligence to accurately' transmit and promptly delivei- the message; it does not insure accurate transmission and prompt delivery, but undeH^es to exercise due diligence in these fespects. In' an action against a telegraph com- pany for damages for failing to ac- curately or promptly delive'r a 'til€s- sage, the plaintiff makes out^ a pi'i'ma. facie case of negligence by proving the delivery to it of the message, and that it was inaccurately or not promptly de- livered. P^arsall v. W. U. T. Co., 134 X. Y. 356, 26 N. E, 534. ■ Delay in , transmittin|:^ messages.^ There can be no recovery against the company for' its mere' delay in' trans- niittiiig a inesSagfe to another state, and the fact that the sender paid extra to have it ' repeated to the sending office is not material. Searn y. Western Union Telegraph Co.', 36 Misc. 557, 73 N". Y. Supp. 1077. 18. Riley v. Western Union Tele- graph' Co., 8 Misc. 217, 38 N. Y. Su^p. 281; Postal Telegraph Co. v. Robert- s^ii; 3'6 Misc. 785, 74 N. Y. S^pp. 876; Freschen v. Western Uniion Telegraph Co., 115 Misc. 389, 189 K Y. Supp. 649. ' ■ " ' ■ ■ 19. Hhlsted v. Postal Telegraph ( able Co., 193 N. Y. 393, 85 N. E. 1078. Where the blanks furnished by the company, upon one Of which the Ines- sage was written, had been for some time in the possession of the sender, wllieh blanks coritaiiied an agreement Bijtweeii the signer and', the comp'iny tliat the obmipaiiy 'would not be re- sponsible for any erroj' in the tfari's- inission' of the message, Unless 'it was repeated. It was 'held that it' iilust 'be pi-csUmed that th^ sender undefStbiKl ihe contents of the blank and aceeftted 874 ; COEPGRATIQNS. ; , non-delivery is- a reasonable, one.^° A telegraph company is responsible for its neglect to perform its duties to one to whom a telegram is addressed as well as to the sender, and a stipulated limitation of liability binds both.^" When a mes- sage is written upon A blank of the company containing a stipulation limiting its liability, that contract is binding upon the, receiver and he caimot recover by reason of a mis- take in transmission where there is no evidenc,^ of negligence on the part of the company other than the fa6t that changes were made therein between its delivery to the company and its receipt.^ Notwithstanding the right of a telegraph com- pany to adopt such regulations and the contract, made be- tween the sender of a message and the company, public policy forbids that such regulations and contract shall relieve a tele- graph company from liability caused by gross negligence of its agents and employees.^ 810. Consolidation of corporations. ' ' Any corporation organized under this article may lease, sell or convey its property, rights, privileges and franchises, or any interest therein, or any part thereof to any telegraph or telephone corporation organized under or created by the laws of this or any other state, and may acquire by purchase or con- veyance the property rightg, privileges and franchises, or any interest therein or part thereof of any such .corporation, and may make payments therefor in its own stock, money or property, or receive payment therefor in the stock, money or property o:^ the corporation to which the same may be sold, leased or conveyed, but no such, lease, sale, purchase or conveyance shall be valid until it shall haye been ratified and approved by a three-fifths vote of its board of directors or trustees, and by the vote or written consent of stockholders owning at least the ■ terms, and he is estopped from v. .Western Union Telegraph Co., 115 denying or disputing the agreement. Misc. 389, 189 N. Y. Supp. 649. Breese et al. v. U. 8. Telegraph Co., 48 Gross negligence. — Where a tele- N. Y. 132. graph company pever sent a ca,ble mes- 20, Freschen v. Western «Jnjoji Tele- sage delivered, to it for transmission, graph, ,0o., 115 .Misc., 3,?9, ,189 N. Y. and the failure to deliver is not shown .Supp. ,649. , , , , . to have been , due to mistake in tran- 1. Halsted V. Postal Telegraph Cable scribing or difficulty in transmitting, Co., 193 ^. Y. 393, 85 N. E. 1078; New the company, is, guilty of gross negli- York Fruit Market v. Western Union genoe and is not relieved by limited Telegraph Co., 190 App. Div. 60, 179 liability stipulations nor does a stipu- le. Y. Supp. 483. lation relating to the time for presen- 2. Halsted v. ,PD8tal Tejegrapli Cable tatioii of notice , of claim, exempt it Co., 193 N. Y. 293, 85 N. E. 1078; from liability! ■ Freschen v. Western Weld V. Postal Telegraph Cable Co., Unioji Telegtuph Co., 115 Misc. 2i89, 310 N. Y. 59, 103 N. E. 957; Freschen 189 N. Y. Supp. 64&. TBANSPOBTATION. CpRP0RA.TI0NS. ,875 three-fifths of the papital stock given at a meeting of all t.^ie stockholrlpi^s duly .called for that purpose. " 3 Where tlie property of a telephone company has been .-old in compliance with section 104 of the Transportation Corpo- rations Law, a stockholder who did not consent to such sale is not entitled to have appraisers appointed for the purpose of ascertaining the value of her stock under section 17 of the Stock Corporation Law. Under section 321 of the General Corporation Law, sections 16 and 17 of the Stock Corporation Law, being in conflict with section 104 of the Transportation Corporations Law, the latter must prevail.* 811. Special policemen. The police department or board of poUee of any city may, in addition, to the police force now authorized by law, appoint a number of persons, not exceeding two hundred, who may be designated by any corporation operating a system of signaling by telegraph to a central ofS.ce for ■ police assistance, to act as special patrolmen in connection with such telegraphic system. And the persons so appointed shall, in and about such service, have all the powers possessed by the members of the regular force, except as they may be limited by and subject to the supervision and control of the police department or board of police of such city. No person shall be appdinted such special policeman who does not possess the qualifications required by such police department or board of police for such special service ; and persons so appoined shall be subject, in case of emergency, to do duty as part of the regular police force of the city. The police department or board of police shall have power to revoke any such appointment at any time, and every person appointed shall wear a badge and uniform, to be furnished by such corporation and approved by the police department or board of police ; such uniform shall be designated at the time of the first appointment and shall be the permanent uniform to be worn by such special police, and the pay of such special patrolmen and all expenses connected with their service shall be wholly paid by such corporation, and no expense or liability shall at any time be in- curred or paid by the police department or board of police of any city, for or by reason of the services of such persons so appointed. ' ' 6 Tramway Corporations. 812. Incorporation. "Thirteen or more persons may become a corporation for constructing, main- taining and operating an elevated tramway, constructed of poles, piers, wires, rods, ropes, bars or chains, for the transportation of freight in suspended bucket^, ears or other receptacles, for hire, by making, signing, ackhowleidgin'g and filing a certificate stating the name of the corporation, the nuiaber of years it is to con- tinue, the places from and to which such tramway is to be' coufltnictid, main- 3. Trans., Corp. L., § IH- Y. 661, 117 N. E. 1063. 4. Matter of Brongon, 177 App. Div. 5. Trans. Corp. L., § 105. 374, 164 N. Y. Supp. 179, aiffd. 321 N. 876 COBPOBATIONS. tained and operated, its length as near as may lie, the name of each county through or in which it is made or intended to be made, the amount of itft capital stock and the number of shares into which ^it is to be divided, the number of the directors thereof , not .less than three, the names and places of reisidenee of the directors for the first 'year, the place of residence of edfch subscriber thereto and 'the number Of shares he agrees to' take in such corporation. '' 6 : ■■ 813. Powers. :, "Every such corporation, in'addition to the powers confe^'red by the general and stock corporation , lays, shall have power : ,,,,,. 1. To cause such examination and surveys for its proposed tramway to bo made as may be necessary to the selection of' the most advantageous route, and for such purpose by its oflcers and servants, to enter upbi the lands or waters of any person, but subject to responsibility for all damages, done thereto. , 2. To lay out its tramway and to construct the same as hereby provided. 3. To erect and maintain all necessary and convenient buildings, ■ stations, fixtures and machinery for the accommodation and transaction' of its business. "T 814. Right to acquire land by condemnation. "In ease any such corporation is unable to agree for the purchase, use or lease of any real property required for the purjioses of its incorporation, it shall have the right to acquire title tO the same by condemnation. " 8 In proceedings to condemn land under the right of eminent domain for the purposes of the road-way of an elevated traiM- way company, incorporated under chapter 462 of the Laws of 1888, it was incumbent on the petitioner to show, first, a legis- lative warrant for such proceedings on its part; and, second, if the right was challenged, that the business which it was organized to carry on was public, and that the taking of pri- vate property for the purposes of the corporation was a tak- ing for public use.' 815. Crossings. "Whenever any tramway, constructed by any such corporation, shall fti'oss a railroad, highway, turnpike, plank-road or canal, such tramway shall be so constructed as not to interfere with the free use of such railroad, highway, turn- pike, plank- road or cajial for the purposes for which it was intended. " 10 '■ ' '- Turnpike, Plank Road and Bridge Corporations. 816. Incorporation. "Five or more persons may become a co:i;poration for the purpose of con- structing, maintaiii'ing, and owning a turnpike, plank-road or a bridge, or cause- 6. Trans. Corp. L., § 30. 58 Hun 351, 13 N. Y. Supp. 116, affd. 7. Trans. Corp. L., § 31. 128 N. Y. 408, 28 N. E. 506. 8. Trans. Corp. L., § 33. 10. Trans.'Oorp. T.., § 33, ' ' 9. Matter of Split Rock Cable Co., TEANSPORTATION COKPOKATIONS. 877 way across a^^y stream or channel of \vater, or adjoining bay, swamp, naarsli, or water to form in connection with sucli bridge or causeway a continuous roadway across the same, by signing, acknowledging and filing a certificate containing the name of the corporation, its duration, not exceeding; fifty years, the amount and number of shares of its capital stock, the numbei: of its directors, and their names and post-of&ce' addresses for the first year, the termini of the proposed road, its length, and each tdwli, city or village into or through which it is to pass, or if a bridge, the location and plan thereof, and the post-office address of each subscriber aind the number of shares of stock which he agrees to take, thfe aggregate of which subscriptions shall not be less than five hundred dollars for every mile of road, or if a bridge corporation not less than one-f bUrth' of tlie amount of the capital stock, and five pei? ceutilln of which must be actually jjaii in cash. Th«ji'e shall be 'indorsed on and annexed to the certificate and made a part thereof the affidavit of at least thi'ee of the directors named therein; that the required amount of capital stock has been subscribed and the prescribed per- centage paid in cash. " li 817. Location of office of corporation. ' ' Within two weeks after the formation of any such corporation its directors shall designate some place within a county in which its road or bridge or some part thereof shallbe constructed, as its ofice, and shall give public notice thereof by publishing the same once in each week for three successivie weeks in a public news- paper in the county, and shall file a copy of the notice in the office of the county clerk of every county in which any part of the road or bridge is, or is to be constructed, and if the location of such office shall be changed, like notice of the change shall be published and filed, in which shall be specified the time of making the change, before it shall take effect. Every notice, summons or other paper required by law to be served on the corporation may be served by leaving the same at such office with any person having charge thereof, at any time between nine o'clock in the forenoon and five o'clock in the afternoon of any day except Sunday or a legal holiday. "12 818. Proof of incorporation. "In any action brought by or aigainst any domestic turnpike or plank-rdad corporation, which shall have been in actual operatibfl, and ill possessioh'of a road upon which it has taken toll for five consecutive years, next preceding the commencement of . the action, parol proof of such corporate existence and use shall be sufficient to establish the incorporation of the corporation, for all the purposes of the action, unless the opposing party shall set up a claim in his eomplaiiit or answer duly verified of title in himself to the road, or some.pai't 11. Trans. Corp. L., § 120. Co. v. Vaughan, 14 N. Y. 546. Authority of bridge companies to Chapter 566 of the Laws of 1890 only lay tracks and operate railway.-^See applira to turnpikes organized under L. ];§93, <;li. 225. , ;, , .; , ,, , , .the (General Turnpike Act. Aurora & County bridges.— See County Law, Buffalo Plank Road Co. v. Schrot, 90 §§ 60-80. , Hun 56, 35 I^. Y. Supp. 602. Incorporation. — Eastern Plank Road 12. Trans. Corp. L., § 137. . 878 COBPbBATIONS. thereof stating the nature of his title, and right to the immediate possession and use thereof i " 13 . '' 819. Extension of corporate existence, ','1^0 turnpike, plank-r,oad or bjridge corporation shall extepd its corporate ex- istence, pursuant to the provisions of the, general corpora,tiou law, . without the written cons3nt of the persons owning, at ;least; two-tjiirds of its,; capital,, stock, nor without the consent of the board. of supervisors, of each county j^n -Hthieh, any part- of its road, or bridge is, situated, which consent shall be giv,en by a i;eso- lution of th,e, board adopted at, any regular or spepjal meeting, and a copy of such resolution, certified by,tlie, clerk, of the ,boaTd, or , verified, by the affi^S'Vit of, some, member thereof, together with such consent qf the stockholders, a,nd, a statement yej-ifled by the affidayit of the president and, treasurer of the fjorpora- tion, showiiig , the. act.ual capital expended upon the, construction p,f the road, ex;, elusive of repairs, the name of each town or ward through or into .w,hic}i the road passes, and, if any part of the road shall have been abandoned, the actual cost of the remaining part, exclusive of repairs, shall be filed with the certifi- cate of the continuance of the the corp'ot^te 'Sxisteiiee. No further abandonment' of . any road belonging ,to a corporation whose corporate existence Jiaabeen so extended shall :be made, except with- the, consent of ,a majority of the boardi of supervisors of the county in which the abandoned portion of the road may ;lie, which consent, shall be filed in the office of the clerk of the county."14 ; ■,, , 820. Consolidation of corporations ;' sale of ffaiicMse. • ' "Any two or more of spchj corporations may consolidate, lnt,o one corpo^ration on such terras as the persons owning two-thirds', of the, stock. of each corpor'atioii m'ay' agree upon, and may cliange the, name" of the road on, filing in the office' where the original certificates of incorporation were filei.,a certificate containing itne' names of the roads so , consolidated, arid, the napie ,by which such road shall there- after be known. Any plank-road or turnpike corporation may, with the consent of the owners of sixty percentum of its stock, sell and convey the whole or any part of its rights, property and franchises to any other domestic plank-road or turn- pike corporation, and such sale and conveyance shall, vest. the rights, property, and ,fi;ai}(jhise9 thereby transfe^cred in the corporation to.; wji,ieh they are conveyed :^or. the .term 9,f its corporatp fi3fistewe.,"iB , 821. Sale of rights franchises and property to the connty. "Any turipike, ' plahk-roaa or bridge cbrporation indjr by the affirmative vote of stockholders owning a inajority of tlie stock thereof,' expiessed in writing, or at 'a sp'eciSir "meeting oi^ the stookliolders oif such 'corporation hel'dujibh written notice of at least ten days to all the stockholders thereof, authorize its board of dirfectors oi* trustees, to dispose of the rights, franchises and property Of such corporation within 'a do'urity, 'pilrsiiaTit to' Sections tli'ree hundred arid' thirty-mght to three hundred and forty- two,' ittclusivie; 'of the'higV *ay law, for a specified sum'; and thereupon the board of directors or trustees 13. Trans, 'dort;. 'L.,' § 147.' '' 15. Trans. -Corp. L., § 138. 14. Trans.' Corp. L.,§ 1'52/''' '• ' ''•''■■ ''"''' . • ---j-.,,,i;> ,'. ■■.■ ■ TBANSPOBTATI0N c6RP0HATI0NS. 879 of such coTpor&tioii may convey and sell such rightt, firaBohises and plroperty: to the' county accordingly. " 16 ■ '■' !■ . ■ "''> ' i' : 822. When stockholders to be direbtors. ' ' when the whole number of stockholder ' in ' any turtipike of' ' plank-road corporation shall not exceed the number of director^ 'specified' in th^'cettifieate • of incorporation, each stockholder shall be a; director of ' such corporation, and the stockholders shall constitute the board of directors, whatever may be their ■ number, and a majority thereof shall be a quo'l-iiin for the transaction of busi- ness. ' ' 17 823. Acts of directors prohibited. > ; .■'No director of .any such; corporation shall, be concemed, . directly Or indirectly,, iu any conti'aet for making , or wprki?i'g any road belonging to it during the .time ; lie. shall jb€i, a; dij'ec.tpr, .,,No coplractojr .^pr , the. making .of such road, or any pari thereof^ shall make a new contract f o/ the perf orniance' of his ' work, or ariy-'part df' it,' 'other than by hiring' ''hands; teams, carriages or 'utenSilS to bC' supeirinteiided ■ and paid by hiniself,.'-.tinleSB. such new ic6ntracti and' its terms ■ be laid before ithe bo^rd' of; directors and, be, apprpyed by ;them. v. IS; J .; , . , , Under thie'pro-^sfo'iis'Mt'the statitte' J)'r6Mbitiiig; directors ' of plank road' c6kri]^aniek froto being tbiicetned in aiiy cbh- tract for the making Or working" of the road, or ai'.y part ; thereof, a'coiitract between a plank road company and two of its 'directors, for the construetiotl by the latter of apportion of the road, isi absolutely voi'di^^ : ■ - ; - .; 824. Restrictions on location of road. .. ,,. . ,,, ,,. ^^ '■!No such rpad. sljall be, laid. out. through any orchard of .th^ growth ,o^j four; years, or more, to the injury , or , destruction ^f. fruit trees. Or through any garden cultivated for four year? or more before the laying. oijt' .of the road, 6i ' through any dwelling house or building connected ' theresvlth, 'or' any yards' bi" ' inclosures necessary f.6r its iise '6f' enjoyment 'without' the coiiseht of the owner thereof, ribt' shall any such corporation bridge any stream' iri -any jmanlnei' that will prevent or endanger' the passaigeiofany^raft' of twenty-five feet.iiijiTyidth, or where, the >same is navigable, by 1 vessel^, flr,stesnnb.oats.";20 .;.ii.' :.--\'. 825. Agreement for use of highway. "The supervisor' and commissioner of highways, or a majority of them if there be more -than one of any town, may agnee in Writifig with any such. L., § 121. ' ' Y. .586, 65 N. E. lllS. . 880- , COBPORATIONS. . ration iox the use of any part , of a public highvpay, therein required for the con- struction of any such road, and the compensation to be paid by the corporation for taking and using such highway for such purpose on first obtaining consent of at least two-thirds of all the owners of land bounded on or along jsuqh highway, which agreement shajl be filed and, recorded in the town clerk's oflice of the town. If such agreement can not be made the corporation may acquire the right to take such highway for such purpose by condemnation. TJie compensation there- for shall be paid to the conuniasioners of, high,wa,ys, to be expended by them in improving the highw&ys of the town. "1 The acts authorizing the formation of plank road com- panies give to such companies no interest or easement in or upon the lands adjoining their road, and no right to restrict the use which the proprietor of such lands may make of his own premises.^ The rights and duties of plank road com- pany towafd the public during the construction of the plank road on the site of the highway, are similar to those of com- missioners or overseers when repairing highways.^ The pub- lie ma,y lawfully continue to travel on a highway while a plank road is being built thereon.* And where a plank road com- pany takes and uses a public highway for its purposes, the road thus appropriated does not cease to, be a public highway. The general right of the public to use it for the purpose of travel, with horses, carriages and on foot, remain unimpaired.^ When the corporation has paid the commissioners of high- ways for the interest of the public in the road, it succeeds to all the rights of the town commissioners to make such re- pairs in the road as the public interiest requires; whether such repairs consist in excavations or embankments to bring the road to a proper grade, and thus to improve its condition as a public thoroughfare.^ But although a turnpike corporation has acquired a right to the use and control of a town highway for its purposes, there still remains in the highway commis- sioners a general control over it as a highway, and they have 1. Trans. iCorp. L., J 122. Barmore, 50, N. Y, 302. , The power of the supervisor and 2. Auburn and Cato Plank Eoad Co, commissioners of highways to contract v. Douglass, 9 N. Y. 444. with, a plank road company, as to its 3. Ireland v.. Oswego, etc. Pla^^k taking and using a highiiVay, of the Road Co., 13 N. Y. 53q. town for the construction of , its road. *■ Ireland v. Oswego, ete. Plank Palmer v. Fort Plain and Cooperstown Eoad Co., 13 N. Y. 526. Plank Road Co., 11 N. Y. 376. 5. Walker y. Gaywood et al., 31 N. Corporation may take entire fee of Y. 51. lands neoded for its: road. Heath v. 6. Benedict v. Goit, 3 Barb. 459. , TEANSPOBTATION COEPOBATIONS. 88.1 a duty to perform towards the public in connection with its proper maintenance as such.'' 826. Application to board of supervisors. ' ' If the lands necessary for the construction of the road or bridge of any such corporation in any county have not been procured by gift or purchase and the right to take and use any part of any highway therein required by such corporation shall not have been procured by agreement with the supervisor and commissioners of highways of the, town in which such highwa,y is situated, the corporation may make application to the board of supervisors of each county in which such bridge or road, or any part therepf, is to be located, for authority to build, lay out and construct the same, and take the necessary real estate for such purpose. Notice of the application shall :be, published in at least one, public newspapers in each county for six successive weeks, specifying the time and place where it will be made, the location, length and breadth of any such bridge, and the length and route of any such proposed road, its character, and each town, city and village in or through which it is to be" constructed. The application may be made at any annual or special meeting of the board; and if the corporation desires a special meeting therefor any three members of the board may fix a time when the same shall be held, and notice thereof shall be served upon each of the other supervisors by delivering the same to him personally or leaving it at his place of residence at least twenty days before the meeting, and the expenses 6f the special meeting and of notifying the members of the board thereof shall be paid by the corporation. All pe/sons interested therein or' owning real estate in any of the towns through which it is proposed to construct the road may appear and be heard upon the hearing of the application. The board may take testimony in respect thereto, or autliorize it to be taken by a committee of the board and may adjourn the hearing from time to time. After hearing the application the board may, by an order entered in its minutes, authorize the corporation to construct such bridge or road and to take the real estate necessary for that purpose, and a copy of the order certified by the clerk of the board shall be recorded by the corporation in the office of the clerk of the county in which such bridge or road or any part thereof is, to be located before any act shall be done under it. "8 827. Commissioners to lay out road. "If the application for the construction of any such road, is granted, the board shall appont three disinterested persons, not owners of real estate in any town through which the road is to be constructed, or in any adjoining, town, com- missioners to lay out the road. They shall take the constitutional oath of office, and without unnecessary delay lay out the route of such road in such manner as in their opinion will best promote the public interests; they shall hear all persons interested who shall apply to be heardand may take testimony in relation thereto, and shall cause an accurate survey and description of the road and the neces- sary buildings aiid gates, signed and acknowledged by them, to be recorded in the clerk's office of the county. If the road is situated in more than one 7. Matter of Application of Ri B. R. 8. Trans. Corp. L., § 123. Co., 133 N. Y. 351, 35 N. E. 381. 56 882 cbiiPOEATioNS. t'ounty; such survey- and description shall be separate as tb that portion of each county and filed in the oflSoe of the clerk of the county to which it relates. The corporation shall pay each commissioner three dollars for every day spent by him in the performance of his duties and his neeessarv expenses." 9, , , .-, r ; 828. Possession of and title to real estate. "The route sb 'laid out and surveyed by the commissioners shall be the route' of the road, and the corporation may enter upon, take and hold for' 'the 'purposes of its incorporation, the lands described in 'silch survey as necessary ifor the con- struction of its roiad, and requisite buildings and' 'gates. If for any cause the o'wner of' any of SuCh lands shall be incapable of selling' the satne or his name or' residence can not with reasonable diligence be ascertained or the Corporation is unable to agree ■with the O'vsmer for the purchase thereof, it may acquire title thereto by condemnation. " 10 829. Change of route J extensions and branches. ^^ Any. such corporation ma,y, with the written consent of . the o\vners of two- thirds of its capital stock and' of a. majority of the commissioners of highways of the to'wn or towns in which any change or .extension is proposed to be matle, construct , branches to. its main line or extend thfi same, or chaA^e the route of its road or any .part thereof, and acquire the right of way for the same in .the same majjner as for the original or main line, and may, by any of i^ pf&cers, agents or. servants, enter .jjpon lauds -for the purppse, of making any examination. survey or map, doing np unnecessary damage ; . but before entering uppii, taking or using such lands, the corporation shall make a survey and map; thereof, desig-; nating thereon the la^ds of each owner or ; occupant • intended to . be taken pr used, which shall be signed, and acknowledged by t^ie engineer making the, same and the president, of the, , corporation .and fil^d in the ofSceof the clerk of the county in which the laud is situated. "U 830. Use of turnpike road by plaink road. .J' ' "No plank-road shall be "made on the roaldway of any turnpike cdrpbrfttion ■without its consent, except for the purpose of crossing the same. Any plarik-road corporation may contract with any connecting turnpike corporation for the purchase of its roadway or a part thereof, or" of its stock, on such terms as may be mutually agreed upon, and such stock, if purchased, shall be held bythelplank- Toad corppration for the benefit of its stockholders in proportion ' to • the amount of stock held by each, and a tAnsfer of stock in the plank-road oorpor9,troii shall carry with it its proportional amount of the turnpike stock; ■ and entitle the holder thereof to his share of the dividends derived therefrom.- After the purchase Of the whole of the stock of any such turnpike corporation by such plank-rdad corpo- ration the directors of the plaHk-road corporation shall be the directors of thfe turnpike Corporation, and shall manage its affairs and render an account; of the same annually to the stockholders Of the plank-road corporation. If the plank-road corporation is dissolved, its stockholders at the time of dissolution shall be the 9. Trans. Corp.' L..§ 124. 11. Trtas, Corp; I/., § 135. 10, Trans, Oorp. K, § 12,5. ' ' TRANSPORTATi'ON ' 'cOKPORATIONS. 883 stoekTiolders of the turnpike corporation ' in proporticin to the amount of stock held by eachj and the stock of the turnpike corporation shall thereafter be deemed to be divided into shares eijual iii number to the shares of stock of the late plank-road corporation, and scrip therefor shall be issued accordingly to each of the last stockholders of the plank-road ' corporation, and the officers of the turnpike corporation shall be the same in number as provided for in its charter or certificate of incorporation, and shall be chosen by such former stockholders of the plank-road corporation or- their assigns. A corporation owning a turnpike road on or adjoining which a plank-road shall have been constructed may abandon that portion of its road on or adjoining the route of which a plank-road ie actually constructed and used."i2 .;■■; ;• ,'T.:'A3 ;;.;,i, ,'•,■'■ •. ,;., 831. Width and construction of road. "Every such plank-road sliall be so constructed as to make, secure and maintain a smooth and permaiient road, the trac'k of which shall be made of tinlber, Jlanb or other hard 'material forriim^' a hard and'eveii surface, and every' such turnjiike road shall be bedded with stone, gravel or' such other material as ina!y be thunS oh the line thet'eof, and faced with broken stone or gravel, forming a' hard and even surface with good arid suAcient ditcbes on each side wherever practicable, aiid all such roads shall be laid oiit'at least four rods wide, and the arch or bed at least 'eigbteen feet wide, and shall be so constructed as to permit carriages and oilier vehicles ebriveniently to pass each other, and to pass on and off Such' 'road' where intersected with other roads. Any corporation which shall have diiCe laid its' road with plank inky relky the same^ or any part thereof, with broken stoiie, gravel,' shells' or 6ther hard'iiiaterialsj forming a good arid substantial road. Aiiy filank-road' or turnpike corporation may lay iron rails on its road suitable for the lise of wa'gdris arid vehicles drawn by horses or other ariini'als over its 'road, but no' other motive 'pdwte sliall be usecl thereon. ' ''ft ■ 832. Construction of hrjdges ; obstruction of rafts prohibited. "Every bridge constructed by any such corporation shall be built with a good and sribstaritial railing iji- sldiig' at least four and one-half feet high, and o^^er any streaim navigable by rafts ' the (ior'pof atiori shall' keep the charind of the stream above and below 'the bridge' f'ree and clear from all deposits, forriied' 'or 'occasioned by the erection 'of the bridge, which shall in any Wise obstruct the navigation ther6f, akd shall be liable to all per'sdas unreasonably or unnecessarily delayed or hindered in passing the same for all damages sustained thereby. Nothing in this section shall be construed to authorize the bridging of ftriy river or water course Where the tide ebbs' aid flows, or ariy waters Over which' the federal authorities have ariy' 'Control/ uriless the cOllsent ' of ' such federal authiorities be first bbtaiW^d; iiAr ttie 6ouStructiori of any 'bridge' within the limits pf escribed by any existing law for' the eree'tlioii' or maintenance of any other bridge. "14 12 Trans. 'Corp. li.'; § 1Z6'. " ''" ' th'is section of ihe Transportation Cor- 13. 'Trans. Corp. L'., § 127. ' poratioris 'Law. An owner of prop- 14. trans. Corp. L., § 128. Crty 'on 'Jamaica bay, loCated 'four Jamaica Ba^ is not ' a "st'rea'ih," nillps distaint from a turnpike road within the meaning of section 121 or proposed to He Constructed acr6ss the 884 COBPOBATIONS. 833. Certificate of completion of road or bridge. "When any such corporation shall have eomjjleted its bridge or road or any five consecutive miles thereof, it may apply to the commissioners of highways of each town in which the completed road or brjdge is situated to inspect the same, and if a majority of the commissioners are satisfied that the road or bridge is made and completed as required by law and in a manner safe and convenient for the public use, they shall make a certificate to that effect, which shall be filed in the office of the county clerk. Each commissioner shall be paid by the corporation two dollars^ per day for his service and necessary expenses. ' ' 15 834. Gates, rates of toll; and exemptions. ' ' Upon filing such certificate such corporation may erect a toll-gate at such bridge or one or more toll-gates upon the road so inspected, and may deraajid and re,ceiye the following rates of toll, a printed list of which shall be conspeeuously posted at or over each gate: If a bridge corporation, such sum as shall be from time to time prescribed by the board of supervisors of the county or coiunties in which the bridge is located. If a turnpike or plank-road, for every vehicle drawn by one animal, one cent per niile, and one cent per miles for each addi- tional animal; for every vehicle used cMefly for carrying passengers, three cents per mile, and one cent per mile for each additional animal; for every, horse rode, led, or driven, three-quarters of a cent per mile; for every score of sheep or swine, one and one-half cents per mile, and for every score of neat cattle, two cents per mile. When diverging roads strike any plank-road or turnpike at or near any toll-gate, the board of supenrisors of the county may direct that the toU charge shall com- mence from the point of such divergeueei, and only for the distance traveled on such turnpike or plank-road, but fractions of cents may be made units of cents in favor of the plank-road or turnpike corporation. The corporation may from time to time commute, but not for a longer period than one year at any time, with any person whose place of abode shall adjoin or be near to the road for the toll payable at the nearest gate on each side thereof, and the commutation may be renewed from year to year. . No tolls shall be charged or collected at any gate from any person going to or from public worship, a funeral, school, town meeting or election at which he is a voter to cast his vote, a military parade which he is required by law to attend, any court which he shall be ^^quired to attend as a juror or witness, nor when going to or from his required work uppn any public highway, nor when transporting troops in the actual service of the United States; bay, cannot maintain an actiA to en- not, of itself, establgh the existence of join the oonstruotion of the turnpike spepial damages to the property owner road, on the ground that it will con- from such construction. Carvalho v. stitute an unlawful interference with Brooklyn & J. B. Turnpike Co., 56 public waters of the state and with App. Div. 523, 67 N. Y. Supp. 539, affd. the navigation of the bay, unless he 173 N. Y. 58i6, &5 N. E. 1115. shows special damages resulting to Private bridge over Great South Bay himself therefrom. The mere fact that is authorized- People ex rel. Howell the tide vrill be retarded some fifteen \ . .Jessup, 160, N. Y. 349, 54 N". E. 683. minntes,, and that there will he a oor- 15. Trans. Corp. L., §. 129. responding detention of the tide, does TKANSPOfitATiON CORPOBATIONS. 8B5 and no toll from peisoiis iiving Dtithin one-half mile 'of theigate bythe most usual traveled road when not engaged in, the , tmiisportation of other pBTSOnis or. prop- erty exeeipt that persons living within one ^ile of the gate, by the most usually traveled road, in a-n. jijoorporated .village of over six , thousand, inJiat>itants, , when not engaged in the trauspartatioii, of ptheri poisons, o.r property shall bo .exemgt from the pajonent of ioll. . , ^ Where a different rate is not otherwise prescribed or ' permitted by law, any ibrporation inairitainih'g a plank-road, turnpike roaii or bridge and siuthorized, or which shallbe hereafter authorized, to receive- tolls for the palssage of vehicles over the same, may loharg* and receive for each and every motor vehicle propelled by anyjppwer other than aiiimal power, passing over the same, a toll rate as pr.escril)ed by sectiop three hundred ten of the highway law, ,The directors of the several plank-road and turnpike road companies in this state shall annually abate three dollars from the toll of any inhabitant, not an inn-keeper, or all of it in the aggl'egate not exceeding that sum, who shall con- struct oh his own land, and ' keep in fepiir, a watering trough beside the plank- road "or turnpike road as. the case may be, well' Supplied with fresh 'fratet^ the surface of which: shall b^ two or niore feet above the level of the ground, 'and easily , accessible; for horses v^ith:vehi(jles; but the conimissioijers of highways, of the towns lespectively shall,, and ,they are hereby invested with full power and authority to designate those necessary for the ' public convenience £|,long said plank-road or turnpike road, as the ease niay be, '^nd no others than those designated shall be allowed siieh ^batferrvent of toll. ' . In case the' directors of aiiy • plank-road or turnpike rbad 'cbinpany in this state, shall refuse or Hegleet to abate the toll as aforesaid, any inhabitant having constructed a watering trough in corripliance therewith, m?iy notify the commissioner or commissioners of highways, as the; case, may be, of the tO'wn in which the same had been erectpd, of such neglect or refusal , on the part , of , tfie directors aforesaid, whose, duty it shall he, and who are hereby, invested wi^th full power and authority to proceed without delay, to ah examination of said watering troiigh ; and if, upon a full eixathiiiatibn of the Saine, the' Said commissioner or commissioners, as the case may be, or a majority of them, shall deem it necessary for the convenience of the public that such watering trough ought to be inaintained, he or they, as the case may be, shall forthwith notify the said directors accordingly, by serving a written notice on'tlie presideiit of the company, to that effect, in which the necessity of its maintenance shall be clfearly expressed; and if the said directors shall still refuse or neglect to abate the toll as aforesaid, and shall demand and take toll, on the application for such abatement, in violation of the pro'visions of the preceding paragraph, for the space of thirty days after the service of such notice, they shall be liable to a penalty of, t-wenty dollars, to be recovered in an actioii at law at the suit of the person having constructed said watering trough. "l(i . , , 16. Trans. Corp: L., § 130. ' authorizing k ' corporation organizisd Regulation of toll rates by' suxjct- under the General Turnpike Law visors. — See County Law,' § -73. ' (Ghap. SIO, Lawsi oof '1S47) to exaiot Unsafe toll bridges. — See Highway certain tolls, is ainended (by striking Law', § 78. , , , H. therefrom the provision permitting the Chapter 151 of the Laws Of 1898, by corporation to charge a toll for each which chapter 92 of the Laws Of ' 1882, velocipede or bicycle, the effect of 886 ,, , CQBPORATIOlirS. , ,,. When a plank road company has erected its toll gates with- in the distances authorized by law, and has fixed the rates of toll at the several gates at an amount not exceeding the legal rates for the entire' distance, and for the distances betVeen the several gates, it may lawfully exact the full toll thus fixed, at a particular gate; notwithstanding the traveler may not have traveled upon the road a distance which, at the established rate per mile actually traveled, would amount to such toll." So a special act, authorizing a turnpike company to charge fixed rates of t;oll instead of a specified sum per mile and making no distinction between persons living within a mile of the gate and those living at a greater distance, and m,akiug no exemptions, is not limited by this section.^ The provision that no tolls shall be collected at any gate from any person living within one-half mile of the gate, only applies to corpo- rations incorporated under the general act and does not apply to a turnpike company incorporated in 1799 under a special charter.^ And where a person claims exemption from the pay- ment of toll upon a plank road he must establish not only the fact that he " lived within one mile of the gate by the most usually traveled road," but, also, that at the time when toll was exacted of him he was ' ' not engaged in the transporta- tion of other persons or property."^ Where a person, assum- ing to act on behalf of a turnpike company, makes an oral agreeriaent with the life tenant of a farm withih half a' mile of the toll gate, that if such life tenant will close up a private road which diminishes the travel over the turnpike, the occu- which amendment is, to reduce the of an automobile, wliich is not withi^i earning ca/paioity of the oorporation the terms of its charter., ZVUallory v. twenty-five per cent, is uneonstitu^ Saratoga Lake Bridge Co., 53 Misc. tional. Rochester & Oharlotte Turn- 446, 104 N. Y. Supp. 1035. pike Eoad Oo. v. Joel, 41 Aipp. Div. 2. Great Western Turnpike, Co. v. 43, 98 N. Y. Supp. 346. Shafer, 57 App. Div. 331, 68, N. Y. 17. Mlallory v. Austin, 7 Bfeirh. «26., .Supp. 5, affd. 173 N. Y. 662, 65 N. E. 1. Monticello & Fallsburgh T. E. Co. , 1121. v. Leroy, 72 App. Div. 241, 76 N. Y. 3. Conly y. Clay, 90 Hun 20, S.i N. Supp. 315. Y. Supp. 531. Toll for automobile. — ^Prior to the Under the act of 1849, in relation ,£wn;endment of the, statute by L. 1907, to plank and turnpike roads^ all per- ch. 137, it was held that a hridge com- sons traveling, over a plank road, pany, mainta,ining a bridge carrying a whether such persons go for the pur- highway across a lake and authorized pose of oonduoting, or of uniting in, by its charter , to collect tolls for the the exercises of devotion — are equally passage of certain vehicles ai;d animals, exempt fropi, the payment of ;tpn. may not demand tolls for the passage Skinner v. Anderson, 12 Barb. 648. TEANSPORTATION COKPOBATIONS. 887 pants of the farm shall be forever relieved from liability to pay tolls, the turnpike company cannot, after recognizing the agreement for' forty years, question the authority of the per- son who madie the agreement on its behalf.' M 835. Location of gates and change thereof. "No Such corporation shall erect any toll-gate, house or other building within ten rods ol the front of any dwelling house, barn or other out house, without the written consent of the owner, and the county judge of' the county in which the same is located shall, on application, order any building so erected to be removed, and if a majority of the commissioners of highways of any town, in which a toll-gate shall be located, or in an adjoining town, shall deem the location of any gate unjust to the public interests by reason of the proxiriiity of diverging roads or otherwise, they may, on fifteen day's written nptice to, the . president or secretary of the corporation apply to the county court of the county in which the gate is located, for an order to alter or change its location. On hearing such application, and viewing the premises, if deenied necessa,ry, the court may make such order in the matter as may be just and proper. Either party may, within fifteen days thereafter, appeal to the appellate division of the supreme court from such order, on giving such security as the county judge, making the order, may prescribe. Upon such appeal the supreme court, on motion of either party and on due notice, shall appoint three disinterested persons who are not residents of any town through or into which such road shall run, or to or from which it is the principal thoroughfare, or any adjoining town, as referees to hear, try, and determine the appeal. Such referees shall view the premises and the location of the gate, and hear the parties in the same manner as on the trial of an issue of fact by a referee in a civil action in the supreme court, and report their decision thereon and the reasons therefor, and the evidence taken thereon to the supreme court, and such court shall review the report and render judgment thereon as justice and equity shall require, which shall be final and conclusive. The referees shall be entitled to ihe same fees as referees in eiyil actions in the supreme court, to be paid in the first instance by the party in whose favor their report or decision shall be, and the supreme court shall award judgment therefor, with such costs and expenses as it may deem reasonable, to the successful party on the appeal, which judgment shall be entered with the order affirming or reversing the order appealed from, and may be enforced by execution as a judgment of a court of record. If the order of the county court is not appea;led from, it may be enforced, as the court may direct, and the court may allow such costs as may be deemed just and equitable. ' ' 6 836. Mile-stones, guide-posts and hoist-gates. "A mile-stone or post shall be erected and maintained by every such corpo- ration on each mile of its road, on which shall be fairly and legibly marked or inscribed the distance of such stone or post from the place of commence- 4. Great Western Turnpike Oo. v. 1121. Shafer, 57 App. Div. 331, 68 N. Y. . 5. Trans. Corp. L., § 133. Supp. 5, aflFd. 172 N. Y. 662, 65 N. E. 888 COBPORATIONS. ment of the road, and when the road shall commence at the end of any other road having mile-istones or posts on which the distance from any city or town ia marked, a continuation of thJaX distance shall in like manner be inscribed. A guide-post shall also be erected at the intersection of every pubHe road leading into or from every turnpike or plank-road, on which shall be inscribed the name of the place to which such intersecting roads leads in the direction to which the name on the guide-post shall point. No plank-road or turnpike corjioratibn shall erect ot put up any hoist-gate on its road. Any person who shall wilfully break, cut down, deface or injure any mile-stone, post or gate on such road, or dig up, or injure any part of the road, or anything belonging thereto, shall forfeit to the corporation twenty-five dollars for every offense, in addition to the damages re- sulting from the act. " G - 837. Toll-gatherers. ' ' Every such corporation may appoint toll-gatherers to collect toll at each gate, who may detain and prevent frdm passing through the gate, any person riding, leading or' driving animals or Vehicles, subject to the payment of toll, until the to ir is paid, but if he shall unreasonably hinder or delay any traveler or passenger liable to the payment of toll, or shall demand or receive from any person more toll than he is authorized by law to collect, he shall forfeit to such person the sum of five dollars for every ofEense, and the corporation employing hiin shall be liable for the payment thereof, and for any damages sustained by any person for acts done or omitted to be done by him in his capacity of toll- gatherer, if, on recovery of judgment against the toll-gatherer therefor, execution thereon shall be returned nulla bona. " 7 • 838. Penalty for running gate. ' ' Any person who, with intent to avoid the payment of toll, Shall pass any gate, without pajang the toll required by law, or shall, With his team, carriage or horse, turn otit of a turnpike or plank-road and pass any gate thereon on ground adjacent thereto, shall forfeit for each ofEense the sum of ten dollars to the corporation injured." S 839. Inspectors. , " The commissioners of highways of the several towns and the trustees or other officers in the incorporated cities, and villages of the state, who perform the duties of commissioners of highways in such cities and villages, shall be inspectors of plank-roads and turnpikes, ^n their respective towns, cities and villages. They shall inspect or cause to be inspected by one or more of them the whole of such turnpike or plank-road as lies in their respective towns, ^'illages or cities, at least once in each month, and whenever written complaint shall be made to :uiy inspector, that any part of such road lying in the town, city or village of such inspector is out of repair he shall, without delay, view and examine the part 6. Trans. Corp. L., § 136. tect turnpike and plank road corpora- 7. Trans.- Corp. L., § 131. tions in the enjoyment of their fran- 8. Trans. Corp. L., § 133. ohises. Monterey, etc. Plank Uoad Co. Forcibly and fraudulently passing v. Chamberlain, 32 N. Y. 9159. gate. — Intent of the statute is to pro- TKASrSPOBTATION CORPOEATIONS. 889 complained of. If such tunipike or plank-road shall be found to be out of repair or in couditibn not to be conveniently use3 by the public, such inspectors' or either of them, or the one to whom such complaint shall have been made, shall give written notice to the toll-gatherer, or person attending the gate nearest the place out of repair or in bad condition, to cause the same to be put in condition before a time therein designated not less than forty-eight hours after the service of such notice, or to appear before the county court of the county in which that part of the road is situated, at a time in said notice designated, and show cause why such turnpike or plank-road should not be repaired or put in good condition as in said notice directed. If such road shall not have been theretofore repaired or put in good condition as in said notice directed, then the county court shall, upon the return of such notice, hear the allegations and proofs of the parties, and it shall ialways be open for that purpose; aiid if the court shall find siich road to be oiit of repair or in bad condition it may give additional time for the repair thereof, or it may order the gate nearest the place out of repair or in bad condi- tion to be immediately upon the service of the order, or at a time therein specified, thrown open and to remain open until the road shall be fully repaired at the place directed to be repaired as aforesaid. Such order shall be served in the manner therein specified upon the keeper of the gate so ordered io be thrown opeA. Any inspector within the town,* city or village where suoli road has been repaired pursuant to notice or order as aforesaid, may certify that such road has been duly repaired. The fees of the inspector for the services above mentioned shall be two dollars for each day actually employed,' together with necessary witness ieea, to be paid by the' cbrp'oration or person whose road iS ^6 inspected, if the gates are ordered to be thrown open, but otherwise to be charged, audited and paid' in the same iuanner as other fees of commissioners of highways. Any inspector' who neglects to perform his duties' shall forfeit to the party aggrieved the Sura of twenty-five dollars for each offense. Every keeper of a gate ordered to be thrown open, not immediately obeying such order or not keeping such gate open until such road shall be folly repaired or until a certificate that' such road has been duly repaired is granted, or hindering or delaying any person' in passing,' or taking any tolls from any person passing such' gate during the time it ought to be open, shall forfeit to the party aggrieved the sum of ten dollars for each oifense, and the corporation or person owning the road, who shall refuse or neglect to obey the requirements of any such order, , shall forfeit to the people of the state the sum of two hundred'dollars for each offense. "9' ' 840. Highway labor upon line of plank road or turnpike. "Every person liable for highway labor living or owning property on the line of any plank-road .or turnpike may, on written application to the commissioners of highways of the town, on any day previous to making out the highway war- rant by the commissioners; bo assessed for the highway labor. upon his property upon the line of such road, in the discretion of the commissioners to be worked out upon the line of such road as a separate road district, and the commissioners shall make a separate list of the persons and property so assessed, as for a separate road district, and .deliver the same to one of the directors of the corporation owji- 3. Trans. Corp. L., § 134. Suydam v. Smith, 52 N. Y. 383. Powers and duties of inspectors. — 890 COKPOBATIONS. ing sueli road^ who, shall cause such highway labor to be worked out on such road in the same manner that overseers of highways are required to do, and such directors shall possess the powers and have the authority to compel the perform- ance of such highway labor or, the payment of the tax therefor as such overseers now have by law, and shall make like returns to the commissioner of highways, and any person so assessed may commute for the highway labor assessed upon him or his property by paying the sum now fixed by law as the commutation for such highway labor. ' ' 10 841. Hauling logs and timber. "Any person who shall draw or haul or cause to be drawn or hauled, any logs, timber or other material upon the bed of any plank or turnpike road, unless the same shall be entirely elevated above the surface of the road on wheels or run- ners, and the road-bed shall be injured thereby, or who shall do or cause to be done any act by which the road-bed, or any ditch, sluice, culvert or drain ap- pertaining to any turnpike or plank-road shall be injured or obstructed, or shall divert or cause to be diverted, any stream of water so as to injure or endanger any part of such road, shall forfeit to the corporation the sum of five dollars for every offense in addition to the damages resulting from the wrongful act. "li 842. Encroachment of fences. ' ' Whenever the president or secretary of any turnpike or plank-road corpora- tion shall notify any inspector of such roads in the county where situated that any person is erecting or has erected any fence or other structure upon any part of the premises lawfully set apaj't for any such turnpike or plank-road, the inspector shall examine into the facts and order the fence or other structure to be removed if it shall appear to be upon any part of any such road, and any person neglecting or refusing to remove the same within twenty days or such further time not exceeding three months, as may be fixed by the inspector, shall forfeit to the corporation the sum of five dollars for every day, during which the fence or other structure shall remain upon such road, but no such order shall require the removal of any fence, previously erected, between the first day of December and the first day of April." 12 843. Penalty for fast driving over bridges. "Any plank-road, turnpike or bridge corporation may put up and maintain at conspicuous places at each end of any bridge, owned or maintained by it, the length of whose span is ngt less than twenty-five feet, a notice with the following words in large characters: 'One dollar fine for riding or driving over this bridge faster than a walk.' Whoever shall ride or drive faster than a walk, over any bridge, upon which such notice shall have been placed, and Shall then be, shall forfeit to the corporation the sum of one dollar for every such offense. ' ' 13 844. Taxation and exemption. "So much of any bridge or toll-house of any bridge corporation as may be within any town, city or village, shall be liable to taxation therein as real estate. 10. Trans. Corp. L., § 151. 12. ,Traii8. Oorp. L., § 143, 11. Trans. Corp. L., § 14». 13. Trajis. Corp. L.,' § 144. TEANSPOETATlbW CORPOKATIONS. 891' Toll-houses and other fixtures and air property belonging to any plank-r6ad or turnpike corporation shall ' be exempt from assessment and taxation for any purpose until the surplus annual receipts of tolls on its road over necessary re- pairs and a suitable reserve fund for' repairs or relaying of plank, shall exceed seven per centum per a^hhum on the first cost of the road. If the assessors of any town, -village or city and the eoi'poration disagree concerning any exemption claim, the corporation may appeal to the county judge of thie county in which such assessment is proposed to be' made, who shall, after due notice to both parties, exaimilie . the books and vouchers oif the corporation; and take such further proof as he shall deem proper, and decide whether such corporation is liable to taxation under this section, and his decision shall be final. ' ' 1* A street taken for the purposes of a, plank road does not cease to be a street. The right of the public to use it remains unimpaired. "While the public, in consideration of the. pay- ment of tolls, is relieved from keeping it in repair, and the duties in that respect, to an extent, are imposed upon the plank road company, yet the public authorities are not ousted of their jurisdiction, especially in particulars not in conflict with its purposes or rights^ Hence, it may be assessed for public improvements.^^ 845. Actions for penalties. ' * No action to recover any penalty against any turnpike or plank-road corpo- ration, shall be commenced or maintained against it, or of its officers or agents, unless commenced within thirty days after the penalty' was incurred. ' ' 16 846. Surrender of road. "The directors of any plank-roa,d or turnpike corporation may abandon the whole or any part of its road at either or both ends thereof, upon obtaining the written consent of the stockholders, owning two-thirds of the stock of the corpo- ration, which surrender shall be by a declaration in writing to that effect, attested by the seal of tlie corporation and acknowledged by the president and secretary. Such declaration and consent shall be filed and recorded in the clerk's office of the county in which any part of the road abandoned shall be situated, and the road so abandoned shall cease to be the road or the property of the corporation, and shall revert and belong to the several towns, cities and villages through which it was constructed, and the corporation shall no longer be liable to maintain it or to be assessed thereon, or permitted to collect tolls for traveling over the same, but without impairing its right to take toll on the remaining part of its road at the rate prescribed by law. And whenever any turnpike or plauk-road company, now existing or hereafter created, shall abandon all or any • part of its road within this state, in the manner above provided, or whenever the charter 14. Trans. Corp. 'L., § 141. E. 703. 15. People ex rel. Cayadutta P. E. 16. Trans. Corp. L., § lie. Co. V. Oummings, 166 N. Y. 110, 59 N. 892 COBPOEATIONS. or franchise of such coiapany shall be annulled or rpvoked, the road of such turnpike or plank-road company shall revert to and belong to the several towns, cities and villages through which such road shall pass. Aiid it shall be the duty of the several towns, cities and villages acquiring any road under this section to immediately lay out and declare the same a free public highway. And it shall be the duty of the several towns, pities and villages, to laaintain and work every road acquired under the provisions of this section in the same manner as the other roads of such towns, cities and villages are maintained and worked. And any town, city or village may Ijorrow money in th(3, manner provided by law for the purpose of improving or repairing the same. "17 The policy of the state, as indicated by legislation, is that public roads, constiMicted by turnpike or other corporations under special charters or general statutes, shall, on disso- lution of the companies which constructed them, or their abandonment by such companies, become and be thereafter treated as public highways.^' But upon the termination of the corporate existence of a plank road company -which owns lands by purchase in fee, this public have not a right of unob- structed travel over that portion of its road.^^ 847. Dissolution of corporation; road to be highway. "Every turnpike, plank-road or bridge corporation may be' dissolved, by the legislature when; by the income arising from tolls, it shall have been compensated for all moneys' expended in purchasing, making, repairing and taking care Of its road, and have received in additiOii thOreto an average annual interest at the rate of ten per centum, and on such dissolution all the rights and property of the corporation shall vest in the people of the state^, , Any , such , corporation, which shall not within two years from the iUing of its certificate of incorporation, have commenced the construction of its road or bridge and actually expended thereon ten, per centum of its capital, or which shall not within five years from such filing have completed its road or bridge, or, in case such bridge is de- stroyed, shall not rebuild ,the same within five years, or which for a period of five consecutive years shall have neglected or omitted to exercise its corporate functions, shall be, deemed, dissolved. Where the corporation has neglected or omitted for five years to exercise its corporate functions, and its, road-bed, or right of way shall have been used as a public highway for tha.t period, or where any such corporation shall have become dissolved, or where the road or any part of it of a turnpike or plank-road corporation, or the bridge of any bridge corporation, shall have been discontinued, such road-bed or right of way, and 17. Trans. Corp.: L., ,| 140. , , way of the town. Town of. Palatine v. Effect of surrender.— Heath v. Bar-. .New York Cent. & H. R. R. Co., 22 more, 50 N. Y. 303. App. Div. 181, 47 N. Y. Supp. 1034. 18. People ex rpl. Keene v. Super- 19. People ex rel. Clausen v. Nqw- visors, 151 N.' Y. 190. 45 N. E. 453. burgh and S. Plank R. Co., 86 N. Y. 1. Abandoned turnpike becomes high- TKANSPOETATION CORPORATIONS. OVO siieii discontinued road or bridge and tlio road or bridge of any such dissolved corporation, shall thereafter bo a jiublic highway, with the same effect as if laid out by the commissioners of highways of the town, and be sub- ject to the laws relating to highways anrl the erection, repairing and preserva- tion of bridges thereon. "20 848. Town must pay for lands not originally highway. ' ' When the corporate existence of any plank-road or turnpike corporation shall have ceased by limitation of time, or where any judgment of ouster or dissolution, or restraining the exercise of its franchise, has been rendered in any action against it, such portion of the line of its road as was built over lands which were originally purchased by it and not preyiousjy a public highway shall not be used as a public highway, nor be taken ^ possession or control of by the town in which the same may be, or by any of the authorities thereof, or be claimed or worked or used as a public highway until the town shall pay over to .the treasurer, receiver or other legal Tepresent9,tives of the corporation, or its as- signs, the principal sum of the amounts paid by it for such lands, as' shown by the deeds of eoiiveyarice thereof to it, and every such judgment shall provide accordingly. Such payments shall be made within three months after the ex- piration of the corporate existence of the, corporation, or if any sueji judgment •has been pr shall be rendered within three months after service of written notice of the entry thereof on the supervisor of the town, and the person receiving such payment shall execute a proper discharge therefor and a conveyance to the town of all the title and interest which the corporation had m Such lands at the ex- piration of its corporate' existence. "1 .: Water Works Corporations. 849. Incorporation. "Seven or more persons may become a corporation for the purpose of supply- ing water to any of the cities, towns, or villages and the inhabitants thereof in this state, by executing, acknowfledging and tiling a certificate stating the name of the corporation, the amount of its capital stock, the number of shares into which it is to be divided, the location of its principal ofaee, the number of its directors, not less than seven, the names and places of residence of the directors f ot the first year, the names of the cities, towns and villages which it is proppsed to supply with water; that the permit of the authorities of such cities, towns and villages herein required has been granted; the post-office address of each subscriber, and the number of shares he agrees to tak«! in such corporation, the aggregate of which shall be at least one-tenth of the ' capital stock, and ten ])pr centum of which shall be paid in cash to the directors. At the time of filing there shall be annexed to the iiertifieate and as a part thereof, a permit, signed and acknowledged by a majority of the board of tritstees of the village, in case an incorporated village is to be supplied with water, and in case a town, or any part thereof, not within an incorporated village, is to he so supplied, by the supervisor, justice ,pf the peace, town clerk and higliway commissioners thereof or a majority of them, and in, case a city is to be supplied with water, 'bj^'the 20. Trans. Corp. L., § 149. 1. Xrais. Corp. L., § 150. 894 coepokatiojSis. board of water commissioners of said city, oi- by such other board or set of officials as perform the duties of water, cojumissioners and have charge of the water supply for said city, authorizing the formation of such corporation for the purpose of supplying s,uch city, village or town with water, and an affidavit of at least three of the directors that the amount of capital stock herein re- quired has been subscribed and paid in cash. ' ' 2 "No corporation shall .be formed under this chapter (Business Corporations Law), for the purpose of accumulating, storing, conducting, furnishing or sup- plying water for domestic, manufacturing or municipal purposes in the city of New York. ' Any corporation formed for the purpose of supplying any other city of the state with water, if unable to agree with the owners of any real property required for the purpose of the corporation for the purchase thereof may acquire title thereto by condenmation. ' ' 3 850. Municipal ordinances. Ordinances adopted by the common council of a city, aftor the passage of the Transportation Corporations Law, for the purpose of regulating the opening of street surfaces for the laying of gas and water pipes and the making of sewer con- nections, although authorized by the charter of the city, have no application to and caniiot regulate or prohibit the laying of water mains through the, city by a water company organized under the statute in question for the purpose of supplying water to adjacent towns and villages, since the legislature could not have intended to vest in the common council the right to repeal or amend, by ordinance, a general statute of the state.^ 851. Duty to supply water generally; contracts with municipalities. "Every such corporation shall supply the authorities or, any of the inhabitants of any city, town or village through which the conduits or mains of such corpo- ration inay' pass, or wherein such corporatioiis may have organized, . with pure and wholesome water at reasonable rates and cost, ■ and the board of , trustees of any incorporated village and the water commissioners or other board or officials performing the duties of water commissioners, and having charge of the water ■ ■ • - 2. Trans. Corp. ,L., § 80. not thereby constituted a governmental Property subject to taxation. — ^A agency, and it^ property is subject to corporation organized under; the act taxation. People ex rel. The Mills providing, for the formation of water, Water-Works Co. v. Forrest et al., 97 works comipanies in the towns and .vil- N". Y. 97. lages of the state (Chap. 737, Laws 3. Business Corporations Ia»-, § 15, of 1S73; chap. 415, Laws of 1876,. and iis amd. by L. 1909, ch. 240. cha/p. 171, Laws of 1877), which has 4. Rochester & Lake Ontario Water contracted with the town or village to Co. v. City of Rochester, 176 N. Y. .?fi, furnisli it with apeeified water facili- 68 N. E. Il7. ties, for an agreed compensation, is TBANSPOKTATION OORPOBATIONS. , 895 supplies of any city of this state, shall have the power to contract in. the iame and behalf of the ;muiiicipal corporation o'i which they are officers, for the term of one year or more for the delivery hy such company tb the village or city, of water through hydrants oi' otherwise, : for ■ the extinguishment of fires and for sanitary and other public purposes ; .and the amount of such contract agreed to be paid shall be annually raised as a part . of the expenses of such village or city, and shall be levied, assessed and collected in the same manner as other expenses of the village or city are raised, and when collected shall be kept separate from other funds of the .village or city, and be paid over to such corporation by such trustees or city ofl&cials, according to the terms and condi- tions of any such contract; and any such contract entered into by the board of trustees of any village or by water commissioners or other board performing the duties of water commissioners and having chsirge of the water supply of any city, shall be valid and binding upon, such village or city, but no such contract shall be made for a longer period than ten years nor for a sum exceeding in the aggre- gate, two and one-half mills for every dollar of the taxable property of such village or city, per annum, except upon a petition of a majority of the taxable inhabitants of any such village or city, or portion thereof, which it is proposed to supply with pure and wholesome water, unless a resolution authorizing the same has been submitted to a vote of the electors of the village or city, in tha manner provided by the village law or city charter, and approved by a majority of the voters entitled to vote and voting on such question at any annual election or special election duly called; and any board of trustees or board of. water commissioners or other city officials, when so authorized, may make, such contract for a terra not exceeding thirty years, and the amount of such contract shall be paid ,in semi-annual instalments. The town board of any town may estfiblish a water supply district in such town outside . of a city or incorporated village therein, by filing a certificate describing the bounds thereof, in the office of the town clerk; and may contract in the name of the town for the delivery, by a corporation, subject to the provisions of this article, of a supply of water for fire, sanitary or other public purposes, to such districts, and the whole town shall be bound by such contract, but the rental or expense thereof shall annually, in the same manner as other expenses of the town are raised, be assessed, levied upon and collected only from the taxable property within such ■ water supply district. Such money, when collected, shall be kept as a separate fund and be paid over to such corporation by the supervisor of the town, according to the terms and conditions of any such contract. Ko guch. contract shall be made for a longer period than five years, nor for an annual expense exceeding three mills upon each dollar, of the .taxable prpperty within such water supply district, pro- vided, however, that where the population of the water supply district does not exceed one thousand inhabitants such contract may be made for a period not longer than ten years. ' ' B 5. Transportation Corporations Law, to contract with a water supply com- § 81. pany, not affected by the Tiansporta- Contracts with villages; establish- tion Corporations Law. Woodside ment of system. — See Village Law, Water Co. v. Long Island City, 33 §§ 22iO-33'5. App. Div., IS, 48 ^^T. ,y, Supp. 68f, aflfd. Long Island City; limitations upon 159 N. Y;.,558, 54 ,K E. 1095. the power of its water commissioners Under chapter 737 of the Laws of 896 COEPOBAHOKS. The franchise conferred upon a corporation organized tinder the act providing for the incorporation of water works companies (Chap. 737, Laws of 1873, amended by chap. 213, Laws of 1881), is not exclusive in its nature; it does not give to the company the exclusive and permanent right, during the term of the corporate charter, to purvey water' to the town or 1873 the favorable votes of the electors of a village is a condition precedent to the making of a contract with a corporation organized under the Water Act for the delivery of water by it to the village for public purposes. Such vote does not present a question of ratification or waiver, and a vote au- thorizing a contract cannot relate back to and Validate a contract as of a prior time at which it was made, and tlie most that it can legally do would be to make the contract operate from and after the favorable vote of the elec- tors of the village upon the subject. Sqxiire v. Preston, 83 Hun 8'8, 31 N. Y. Supp.' 174. Water supply district, validity of contract to supply portion of district. —Section 81 (Ii 1890, ch. 566; as arad. by h. 1896. ch. 678) required that the territory supplied with water under the contract shall correspond in area with the' territory which is designated as the water supply district. Whe^o the distract, as established by the town board, includes the whole town, whicli is eighteen miles long and six ihile^ wide, a contract for the supply nf water to two villages only in such town occupying less than one' square mile of territory is invalid, notwit''- standing that such villages' contain eighty per cent of the inhabitants of the town and about forty per cent nf the taxable pvopert>- therein. People ex rel! Tupper I.ake' W. Co. a'. Sisson, 75 'App. Div. 138, 77 N. Y. Supp. .176. affd. 173 N. Y. 606, 66 N. K. 1115. Section 81 authorizes the board of trustees of a village to make a con- tract, embodied in resolutions passed by it, by which they gi-ant to two desig- nated persons the right to install a sys- tem of water works in its streets and use exisiiog hydrants owned by the vil- lage upon condition that such hydrants, together with additional ones to be thereafter ' erected, should be connected with the system so constructed and that for the use of the water for fire protec- tion the village should pay annually to such persons the sum of $350 for a period of five years with the right to a renewal at tliat 'priee at the ex- piration of said time and that in case of a failirre to complete the system by the specified time "this grant, franchise or privilege be null and void and of no efi'ect." Village of Bolivar V. Bolivar Water Co., 63 App. Div. iSi, 70 N. Y. Supp. 750. A corporation organized under sec- tion 80 of the Transportation Cor- porations Law for the purpose of supplying water to the authorities and inliabitants of the former town of Jamaica, now incorporated in the city of 'Sew York, is required by statute to supply said authorities and inhabi- tants with ipure and wholesome water at reasonable rates and cost, and by virtue of section 472 of the charter of Greater New York, the commissioner of water supply, gas and electricity in his power to exercise superintendence, regulatipn and control in respect of the supply of M'ater by such company may direct it to install new mains and hydrant.S at its own expense. City of New York v. .Jamaica Water Supply Co., 181 App. 3)iv. 49, 167 N. Y. Supp. "763, affd.';iJ6"X. Y. .->73. 123 N. K. 859. TBANSPOBTATION ; CqEPOKATIONS. 897 village to supply which it was created, and neither the statute nor the constitutional provision prphibitiiig, legislation im- pairing the obligation of contracts precludes the grant of, a charter tp. another company, that has obtained the requisite assent of the municipal authorities, authorizing it to fc-iipply water from other sources to the inhabitants of the same town or village. By sueh a charter no rights are taken from the public or given to the corporation, beyond those which the words of the charter, by their natural and proper con- struction, purport to convey.^ A water company operating under a municipal franchise must continue to supply water even though it is obtained from sources not originally con- templated.' A water company, under contract to supply water to ia customer, is bound to force the water into the cus- tomer's house, and tlie practice of opening water taps in cold weather does not excuse it.^ When an incorporated' village avails itself ' of the permissive authority to construct aUd maintain a system of water works, conferred by the general acts of the legislature upon all incorporated Villages in the state, the grant of powe* is to be i^egardeid as exclusively for public piitposes and as beloriging to the corporation in its public, political or municipal character, and for the non-user or misuser of such power, as in failing to keep the water-sys- tem in conditioii to furnish protection from fires, the rorpo- ration cannot be made liable at the suit of a oitiizen.* 6. Syracuse W^ter Co. v. :;Cit,y of 'upon any f rag-men t ; of it. People ex Syracuse, 116 K Y. 167, 23:N. B,. rel. Village of, Pelham; Manor v., New 381; Matter of City of .Brooklyn, 143, Rochelle Wwter Co., 119 App. Div. N. Y. 596, 38 N. E. 983. "473, 104 N, Y. Supp. 92. 7. On mandamus brought to compel a 8. Whiteihouae v. Statpi, ■ Island water company, to furnish vater as ^^^^^ ^^ ^^^ ^pp ^^ ^^^'^^ j^^ required, by its franchise and contract ^ Sudd 544 with tlje muniei'pality, an allegation of the return reciting in liaec , verba 9. Springfield Fire Insurance Co. v. .,^,, ,° . . r,- . Village of Keesville, 148 N. Y. 46, 42 an isolated, clause of the contract which ^' ,■ , , prescribes deductions of rent for. nc- • ' • gleet to supply water is, subject to do- Contract to construct and maintain murrer as not stating. a, defense. This, a water system for a town.— A tax- beeause the contenition that the water payer, whose buildings are destroyed company is not obliged to, supply I'y Are because of the contractor's watei;, but may as an alternative sub- Failure to fulfill his contract, cannot init to deductions in rent is, a ques- i-eeovet thereoh; Smith v. Gfeat South tiop which depends upon the construe- Bay Water Co.; 83 App. Biv. 437, 81 1 ion of tlie entire contract and not X. Y. Supp. 813. 57 '■ ' 898 CORPORATIONS. 852. Eates. There is not necessarily an unjust discrimination because different rates are charged to different consumers if the cir-^ cumstanees under which the water is furnished differ and the price charged in each case is reasonable.^" Where a water company, in consideration of the right to lay and maintain its water mains and pipes through the streets of an incorporated village for a period of years, entered into a contract with the ATllage whereby it agreed to supply private consumers and corporations in the village with pure and wholesome water at a rate per annum not exceeding a designated amount, the con- tract is a valid, binding and enforceable obligation upon the water company and its successors for the benefit of the in- habitants of the village.^ The requirement of section 81 of the Transportation Corporations Law that a public service water supply company shall supply the inhabitants of a city with water at a reasonable rate is part of its franchise de- rived from the state, and a municipal contract made with such company fixing the rates at which water is to be supplied to private consumers is not binding upon such consumers who may test the reasonableness of the rates by private, action. The fact that certain of said, rates at which water is to be sup- plied to private consumers are " minimima " raises no lire- sumption that the rates are .unreasonable. But no action lies by the municipality either to reform a contract made by it with such water company fixing the rates for private con- sumers by striking out such provisions or to determine whether such rates are reasonable. If the rates be Unreason- able the remedy is iii the hands of the private consuimers.^^ 10. People V. Albion Water Works sioners to lay and assess waiter rates Co., 140 App. Div. 646, 125 N. Y. Supp. upon property not using water from 589. the municipal system, disclose an in- 11. Pond V. New Rochelle Water tent to assist the water commission- Co., 183 N, Y, 330, 76 N.*E. all. ers in eeeuring customers from the 12. City of Mount Vernon v. New patrons of an existing iprivate water York Interurhan Water ,Co., 115 App. works company, are invalid, aftd there- Biv. 658, 101 N. Y. Supp. 832. fore, not enforceable. Warsaw Water Invalid statutory provision for water Works Co. v. Village of Warsaw, 161 rates discriminating against patrons of N. Y. 176, 55 N. E. 486. private water works company. — The , Construction of contract, parol evi- pro-visions pf chapter 284 of the Laws dence.^W;here a water company fur- of 1894, supplementary to the Village nislied a laundry with water through Water Act of 18T5 (oh. 181), which, a two-incli meter under a contract by authorizing village water commis- whereby the price diminished as the TBANSPOETATIOJS CORPORATIONS. 899 853. Powers. ' ' Every such corporation shall have the following additional powers : 1. To lay and maintain its pipes and hydrants for delivering and distiibuting water in any street, highway or public place of any city, town or village in which it has obtained the permit required by section eighty of this article. 2. To lay its water pipes in any streets or avenues or public places of an adjoining city, town or village, to the city, town or village where such permit has been obtained, provided that such right in an adjoining city or village having a population , of more than twelve thousand inhabitants shall be subject to the permission of the local authorities thereof and upon such conditions as they may prescribe. 3. To cause such examinations and surveys for its proposed water-works to be made as may be necessary to determine the proper location thereof, and for such pui'pose by its oflcers, agents or servants to enter upon any lands or waters in the city, towd' or village Where organized, or in any adjoining city, town or village, for the purpose of making such examinations or surveys, subject to liability for all damages done. ' ' 13 consumption increased, and this sup- ply being insufScient, a second two- inch meter was installed under a simi- lar contract, and a question arises as to whether the price to be paid is to be determined by aggregating the water flowing through both meters or by treating each separately, parol evi- dence ds admissible to show the in- tention of the parties. Green Island Witter Supply Co. v. Trojan Laundry Co., lae App. Div. 584, 110 N. Y. Suppi 508. 13. Transportation CorporationiLaw: §:82. ' Laying pipes in streets of adjoining village. — A water company having a permit,' under: chapter 737 of the Laws of 1873, from the trustees of an in- corporated village, authorizing the formation of the company to supply such village with water, may, by force of section 83 of chapter 56'6 of the Laws of 1890, ilay its ' pipes in a pub- lic highway in an adjoining Tillage, without having first obtained the con- sent of such adjoining village. Pel- ham Manor v. New Rochelle, Water Co., :67 Hun 98, 31 N. Y.; Supp., 1110. affd. 143 N..Y. 533, 38 N. E. 711. The right to lay water mains in an ad- joining town conferred by the Trans- portation Corporations Law prior to the amendment .to section 83 thereof made by chapter 310 of the Laws of 1905, did not ■ constitute a franchise beyond ' legislative recall, and hence after said amendment requiring the consent of the municipal, authorities of the adjoining town, a water com- pany cannot lay. mains therein ^ithou' the permission of; such authorities who may prescribe the ..conditions Ijo b? imposed. The municipal authoHtjes whose consent; must , be obtained are not, the adnjinis^rative officers in charge of the highways, but is the ; legislative body empowered to grant , franchises for the use of public streets. Richards v. Citizens' Water Supply Co. of, Newtown,.; 140 App, Div. 306. 135 N. Y. Supp. 116. Maintenance qf, water pipes through city upon right of way, of railroad company; furnishing water to rail- road company. — ^A water works com- pany .organized under the Transporta- tion, . Corporations Law (L. 1890, , ?h. 566, §§80, 81,, .83, as amd. by L. 1893, ch. 617, and L. 1894, ch. 3301, for the purpose of supplying water to the towns and villages, named in its cer- 900 OOEPOEATIONS. Cutting, removing and storing ice from its reservoir ai'e properly incident to the main purposes of a company incor- porated to furnish pure and wholesome water to a munci- paUty and axe within the corporate powers." 854. Sutvey and map. " ' ' Before entering upon, taking or using any land, for the purposes of its incorpo- ration, such corporation shall cause a survey and map to be made of the lands intended to be taken or entered upon, by and on which the land of each owner or occupant sliall lie designated, which map shall be signed by the president and tificate of incorporation, and from which it 'has obtained the permits re- quired by section 80, has the power, under subdivision 2 of section 82, to lay and maintain its "water pipet. in any streets or avenues or public places of an adjoining city, town or \ illagi' to the city, towji or village where such permit has been obtained;" but the provision of section 81, that "Every such corporation shall supply the au thorities or any of the inhabitants of nny city, town or village through wlnCli the conduits or mains of such corporation mtiy pass or wherein such (orporation inay have organized, witli pure and wholesome water at reason- able rates and cost," does not author ize the water eonlpany ' to ftirnish water to any of the inhabitants of an intervening municipality through which its conduits or mains may pass, un- less it has obtained the consent^ of the autliorities of that municipiality. While ii Avater colflpany duly incor- porated under the Traflsportatloil Cor- jjorations Law (L. 18&0, ^h. 566. as amd. by L. 1892, ch. 617, and L. 1894, ch. 23i(j) for the ipufpoSe of su'pplyin:; n ater to several towns and villages, i:art of which are separated from the others by the tferritory of ' the city of Rochester, may lay and maintain it^ water mains thrdugh the city, with- out the Consent of the authorities thereof, on the right of way of a rail- road running through the city, under and in considftriition of an agreement to furnish the railroad company water at stipulated prices, and under such agreement may furnish the railroad company with water for railroad pur- poses; the city, which' has built and maintains a public water system for supplying water to its inhabitnats and industries, is entitled under the statute (L. 1903, ch. 553), proJiibitiug any per- son or corporation, except the city , of Rochester, from furnishing or dis- tributing , water within such , city, , ex- cept under a franchise granted , by , the , common council thereof, to a perma- nemt injunction restraining , the water company from supplying water to a block of buildings owned by the rail- road company not used for railroad purposes, but leased to tenants. City of Rochester v. Rochester & Lake On- tario Water Co., 189 N. Y. 323, »2 N. E. 154. When water works company not re- quired to go around city with its water mains attd pipes.^See Rochester & Lake Ontario Water Go. v. City, of Rochester, 17'6 N. Y.- 36. 68 N. E. 117. Laying of water pipes does not impose additional burdeii upon land so as to entitle owner to additional com- pensation. Crooke v. Flatbush Water Works Oo., 29 Hun 345. 14. People ex rel. Goff v. Kirk, e,") MiSc. 657, 122 N. Y. Supp. 604, aflfd. 13'6 App. niv. 45, 119 N. Y. Supp. 862. ■ TEANSPOETATION GOBPOEATIONS. 901 secretary, and ffled in the office of the. county clerk of the county in which such lands are situated." 16 855. Condemnation of real property. r., "Any coi'poration organized under this article, shall have the right, to acquire real estate, or any interest therein necessary for the purposes of its, incorporation, and the right tp lay, relay, repair and maintain conduits and watgr pipes vyit!^ ,con- neetions and fixtures, m, through or over the lands of others, the right to in- tercept and divert the flow of waters from the lands of riparian owners, and from persons owning Or interested in any waters, and the right to prevent the flow of drainage of noxious or impuire matteirs from the lands' of others into its reservoirs or sources of supply; If any such corporation, which has made a con- tract with any city, town or village or with any of the inhabitants thereof for the supply of ^pure and wholesome water as 'authorized by section eighty-one of this article, shall be unable to agree upon the terms of purchase of any such property, or rights, it may acquire the same by condemn,ation. But no sucli corjjoratipn shall have ^ower to take or use water from any of the canals of this state, or any , canal reservoirs as feeders, or any streams which have .been taken by the state for the purpose oit supplying the canals witjb, water.'' 16 , 15. Transportation Corporations Iaw, § 83.., ,:„, , , ', The failure of: the corporation to file the survey and map entitles the landowner to the dismissal of sucli proceeding, where such objection thereto has .been duly made. Matter , of Citizens' Water: Works Co.. S2 Apv- Div. 54, 53 N. Y;- Supp. 473. 16. , Transportation Corporations Law. § 84. .. .. Constitutionality of section deter mined. Poeantioo Water Works- Co. V. Bird, 130 N. Y. .349. 39 N. E. 246. Power of eminent domain may be conferred upon corporations created under chapter 737 of Laws Of 1873, ..providing f6r tlie fotination of water works companies in towns and vil- a lages. Matter of New Roclielle Water Co., 46 Hun 635, 12 St. Rep. ■646. A company, incorporated for the purpose of furnishing pure and whole- some water, in the stbsence of the con- sent of the town or village in whicli it is locatodv required by chapter' 737 of the Laws of 1873; and of evidence , that a contract has been made for the furnishing of hydrants for public- sanitary , purposes, cannot maintain proceedings , for the, condemnation of land for the purposes of acquiring the title thereto under : the exercise, of the right of eminent domain. Citizens' Water' Works Co', v. Parry, 59 Hun 203-, 13 N.: Y. Supp. 490,iaffd. 128 N. Y. 6'69; 39 N. E. 148. The supplying ' of I pure and whole- some 'water to villages is a paiblic use and the right ' to - exercise the pftwer maiy be conferred' upon a, private cor- poration. Stamford Water Co. v. Stanley, 39 Hun 424, affd. 103 N. Y. ' 650. • : : . ■ Acquisition of works of private Mr- poration.--^The:act'.' (L. 18'75, ClV.' 181) authorizing villages to Siipply them- .selves'with water and permitting' the acquisition' of the woi-ks of any pri- •pate cdi"poratlOn' ithat may' be Supply- ing the munioipality with water, does not make it the duty of the' water commissioners to aicquire the • prop- ■erty of the existing corporation ' or corpoi'fttions. Skaneateles ' Water Works Co. ' v? Village of Skaneateles, 161 N. Y. 1154, 55 ^N. E.' 563; ' Liability fo*' destruction of private 902 COBPOBATIONS. A water- works cornpany, not having a contract with the public authorities to supply a village with watet, cannot exer- cise the right of eminent domain; but its right to use the streets of the village for its pipes is based, not upon its right to condemn property, but up removal of water pipes and hydrants so placed in the street in front of his premises without his consent." 856. Right to contract with other cities villages and towns; amended certificate. "When any Such corporation haa entered into a contract with the iiuthorities of any city, town or village not mentioned in its ctotifieate of incorporation, but situated in the same county as the city, towns or villages mentioned therein or an adjoining county, to supply it with pure and wholesome water, it may file an amended certificate stating the name of such other city, town or village to be supplied with water, and it may thereupon supply any such city, town or village with water in the same manner and with the same rights and subject to the same requirements as if it had been named in the original certificate of incorporation. "18 water system. — ^Wher© a village, in establishing a municipal water sys- tem, destroys a private system, it is liable to the private owner. Boyer v. Village of Little Falls, 5 App. Div. 1. 38 N. y. Supp. 1114. 17. Witcher v. Holland Water Works Co., 66 Hun 619, 30 N. Y. Supp. 560, aild. 142 N. Y. 626, 37 N. E. 565. 18. Transportation Corporations Law, § 85. The Appellate IMvision of the Second Department in ctnstiuing this section said: "We think that it is quite plain that the contract referred to in section 85 of the statute must be substantial in its nature; one that requires the water supply company to perform within the territory^ of the contracting municipality the powers and duties conferred upon it by sec- tion 81 of the statute in the locality in which it was incorporated under section 80. We tiiink it ia not to be supposed that, under the provisions of section 85 of the statute, the Legis- lature intended that a corporation en- tering into a contract therein specified could base its right to an amended certificate of incorporation upon a con- tract which did not, as far as con- cerned the locality, place the water supply corporation in precisely the same legal situation as it held in the territory of its original incorporation." People ex rel. Urban Water Supply Co. V. Connolly, 164 App. Div. 163, 149 N. Y. Supp. 693, affd. 213 N. Y. 706, 108 N. E. 1105, holding that a contract by wbieh a water supply com- pany incorporated to supply water in the town of North Hempstead, Nassau county, agrees to deliver water to the mains of the city of New York in a certain ward of a certain borough for one year, with an option on the part . of the city to require continuous per- formance for a period of two or three TBANSPOBTAXIOJir CORPOKATIONS. 903 years, does not entitle the company to amend ita certificate so as to be au- thorized to furnish water to ;the whole territory of the city of New York or to lay mains for that purpose^ This, because the board of estimate and ap- portionment of the^ city in making the contract did not attempt to grant a franchise to the water company hut merely contracted for a temporary supply which the city itself was to distribute. Although said water com- pany purchased the property and fran- chises of another company which was authorized to carry on the business of supplying water to a certain ward iu a borough of New York, it did not acquire the right to furnish water to the city of New York outside of that particular ward,, and hence, mandamus does not lie to compel the borough president to permit it to use the pub- lic highways of the borough outside said ward for the purpose of laying and maintaining water mains. 904: COBPOEATIONS. CHAPTER XXXIV. DiSTBiCT Steam Cobpobationb. 857. In general. 858. Examination of meters. 859; Entry by agent to eut off steam. 860. Duties as to service and rates. 857. In general. i "Any corporation now or hereafter incorporated for the pui-pdafe of supplying steam to consumers from a central station or stations through pipes laid in the public streets, shall be known as a district steam corporation and iipon the ap- plication in writing of the owner or occupant of any building or premises, within one hundred feet of any street main laid down by any such corporation, and pay- ment by him of all money due from him to it, such corporation shall supply steam as may be required for heating such building or premises, notwithstanding there may be rent or compensation in arrears for steam supplied, or for meter, pipe or fittings furnished to a former occupant thereof, unless such owner or oc- cupant shall have undertaken or agreed with the former occupant to pay or exonerate him from the payment of such arrears, and shall refuse or neglect to pay the same; and if, for the space of twenty days after such application, and the deposit, if required, of a reasonable sum to cover the cost of connection and two months' steam supply, the corporation shall refuse or neglect to supply steam as required, it shall forfeit to such applicant the sum of ten dollars and the further sum of five dollars for every day thereafter during which such refusal or neglect shall continue; but no such corporation shall be required to lay a service pipe for the purpose of supplying steam to any applicant where tho ground in which such pipe is required to be laid shall be frozen, or otherwise present serious obstacles to laying the same, nor unless the applicant, if required, shall deposit in advance with the corporation a sum of monoy sufficient to pay for two months' steam supply and the cost of the necessary connections and of th;- erection of a meter and such other special apparatus as are required for use in connection with such steam supply, nor unless the applicant shall provide tho space and right of way necessary for the erection, maintenance mid use of such connections and apparatus, and signify his assent in writing to the reasonable regulations of the corpora^on with reference to the supply of steam to con- sumers. ' ' 19 858. Examination of meters. ' ' Any such corporation may make an agreement with any of its customers by which any of its officers or agents shall be authorized at all reasonable times to 19. Business Corporation Ijaw, § 12. ports. Advance Sheet 42, p. 17. Construction of section.— Weiss v. Laying of pipes for heating and New York Steam Co. (Public Service other purposes.— L. 1879. ch. 317. Commission, 1916). State T)ept. Be- UlSTKICT STEAM COEPORATIONS. 905 enter any dwelling, store, building, room or place, supplied Tyith steam by such corporation and occupied by such customer, for the purpose of inspecting and examining the meters, devices, pipes, fittings and appliances for , supplying or regulating the supply of steam, and for ascertaining the quantity of steam con- sumed, or the quantity of water resulting from the cpndensa'tion of steam con- sumed. Every such ^greenient shall furthel- provide that such officer or agent shall exhibit his written authority if requested by the occupant' of such dwelling, store, building, room or place. Any person who Shall directly or indirectly preve'iit oT hinder such officer or agent from entering such dwelling, Store, building, roomoir place, or from making such inspection or examination, in' viola- tion of such agreement,. shall forfeit to. the corporation the sum. pf twenty-five dollars for each offlense. ? '20 ': . .' 859. Entry by agent to cut off steam. . ' ' If any person or persons, corporation or association supplied with steam by any such corporation, shall neglect or refuse to pay th? rent or remuneration for such, steam, or for the. meter, device,; pipes,, fittings or appliances, let by such corporation for supplying steam, or for ascertaining the quantity of steam con- sumed,, or the quantity of water resulting from the., condensation of, the .steam consumed, agreed upon or due for the same, as required, by his, their or its contract with such corporation, the latter , may thereupon stop and prevent the steam from. entering, the premises , of such person, persons, corporation or associ- ation, so. neglecting or refusing to pay such rent or , remuneration, and may also in any case, in which a person is liable to pay a forfeiture, or to a fine or im- prisonment,- by reason of any act to or tpwards such corporation or its property for which such forfeiture, fine or penalty is imposed by law, stop and prevent the steam from entering the premises of the person so liable, or if such person be an officer or agent of aiiy eoriioration or association^ , stop and prevent, the steam from entering the premises of such corporation or association. In all cases in which such corporation is authorized to stop and prevent the steain from entering aiiy' premises, it may, by its officers, agents Or workineii, enter into or on such premises between the hours of 'eight o'clock in the forenoon and six o'clock in the afternoon and cut off, disconnect, separate and carry away aiiy meter, device, pipe, fitting or other prqperty of the corporation; and: may ,cut ofEj disconnect and separate any meter, device, pipe or fitting, whether the property of the corporation or npt, from the mains or pipes of such corporation. ' ' 1 In view of the right of a steam company to exact a, sufficient deposit to guarantee it against loss through defaulting con- sumers and the great inconvenience of being deprived of the service, the power of discontinuing seirvice should he exer- cised only in clear eases of liability.^ ' ' 860. Duties as to service and rates. "1. Every steam corporation shall furnish and provide such service, instru- mentalities and facilities as shall be safe and adequate and in all respects just 20. Business Corporations Law,; §13. %. (Opinion of Pub. Serv; Comm., Ist 1. Business Corporations Iart to make the reports required by this artitele, to make a written, report thereof to the tax commssion, with siioh information as may be in 'his possession as may lead to the reoovery of any taxes due the state therefrom. If, in its Opin- ion, the interests of the state require it, the tax commission may emapltrjr such person to assist in the collection and preparation of evidence and in the prosecu- tion and trial of laotions for such taxes, and so much of the satoej not exceeding ten per centum thereof, as may be collected from any such delinquent corpora- tion, association, company, partnership or ■person, by reason of such report and .^uch services, as shall have beeri' agreed upon between such person and the tax- ooanmlisaioo or attorney -general aa a compensation therefor, shall be paid to such person, and nothing shall be paid to such person for S'Uch report or services nnless there shall be a recovery of taxes by reason thereof. "S 901. Action for recovery of taxes; forfeiture of charter of delinquent corporation. "An action may be brought by the attorney-general, at the instance of the tax commission, in tlie name of the state, to recover the amount of any account audited and stated by the commission under the provisions Of this article. If any «ueh account shall remain unpaid at the expiration of one year after notice of the statement thereof has been sent as required by this article, and the tax com- mission is satisfied that the failure to pay the same is intentional, it shall so report to the attorney-general, who shall immediately bring an action, in the name 7. Tax Law, § 201, as amd. by I.. p. 8501. 1915, ch. 317. and L. 1921, ch. 44.^; S. Tax Law. § 202, as amd. by L. See B. C. & G. Consol. L., 2nd Ed., 1931, ch. ,443. TAXATIOK. 929 of the people of the state, for the forfeiture of the franchise of any corporation, joint-stock company or association failing to make such payments, and If it is found that such failure was intentional, judgment shall be rendered in such action for the forjEeiture of its franchise and for its dissolution, and thereafter such franchise shall be annulled. ' ' 9 902. Reports to be made by secretary of state. "The secretary of state shall transmit on the first day of each month to the tax commission a report of the stock corporations whose certificates of incorpora- tion are filed, or of the foreign stock corporations to whom a certificate of authority has been issued to do business in this state, during the pre- ceding month. Such report shall state the name of the corpora,tion, its place of business, the amount of its capital stock, its purposes pr objects, the names and places of residence of its directors, and, if a foreign corporation, its place of business within the state. The commission may prescribe the forms and furnish the blanks for such reports. The secretary of state shall make like re- ports to the commission whenever required by it relating to any such corpora- tions whose certificates have been filed or to whom a certificate of authority has been issued prior to the time when this article takes effect, and during any period of time specified ' by the commission in its request for such report. "10 903. Exemptions from other state taxation. "The personal property of every corporation, company, association or partner- ship, taxable under this article, other than for an organization tax, shall be exempt from assessment and taxation upon its personal property for state pur- poses, if all taxes due and payable under this article have been paid thereby. The personal property of every corporation taxable under section one hundr^ and eighty-eight of this article, or ilnder section one hundred aad eighty-eight-a. of this article, other than for an organization tax, as provided in the banking law, shall be exempt from assessment and taxation for all other purposes. The per- sonal property of a private or individual banker actually employed in his busi- ness as such banker, shall be exempt from taxation foi- state purposes, if such private or individual banker shall have paid all taxes due and payable under this article. Such corporation and private or individual banker shall in no other re- spect be relieved from assessment and taxation by reason of the provisions of this article. The owner and holder of stock in an incorporated trust company liable to taxation under the provisions of this chapter shall not be taxed as an indi- vidual for such stock. Personal property exempted from taxation by this section shall not include shares of stock of banks and banking associations taxable under the provisions of sections twenty-four and twenty-four-g, both iriclusivei, of this chapter. "11 , , 9. Tax Law, § S0i3, as amd. by L. 1915, eh. 317. ' 1915, eh. 317, and L. 1921, oh. 443. 11. Tax Law, § 305, as amd. by L. See B. 0. & G. Cbnsol. L., 3Tid Ed., p. 1917, cha. 39, 707. See B. O. & O. S503. •' '■ Consol. L., 2nd Ed., p. 8503. 10. Tax: Tjawi §'804, as amd. by L. 59 h ?; 930 CORPORATIONS. 904, Application of taxes. , "The taxes imposed by tjiis article (Tax Law, Article IX) and the revenues thereoi shall be applicable to the general fund of the treasury and to the pay- nieut of all claims and demands which are a lawful charge thereon.* '12 905. Limitation of time. "The provisions of the codesof civil prooedm-e (Civil Practice Act) i relative to the limitation of time of enforcing a civil remedy shall not apply to any proceed- ing or action taken to levy, appraise, assess, determine or enforce the . collection of any tax or penaty prescribed by this article, and this section shall be construed as having been in effect as of date of the original enactment of the corporation tax la.w, provided, however, that as to real estate in the hands of persons who are owners thereof who would be purchasers in good faith but for such tax or penalty, and as to the lieu on real estate of mortgages held by persons who would be holders thereof in good faith but for such tax or pena,lty, all taxes and penalties which have prior to April first, nineteen hundred and seventeen became due and payable pursuant to this article, and which have not been referred to the attorney-gen- eral pursuant to section two hundred and three of this chapter, shall cease to be ,a lien on such real estate as against such purchasers or holders, after the expiration of ten years from the time when such tax became due and payable. "13 Franchise Tax on Busin&ss Corporations, , 906. Definitions. "As used in this article: ,1. The > toim ,'coiporatioi! ' includes a joint-stock company or association: ■,2. The words, 'tangible personal property' shall be taken to mean corporeal personal property, such, as machinery, tools, implements, goods, wares and mer- chandise, and shall , not be taken tp mean money, deposits in bank, shares of stock, bonds, notes, credits or evidence? of an interest in property and evidences of debt; 3. The term 'entire net income' means the total net income before any .de- ductions have , been made for taxes paid or to be paid to the governraent of the United States on either , profits lOr net income or for any losses sustained by the corporation in other fiscal or calendar years whether deducted by the government , of, the TJijited States or not. "14 907, Franchise tax on cc|^porations based on net income. "For the privilege of exercising its franchise in this state in a corporate or Organized capacity every domestic corporation, and for the privilege of 'doing business in this state, every foreign corporation, except corporations specified in the next section, shall annually pay in advance for the year bej^inriing Novem- ber first next succeeding the first day of July in each and every year an annual franchise tax, to be computed by the tax commission upon the basis, of its entire 18. Tax Law, § a06. , 14. Tax Law, § ,g08, as added by L. 13. Tax Law, § 207, as amd. by 1.. 1917, ch. 526, and amd. by L, 1916. 1917. ch. 410. ch. 417, and L. 1919, eh. 638. TAXATION. 931 net, incpme for its fiscal or the ceJendar year next preceding, as hereinafter pro- yided, which entire net income is presumably the same as the eriiiire net income upon which such, corporation is required, tp, pay a ta^ to the United State^, or, as otherwise provided by section two hupdred and fourteen of the tq,2!; law, except that the entire net income of a corporation not organized under the laws of a,ny state within' the United States which shall be taken as the basis of computation by the tax commission shall be, the entire net income in fact rather than the amount, eariied in the United States or the amount returned to the United States treasury department. "15 908. Oprporations exempt.. ' ' Corporations wholly engaged in the purchase and sale of, and holding title to, real estate for themselves, corporations whose sole business consists of holding the stocks of other corporations for the purpose of contrbUing the management and affairs of such other corporations, except such as are specifically subject to report under the provisions of subdivision nine of section two hundred and eleven of the tax la;W> andfeorporations' liable to tax under sections one hundred and eighty-four to one hundred and eighty -nine inclusive of this chapter, banks, savings banks, institutions for savings, title guaranty, insurance or surety corpo- rations shall be exenipt from the payment of the taxes prescribed by this- article."16 909. Reports of corporations to tax conuuission ' ' Every oprporation taxable under this article as well as foreign corpora- tions having ofScers, agents or representatives within the state shall annually on or before July first, or ' within thirty days after the making of its report of entire net income to the United States treasury department for any fiscal or calendar year, preceding said first day of July, transmit to the tax commission a report in the form prescribed by the tax commission, specifying: 1. The name and location of the principal place of business of such corporation, the state under the laws of which organized, and the date thereof; the amount of its issued capital stock and the kind of business transacted. Any corporation not organ- ized under the laws of any state within the United States shall state the facts in relation to its entire net income wherever earned and as though organized under the laws of this state, and instead of stating its ineOme as returned to the United States treasury ■dej)artment. ' " '' ' 2. The amount of its entirei net ihcoiiie for its preceding fiscal or the pre- ceding calendar year as shown in the last return of annual net income made by it to the- United States treasury departaient, except 'as provided in subdivision one of thiS' section. If the corporation shall claim that the ' return made to the United States treasury department was inaccurate, the' amount daiined by it to be the net income for such period shall be specified. If any dteduetion has been allowed for losses sustained by the corporation in prior years the amount so allowed and deducted shall be specified. 15. Tax Law, § 309, as added hy L. 16. Tax Law, § gio, as added by'X. 1917, ch.; 726, a/nd amd. by L. 1918, 1917, eh. 736, aiid amdV hy L. i918, ch. 276, L. 1919, ch. 638, L, 1930, ch, ch. 417,. and L. 19gO, ch. 640. 640. , 932 00BP0feAi36NS. 3. The average monthly value for the iistal or calendar year Of its rear prop- erty and tangible personal property in each city, village of portion of a town outside of a village within the state, and the average monthly Value of all its real property and tangible personal property wherever located. 4. The average' monthly va,lue for the fiscal or calendar year of bills and accounts reeeivabie arising from ta) personal property sold by the corporation from merchandise manufactured by it within this state; (b) personal property owned by the corporation and not manuJac'tured by it within this sta,te but sold'by ii or its agents and located within the state at the time of a receipt of the order; (c) the purchase or sale of, or trading in, goods, wares or merchandise not located at any place at which the corporation conducted a ptermaiient or continuous business without the state, and where the bills and accounts reeeivabie arose from orders received or accepted by any officer or agent, or at any place of busi- ness, in this state; and (d) services performed by any officer, agent or represent- tive of the corporation connected with, sent from, or reporting, either directly or indirectly, to any officer located in this staite or at any office located; owned, rented, or occupied in this state. Also the average total monthly value for the fiscal or calendar lyear of bills and accounts reeeivabie arising from the manu- facture by it of personal property or the purchase or sale of, or trading in; personal property, or from sei^vices performed: by the corporation, its officers or agents, excluding those arising iu any way from advances or loans. 5. The average total value for the fiscal or calendar year of the stock of other corporations owned by the corporation, and. the proportion of the average value of the stock of such other corporations within the state of Neiy York, as allocated pursuant to section two hundred and fourteen of this chapter. '6. If the . corporation has no real or tangible personal property within, the state, the city, village or portion of a town outside of a village in the, state in which is located the office in which its principal finaupial concerns within the state are transacted. 7. Such other f a.cts as the tax commission maj- , requii'e for the purpose ,of making any computation required by this article, or for the purpose of com- parison with former reports to determiiie whether or not such reports were erroneous or fraudulent. S. Any corporation t^xaiblc hereundei' upon its entire net income may omit from its report the statements required by subdivisions four and five by incorpo- rating in its report a consent to be taxed upon its entire net income. Corpo- rations having no net income shall, however, complete the segregation of assets in every case. , , , 9. Any corporation ownmg or controlling, either directly or indirectly, sub- stantially all of the capital stock of another corporation, or of other corpora- tions, liable to report under this article, may be required to make a consolidated report showing the combined entire net income, such assets of the corporation as aro required for the purposes of this article, and such other information as the tax commission may require, but excluding intercorporate , stockholdings and in- tercorporate accounts. The tax commission may permit the filiiig of a porabiTiecl report where sub- stantially all the capital stock of. two or more corporations liable to taxation under this article is owned by the same interests. The tax commission ' may impose the tax provided hx this article as though the combined entire net income and . T4XATI0U. 93? segregated assets were those of one corporation, or may,, in ^uch other manner as it shall determine, equitably ad just, the tax. Where any corporation liable to taxation under this article conducts the busi- ness whether under agreement or otherwise in such manner as either directly, or indirectly to benefit the members or stockholders of the corporation, or any of them, or any person or persons, directly or indirectly interested in such business by selling its products or the goods or commodities. in which it deals at Iqss than a fair price which might bo obtained therefor, or where such a corporation, a substajitial portion of whose capital stock , is oiyjied either directly or Jndiiectly by another corporation, acquires and disposes of the products of the corporation BO owning the substantial portion of its capital stock in such, a manner as^, to create a logs or improper net, income, the taj? commission may re,quire such facts as it deems necessary for the, proper computation provided by this article, and may , for the purpose of the act determine the amount which shall be deemed, to be the entire net income of the business of such corporation for the calendar or fiscal year, and in determining such entire net income the tax commission shall have regard to their fair profits which, but for any agreement, arrangement or understanding, might be or could have been obtained from dealing in such pro- ducts, goods or commodities. " 17 910. Reports by corporation on basis of fiscal year. "A corporation which reports to the United States treasury departnient on the basis of its fiscal year, may report to. the tax^ commission upon the same basis, except as provided in section two hundred and f ourteen-a of tihis chapter. ' ' IS 911. Verification and form of reports. ' ' Every report required by this article shall have annexed thereto the affidavit of the president, vice-president, secretary or treasurer of the corporation to the effect that the statements contained therein are true. Blank forms of report shall be furnished by the tax commission, on application, but failure to secure such a blank shall not release any corporation from the obligation of rriaking a report herein required. The commission may require a further or supplenieiital report under this article to contain further information and data necessary for the computation of the tax herein provided. " 19 912. Computation of tax. "If the entire business of the corporation be transacted within the state, the tax imposed by this article, if imposed upon the entire net income, shall be based upon the entire net income of such corporation for such fiscal or ca.lendar year as defined in section two hundred and eight of this chapter, , subject, how- ever, to any correction thereof for fraud, evasion or error, as ascertained by the state tax commission. If the entire business of such, corporation lae not trans- acted within the state, the tax imposed by this article shall be based upon a pro- 17. Tax La*, § 211. as added by L. 1917, eh..: 7a6. and amd. by L. 1919. 1917, ch. 726, and amd. by L. 1918. ch. «38. chs. 376, 417. L. 1919, ch. 628, ajnd :L. ' 19. Tax Law, §,31,3, as a;dded by L. 1930, ch. 640. 1917. oh. 726. 18. Tax Law. § 212; as added by L. ;, . 934 OORPOEATIONS. portion of such entire net income, to be determined in accordance with the follow- ing rules : The proportion of the entire net income of the corporation upon which the tax under this article shall be based, shall be such portion of the entire net income as the aggregate of 1. The average. Monthly value of the real property and tangible piersonal prop- erty within the state. ' 2. The average monthly value of bills and accounts receivable arising from (a) personal property sold by the corporation from merchandise manufactured by it within the state; (b) personal property owned by the corporation and not manufactured by it within this state but sold by it or its agents and Ideated within the state at the time of the receipt of the ordel'; (c) the purchase or sale of, or trading in, goods, wares or merchandise not located at any place at which the corporation conducted a pertoanent or continuous business without the stalte, and where the bills and accounts receivable arose from orders received or accepted by any officer or agent, 6r at any place of business, in this state; and (d) services performed by any officer,' agenit or fepresentaitive of the corpora- tion connected with, sent from, or reporting, either directly oi' indirectly, to any officer located in this state or at any office located, owned, tefited or oc- cupied in this state. 3. The proportion of the average value of the stocks of other corporations owned by the corporftition, allocated to the state as 'provided by this section, bears to the aggregate of 4. The average monthly value of all the real property and tangible personal property of the coiporation, wherever located. 5. The average total monthly value for the fiscal or calendar year of bills and accounts receivable from (a) personal property sold by the corporation from mer- chandise manufactured by it within and without this state; and (b) the pur- chase, or sale of,, or trading in, personal property,, or from services performed by the corporation, its officers or agents, excluding those arising in any way from ad.vances or loans. : , , 6. The average total value of stocks of other, corporations owned by the corpo- ration. 7. In case any report is made as provided by subdivision nine of section two hundred and eleven of the tax law, the tax commission may assess the tax against either of the corporations whose assets or net income are involved in the report and upon the basis of the combined entire net income and the combined segre- gated assets of the corporation and upon such other infprmation at it may possess, or miay adjust the tax in sucli other manner as it shall deterinirie to be equitable. Eeal property, and tangible personal property shall .be taken at its actual value where located The value of share stock of another corporation owned by a corporation liable hereunder shall for purposes of allocation of assets be ap- portioned in and out of the state in accordance with the value of the physical property in and out of the state representing such share stock. It is further provided that every domestic Corporation exercising its franchise in this state and every foreign corporation doing business in this state, other than those exempted by section tWo hundred and ten of this chapter, shall be subject to a minimum tax of not less than ten dollars and not less than one mill upon each dollar of such part of its issued capital stock; at its face value, as TAXATION. 935 the amount of its gross assets employed by it in its business in this state bears to its gross assets wherever employed by it in its business But if such a corporation has stock without par value, then the base of the tax, with relation to such stock, shall be such a portion of such issued capital stock,, at not less than its actual or market value, and not less than five dollars per share, as may be determined by the tax commission, as its gross assets employed in its business in this state bear to the entire gross assets employed in its business. If such a corporation is subject to a tax at the rate of one mill, and it main- tains no regular place of business outside thig state, except a statutory office, it shall be taxed upon its entire issued capital gtpcl? as, herein provided. "20 913. Taxation of corporations acquiring assets or franchises of other corporations. "If any corporation taxable under this article shall acquire either directly, indirectly or by merger or consolidation the major portion of the assets or the franchise 6f ' another corporation or of col-pbrations exel*cising any franchise or franchises or doing business in this state during any year, it shall include in its own next annual return, in addition to its own entire net income; so much, of the en- tire net income of the corporation or corporations whose assets or franchises it acquired as shall not have been used or included in measuring a franchise tax to this state, a,nd shall be taxed upon such combined entire net incomes for the year to ensue and as hereinbefore provided. The provisions for a minimum. tax shall be applied only when under such provisions a tax will result: in excess of the amoimt which would be produced by a tax on entii-e net income as hereinbe- fore provided and then in lieu thereof. This section shall be construed as having been in effect: as of the date of the original enactment of article nine-a of the tax law, as added by chapter seven hundred and twenty-six of the laws of nineteen hundred and seventeen. ' ' l 914. Bate of tax. "The tax imposed by this article- shall be at the rate of four and one-half per centum' of the entire net income of the corporation' or portion thereof taxable within the state, determined as provided by this article, unless taxable upon its capital stock at the rate 6f one mill or subjetft' to the" minimum tax of ten dol- lars, as provided in section two hundred and fourteen of the tax law."z 915. Penalty for failure to report. "Any corporation which fails to make any report required by this article shall be liable to a penalty of , not more tl)an five thpusand doUai-s to be paid to the state, to be collected in a civil action, at the iiji^t^pce of the tax com- . mission; and any ofBeer of any such corporation who makes a fraudulent return or statement with intent to defea-t or evade the payment of, the tfixes prescribed 20. Tax Law, § 214, as added by L. L. 1918, ch. 392, .and amd. by f,, 1919, 1917, eh. . 72-6,, and. amd. by L. IS^S, ch., 628. , ,^_., ', ,' chs, 276, 417, L. ,1919,, ch, 628, L. 1920, 2. Tax Law,' § 215^ as added by !■ ch. 640, and-L. 1931,,ch., 705. ,,,., '._ 1917, oh.,;J,26, and amd. by t., 1919, 1. Tax Law, § 214-a, as added by ch., |628,, and L. 1920,, ch.,640,.. 936 CORPORATIONS. by this article shall be liable to a penalty oi not more than one thousand dollars, to be collected in like manner." 3 916. Powers of tax commission. "The tax commission may for good cause shown exitend tihe tipie AViithin which ajiy corporation is required to report by this article. If any report required by this article be not made as herein required, the tax commission is authorized to make an estimate of the net income of such corporation and of the amount of tax due uiider this article, froon any information in its jios'sessdon, and to or- der and state an account according to such estimate fbr the taxes, penalties and interest due to the state from such coi-poration. All the authority and powers conferred on the tax commission by the provision of seetioti one hundred and ninety-five of the tax law shall have full force and effect in respect of corpora- tions whioh may be liable hereunder." 4 917. Revision and readjustment of accounts by tax commission. "If an application for revision be iiled with the commission by a ooi'poration against which an account is audited and stated within one year from the time any such account shall have been audited and stated, the oomimission shall grant a hearing thereon and if it shall ibe made to appear upon any such hearing by evidemce s.ubmitted to it or otherwise/ that any such account included taxes or other charges which could not have been lawfully demanded, or that payment has been illegally inade or exacted of any suoh account, the commission shall resettle the same according to laTVi and the facts, and adjust the accounts for taxes accordingly, and may, in its discretion, modify the penalty imposed for failure to report as provided in this article, and shall send notice of its deter- mination thereon to the corporation forthwith." 6 918. Review of determination of tax commission by certiorari. "The determination of the commission upon any application madft' to it by aoDy corporation for . revision and resettlement of any account, as prescribed by this article, m/ay , ihe reviewed ; in the manner prescribed by and subject to the provjsipns of section one hundred and ninety-nine of this chapter. ' No certiors.ri to review any audit and statement of an account or any deter- mination by the comiaission under this article shall be granted unless notice of application therefor is made within thirty days after the service of the notice of such determination. Eight days' notice shall be given to the oommis sion of the application for (Such writ. The full amount of the taxes, percentage, interest and other charges audited and stated in such account must be deposited with the state tax commission before making the application and an undertak- ing filed with the commission, in such amount and with such sureties as a justice of the supreme court shall approve, to the effect that if such writ is dismissed or the determination of the comraisBJon affirmed, the applicant for thp writ 3. Tax I>aw, § 216, as added by L. eh. (540. 1917, cb. 72/6, and amd. by L. 1931. 5. Tax Law, § 218, as added by L. ch. 443. 1917, ell. 736, and amd. by L. 1930. 4. Tax Law, § 217, as added by L. ch. 640, and L. 1921, ch. 443. 1917, ch. 726, and amd. by L. 1920. TAXATION. 937i, will pay all costs, and charges which may accrue against it in the prosecution oftte writ, including cosfe of all appeals." 6 919. Audit and statement of tax. "On or before the first day of December in each year the tax conuniBsion shall audit and state the account of each corporation known to be liable to a tax under this article, for its preceding fiscal or the preceding calendar year, and shall compute the tax thereon and p^robeed to collect the- same. The tax' com- mission shall determine the portion of such tax to be distributed to the several counties and the amounts to be credited to the several cities or towns thereof, when the same is collected and shall certify such determination to the state comptroller. If the corporation has real property or, tangible personal property located in a village, or if it has no real or tangible personal property in the state but the office in which its principal financial concerns within the state are transacted is located in a village, the tax oommission shall certify such facts to the state comptroller, wnth the name of the village in which such , ofiice or property is located."? 920. Notice of tax. "Every report required bjf section two hundred and eleven of this chapter shall contain the post-office address of the corporation and lines or spaces upon which the corporation shall enter its entire net income. Notice of tax assess- ment shall be sent by mail to the post-office address given in the report, and, the record that such notice has been sent shall be presumptive evidence of the giving of tlie notice and such record shall 'be preserved by the tax commission." 8 921. When tax payable. "The tax hereby imposed shall be paid to the state tax commission on or before the first day of Jamiary of each yiear, or within thirty days after notice of the tax has been given as provided in section two hundred and nineteen-ib of this chapteT if such notice is given subsequent to the first day of Decemiber of the year for which sudh taxis-imposed. If suchtax be not so paid, or in the case of additional taxes, if not paid' within thirty days after notice of such addi- tional tax has been given as provided in section two hundred and nineteen-d oif this chapter and such notice of additional tax is given subsequent to the first day of' December of the year for which aucih additional tax is imposed, the corporation lia- ble to such tax shall pay to the state tax Gommiasion in addition -to the amount of sudh tax, as additional tax, ten per centum of such amount, plus one per centum for each month the tax or additional tax remains unpaid, but the state tax oommission upon submission to it of satisfactory proof that the failure to pay such taxes, or additional taxes, within the time prescribed in this; article, was niot willful or evasive, may modify the exaction to not less than one per centum for each month following the due date of the tax. Baxsh such tax or additional 6. Tax Law, § 219, as added by L. 628. 1917, ch. 736, and.amd, by L. 1918, 8. Tax Law, § S19-b, as added by ch. ,417, and L. 1931, ch. 443. L. 19,17,,ch. 736, and amd. by L. 1919, 7. Tax Law, § 2i,9-a, as added by L. ch. 688. 1917, eh. 726, and amd. by L. 1919, ch. 938 COKPOKATIONS. tax ahall be a lien uipon and binding upon the real and personal property of the corporation liable to pay the same from the time when it is payable until the same is paid in full." 9 j, 928. Corrections and changes. "If the amount of the net income for any year of any corporation taxable under this article aa returned to the United States treasury department is changed or corrected by the commission of internal revenue or other officer of the United States or other competent authority, such corporation, within ten days after receipt of notice of such change or correction, shall make return under oath or affirmation to the tax commission of such changed or corrected iiei income, and shall concede the accuracy of such determination or state wherein it is erroneous. The tax commission shall ascertain, from such return and any other informa- tion in the possession of the eommissiion, the entire net income of such corpora- tion for the fiscal or calendar year for which sucli change or correction has been made by such commissioner of internal revenue or other officer or author- ity. All the authority conferred on the tax oommissdon by the provisions of sec- tion one hundred and ninety-five of this chapter is hereby granted to it in respect to the ascertainment of such entire net income. The tax commission shall thereupon reaudit and restate the account of such corporation for taxes based upon the entire net income for such fiscal or calendar year, such reaudit to be according to the entire net income so ascertained by the tax commission- The proceedings and determination of the tax commission in the making of such reassessment may be revised ajid readjusted and reviewed in the manner pro- vided by sections two hundred and eighteen arid two hundred and nineteen of this chapter, as in the case of an original assessment of the tax. If from such reassessment it appears that such corporation shall have paid under this article an excess of tax for tlie year for which such reassessment is made, the tax com- mission shall credit such corporation with suoh amount. Such credit may be assigned by the corporation in whose favor it is allowed to a corporation liable to pay taxes under this article, and the assignee of the whole or any part of such credit on filing with the commission such assignment shall thereupon be entitled to credit upon the books of the tax commission for the amount thereof on the current account for taxes of such assignee in the same way and with ; the same effect as though the credit had originally been allowed in favor of such assignee. If from such reassessment it appears that an additional tax is due from such corporation for such year, such corporation shall, within thirty days after notice has beeen given as provided in section two hundred and nine- teen-b of this chapter by the«tax commission, pay such additional tax." lo 923. Warrant for collection of taxes. "If the tax imposed by this article be not ipaid within thirty days after the same becomes due, unless an appeal or other proceeding shall have been taken to review the same, the tax commission may issue a warrant under its official 9. Tax Law, § 319-c, as added by 10. Tax Law, § 2l9-d, as added by L. 1917, oh. 736, and amd. by L., 1918, L. .191,7, eh. 7»6, and amd. by L. 1918, ch. 271, L. 1919, ch. 638, L. 1926^ ch. ch. 37,6, L. 1919, ch. 628, and L. 1931. 640, and L. 1931, ch. 443. ch! 443. TAXATION. 939 seal directed to the sheriff of any oouiity of the state oommariding hiin to levy upon and sell the real and personal property of the corporation owning the same, found within his county, for the payment of the amount thereof, with the added penalties, interest and the cost of executing the warrant, «nd to return such warrant to the tax conuniseion and pay to. it the mnney collected by virtue thereof by a time to be therein specified, not, less than sixty days from the date of the warrant. Such warrant shall be a lien upon and ^hall bind the real and personal property of the corporation against whom it is issued from the tame an actual levy shall be made by virtue thereof. The sheriff to whom any such warrant shaU be directed shall proceed upon the same in all respect?, with like effect, and in the same manner as prescribed by law iini respect to execu- tions issued against property upon judgments of a court of record^ and shall be entitled to the .'same fees for his services in executing the' warrant, to be col- lected in the same manner." ii , 924. Action for recovery of taxes; forfeiture of charter by delinquent corporations. ■'Actions may ibe brought at any time by the attorney-general at the instance of the tax commission, in the name of the state, to recover the ampunt pf any taxes, penalties and interest due under this article. If such taxes , be not paid within one year after the same be due, and the tax commission is satisfied that the failure to pay the same is intentional it shall so report to the attorney- general, who shall immediately bring an action in ^he name of the people of the state, for the forfeiture of the charter or franchise of any corporation failing to make such payment, and if it be found that such failure was intentional, judg- ment shall .be rendered in each action for the forfeiture of such charter and for its dissolution if a domestic corporation and if a foreign corporation for the annulment of its franchise to do business in this state." 12 925. Deposit of revenues collected. "The state tax commission shall deposit daily to the credit o3 transaction is subject to tax when transfer is made by the bank to the stockholders, provided the bank was an actual holder of the stock. Eept. of Atty. Genl., Feb. 31, 1911. Four corporations turned over all their stock to fifth in return for is- suance of stock. These corporations directed the ; new corporation to issue stock directly to a trustee. The trus- tee issued its certificates to the stock- holders in the four original corporar tions. The ' isBue of stock made by the new cbrporation is not taxable, being an original issue, but the issu- 946 COEPOKATIONS. poses a tax upon every transfer whether intermediate or final.* .And so where in proceedings for a merger of .two cor- porations, the stockholders of the constituent compaiiies trans- ferred their shares to pertain persons acting as trustees, who in tur];i upon the completion of the merger surrendered the shares in lieu of which stock of the merging corporation was issued to them, which stock was in turn transferred to the holders of the stock of the merged corporations according to their respective interests, the intermediate transfers to and from the trustees are taxable.^ Likewise transfer of shares of stock under a voting trx^st agreement is subject to a transfer tax.'' And certificates, issiied by the trustee under , a, voting trust agreement, to each of the stockholders that he, the stock- holder, was the owner of a designated number of shares of the capital stock deposited with and to be held by the trustee under the agreement as voting trustee are taxable.'' Aiid cor- aiice of the trustee's eertifica/tes eon stitutes such a transfer of beneficial interest as to be taxable. Rept, of Atty. Gfinl., Aug. 26, 1910. The issuance of stock after an in- crease of capital stock has been ,pro- vided for constitutes an original issue of stock to which the Transfer Tax Law is inapplicable. Eept. of Atty. ;Genl. (1908)j, 529. , " , . 4. Eept. of Atty. Geiil., Dec. 1,1909; Kept, of Atty^. Genl., April 14, 1911. 5. Opinion of Atty. Genl., May 6. 1913. Non-taxable transfers. — Surrender of stock by reason of merger agreement is not a taxable transfer. Rept. of Atty. Genl., Sept. 10, 1910. Upon the merger of two corpora- tions, the surrender of stock by the original stockholders to the merged corporation in return for stock in the latter is not taxable as a transfer. Rept. of Atty. Genl., April 14,- 1911. Where banking corporations are merged as provided by sections 36 et seq. of the Banking Law, stock owned by the merged corporation, transferred by the merger to the merging cor- lK>ration, is taxable. Opinion of Atty. Genl., Jan., 16, 1913, , 6. Eept. of ■ Atty. Genl., , Jan., 37 1911; Rept. of Atty. Genl.,, Feb, 8 1910; Eept. of Atty. Genl. (1911) Vol. 2, p. 586. ' ' ' , ., ,, ; 7. U. S. Radiator Co. y. State \ji New, Yorlc, 308 N. Y. 144,, 101 N. E, 78,3,; Eept. of Atty ..,GenI. (1911), '^o'l 2, p. 616. The stock of a railroad company was delivered ty the stockholders to voting trustees who delivered to ea^h of the stockholders their certificate entitling him at the expiration of the trus,t agi-eement to a retrajisfer of ,hi8 shares. Thereafter, and for the pur- pose of adjusting the debts of the company, an agreem,ent was made be- tween certain banks, as "managers," a trust company as "depository," and the stockholders and bondholdcira as "depositors." After the readjustment was accomplished the voting trust cer- tificates were surrendered to the first named voting trustees who issued nevi' certificates and delivered them to the new voting trustees who issued the usual certificates. Held upon ex- amination, of the agreements and the facts that, for the purposes of a ti'ans- TAXATION. 947 porate stock, held by trustees under a votings trust agreement by the terms of whicb the trustees were to redeliver the stock to the holders of' trustee certificates upon the termination of the contract, is subject to a transfer tax, oh, the redelivery of the stock,^ The tax is imposed by this section only on con- tracts of sale or transfer made or in whole or in part effec- tuated within the State of New York, and a contract of sale or transfer made and etfectuated without the State of New York is not rendered subject to a tax merely because of the fact that a record :of the transaction is made -within the State of New York pursuant to the command of section 2,76 of the Tax Law.^ However if an assignment, executed without the state, is de- livered within the state the transfer effected thereby is sub- ject to the tax.^" The fact, that transfers made within the state by non-residents of certificates issued by foreign corpo- rations and -owned by such non-residents are subject to the tax, does not constitute it a tax upon property without the jurisdiction of the state ; regarded as a tax not upon property but upon the privilege of its transfer, the state has the right to tax all business done and all contracts made within its ter- ritory, although relating' to property situated elsewhere, pro- vided they are not protected as federal agencies, whether the business is done or the contracts are made; by residents or non-residents ; assuming, however, that the tax is in effect a tax upon property, the certificates may, for the purposes of taxation, be treated as property, and when fonnd here are within the jurisdiction of the state and subject to the tax, so that whether regarded as a tax on the transfer of or upon the certificates themselves, it affects neither persons nor property without 'the jurisdiction of the state. The act does not violate the commerce clause of the Federal Constitution because it taxes transfers of certificates of stock in foreign corporations made by non-residents in this state.^^ fer tax, there was only a single trans- 742; Opinion of Atty. Genl., Feb. is. fer of the shares of stock and henoe 1913. only one of the transfers made under 9. Rept. of Atty. Genl, (1913), Vol, the trust agreement is liable to tax 2, p. 373. under section 370 of the Tax Lftw. 10. Luitwieler v. Liiitwieler Pump- Hudson & Manhattan R, Co. V. State ing Engine Co.i 190 App. Div. 80, 170 of New York,;3a7 N. Y. 333, 135 N. E. N. Y. Supp. 463. 202. 11. People ex rel. Hatch v. Rear 8. Chicago Great Western R. Co. v. don, 184 N. Y. 431, 77 N. E, 970, affd. State- of New York, 197 App, Div. 204 U,S, 153; Rept. of Atty: Genl,, 948 COEK)BATIONS. 933. Stock without nominal or par value. "The tax payable under section two hundred and seventy of the tax law in respect of any sale or agreement of sa,l^ or any memorandumi of sale or delivery or transfers of shares or certificates of any share without designated monetary value hereafter issiied by any such corporation issuing such shares shall be at the rate of two cents for each and evely share of such stocK so transferred. " 12 934. Stamps generally. "Adhesive stamps for the purpose of paying the state tax provided for by this article shall be prepared by the tax commission, in such form, and pf such de- nominations and in such quantities as it may from time to time prescribe, and shall be sold by it to the person or persons desiring to purchase the same; the tax commission shall make provision for the sale of such stamps by such persons, in such places and at such times as in its judgment; may be necessary. The tax commission may from time to time and as often as it deems advisable provide for the issuance and exclusive use of stanips of a new design and for- bid the use of stamps of any other design. In order to effect such a change and to discontinue the use of sta,mps of a former design the tax commission shall publish or cause to be published once in each week for each of three months im- mediately preceding the time for taking effect of such change, in one or more daily newspapers published in each of the first and second class cities of the state, a notice to the effect that after a certain day, which shall be at least three months after the first publication of said notice, none other than the new issue or design of stamps shall be accepted or made use of in payment of the tax provided for by this article. After such date it shall be unlawful for any person to make us of any other than the new issue or design of stamps in payment of such tax. Any person violating any of the provisions of this section shall be guilty of a misdemeanor. Any person lawfully in possession of unused stainps of an old or superseded issue or design, may, within ninety days from the time when such change becomes effective as aforesaid, surrender the same to the tax commissioij together with a sworn statement setting forth the name and address of the owner and party sur- rendering said stamps, how, when and from whom the same were acquired and such other pertinent information as the tax commission may requir?; whereupon the tax commission shall redeem such unused and surrendered stainps by ex- changing therefor stainps of . a like denomination of the new issue or design. Failure or refusal of the tax commission to redeem the same by such an exchange may be enforced by mandamus. "13 Oct. 3, 1910; Kept, of Atty. Genl.. provisions of this section, taxable at March 9, 1911; Rept. of Atty. Genl. the rate of two cents for each and (1911), Vol. .S,,p. 575. every share of stock so transferred. 12. Stock Corpopation Law, § 31, but this provision does not relate or pt., as added by Tj. 1913, ch. 351, and apply to the transfer of stock of a amd. by L. 1917, oh. 501, and L. 1931. joint stock association. Eept. of Atty. chs. 694, 705. Genl. (1913), Vol. 3, p. 535. Transfer tax.-^ales or transfers of 13. Tax Law, § 371, as amd. by L. corporate stock without any nominal 1913, oh. 811, and L. 1931, ch. 443. or par value are, by virtue of the Defective and obsolete stainps. — The TAXATION. 949 935. Sale of stamps. "No person, firm, company, association oi' corporation other than a corporation organised under the banking law of this state or under the national bank act of the United States, or a duly authorized agent of the tax commission, shall sell or expose for sale, traffic in, trade,' barter or exchange any stamp issued pursuant to this article, and purchased or acquired by him d-fter the time when this- section as hereby amended takes effect, Without first obtaiihing from the tax commission its Written consent to sell, traffic in, trade) barter or exchange such stamps, except that in connection with a safe of or agreement to sell stock a. broker or agent of the principal making such sale or agreement to sell may supply and affix the stamp or stamps required by this article. NO person shall sell or expose for sale any stamp so purchased or acquired for a sum less than the face value thereof without the written consent of the tax commission. Any person lawfully in possession of unuseS'stardps may request the tax commission for. its consent to sell or 'dispoSe of the same. He shall present to the tax com- missi-on, if so required, a sworn statement setting forth the name and address of the owner and the party desiring to sell or dispose of said stamps; how, when and from whom the same were acquired and the name and address of the person or persons to whom it is proposed to sell or dispose of the same, and such other pertinent and relevant information as the tax commission may require. There- upon the tax commission may give its written consent to sell the same. Upon the faOure or refusal of the tax commission to give such consent the same may be enforced by mandamus. Any person ■ violaating any of the provisions of this section shall be guilty of a misdemeianor, and upon conviction thereof shall be pusiishable by a fine of not less than five hundred nor more than one thousand dollars, or by imprisonment for not more than six months, or by both such fine and imprisonment, in the discretion of the court. "14 This section, providing that no person, etc;, " shall sell or expose for sale any stamp issued pursuant to this article, without first obtaining from the Comptroller his written con- sent," and making a violation of the provision a misde- meanor is unconstitutional.^^ Penalty for failure to pay tax. "Any person or persons liable to pay the tax, by this article imposed, and any one who acts in the matter as agent or broker for such person or persons, who comptroller may make a ruling that Claims. Reipt. of Atty. Genl., June stamps of a defective and obsolete 8, 1909. issue shall not be accepted in payment 14. Tax Law, § 371-a, as added by of. the tax upon transfers of stock L. 1911. eh, 12, and amd. by L. 1913, after a fixed date. But Jie has no au- oh. 811, L. 1916, qh. 553, and L. 1921, thority to redeem unused stamps of eh. 443. a former issue or to exchange aew 15. People ex rel. Isaacs v, Moran, stamps therefor. Claims for redemp- 206 N. Y. CTO, 99 N, E. 1115, revg. tion of stamps may be presented to 150 App. Div.. 226, 134 N, Y. Supp. the Legislature or to the Court of 931 on dissenting opinion. 950 COKPOBATIOWS. shall make any sale, transfer or delivery of shares or certiflcateis of stock without paying the tax by this article imjposed, and any person who shall in pursuance of any sale, transfer or agreement, deliyer any stock or evidence of the sale or transfer of or agreement to sell any stock, or bill or memorandum thereof, or who shall, transfer or cause the same to be transferred, upon the books or records of the association, company or corporation, and any association, company or corporation whose stock is sold or transferred, which shall 'transfer or cause the same to be transferred upon its books, without having the stamps provided for in this article affixed thereto, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not less than five hundred nor more ,than one thousand dollars^ or be imprisoned for not inore than six month or by both such fine and imprisonment, in the discretion of the court. "17 937. Canceling stamps; penalty for failure. • "In every case where an adhesive stamp shall be used to denote the payiueut of the tax provided by this article, the person using or affixing the same shall write or stamp thereupon the initials of his name and the date upon which the same shall be attached or used, and shall cut or perforate the stamp in a sub- stantial manner, so that such stamp cannot be again used; and if any person makes use of an adhesive stamp to denote the payment of the tax imposed by this article, without so effectually canceling the same, such person shall be deemed guilty of a misdemeanor, and upon conviction thereof shaU pay a fine of not less than two hundred nor more than five hundred dollars or be imprisoned for not less than six months, or both, in the discretion of the court. ' ' 18 938. Contracts for dies. "The tax commission is hereby directed to make, enter into and execute for and in behalf of the state such contract or contracts for dies, plates and printing necessary for the manufacture of the stamps provided for by this article, and provide such stationery and clerk hire together with such books and blanks as in its discretion may be necessary for putting into operation the provisions of this article ; the tax commission shall be the custodian of all stamps, dies, plates or other material or ' thing furnished by it and used in the manufacture of such state tax stamps, and all expenses incurred by it and under its direction iu carrying out the provisions of this article shall be paid to it by the state treasurer from any moneys appropriated for such purposed "19 17. Tax Law, § 373, as amd. by L. 10, 1910. 1911, ch. 353, and L. 191S, ch. 392. A brokerage firm whicli delivers a Failure to aflSx stamps. — ^A transfer memorandum of sale of stock with agent of a corporation who deliber- cancelled Stamps affixed thereto by ately neglects to require the affixing employees whose acts are unknown of stamps, subjects himself not only to said firm, is liable for the penalty to a civil penalty, but also to prose- provided by statute. Rept. of Atty. cution for a misdemeanor. Eept. of Genl., April 27, 1910. Atty. Genl., April 27, 1910. 18. Tax Law, § 273. as amd. by L. Transfer agent of the U. S. Steel 1911, ch. 352. CJorporation must require tax due on 19. Tax Law, § 274, as amd. by L. transfer to be paid before transfer 1921, ch. 443. is made. Rept. of Atty; Genl., Sept. TAXATION. 951 939. Illegal use of stamits. , : > "Ajiy person who shall willfully reihoye or, alter or' knowingly peimit to W removed or altered the canceling or defacing marks of aiiy stamp provided for by this article with intent to us6'sueli stamp, or who shall knowingly or willfully buy, prefpare for use, use, have ia his possession or suffer to be used any washed, restored or counterfeit stamp, and a;ny person who shall intentionally remove or cause to be removed or knowingly permit to be removed any stamp, affixed pur- suant to the requirements of this article, shall be guilty of a misdemeanor and on convietion thereof shall be liable to a fine of not less than five hundred nor more than one thoBS^iidr.dcjllars, or be imprisoned for not more than one year, or by both such fine and' imprisonment,' at the^ discretion of the court. ' ' 20 940. Registration, "Every person, firm, company, association or corporation engaged in -whole or in part in the making or negotiating of sales, agreements to sell, deliveries or transfers of shares or certificates of stock, or conducting or transacting a stock brokerage business, and every sitock association, comipany or corporation which shall maintain, a principal office or place of , business within the state or which shall keep or cause to be kept within the state of New York a place for thie sale, transfer or delivery of its stock, shall within ten days after the amend- ment to this section shail take effect if such a certificate shall not have been theretofore filed with the state comptroller, or within ten days after engaging in such business or after establishing such principal office or place of business or Buoh place for the sale or transfer of its stock, as the case may be, file in the oflice of the tax commission a eei'tifieate setting forth the name under which such business is, or is to be, conducted or transacted, and the true or real full name or names of the person or persons conducting or transacting the same, with the post-office address or addresses of said person or persons,' unless the party so certifying be a corporation, in which event it shall set forth its said principal office or place of business and when and where incoi"porated. Said certificate shall be executed and duly acknowledged by tlie person or persons so conducting or intending to conduct said business or by the president or secretary of the corporation as the case may be. In the event of a change in the persons eomiposing such firm, company or asso- ciation or of the address of any such person, firm; company, association or cor- poration, or termination of such business or relationship, a like certificate setting forth the facts with respect to such change or termination shall within ten days thereafter be filed in the office of the tax conunission. Any such person, firm, company, association or corporation who shall fail to comply with the provisions of this section shall be guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not less than one hundred dollars nor more than five' hundred dollars or be imprisOiied for not more than six months or by both such fine and imprisonment, in the discretion of the court." 1 20. Tax Law, § 275, as amd. by L, 1913, chl 779, and amd. by L. 1914, 1911, ch. 13, and L. 1913, ch. 393. ch. 206, and L. 1921, ch. 443. 1. Tax Law, § 275-a, added by L. 952 OOKPOBATIOBTS. The purpose of this enactment, is to afford; tiie Comptroller a practical means of ascertaining by, an inspection of the stock- book, transfer ledger and other records of the corporation, association or company, what, if an,y, taxable transfers of stock haye been made. The section does not apply to the, ordinary business corporation, the stock of which is not listed or upon the market for sale and which maintains no oESce or placoj aside from its principal office or place of business, for the keeping of its stock-book or transfer ledger, the sales or transfers of the stock of which are entered only upon the stock- book thereof, kept at its principal office or place of business.^ 941. Books and records to be kept. "Every person, firm, oo-mipany, association or corpcratiou, engaged in whole or in part in the making or negotiating of sales, agreements to sell, deliveries or transfers of shares or certificates of stock, or conducting or transacting a brokerage business, shall keep or cause to be kept at some accessible place witliin the state of New York, a just and true book of account, in such form as may* be prescribed by the tax commission, wherein shall be plainly and legibly recorded in separate columns, the date of making eveiy sale, agreement to sell, delivery or transfel- of shares or certificates oi stock, the name of the stock and the number of shares thereof, the face value of the stock, the namie of the seller or transferrer, the name of the purchaser ov transferee and the number and face value of the adhesive stamps afiixed and the identifying numjber of the bill or memorandum of sale used as provided for by section two hundred and seiyenty of this chapter. . Every association, eomipany or corporation shall keep or cause to be kept at some accessible place within the state of New York, a stock certificate book and a just and true book of account, transfer ledger or register, in such form as may be prescribed by the tax commission, wherein shall be plainly and legibly recorded in separate columns the date of making every transfer of stock, the name of the stock and the number of shares thereof, the serial number of each surrendered certificate, tihe name of the parties surrendering such certificate, the serial num- ber of the certificate issued in exchange therefor, the number of shares covered iby said certificate, the name of the party to whom said certificate was isaued and evidence of the payment of the tax provided, for by section two hundred and seventy of this chaipter, which evidence, however, shall be provided in one of the ifollowing manners and Sot otherwise, to wit: (a) By attaching to the stock certificate surrendered for transfer, the stamips required for such transfer, or (b) If the stamps are not attached to the certificate, but are attached to the bill or memorandum of sale effecting or evidencing the transfer of such certificate, by attaching to said certificate the said bill or memorandum of sale T\'ith stamps attached, or (c) If the stamps covering the transfer are attached to a bill or memorandum effecting a transfer of one or more certificates or to one or more certifioateS 2. Eept. of Atty. Genl. (1913), Vol. 2, p. 469. TAXATION. 953 included in said transfer, a notation must be made upon such certificates, bill or memorandum, as the case may be, clearly specifying and identifying the cer- tificate or certiflcaites of stock to the sale or transfer of which the said stamps apply, or ' (d) If the bill or meniprandiim bearing such stamjps is not attached to the surrendered certifleate or cei"tifieates to which it applies; a. natation must be made upon such bill or memorandum stating the serial numlber or numbers of the certificates to which said bill or memorandum applies, as proivided by sec- tion two hundred and seventy of this chapter. It shall also retain and keep all surrendered or canceled shares or certificates of its stock and all memoranda relating to tie sale or transfer of any thereof. All such books of account, transfer ledgers, registers and stock certificate ibooks, shall be retained and kept as aforesaid f pr a .period of at least two years subsequent to the date of the last entry made therein as herein required : and all such surrendered or canceled shares or certificates of stock and memoranda relating to the sale or transfer of stock,' shall be retained and 'kept for a peiriod of at least two years from the date of the delivery thereof. For the purpose of ascertaiiiing whether the tax imposed by this article has been paid, all such books of account, transfer ledgers, registers, stock certificate books, surrendered or canceled shares or certificates of stock and memoranda relating to the sale or ti-ansfer thereof, shall at all times between the hours of ten o'clock in the forenoon and three o'clock in the after- noon, except Saturdays, Sundays and legal holidays, be open to examination hv the tax commission or its duly authorized representative. The tax commission may enforce its riglit to examine such books of account and bills or memoranda of sale or transfer; and such transfer ledger, roister and stock certificate books and, sjjrrendered or canpeled sliares or certificates of stock hy mandamus. If the tax oomlmission ascei'tainss that the tax provided for in this article has not been paid, it shall bring an action in its name as, such tax commission, in any court of eojmpetent jurisdiction for the recovery of suoh tax and for any penalty incurred by any pei'son under the provisions of this article. Eyerj' person, firm, company, assoeiatden or coi'poration who shall fail to keep such book of account or bills; or memoranda of sale or transfer, pr transfer ledger, register or stock certificate book or surrendered or canceled shares or cer- tificates of stock as herein required, or who altej'S) cancels, dbliterates or destroys any part of said records, or makes any false entry therein, or who shall refuse to permit the tax commission or any of its authorized representatives freely to examine any of said, boolcs, records or ipapers at any of the times herein provided, or who shall in any other respect , yiolate any of the provisions of this section shall ibe deemed guilty of a misdemeanor and on conviction thereof shall for each and every such p;ffense..pay a fin© of not less than five hundred dollars nor more than five thousand dollars, or be imprisoned not less than three months nor more than two years, or both in the discretion of the court." 3 3. Tax Xiaw, % 216, as amd. by L. the comptroller to secure evidence from 1910, ch. 453, L. 1911, ch. 353, L. 1913, relator's private books and papers of ch. 393, L. 1913, eh. 779, and L. 1931, violations thereof which might be ch. 443. made the basis of criminal proceed- Constitutionality. — Prior to the in^s against him tliereunder, or of an amendment of 1910 it was held, that action for pemalties, violates the pro- the statute in attempting to authorize visions of section 6, article 1 of the 954 COEPORATJON.J. 942. Civil penalties; procedure. "Any person, firm, company, association or corporation who shall violate any of the provisions of section two himdred and seventy or section two hundred and seventy-two of this chapter shall in addition to the penalties herein pro- vided forfeit to the people of the state a civil penalty of ten dollars for eaoh and every share of stock so sold or transferred, or transferred or entered upon the books of the corporation, as the case may be, without the payment of the tax by this article imposed thereon. Any person who shall violate any of the other provisions of this article shall in addition to the penalties hereinbefore provided forfeit to the people of the state a civil penalty of five hundred dollars for each and every such violation. The tax commission shall bring an action in its name as such tax commission in any court of competent jurisdiction for the recovery of any civil penalty; and all moneys collected by it shall be paid into the state treasjiry. In an action against a corporation or its transfer agent to recover a penalty because of its transfer of stock upon the books or records of the corporation without require- ing the payment of the tax by this article imiposed, the failure of the corpora- tion or its transfer agent, on the demand of the tax commission or its duly au- thorized representatives, to produce the surrendered cei-tifieate or memoranda of sale with the required stamps attached, shall eqnstitute prima facie proof of the nonpayment of the tax imiposed by section two hundred and seventy of this chapter." 4 943. Effect of failure to pay tax. "No transfer of stock made after June first, nineteen hundred and five, on which a tax is imposed by this article, arid which tax is not paid at the time of such transfer, shall be made the basis of any action or legal proceedings, nor Bhall proof thereof be offered or received in evidence in any court in this state." 5 State Oonstitution, which provides N. E. 889. that no person shall be compelled In Books and records. — The fact that any criminal ease to be a witness stock books of a New York corpora - against himself. However the eon- tlon are kept at its place of business demnation of this phase of this sec- in the State of Ehode Island does not tion which carries with it oondemna- relieve the corporation from the duty tion of the other clauses of this article imposed upon it by this section,' and providing for mandamus to enforce such corporation must keep the books the right to examine such iooks and and records required by said section, papers and making it a misdemeanor Rept. of Atty. Genl., Vol. 2, p. 674. to refuse to allow an examination Examrnatiou of stock certificate book thereof, does not work any destrue- of transfer agent. — 'Comptroller is tion of the statute imposing taxes on authorized to examine the stock cer- stock transfers, and in the general tificate book as well as the account scheme of the article there is nothing book of a transfer agent of numerous to criticise; and the other provisions corporations. Rept. of Atty. Genl., are so complete and independent that April 5, 1911, they are separable from those which 4. Tax Law, § 277, as amd. by L. aie objectionable. People ex rel. Fer- 1912, eh, 292, and L, 1921. cli. 443. guson v. Reardon, 197 N, Y. 23,6. 90 5. Tax Law, § 278, TAXATION. 955 The effect of this section is not to impose upon the vendot who fails to pay the tax a forfeiture of his property; but simply denies to hini the right to enfbrce the' contract of sale, and hence the provision is not unconstitutional.^ The statute is satisfied if the tax be paid when the transfer is accom- plished.'' The statute does not provide that a person must pay this tax before he can make or bring an action to enforce a contract for the transfer of stock. Such payment is not made a condition precedent to the right to bring an action and plain- tiff is not compelled to allege compliance, but the failure to pay the taxis matter to be pleaded as a defense.* Likewise 6. Sheridan v. Tucker, 145 App. Div. 145, 12.9 N. Y. Supp. 18. The donee of corporate stock claim- ing title by gift causa mortis or inter vivos oan prove such gift only in a case where the dofior affixed the proper Stamps to the certificates at the time of the gift and delivery thereof. Mat- ter of Ealeigh, 75 Misc. 55, 134, N, Y. Supp. 684. 7. Waddle v, Cabana, 330 N. Y. 18, 114 N. E. 1054; Phelps-Stokes Es- tates V. Nixon, 322 N. Y. 93, il8 N. E. 341; Smyth v. Pure Ice Co, of Wil- liamsburg, 193 App. Div. 479, 184 N. Y. Supp. 305. 8. Bean v: Flint, 304 N. Y. 153, 97 N. E; 490; Graffney v;' People's Trust Co. of Binghamton, 191 App. Div. 697, 182 N. Y. Supp. 451, affd. 231 N. Y. 69 (mem.). See also, Sheridan v. Tucker, 138 App. Div. 436, 123 N. Y. Supp. 800. In an action by a stockholder of record of an insolvent trust company to recover from the executor of the actual owner of the shares of stock the amount he paid as his statutory liability, the plaintiff i§ entitled to recover on proving a transfer of the certificate in blank, a delivery thereof to the testator and that it remained in his possession till the time of hi^^ death and is now in the possession of his executor, though:: there are no stamps on the certificate showing that the transfer tax had been paid, for in the case of a transfer by delivery of a certificate assigned in blank, the stamps must be attached, under sec- tion, 315 of tbe former Tax Law, to a bill or memorandum of the sale ' de- livered by the seller to the buyer, and therefore, the fact that the certificate , did not have, , a stamp affixed to it is not , evidence that the tax , had not been paid, but such fact of non-pay- ment must be proved as a defense. Gaffriey v. People's Trust Co. of' Bing- haraton, 191 App. Div; 697, 182 N. Y Supp. 451. Action to recover installment due on sale of stock. — ^Where an agreement for the sale of corporate stock for a certain, sum payable in weekly install- ments provided that when they should aggregate a stated amount a certain number of shares of the stock were to be transferred to the buyer, the re- mainder when the full amount was paid, and further, that during the con- tinuance of : the agreement and until there should be! a default for five days the stock should be indorsed in blank and delivered in escrow to one- Ivho should hold the same in accordance with said agreement, the buyer to have no power or authority: to vote the stock or exercise any of the rights of a stockholder, the agreement is one for the sale of stock within the mean- ing of section 270 of the Tax Law, a- 956 COBPOBATIONS. the statute does not prevent the holder of stock from recover- ing in an action for damages for the purchase price of stock which the defendant refused to take.^ But in an action by an assignee of stock certificates to compel the corporation to transfer shares upon its hooks in order to effectuate a written assignment of those shares on which no tax 'tad been paid or stamps affixed, it is an essential part of the plaintiff's, cause of action to a,llege and prove the payment of the stamp tax. Such payment is a condition precedent to the right of plaintiff to maintain the action, for section 278 of the Tax Law forbids the bringing of any action based upon a transfer on which the tax has not been paid. And this rule applies where the delivery of an assignment of stock was made within the state though the assignment was executed outside the state.^^ How- ever, in an action by a stockholder against a corporation to compel it to transfer shares upon its books, it is no defense to allege, in substance, that the plaintiff' having entered into an executory contract to sell said stock to a third person has not paid the stamp tax imposed on such transfers. The defend- ant corporation can only insist that stamps shall be affixed and canceled at the tiirte the transfer is accomplished, which cannot be done uiltil the transfer is actually made. The statute is satisfied if the tax be paid when the transfer is ac- complished.^^ 944. Applioation of taxes. ' ' The taxes imposed under this article and the revenues thereof shall be pajd by the tax commission into the state treasury and be applicable to the gen- eral fund, and to the payment of all claims and demands which are a lawful charge thereon. ' ' 13 945. Refund of tax erroneously paid. "If any stamp or stamps shall have been erroneously afSxed to any book, certificate of stock, or bill or memorandum of sale, the tax commission may, upon * amended. Upon the indorsement of 9. Phelps ^Stokes : Estate v. Nixon, the stock in blank and its delivery in 233 N. Y. 93, 118 N. E. 241. escrow the tax thereon became imme- 11. Luitwieler v. Luitwieler Pump- diately due and payable by the seller ; ing; Engine Co., 190 App. Div. 80, 179 and he having failed to affix the N. Y. Supp. 463. stamps required by law defendant was 12. Smyth v. Pure Ice Co. of Wil- at liberty to plead the fact as a de- liamsburg, 193 App. Biv. 479, 184 X. fense in an action to recover an in- Y. Snpp. 305. stallment under said agreement. Phil- 13. Tax Law, § 279, as amd. by L. lips V. GroBsman, 76 Misc. 497, 135 X. 1921, ch. 443. Y. Supp. 567. TAXATION. 957 presentation of a claim for the amount of such stamp or stamps and upon the production of evidence satisf aetorj- to it that such stamp or stamps was or were 80 erroneously affixed so as to cause loss to the person or persons making such claim, pay such amount or such part thereof as it may allow, to such claimant out of any moneys appropriated for that purpose. Such claim shall be presented to the tax commission in writing, duly verified, and shall state the full name and address of the claimant, the date of such erroneous affixing, the face value of such stamp or stamps and shall describe the instrument to which the stamp or stamps were affixed and contain such evidence as may be available upon which the demand for such refund is based. Such claims shall be presented within ninety days after such erroneous affixing unless such aflSxing shall have taken place prior to the date on which this act shall take effect, in which case such shall be presented within ninety days after the date on which this act shall take effect. If the tax commission rejects a claim or any part thereof, the claimant may file a claim for the recovery of such sum as the tax commission shall have refused to allow, with the court of claims, which shall constitute a private claim against the state and shall be subject to all the provisions of law governing such claims, except that all claims so presented shall be filed with the court of claims within ninety days from the date on which such claim shall be rejected by the tax commission. For the purposes of this section, the tax commission's decision shall be deemed to have been made at the time of the depositing of a copy of such decision in the postoffice inclosed in a duly post-paid wrapper and directed to the person making such claim at the address contained in the verified claim presented to the tax commission as hereinbefore provided. ' ' U 14. Tax Law, § 280, as added by L. 1910, ch. 186, and amd. by L. 1921. ch. 443. Application. — The face value of stock transfer stamps should not be re- funded to the Standard Oil Company, although such company has sui-ren- dered certificates of stock held by it to its various subsidiary corporations and has issued new certificates to those companies. Kept, of Atty. Genl.. Mar<3i 7, 1912. Claims for refund for stamps erron- eously affixed must be verified, and state the full name and address of the claimant, and that a loss will accrue to the parties making the claim. Rept. of Atty. Genl., March 9. 1911. Refund of amount of stamp tax, paid under the unconstitutional amend- ment of 1906, may be made by the Comptroller. Flower v. State of New York, 143 App. Div. 871, 138 N. Y. Supp. 308. FORMS. Certificates under Business Corporations Law 961 Certificates under General Corporation Law 972 Certificates under Stock Corporation Law 988 Certificates under Transportation Corporations Law 1017 Miscellaneous Corporation Forms 1030 Specific objects of Business Corporations 1043 Procedural Forms 1069 [959] FORMS. FORMS FOR CERTIFICATES UNDER BUSINESS CORPORATIONS LAW FORM No. h Certificate of Incorporation of a Company All of Whose Shares Are to Have a Designated Par Value. (Pursuant to § 2, Buaineag Corporations Law) We, the undersigned, for the purpose of forming a corporation pursuant to Section 2 of the Business Corporations Law of the State of New York, do hereby certify as follows: 1. That we are all of full age,; that at least two-thirds of us are citizens of the United States, and that at least one of us is a resident of the State of New York. 2. The name of the corporation shall be . 3.. The purposes for which it is to be formed are '....'...'/...: 4. The amount of the capital stock shall be $ , 5. The number of shares of which the capital stock shall consist is . , of the, par value of if. each (of which Shares shall be preferred stock and • . • . ., shares shall be common stock. The preferences of the pre- tended stock shall be as follows ..,.'.. .'.'. . .;:... j .. i ...■...........) . 6. The amount of oapiial with whict the corporation will begiii : businp.=is is $ '", \ ;■ ;■ """■''■' • ■ ' ' 7. The principal business office shall be located in the Gity of . .i , County of ., N. Y. (If in New York City the Boroiigh must be stated.) 8. The duration shall be (perpetual). 9. The number of directors shall be ......... . 10. The names a,nd post-office addresses of the directors for the fir-st year are: Name P. O. Address 11. The iiames and post-office addresses of the subscribers of this certificate, and the number of SharfS of stock which each agrees to take in the corporation, are as follows: Name P. 0. Address Shares [961] 61 962 GORPOEATIONS. In Witness Whereof, we have made and signed this certificate, in triplicate, this day of •,,. .'..,19.: State op New Yobk, ) cottntt of ,(^^" Oi tJiis day of , 19 . . , before me personally came, > and , to me known to be the persons described in and who executed the foregoing, instrument, and they thereupon severally duly acknowledged to me that they executed the same. Notary Public County of . FORM No. 2. Certificate of Reorganization. (Pursuant to § 4, Business Corporations Law) We, the undersigned, John Doe and Richard Roe, do hereby certify: 1. That the Chemical Manufacturing Company is a corporation duljr organized and existing under the laws of the State of New York. That its certificate of incorporation was filed in, the office of the Secretary of State on the 12th day of September, 1851, pursuant to chapter 145, Laws of 1848, and that its term of existence was extended to the 12th day of September, 1951, by a cei^ificate filed in the office of the Secretary of State on the 10th day of September, 1901. That said corporation is not a moneyed or transportation corporation, nor does its business partake of the nature of banking or insurance. . 2. That the directors of said corporation called a meeting of the stock- holders thereof by publishing a notice stating that said meeting would be held at the office of the corporation at No Street, in the City of New York, Borough of Manhattan, on the 10th day of March, 1921, at 2 o'clock in the aiternoon for the purpose of voting upon a proposition to re-incorporate said corporation under Chapter 12 of the Laws of 1900', entitled "An Act Relating to Business Corporations, Constituting Chapter 4 of the Consolidated Laws," as amended. That said directors caused said notice to be published once a week, for three successive weeks, in the , a newspaper of the county in which the principal business office of the Chemical Manufacturing Company is located, and also caused to be served upon each stockholder, at least three weeks before! said meeting a copy of said notice, by depositing it in the post-oflSce, postage prepaid, addressed to him at his last known post-office address, as more fully appears by the affidavits of the publication and service of such notice hereto annexed. That the stockholders met at the time and place specified in such notice, and organized by choosing the undersigned John Doe, who is a director of said cor- poration, as the Chairman of the meeting, and the undersigned Richard Roe, as the Secretary thereof. FORMS FOR CERTIFICATES, BUSINESS CORP. LAW. 963 That a vote of the stockholders was then taken upon the following resolutions : "Resolved, That the Cheoiieai Manufacturing Conipany, be re-ineorporated under Chapter 12 of the Laws of 1909^ entitled 'An Act Relating to Business Corporations, Constituting Chapter 4 of the Consolidated Laws,' as amended, and be it further Resolved, That the Chairman and Secretary of this meeting be, and they are hereby authorized and directed to execute and acknowledge a certificate of the proceedings of this meeting' pursuant to Section 4 of the Business Corporations Law, and to file such certificate in the public offices designated by law for that purpose." Upon the vote being canvassed it was found that votes representing ' shares of stock, being a majority of all of the stock of the corporation, had been cast in favor of the proposition, and such resolutions were thereupon declared duly adopted. And we do further certify as follows: 1. The name of the corporation is Chemical Manufacturing Company. 2. The purposes for which it is formed are the manufacturing, compounding, producing, purchasing and selling of chemicals and drugs of all kinds. 3. The amount of its capital stock is $100,000, all common. 4. The number of shares of , which the capital stock consists is 1,000 of the par value of $100 each, and that it has all been fully paid in. 5. The principal business offipe is located in the Borough of Manhattan, City and State of New York. 6. The duration of the corporation is to continue until the 12th day of Sep- tember, igisi. 7. The number of its directors is 5. 8. The names and post-office addresses of its directors are: Name Address In Witness Whereof, we have made and executed this certificate in triplicate, this 11th day of March, 1921. JOHN DOE, Chairman of Meeting. RICHARD ROE, Secretary of Meeting. (Add acknowledgment.) • FORM No. 3. :., Certificate of Payment of One-half Capital Stock. {Under § 5, Business Corporations Law) The undersigned, constituting a majority of the directors of the Corporation, for the purpose of complying with the requirements of Section 5 of the Business Corporations Law, do hereby certify that one-half of the capital 964 OOBPOKATIONS. Btock of said corporation has been paid in, and that of the ca,pital stock paid in $. has been issued for property purchased. . . State of New Yokk, ■) CotTNTT OF. .......... U *^' On this day of , 19 . . , before me personally came -J, ■,:..,..•,.,;.._,,.,.,..,...;.. and ,,,to me personally kjipwn to be the. persona described iji and who executed, the foregoing instrument, and they thereupon severally duly acknowledged to me that they executed the same. Notary Public, ..,.,. County. State of New Yoek, ] , , County OF Kew, Yqkk, f ^^; " A. B. and X. Y., being duly sworn, each for himself dfepbSeS and says, that he, the said A. B , is President, and he,' the said X^ Y., is Secretary of the .......... ■ Corporation; that he is' pei'sonally acqliEtinted with .......... , and . i ......... the 'persons who niade the foregoing certificate of payment of one-half capital stock of said corporation, and kiioA^s th^t each of them is a director of said corporation, and that together* they coiistitute a iiiajority of the directors thereof • that he has read' the f orfegoing ceftilicate' and knows the contents thereof and that the statements therein contained are true. Sworn to before me this . . . day of , 19. President. Secretary. Notary Public, County. FORM No. 4. Agreement for Consolidation of the Vulcan Iron Works, Inc., and the American Foundry Co., forming the American Iron Corporation. (Pursuant to § 7 of the Business Corporations Law) This Agreement, made and entered jnto by and between the Vulcan Iron Works, Inc., and the American Foundry Co., and signed by a majority of their respective boards of directors and under their respective corporate seals, Witnesseth, that the said Vulcan Iron Works, Inc., is a corporation duly organ- ized and existing under and by virtue of the Business Corporations Law of the State of New York, for the purposes set. forth in, its certifiestte pi .incorporation Hied in the office of the Secretary of .State, at Albany, on the ..,.;,. day of . . ., , 19. ., and in the office of the Clerk of the, County of Westchester, on the day of , 19 . . ; FORMS FOE CERTIFICATES, BUSINESS CORP. I^AW. 965 That the American Foundry Co. is also a corporation duly organized and exist- ing under and by virtue of the said Business Corporations J>aw for the purpbseji set forth in its certificate of incorporation filed in the office of the Secretary of State at Albany on the day of , 19 . . , aiid in the office of the Clerk of the County of Rockland, on the day of . . , 19..; '\^\ ' ' _ ' [ _ _ ■ ' ,.,'',':., That the purposes for which the two corporations aforesaid were formed are similar; That, pursuant to Section 7 of the Business Corporations Law of the State df New York, the parties aforesaid agree to, and do hereby consolidate the said Vulcan Iron Works, Inc., and the American Foimdry Co. into a single cdrpora- tion, and do hereby further consent, agree and provide as follows: First: The name of the new corporation formed by this consolidation shall be American Iron Corporation. Second: The number of the directors who shall manage its affairs shall be Third: The name-s and post-ofiice addresses of the directofs for the first year are Names Post-ofl5ce Addresses Fourth: 'The term of it's duration sUall' he i'if'fij years. Fifth.' I'he operations of the corporation are to be carried on in the Ciiy and County of New York, and generally in the State of New York and throughout the world. . Sixth: Its principal place of business and principal business office is to be located in the City of New York, County of New York, Borough of Manhattan. Seventh: The apiount of its capital stock shall be $^ . ^ .' '.'.'. .". '., and it' shall be divided into .........'. shares of the par value of $ . . each, of which shares shall be preferred stock, entitled to cnniulative dividends of six per centum per annum before any dividends shall bfe declared or p'aid upon the common stock. After such dividends of six per cent per annunoi shall have been declared and set aside for the benefit of the holders of preferred stock in any year, no further dividends shall be payable tliereon in that year, but all remaining net profits of the corporation for such year may, in tile discretion of the directors, be declared and paid as dividends upon the common stock, or the whole or a portion of such net ea,rnings may be set aside as a reserve fund or surplus. 'in caSe of any distribution of the assets of the corporation, upon dissolution or otherwise, the holders of the preferred stock sliall first receive 'payment in full up to the par value of their shares, before any payment shall be made to the holders of common stock on account thereof; and after such payment of the par value of the preferred stock the holders of preferred shares shall not be entitled to pafticipatle in any further distribution of assets, but the entire sur- plus assets then remaining shall be distributed among the holdefs of the cominon stock exclusively. Eighth: The shares of the capital stock of the new corporation -^Jiap. be dis- tributed as follows: , Each stockiiolder of the Vulcan Iron WoTks, Inc., upon presenting his eer- 966 CORPORATIONS. tificates of stock to the transfer agent of the American Iron Corporation, for cancellation, shall be entitled to receive for and on the basis of each four shares of stock so surrendered, certificates for and on the basis of four shares of com- mon stock and one share of preferred stock of the American Iron Corporation; so that the rate of exchange shall be four shares of stock in the Vulcan Iron Works, Inc., for five shares of stock in the American Iron Corporation, and so that four-fifths of all stock of the American Iron Corporation so issued in exchange for stock of the Vulca,n Iron Works, Inc., shall be common stock, and one-fifth of all stock of the American Iron Corporation so issued in exchange for stock of the Vulcan Iron Works, Inc., shall be preferred stock: Each stockholder of the American Foundry Company, upon presenting his cer- tificates of stock to the transfer agent of the American Iron Corporation, for cancellation, shall be entitled to receive for and on the basis of each three shares of common stock so surrendered, certificates for and on the basis of foui shares of common stock in the American Iron Corporation, and no more; so that the ra,te of exchange shall be three shares of common stock in the American Foundry Company for four shares of common stock in the American Iron Corporation; Each holder of preferred stock of the American Foundry Company, upon pre- senting his certificates of such stock to the transfer agent of the American Iron Corporation, for cancellation, shall be entitled to receive for and on the basis of each share of preferred stock so surrendered, certificates for and on the basis of one share of preferred stock of the American Iron Corporation, and no more, so that the rate of exchange shall be one share of preferred stock in the Ameri- can Foundry Company for one share of preferred stock in the American Iron • Corporation. No stock of the new corporation shall be issued in exchange for stock of either of the constituent corporations otherwise than as hereinbefore provided, nor, upon any other rate of exchange whatsoever. Both of the corporations, parties hereto, were organized for the purpose of carrying on business both within and without the State of New York; and it is the purpose, likewise, of the new corporation to conduct its business both within and without said State. In Witness Whereof, we, the undersigned, directors of the Vulcan Iron Works, Inc., and of the American Foundry Co., have executed this agreement in tripli- cate, and have caused to be affixed the seals of our respective corporations, this day of , 19. . Directors of the Vulcan Iron Works, Inc. (Seal of the Vulcan Iron Works, Inc.) Directors of the American Foundry Co. (Seal of the American Foundry Co.) State op New York, 1 COTJNTY OF. ,f '^" On this day of , 19. ., before me personally came (insert names of all of the directors of both corporations, if they are assembled 967 and can conveniently acknowledge at one time; it is unnecessary to prepare a separate certificate of acknowledgment for the directors of each corporation), to me personally known and known to me to be the persons described in and who executed the foregoing instrument, and they thereupon severally duly acknowl- edged to me that they executed the same. Notary Public, County. State of New York, ) CotTNTT OP , ( ^^' ■ , being duly sworn, deposes and says, that he is the Secretary of the Vulcan Iron Works, Inc.; that as such officer he has lawful custody of the books and records of such corporation and of the seal thereof; that he has exam- ined said books and records, and that it appears therefrom that (insert names of the directors of the Vulcan Iron Works, Inc.), the persons who have signed the foregoing consolidation agreement, are directors of said corporation, and that together they constitute all of the directors thereof; that the first seal affixed to such instrument is the seal of the said Vulcan Iron Works, Inc., and that he affixed the same pursuant to order of the board of directors. Sworn .to before me this day of ..,19.. Notary Public, County. State of New York, 1 County of •>( ^^'' being duly sworn, deposes and says that he is the Secretary of the American Foundry Company ; that as such officer he has lawful custody of the books and records of said corporation and of the seal thereof; that he has examined aaid books and records and that it appears therefrom that (here insert names of the directors of the American Foundry Company), the persons who have signed the foregoing consolidation agreement, are directors of said corpora- tion and that together they constitute all of the directors thereof; that the second seal affixed to such instrument is the seal of the said American Foundry Company, and that he affixed the same pursuant to order of the board of directors. Sworn to before me this . . . . day of ,19.. Notary Public, County. In the Matter of the Consolidation of the Vulcan Iron Works, Inc., with the American Foundry CcJinpany, forming American Iron Corporation. ■ ' Minutes of meeting of the stockholders of the Vulcan Iron Works, Inc. Pursuant to Section 8 of the Business Corporations Law of the State of New York, a meeting of the stockholders of the Vulcan Iron. Works, Inc., was held at N"o . . : St., in the City of , N. Y., on the 968 COEPOKATIONS. day of , IS. ., at o'clock .... M., upon notice of which the following is a copy: "To the stockholders of the Vulcan Iron Works, Inc. Take notice that a special meeting of the stockholders of the Vulcan Iron Works, Inc., will be held at No ':'..."..'. St., in the City of : . ., N. Y., on the day of , 19 . . , at . . * o'clock .... M., for the purpose of taking ' action in approval or disapproval of an agreement which has been entered into by the directors of said corporation and the directors of the American Foundry C!ompany, having for its purpose the consolidation of the two corporations into a single corporation to, be known as the American Iron Corporation, a copy of which agreement is enclosed herewith. Date,d, ,. ,19,. ■ ., , : , President. , Secretary." The foregoing notice was duly served at leapt two weeks before the meeting, upon each stockholder, by depositing a copy thereof in, the post-oifice, securely sealed in a post-paid wrapper, addressed to him at his last known post-oflSce address, and by publication thereof for at least two successive weeks in the a newspaper published and circulating in the County of Westqliester, that being the county in which the Vulcan Iron Works, Inc., has its principal place of business, and in the, , a newspaper published and circulating in the County of Rockland, that being the county in which the American Foun- dry Company has its principal place of business. At the time and place fixed by such notice, the President of the corporation called the meeting to order, and upon roU-eall it was found that stockholders were assembled in person or by . proxy representing shares. By direction of the President, the Secretary read the call for. the meeting and the agreement for the consolidation of this corpqratipn with the American l^oun- dry Company, signed by the directors of the respective corporations, and .dated the day of , 19. . , ; . Upon motion of ..... ; seconded by . . .; , the following, resolution was offered for adoption: " Whereas, the directors of this corporation and the directors of the American Foundry Company have entered into an agreement for the consolidation of said corporations into a single corporation under the name American Iron Corpora- tion, and such agreement has been read to the stockholders of the Vulcan Iron Works, Inc., assembled at Ihis meeting, and Whereas, it is the sense of this meeting that such action of the directors should be approved; now, therefore, be it Resolved, That the consolidation' agreement aforesaid, dated the day of 19 . . , be approved, and that the Secretary of this corpora- tion be directed to make and verify copies of the proceedings of this meeting, to be attached to said consolidation agreement and filed according to , law, and that the directors and ofiicers of thi« corporation be authorized and empowered to do any and all things reqviisite and proper to carry such agreement into full effect." ,;..,.,,'.. . , , , , The vote upon such resolution was taken by ballot, and upoft coUipletion of the canvass it was found that stockholders owning shares, being at least two- thirds of the stock of the corporation, had voted in favor of the resolu- FORMS FOR CEKTIFICATES, BUSINESS CORP. LAW. 969 tion, and that ballots, representing shares of stock were cast against such resolution. The names of the stockholders who voted against the approval of the agree- ment to consolidate', and the number of shares owned by each, are as follows: Names Number of shares The President of the corporation announced that the resolution had been duly carried. Thereupon, and , the dissenting stockholders aforesaid, severally aniiounced that they objected to the consolidation and deinanded pay- ment for their stock. Upon motion, duly secoiided and carried, the meeting adjourned. (Signed) .'....;' .-..;.., President. .- . .• . , Secretary. State or New York. 1 CouNTr OF f ^^•' , being duly sworn, deposes and says, that he is the Secretary of the Vulcan Iron Works, Inc., and as such ofiicer acted at and took the minutes of a meeting of the stockholders of said corporktion, held on tie .......... day of , 19 , . ; that' lie has compared the foregoing transcript with the original minutes, and that such transcript is a full 'and true copy of the pro- ceedings of such meeting and of the whole thereof; that the instrument to which said copy is annexed,, entitled " Consolidation Agreement of the Vulcan Iron Works, Inc., and the American Foundry Co., forming the American Iron Obr- poration," is the same agreement which was read to aild approved by the stock- holders of the Vulcan Iron Works, Incl, at the meeting aforesaid. Sworn to before me this , . . day of , 19 . Notary Public County. In the Matter of the Consolidation of the Vulcan Iron Works, Inc., with the American Foundry Company, forming American Iron Corporation. Minutes of meeting of the stockholders of the American' Foundry Company. Pursuant to Section 8 of the Business Corporations Law of the Staie of New York, a meeting of the stockholders of the American Foundry Company was held at No. ■ ■ • Street, in the City of ...:......, N. Y., on the ..: day of ...;....:'., 19.., ait .,:■....... o'clock .. M., upon notice of which the following is a copy: "To the stockholders of the American Foundry Company: Take notice that a special meeting of the stockholders of the American Foundry 'Company will be held at No Street, in the 970 CORPOKATIONS. City of , N. Y., on thi day of ,, 19. . , at . ; '. o'clock . ., M., ifor the purpose of taking action in approval or dis- approval of an agreement which has been entered into by the directors of said corporation and the directors of the Vulcan Iron Works, Inc., having for its purpose the consolidation of the two corporations into a single corporation to be known as the American Iron Corporation, a copy of which agreement is enclosed herewith. • Dated , 19. . , President. , Secretary." The foregoing notice was duly served, at least two weeks before the ineeting, upon each stockholder, by depositing a copy thereof, securely sealed in a post- paid wrapper, addressed to him at his last known post-office address, in the post-office, and by publication thereof for at least two successive weeks in the , a newspaper published and circulating in the County of Rockland, that being the county in which the American Foundry Company has its prin- cipal place of business, and in the , a newspaper published and cir- culating in the County of Westchester, that being the county in which the Vulcan Iron Works, Inc., has its principal place of business. At the time and place fixed by said notice, the President of the corporation called the meeting to order, and upon roll-call, it was found that stockholders were assembled in person or by proxy representing shares. By direction of the President, the Secretary read the call for the meeting and the agreement for the consolidation of this corporation with the Vulcan Iron Works, Inc., signed by the directors of the respective corporations and dated ihe day of , 19 . . Upon motion of , seconded by , the following resolution was offered for adoption: Whereas, the directors of this corporation and the directors of the Vulcan Iron Works, Inc., have entered into an agreement for tlie consolidation of said corporations into a single corporation under the name American Iron Corpora- tion, and such agreement has been read to the stodcholders of the American Foundry Company, assembled at this meeting, and Whereas, it is the sense of this meeting that such action of the directors should be approved; now, therefore, be it Resolved, That the consolidation agreement aforesaid, dated the day of , 19. ., be approved, and that the Secretary of this corpora- tion be directed to make and verify copies of the proceedings of this meeting, to be attached to said consolidation agreement and filed according to law, and that the directors and officers of this corporation be authorized and empowered to do any and all things requisite and proper to carry such agreement into full effect." The vote upon such agreement was taken by ballot, and upon completion of the canvass it was found that stockholders owning shares/, being ■ at least two-thirds of the stock of the corporation, had voted in favor of the resolu- tion, and that no votes had been cast against its adoption. The President thereupon announced that the resolution had been carried, and the meeting adjourned. (Signed) , President. , Secretary. FOBMS FOB CERTIFICATES, BUSINESS COEP. LAW. 971; State of New Yobk, County of .!■ ........... being duly SWorh, deposes and says that he is the Secifetafy of the American Foundry Company, and as such officer acted at and took the min- utes of a meeting of the stockholders of said corporation, held on the day of , 19 . . ; that he has compared the foregoing transcript with the original minutes, and that such transcript, is a full and true copy of the proceedings of such meeting and of the whole thereof; that the instrument to which such copy is annexed, entitled "Consolidation Agreement of'the Vulcan Iron Works, Inc., and the American Foundry Company, forming the American Iron Corporation," is the same agreement which was read to and approved by the stockholders of the American Foundry Company at the meeting aforesaid. iSecretary. Sworn to before me this day of .....:...., 19.. Notary Public, County. 972 CORPORATIONS. FORMS FOR CERTIFICATES UNDER GENERAL CORPORATION LAW FORM No. 10. Certificate of Amendment to Correct Informality and Eliminate Un- anthorized Matter. (Pursuant to the first paragraph of § 7, General Corporation Law) Wei tie undersigned, (insert names) do hereby certify, pursuant to Section 7 of the General Corporation Law of the State of New York, as follows : / ' ' First: That we are the corporators (or directors) of the A. B. Company, a Business Corporation, the certificate of incorporation of which was filed in the Office of the Secretary of State, at Albany, N. Y.. on the Al day of , 19. ., and in the OiBce of the Clerk of the County of , N. Y., on ihe day of , 19 . . . Second: That such certificate is informal in that it fails to state the amount of capital with which the corporation will begin business. Third : That the last paragraph of such certificate, which reads, " The direc- tors of this corporation shall have full power and authority to sell, transfer and convey to any other corporation all of the properties, real and personal, of this corporation, without the necessity of first obtaining the consent of the holders of any of the stock of this corporation," is unauthorized by law. Fourth: That this amended certificate is filed to correct such informality and to strike out said matter not authorized by law, and for the accomplishment of that purpose it is hereby declared: (a) That the amount of capital with which the corporation will begin busi- ness is $500; (b) That the last paragraph of the original certificate of incorporation, which paragraph reads, " The directors of this corporation shall have full power and authority to sell, transfer and convey to any other corporation, all of the proper- ties, real and personal, of this corporation, without the necessity of first obtain- ing the consent of the holders of any of the stock of this corporation," is hereby stricken out and eliminated. In Witness Whereof, we have made and executed this instrument, in triplicate, this day of , 19 . . • ( Signature ) ( Acknowledgment ) rOEM No. 11. Amended Certificate to Remedy Defective Acknowledgment. (Pursuant to the first paragraph of § 7; General Corporation Law) We, the undersigned, (insert names) do hereby certify that we are all of the corporators of the F. D. Agency, Inc., a certificate of incorporation of which FOKMS FOR CERTIFICATES, GENERAL CORP. LAW. 973 was filed in the Office of the Secretary of State, at Albany, N.. Y., on the day of , 19 . . , and in the Office of the Clerk of the County of , N. Y., on the day of 19 . . ; that the acknowledgment of the certificate, filed as aforesaid, is defective in that the Notary Public who took' the acknowledgment of one o^ the subscribers thereof, to wit, the undersigned Thomas J. McKee, omitted to include in his certificate of such ackn<>wledgment a statement that he knew the said Thomas J. McKee to be the person described in and who executed the instrument; that for the pur- pose of correcting such defective acknowledgment we do hereby make this amended certificate of incorporation, as follows: (Here re-state, without change, the whole original certificate of incorporation, down to, but not including the witness clause.) In Witness Whereof, we have made, signed and acknowledged this amended cer- tificate of incorporation, this •. . day of :...,....., 19 .. i JOHN DOE. RICHARD ROE. THOMAS J. McKEE. State of Hew Yobk, J CoTJNTY OF New YOBK,f *^'' On this day of , 19 . . , before me personally came John Doe, Richard Roe and Thomas J. McKee, known to me to be the same persons described in, and who executed the foregoing amended certificate of incorporation, and they thereupon severally duly acknowledged to me that they executed the same. CHARLES BROWN, Notary Public, New York County. FOBIVE No. 12. Statement and Designation Under Section 16 of the General Corporation Law, by a Foreign Corporation. The X. Y. Corporation, a corporation duly organized and existing under the Laws of the State of Illinois, .does hereby state, pursuant to Section 16 of the General Corporation Law of the State of New York, that: First: The business which it propose to carry on within the State of New York is that of selling, installing, repairing and maintaining elevators, lifts and hoisting devices of all kinds for pas'sengers and freight. Second: The place within the State of New York which is to be its principal place of business is No Broadway, in the City of New York. Third: John Doe, who has an office at No Broadway, in the City of New York, is hereby designated as a person upon whom process against the corporation .may be served within the iState of New York, except in a proceeding to puijish, for contempt, and except whpre special provision for the service thereof is otherwise made by law. , . Fourth: The corporation will use with its corporate name, in the State of New York, the affix Inc., so that its name will appear as " X. Y. Company, Inc." Dated at Chicago, 111., January 5, 19. . X. Y. COMPANY, by Richard Roe, ( Corporate Seal. ) , , , President. ss.: ■974 CORPORATIONS. State of Illinois,] County of €ook, (' On this day of , 19 . . , before me personally came Richard Roe, who, being duly sworn, did depose and say that he resides at No. street, in the City of Chicago, Illinois; that he is the President of the X. Y. Company, the corporation described in and which executed the foregoing instru- ment; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so aflSxed by order of the board of directors of said corporation, and that he signed his name thereto by like order. Notary Public. (Add certificate of County 'Clerk authenticating act of the Notary Public.) CONSENT OF DESIGNEE I, John Doe, being the person named in the foregoing designation as a person upon whom process against the X. Y. Company may be served in the State of New York, do hereby consent to said designation. Dated at New York, N. Y., Jan. 8, 19 . . State of New York, County of New Yoke, i ss. : On the 8th day of January, 19.., before me personally came John Doe, to me personally known to be the person described in and who executed the fore- going consent, and he acknowledged to me that he executed the same. • » Notary Public, New York County. ( Attach a copy of the original certificate of incorporation or charter, ' verified as follows) : FORM No. 12A. Verification of Charter or Certificate of Incorporation of Foreign Cor- poration, State of Illinois, | County of Cook, ^®^' " ^. Richard Roe, being duly swbi'n, deposes arid says: That he resides at Street, in the City of Chicago, Illinois; that he is President of the X. Y. Company, an Illinois corporiition; that the foregoing copy is a correct transcript of the original certificate of incorporation of said company and of the whole thereof. ■ RICHAUD ROE. Subscribed and sworn to before nle, this day of , 19. . Notary Public. (Attach County Clerk's ..certificate of authentication.) FOEMS FOE CEBTIFICATES, GENEEAL CORP. LAW. 975 FORM No. 12B. Revocation^ by Person Designated, of Consent to Act as Designee. I, John Smith, being the person heretofore designated by the X. Y. Company, an Illinois corporation, as a person upon whom process against said corporation may be served in the State of New York, hereby revoke my consent to act as such designee. JOHN SMITH. (Add acknowledgment.) FORM No. 13. Appointment of New Designee by Foreign Corporation. (Pursuant to § 16 of the General Corporation Law) The X. Y. Copipany, a corporation organized and existing under, the Laws of the State of Illinois, does hereby, pursuant to Section 16 of the General Cor- poration Law of the State of New York,' certify that (John Doe, the person here- tofore designated by said corporation as a person upon whom process against it might be served in the State of New York, has died) or (has removed from the City of New York, that being the city in which the principal place of business of said corporation in the State of New York is located)' or (said corporation hereby revokes '.the designation of John Doe as a person upon whom process against it may be served in the State of New York), and said corporation hereby designates John Smith, in the placie and stead of said John Doe (deceased or removed), as a peirson upon whom process against said' corporation may be served within said .State, except in a proceeding to punish for contempt, and except where special provision for the service thereof is otherwise made by law. Said John Smith, designated as aforesaid, has an office at No Broadway, in the City of New York, that being the place where said corpofation has its principal place of business within the State of New York. ' , Dated at Chicago, 111.; ,19;.. X. Y. COMPANY, By Richard Ro J, Presideiit. (Corporate seal.) (Add proof of execution and attach acknowledged consent of designee, same as on original designation.) , ,, , FORM No. 14. Certificate of Surrender of Authority to do Business in New York by a Foreign Corporation. The X. Y. Company does hereby certify, pursuant to Section 16-a of the General Corporation Law of the State of New York, as follows : 1. The name of the corporation is X. Y. Company, and it is formed under the Laws of tlie State of Illinois. 2. Said corporation received authority to do business in the State of New York on the , . day of ' , . , . , 19 . . 976 COBPOKATIONS. 3. Said corporation hereby revokes the designation of John Smith as a person upon whom process against it m^y! be served in the State of New York. ■ 4. Said corporation liereby surrenders its authority to do business in the State of New York, and, as evidence of such surrender, it herewith returns to the .Secretary of State, for cancellation, its certificate of authority. ;to do busi- ness in said State, which certificate is hereto annexed. (Or, '' It is unable to return its certificate of authority for cancellation, for the reason that such certificate has been lost or destroyed). In Witness Whereof, said corporation has caused this certificate to be executed in its name and under its seal by its President (or Vice-'President, or other acting head), this day of ": , . . ....... 19. . X. Y. COMPANY, By Richard Rde, President. ( Corporate seal. ) (Add proof of execution in same form as on original statement and designation, and also attach the original certificate of authority, or if that has been ' lost or destroyed, append an affidavit in the following form : ) . State of Illinois,) County of Cook, f ^^' ' Richard Roe, being duly sworn, . deposes and says, that he resides- at No. . , : street, in the City of Chicago, 111.; that he is the President (or Vice- President or a/Cting head) of the X. Y. Company, the corporation mentioned and described in the foregoing instrument. That he has made diligent search and inquiry for the original certificate of authority issued to said corporation by the Secretary of State of New York; that he is unable to find such certifi- cate, and that he verily believes that the same has been lost or destroyed. RICHARD ROE. Sworn to before me this day of , 19 . . Jfotary Public. (Add County Clerk's certificate authenticating act of Notary PubUc.) FORM No. 15. Noting Trust Agreement. (Pursuant to § 25, General Corporation Law) Memorandum of agreement made and entered into this l2th day of June, 192 1, by and between Peter R. Boyd, a stockholder of the Greendale Lumber Cor- poration, and any other stockholders of said corporation who may here- after become parties hereto by signing this instrument, hereinafter men- tioned and referred to as " Stoeliholdens," parties of the first part, and Fidelity Trust Company, hereinafter mentioned and referred to as the Trustee," party of the second part. Whereas, It is contemplated that the G^reendale Lumber Corporation (herein- after mentioned and described as the "Corporation") will raise money for the FORMS FOR CEIlTIFICATES, GENERAL CORP. LAW. 977 purposes of its business by tbe issuance of bonds secured by a mortgage or deed of trust of its real properties to the party of the second part as trustee, and Whereas, It is desired )iy all of the parties hereto that the interests of the purchasers of said bonds shall be protected in every practicable way, and Whereas, It is the sense of the parties hereto that it will tend to protect the interests of such bondholders and will promote the sale of the bonds if the trustees for the bondholders under such mortgage or deed of trust be also madt' the voting trustees of a majority of the outstanding capital stock of the cor- poration ; now, therefore, This Agreement ' Witnesseth, that in consideration of the foregoing and of the mutual promises and covenants herein contained, the parties hereto do hereby covenant' and a,gree, each for himself and not fc*r the others, b\it to and with the others, as follows: First: The said Peter R. Boyd, and each other stockholder who becomes a party hereto, shall assign aiid deliver his Stock certificates to the Trustee, which shall cause the stock represented thereby to be transferred to it; as voting trustee! on the books of the' corporation. Second : The voting trust hereby declared and created shall continue for the full term of five years from the date hereof, and throughout such period the Trustee sliall have the exclusive right to vote upon such stock or to give written consents in lieu of voting thereon, in person or -by proxy at any and all meet- ings of the stockholders of said corporation, for whatsoever purpose called or held, and in any and all proceedings whether at meetings of the stockholders or otherwise, wherein the vote or written consent of stockholders may be required or authorized by law. Third: The Trustee will issue and deliver to each of the stockholders or his nominees certificates' for the number Of shares transferred by him to the Trustee, as aforesaid, in form subsitantially as follows : No Shares TRUST CERTIFICATE The Fidelity Trust Company, Voting Trustee of the stock of the Greeridale Lumber Corporation, under an agreement dated June 12, 1921, haviiig received certain shares of the stock of said corporation pursuant to said agreement, and which agreement the holder hereof by accepting this certificate, ratifies, adopts and assents to, hereby certifies that .......... will be entitled to receive a certificate for fully piid shares of the common stock of said Green- dale Lumber Corporation, of the par value of $100 each, on the 13th day of June, 1926, and in the meantime shall be entitled to receive payments equal to any dividends that may be collected by the undersignd Trustee upon a like number of such shares held by it under the terms of the Trust Agreement afore- said. ■ ' i: . This certificate is transferable only on the books of the undersigned Trustee, by the registered hoMer in person or by duly authorized attorney, and the holder hereof by accepting this certificate manifests his consent that the under- signed Trustee may treat the registered holder hereof as the true owner for all purposes, except the delivery of stock certificates,, which delivery shall not be made without the surrender hereof. In Witness Whereof the said Fidelity Trust Company has caused this cer- 62 978 . COBPORATIONS. tificate to be executed in its name by its duly authorized officerg and its cor- porate seal to be affixed, this day of , 1921. (Seal) FIDELITY TRUST COMPANY, By F. H. Jones, Vice-President. Attest : JOHN FOX, . Secretary. Fourth: At the expiration of the term of the trust hereby created, the Trustee will, upon surrender of the trust certificates, cause to be delivered to the holders thereof shares of stock of the corporation equivalent in amount to the shares represented by the trust certificates so surrendered. Fifth: The Trustee will use its best judgment in voting upon the stock held by it, but it assumes no responsibility for the consequence of any vote cast, or consent given by it, in good faith, and in the absence of gross negligence. In Witness Whereof, the parties aforesaid have hereunto set their hands and seals the day and year first above written. FIDELITY TRUST COMPANY, By John H. Prindel, President. PETER R. BO yd: (Corporate seal.) Attest : JOHN FOX, Secretary. FORM No. 16. Proxy for Stockholders' Meeting. (Pursuant to § 26, General Corporation Law) Know all men by these presents, that I, Thomas Dix, being the holder of 60 shares of capital stock of the Ajax Company, Inc., do hereby constitute and appoint Everett J. Doyle as my proxy to attend a meeting of the stockholders of said company to be held on the 10th day of June, 1921, or any continuation or adjournment thereof, with full power to vote and act for me and in my name, place and stead, in the same manner, to the same extent and with the same effect that I might were I personally present thereat, giving to said Everett J. Doyle full power of substitution and revocation. Dated at Albany, N. Y., this 1st day of June, 1921. In presence of PHILLIP J. TOWNER. THOMAS DIX. FORM No. 17. Consent of Stockholders to Extension of Existence ■ (Pursuant to § 37, General Corporation Law) We, the undersigned, stockholders owning two-thirds in amount of the capital stock of the X. Y. Z. Company, a corporation which was formed by the filing FOEMS FOE CEETIFICATES, GENERAL CORP. LAW. 979 of a certificate of incorporation pursuant to the Business Corporations Law of the State of New York, in the 'office of the Secretary of State on the 11th day of July,, 1894, and in the office of the Clerk of Erie County on the 12th day of July, 1894, which certificate states that the term of duration shall be thirty years, do hereby consent that the term of existence of said corporation be extended for a period of fifty (50) years beyond th* date of expiration of the time specified in said certificate of incorporation. In Witness Whereof, we have made and signed this consent pursuant to Sec- tion 37 of the General Corporation Law, in triplicate, each on the date set opposite his signature hereto. (Signatures) (Dates) (Acknowledgments.) FORM No. 18. Certificate of Extension of Existence by Written Consent of the Stock- holders, Without a Meeting. (Pursuant to § 37 of the General Corporation Law) We, the undersigned, John Doe and Richard Roe, do hereby certify, pursuant to Section 37 of the General Corporation Law, as follows : First: That he, the said John Doe, is the President (or Vice-President), and that he, the said Richard Roe, is the Secretary ( or Assistailt Secretary ) of the X. Y. Z. Company, a corporation duly organized under the Business Corporations Law of the State of New York. Second : The certificate of iricotporation of said company was filed in the office of the Secretary of State on the 11th day of Jiily, 1894, and in the office of the Clerk of Erie County on the 12th day of July, 1894, and said certificate provides that the duration of the corporation shall be for a term of thirty years. Third: That a consent has been given in writing by stockholders owning two- thirds in amount of the capital stock of said corporation that the term of its existence be extended for a period of fifty years additional to the term of thirty years fixed by the original certificate of incorporation. Fourth: That said written consent, signed by stockholders owning two-thirds in amount of the capital stock of said corporation is hereto annexed. In Witness Whereof, we have hereunto set our hands and the corporate seal of the X. Y. Z. Company, this ,.. day of ,19.. President. Secl'eta:ry. (Corporate seal.) (Add acknowledgments.) FORM' No. 19. Certificate of Extension of Existence by Vote. (Pursuant to Section 37, General Corporation Law) We the undersigned, John Doe and Richard Roe, do hereby certify, pursuant to Section 37 of the ,(Je:neral Corporation Law, as follows: 980 C0EP0BATld3 1895, and in the office of the Clerk of Erie County' on the 10th day of June, 1895, and provided that the duration of the corporation should be for a term of twenty-five years. Third: A meeting of the stockholders of said corporation was held on the day of , 19 . . , at the principal office <>t the corporation in the City of Buffalo, N. Y., for the purpose of acting upon a proposition to extend the existence of the corporation. That notice of such meeting was given as required for the annual meetings of the corporation, to wit : by publication once a week for two weeks immediately preceding the meeting, in the Evening News, a newspaper published in the county in which the meeting was held, and by mailing said notice to each stockholder at his last known post-office address, at least ten days before the meeting. A copy of such notice is hereto annexed. Fourth: That at the time and place fixed by said notice, the consent of stock- holders owning two-thirds in amount of the capital stock of the corporation was given, by vote, to the extension of tlie existence of said corporation for a term of fifty years. That the .following is a true copy of the resolution adopted: "Resolved, That the existence of the Star Company be, and it is hereby extended for a period of fifty years additional to, the term of twenty-five years fixed by the origina,l certificate of incorpo];'ation, and further " Resolved, That the officers of the corporation be, and they are hereby directed tq file a certificate of the action of this meeting, under the corporate seal, pur- suant to Section 37 of the General Corporation Law." In \\^itness Whereof, we have hereunto set our hands and the corporate seal of said Star Company, this day of , 19. . ( Seal ) ;...., President. , Secretary. State of New York, ) County of Ebie, f ^^' ' On this day of ........... 19 . . , before mc personally came John Doe and Richard Roe, to me personally known to be the persons described in and who executed the foregoing certificate of extension of existence of the Star Com- pany, and they thereupon severally duly acknowledged to me that they executed the same. Notary Public, Brie Co. FORM No. 20. Notice of Meeting of Stockholders to Extend Corporate Existence. (Pursuant to | 37, General Corporation I/avv) Notice to stockholders of the Star Company: A meeting' Of the stockholders of the above-named corporation will be held at its principal office. No. . . : FORMS FOR CERTIFICATES, GENERAL CORP. LAW. 981 street, in the City ,pf Buffalo, N. Y., on the ........... day of, , 19,., at 10 o'cloqk A. M., for the purpose of acting upon a proposition to extend the corporate existence of; said corpoiration for a period of fifty years beyond the, time specified in its original certificate of , incorporation. Dated , 19 . . (Seal) , President. Secretary. FOBIII No. 21. Waiver of Notice of Meeting of Stockholders. (Pursuant to Section 42, Stock Cbrjporation Law) ' We, the undersigned, together constituting all the members and the holder^' of all of the outstanding capital stock of the Globe Company, a corporation, do hereby waive service and publication of notice of a mepting of the stockholders of said corporation for the purpose of taking action upon (describe business to be transacted) and consent that such meeting be held at No. . .' street, iii the city of , N. Y., on the day of . ; : , 19 . . , at M., and we do sCuthorize and approve any and all action that may be taken at sueh meeting' Ctocerning- the maitters and things above stated. ■ In Witness Whereof, we have set our hands, each on the date set opposite his signature 'hereto. ( Signiaturea-) ' (Dates) FOEM No. 32. Certificate of Change of Name of the A. B. Company to X. Y. Corporation. We, the ■ undersigned, John Doe, President (or Vice-President) and Richard Roe, Secretary, of the A. B. Company, a corporation, for the purpose of changing the name of said corporation pursuant to Section 66 of the General Corporation Law, do hereby certify: First: The corporation was organized under Article II of, the Business Cor- porations Law of the State of New York. Second: The certificate of incorporation was filed in the office of the Secre- tary of State on the 3d day of January, 1915. Third : The corporation was originally incorporated under the name ' Doe Realty Company, and the name was subsequently duly phanged tp A. B. Com,- pany, which is, the present name of the corporation. Fourth: The name which ihe corporation , now desires to adopt is X,- Y, Cor- poration. ., :,.'. ',. , , ..I . ; ,,. ' Fifth: A meeting of the stockhoJiders (or shareholders or members) was specially called and held at No Street, in the City of New York, on the 9th day of December, 19... for the purpose of considering and acting upon 982 COEPORATIONS. a proposal to change the name of the corporation. Notice Of such meeting was duly given in the manner prescribed by Section 66 of the General Corporation Law, and a copy of such notice, together with affidavits of the service and pub- lication thereof, is hereto annexed. A copy of the notice was filed in the office of the Secretary of State on or before the day of the first publication thereof, to wit, on the 24th day of 'November, 19 . . There was presented to the meeting a certificate in duplicate of the Secretary of State that the name which the cor- poration proposes to assume is not the name of any other corporation appearing on his index of corporations as authorized to do business under the laws of the State of New York, or a name which, he deems so nearly resembling it as to be calculated to deceive. One of such duplicate certificates of the Secretary of State is hereunto annexed. Upon motion, duly seconded, the following resolution was adopted by the affirmative votes of the holders of re'cbi-d' of at least two-thirds of the entire capital stock issued and outstanding, irrespective of class or classes of stock (or, if the corporation is authorized to issue shares without par value, then by vote of the holders of record of at least two-thirds of the entire number of shares issued and outstanding, irrespective of class or classes of shares. Or, if it is a non-stock corporation, then, by vote of at least two-thirds of its members) : " Resolved, That the name of this corporation be changed from A. B. Company to X. Y. Corporation." Sixth : The date of adoption of said resolution was December 9, 19 . . In Witness Whereof, we have made this instrument, in triplicate, this day of , 19 . . JOHN DOE, President. RICHARD ROE, Secretary. State or New York, 1 CotTNTT OF ,{**■■ John Doe and Richard Roe, being severally duly sworn depose and say, and each for himself deposes and says: That he, the said John Doe is President, and that he, the said Richard Roe is Secretary of the A. B. Company; that he has read the foregoing certificate and knows the contents thereof and that the statements therein contained are true. JOHN DOE. RICHARD ROE. Sworn to before me this day of ,19.. PETER BROWN, Notafy Public, County. State of New Yobk, 1 COUKTT OF ,^^^'- On this day of , 19. ., before me personally came John Doe and Richard Roe, to me known to be the persons described in and who executed the foregoing certifleate, and they thereupon severally duly acknowl- edged to me that they executed the same. PETER BROWN, Notary Public, County. FORMS FOR CERTIFICATES, GENERAL CORP. LAW. 983 FORK No. 23. Affidavit of Publication of Notice of Stockholders' Meeting to Change Name of A. B. Company to X. Y. Corporation. State op New York, I CfOTJNTY OF New YORK,f ®^" Harold P. Jones, of the City of , being duly sworn, deposes and says: That he is the principal clerk of the publisher of the , a news- paper published and circiilated in the County of New York, and that the notice, of which the annexed is a copy, was published in said ne\yspaper on the 24th day of November and the 2d day of December, last past. HAROLD P. JONES'. Sworn to before me this 3d day ■ of December, 1^ . . SAMUEL COHEN, Notary Public, New York County. To the Stockholders of the A. B. Company: Take notice that a meeting of the stockholders of the A. B. Company will be held at No Street, in the City of New York, on the ninth day of December, 19. ., at 10 o'clock A. M., for the purpose of voting upon a proposi- tion ito change the name of the company to X. Y. Corporation. New York, November 24, 19 . . JOHN DOE, President. RICHARD ROE, Secretary. State of New York, 1 CotTNTY OP , J ^^' ■ Richard Roe, being duly sworn, deposes and says: That he is Secretary of the A. B. Company, a New York corporation, and has custody of its stock book; that on the twenty-fifth day of November, 19 . . , he mailed to each stockholder of said corporation a copy of the foregoing notice of meeting to be held on the ninth day of December, 19.., at 10' cf'clock A. M., for the purpose of changing the corporate name to X. Y. Corporation; that each notice so mailed was enclosed in a securely s.ealed envelope, addressed to the stockholder's last known post-office address, postage prepaid, and was deposited by him, the said Richard Roe, in a regular post-offlce deposit box in the City of New York. That this affidavit is made for the purpose of satisfying the requirements of Section 66 of the General Corporation Law of the State of New York. RICHARD ROE. Sworn to before me this day of , 19.. ,^ PETER BROWN, Notary Public, County. 984 CpKEORATIONS. FOBM No, 24. Certificate of Dissolution. (Purauant to § 220, General Corporation Law) " We, the undersigned, being all the incorporators of the Y. Z. Company, the certificate of incorporation of which was filed in the office of the Secretary of State of New York on the day of , i9 . . , for the purpose of crea.ting a domesitic stock corporataon under the provisions of the Business Corporations Law, desiring to dissolve said corporation pursuant to Section 220 of the General Corporation Law, do hereby certify that: The names of the 'ineorj^orators are. John Doe. Richard Roe and John Smith. No part of the capital has been paid. There are no liabilities. Business has not been begun. We hereby surrender all rights .ind franchises accrued or to accrue by the filing of the aforesaid certificate of incorporation or of anything done thereunder. In Witness Whereof, we (have set our hands to this instrument, in duplicate, this day of , 19 . . StAii; or New York, 1 OOTJNTTOF.. ,f^^'' On this ..... ...i. day of ....,.,...:., :X916, before me personally came to me personally known to be the persons described in and who execute^ the foregoing certificate and t'hey- thereupon severally duly acknowledged to me that they executed the same. ; . ; ' ss. Notary Public. State of New Yobic, ) County of ,(' ; ^ . ■ ; .'. ; :;.;.. :...;.;. j ....■..;■.: .; being duly sworn/ depose and say, and each for himself deposes and says, that he is one of the persons described in and -who executed the foregoing certificate of dissolution of the Y. Z. Company; that he has read said certificate and knows the contents thereof, and that the statements therein contained are true. Sworn to, before me this day of , 1916. FOBM No. 25. Notary Public. Dissolution by Stockholders. (Pursuant to § 221, General Corporation Law) In the Matter of the Dissolution of the Company. We, the undersigned. President and Secretary, respectively, of the Company, a stock corporation, organized under the Business Corporations Law FORMS FOR CBBTIFIGATBSj) GENERAL CORP. LAW. 985 of the State of New York, to the end that such corporation may be dissolved pursuant to Section 221 of the General Corporation Law, do certify as follows: The Board of Directors of the corporation at a meeting called for that pur- pose, upon at least three days' notic^ to each direc^tor, and held at , New York, on the day of , l&. ., by a, vote of a majority of the whole Board adopted a resolution that it was in their. opinion advisable to dissolve such corporation forthwith, and they thereupon called a meeting of the stockholders .for the purpose of voting upon a proposition that the corpora- tion be forthwith dissolved. Such meeting of the stockholders was held on the day of , 1'9 . . , at No Street, in the City of , New York, (that being the city in which the last preceding annual meeting of the corporation was held) (without the publication or service of notice upon the stockholders, the action to be taken at the meeting having been author- ized and the requirements of the statute in relation to the giving of notice and lapse of time having been waived in writing by every stockholder and member of the corporation, which waiver, marked " Exhibit A," is here- unto annexed) or (a notice of the time and place of such meeting, signed by a majority of the directors was published in the , that being a newspaper published and circulating in New York Couhty, that being the county in which the corporation has its principal place of business, once a week for three weeks successively next preceding the day of , 19 . . , that being the time appointed for holding such meeting, and on or before the day of the first publication of such notice, a copy thereof was served per- sonally on each stockholder, or was mailed to him at his last known post-office address). .^, , ... At such meeting the holders of : .' shares, being at least two-thirds in amount of the stock of. the corporg^tipn then,^ outstanding, signified, in writing, their consent that the corporation be dissolved, which consent, attested by the and the '..■..,.' marked ." Exhibit B " is -hereunto annexed. The names and residences of the existing Board of Directors are: Name . , Residence The narnes and residences of the oflScerie of the cbrp'oi'ation are : Name Residence In Witness Whereof we have hereunto Set oiii' hands this ......... ; day of ...:•:.':.; 19.. '■' •■'■■ '■; _ ' ■ ""' ■■' President (or Vice-President). Secretary ( or Treasurer ) . 986 CORPORATIONS, State of New York, ) County op i. . .,( ®^'' On iihis day of , 1916, before me personally came and , to me personally known to be the persona described in and who executed the foregoing instrument, and they thereupon severally duly acknowledged to me that they executed the same. * Notary Public. State op New Yobk, 1 CotTNTT OF ,f ^^'^ and , being duly sworn, depose and say and each for himself deposed and says, that he, the said , is, the , and that he, the said , is the of the Company ; that he has read the foregoing certificate in the matter of the dissolution of the said corporation, and knows the contents thereof, and that the statements therein contained are true. Sworn to before me this . . . . day of , 19.. Notary Public. FORM No. 26. Stockholders' Waiver of Notice, (Pursuant to § 42, General Corporation Law) EXHIBIT A In the Matter of the Dissolution of the Company. We, the undersigned, stockholders of the Company, hereby au- thorize the holding ;of a meeting of the stockholders of the said corporation at No Street, in th| City of , New York, on the ^ day of , . , 19 . . , for the purpose of doing all things requisite and need- ful to the dissolution of the corporation pursuant to Section 221 of the General Corporation Law of the State of New York, and we do hereby waive notice of such meeting, either personally or by mail, or by publication, and hereby con- sent that the meeting be held at the time and place above specified, and that action be taken thereat to dissolve the corporation. In Witness Whereof we have set our hands each on the date written opposite our respective signatures hereto. Signature Date FORMS POK CEKTIFICATES, GENERAL CORP. LAW. 987 I) , Secretary of the Company, hereby certify that the signatures to the foregoing waiver comprise the names of all of the stockholders of record of said corporation. EXHIBIT B In the Matter of the Dissolution of the Company. We, the unders^ed, stockholders of the Company, in meeting assembled, hereby consent that siaid corporation be forthwith dissolved pursuant to Section 221 of the General Corporation Law of the State of New York. Dated at , N. Y., this day of , 19. . The persons who have, in person or by attorney, signed the foregoing consent collectively hold two-thirds in amount of the stock of the ; . . Company. Attested by: President (or Vice-President). Secretary (or Treasurer). (If any stockholder has signed by an attorney in fact, the original power of attorney, with cancelled 25c. U. S. Revenue Stamp, should be attached to the foregoing consent.) 988 GOBPORATIONS. FORMS FOR CERTIFICATES UNDER STOCK CORPORATION LAW FORM No. 35. Consent of Stockholders to Mortgaging of Property. (Pursuant to § 6, Stock Corporation Law) We, the undersigned, stockholders of the Greendale Lumber Corporation, each owning the number of shares set opposite his signature hereto, and owning, col- lectively, two-thirds of the capital Stock thereof; do Hereby Consent that said corporation borrow such sum or sums of money, not to exceed the aggregate amount of $200,000, as, in the judgment of its Board of Directors may be necessary for the transaction of its business, and issue its bonds dated not later than the day of , 19 . . , to mature not sooner than five years, nor later than fifteen years, from the* date of issue, and bearing Interest at a rate of not more than 7 per cent per annum, for the amount so borrowed, and we do further consent that said corporation make, execute and deliver, to such Trustee as may be selected by its Board of Directors, a mortgage of all of the real properties of said corporation to secure the payment of the principal and interest on said bonds. And we do further consent that the Board of Directors, under such resolu- tion as they may adopt, may confer on the holder of any such bonds the right to convert the principal of the debt evidenced thereby into common stock of the corporation within such period as ma.y be fixed by the resolution of the directors ' conferring the right of conversion. Dated 19 . . Signature No. of Shares State of New York, 1 COUNTTC oir , f ^" On this day of , 19 . . , before me personally camp , to me known to be the persons described in and who executed the foregoing instrument and they thereupon severally duly acknowledged to mp that they executed the same. Notary Public, County. Statk of Nkw Y()J{K. ) County of f ^^'^ being duly sworn, deposes and says that he resides at No Street, in the Borough of Brooklyn, City of New York; that he is the Secretary of the Greendale Lu.mber Corporation and has the qustody of its stock book; that he has compared the signatures to the foregoing consent to mortgage the properties of the said corporation and the number of shares set opposite each such signature with the entries on said stock book; that the figures appearing opposite each signature truly represent the number of shares standing in the FOKMS FOE CERTiriCATBS, STOCK COKPOBATION LAW. 989 name of the Signer on said stock book, and that the persons who have signed such consent together constitute the holders of record of tvvo-thirda and more of the capital stock of said corporation. Sworn to before me this . . . day of , 19. Notary Public, County. FOBM No. 36. Certificate of Increase of Capital Stock by Besolution of the Board of Directors. (Pursuant to § 6 of, the Stock Corporation Law) We, the undersigned, . arid , do hereby certify :■ First: That the said is the President of the Greendale Lumber Corporation and the said is the Secretary thereof ; Second: The following is a true copy of a resolution duly adopted by the Board of Directors of said corporation on the day of , 19.. : ■ . ■ " Resolved, That the holders of any or all of the bonds of the Greendale Lum- ber Corporation about to be issued pursuant to a consent of the stockholders filed in the office of the Clerk of County on the , , day of , 19 . . , may, and shall have the right to convert the principal of the debt evidenced by such bonds into common stock of said corporation on the day of , 19 . . , the exchange and conversion to be made on the basis of the par value of the bonds converted for a like par value of stock. Provided, however, and the right to convert is conferred subject to the condi- tion that holders' of such bonds to be converted shall serve upon the corporation at its principal business office, on or before the day of , 19. ., a written notice stating the amount of the par value of the bonds which they will present for conversion." Third: That the holders of not less than two-thirds of the capital stock of aaid corporation duly consented to the adoption of said resolution. Fourth : That on the day of . . ; , 19 . . , the Board of Directors of said corporation duly adopted resolutions of which the following is a true copy: " Whereas, the Greendale Lumber Corporation has issued and outstanding bonds in the aggregate amount of $200,000, which by their terms and pursuant to a resolution of this board adopted with the consent of the holders of t\vo- thirds of the capital stock of the corporation are convertible at the option , of the holders thereof into stock of the corporation on the day of . ., 19. ., provided the holders of such bonds shall have served notice of their election to convert same upon the corporation not later than the day of , 19 ■ • . and Whereas, the holders of such bonds in "the aggregate amount of $100,000 have ' duly served notice of their election to convert the bonds held by them into stock of the corporation, and 990 . . CORPORATIONS. < Whereas, the capital stock of said corporation,, is; insufficient to meet the con- version; now, therefore, be it Resolved, That the capital stock of the Greendale Lumber Corporation be, and it is hereby increased from $300,000, the present amount thereof, consisting of 3,000 common shares of the par value of $100 each, to $400,000, to consist of 4,000 common shares of the par value of $100 each; and be it further Resolved, That the $100,000 of additional capital stock hereby authorized be issued in exchange for $100,000 par value of the outstanding bonds of said cor- poration to the bondholders who have given notice of their election to convert them; and be it further Resolved, That the officers of said corporation be, and they are hereby author- ized to do all acts and things necessary and proper to carry these resolutitons into effect." Fifth: That the amount of capital stock heretofore authorized is $300,000; that the whole thereof has been actually issued; that the amount of the increased capital stock is $400,000. In Witness Whereof, we have executed this certificate, in triplicate, under the seal of the corporation, this day of , 19 . . (Corporate Seal) , President. , Secrcitary. State of New York, 1 County of ,\^^" On this day of , 19 . . , before me personally came and , to me known to be the persons described in and who executed the foregoing instrunjent, and they thereupon severally duly acknowledged to me that they exeeuteji the same. Notary Public, County of FORM No. 37. Certificate of Reorganization. (Pursuant to § 9, Stock Corporation Law) We, the undersigned, do hereby certify, pursuant to Section 9 of the Stock Corporation Law, as follows: 1. That the Federal Building Corporation -was organized under Chapter 12 of the Laws of 1909, entitled "An Act relating to Business Corporations, constitut- ing Chapter 4 of the Consolidated Laws." 2. That the property and franchises of said corporation have been sold pur- suant to the judgment of a court of competent jurisdiction authorizing or direct- ing the same, to wit. : Pursuant to a judgment of the dated the day of , 19 . . , and that a brief description of the property sold- is as follows : 3. That the undersigned, John Doe', is the purchaser of the property and fran- chises of said corporation, sold as aforesaid, and that he has acquired title to the same in the manner prescribed by law, and that he has associated with him, FORMS FOR CERTIFICATES, STOCK CORPORATION LAW. 991 the undersigned Riehard Roe, John Smith and Thomas Jones ; at least two-thirds of whom are citizens of the United States and at least one of whom is a resident of the State of New York, and we, the said John Doe and associates, for the pur- pose of Becoming a corporation to take and possess the property and franchises thus sold, and which were at the time of the sale possessed by the corporation whose property was sold as aforesaid, do hereby further certify: 1. That the name of the new corporation intended to be formed by the filing of this certificate is Federal Building Corporation; and the place where its prin- cipal oflSce is to be located is in the Borough of Manhattan, City, County and State of New York. 2. The maximum amount of its capital stock is to be $500,000, which is to be divided into 5,000 shares of the par value of $100 each (of which $200,000, con- sisting of 2,000 shares, shall be preferred, and $300,000, consisting of 3,000 shares, shall be common. The preferences of the preferred stock shall be as follows : ) . 3. The number of directors who shall manage the affairs of the new corpora- tion is three, and the names and post-ofiice addresses of the directors for the first year are: Names Post-office Addresses 4. The following provisions, contained in the plan or agreement entered into by the parties hereto previous to the sale aforesaid, are hereby made a part of this certificate, to wit.: (here insert any provisions of the. plan of reorganization which it is desired to carry into this certificate). In Witness Whereof, we have hereunto set our hands, this day of , 19.. ( Signatures ) ( Acknowledgment) FORM No. 38. Stockholders' Consent to Change Location of Principal Office of the Corporation. Pursuant to Section 13 of the Stock Corporation Law, we, the undersigned stockholders of the Corporation, organized and now existing under the laws of the State of New York, do hereby consent that the principal busi- ness office of said corporation be removed from its present location in the city of Buffalo, County of Erie, N. Y., to the Borough of Brooklyn,- County of Kings, N. Y. Dated this day of '. ., 19. . 992 COKPOBAXIOJSiS. State of New Yobk, County oi'. . .!• Oil this ...,....,. day of ,.,,19,., before me personally uaine ....,....,..:..... and ....,..,.., to me personally kjiown to be the per- sons described in and who executed the foregoing consent, and they thereupon duly severally acknowledged to me that they made and executed the same. Notary Public. State of Nkw Yobk, 1 County OF... ,..,p^'' , being duly' sworn, deposes and says that he is the Secretary of the Corporation, and as suc!h officer has lawful custody of the stock- book of said corporation; that he has compared the signatures to the foregoing consent with the names entered upon such stock-book; that each of the pWSons who have signed such consent' is a stockholder in said corporation, and that together they constitute the holders of record of the entire capital stock of said corporation issued and outstanding. Sworn to before me this . . . day of , 19 . Notary Public, County. FOEli No. 39. Certificate of Change of Location of Principal Office of the Corporation. We hereby certify that the Corporation is a corporation duly organized under the laws of the State of New York; that A. B. is the Presi- dent and that X. Y. is the Secretary thereof; that the names and places of resi- dence of the directors of said corporation are as follows, to wit: Name / ~, ;,;,; Residence Xhat the name of the 4trporation , is as aboye written, to ^it : Corporation. That the principal office and place of busineaa of said corporation was orig- inally located in the City of Buffalo, County of Erie, N. Y., and it has not been subsequently rempved, therefrom; That it is now desired to change the principal office and place of business to the Borough of Brooklyn, County of Kings, N. Y. ; That it is the purpose of said corporation to actually transact and carry on its regular business from day to day at euch place; That such change has been duly authorized in the manner prescribed by Stec- tion 13 of the Stock Corporation Law of the State of New York, to wit: By the FOEMS FOB CEBTIFIci'l/BSJ STOCK OOKPOBATION LAW. 993 unanimous corise^t, 'oi the stockholders expressed, ' in writing and duly^^knowl- edged ah... .-J ... . . .day of . .i; 19. ., before me tpersdnalily came A. B., X. Y. and, .• .....,; personally known ito me to be the persona described, in and :who executed- the foregoing , instrjimenty and they thereupon severally duly acknowledged 'to me that they executed the same. • '■•■•■■ ■■ as. .. Notary Public, ........:.. County. State o* New York, 1 ' County of. ; . . ,(' A. B., X. Y. and .... i .... ., being duly sWiir'nj depose arid say, and each for himself deposes and says, that he has read the foregoing certificate of change of location of office of the ......'.'.. ! Corporation, and knows the cohtenta thereof and that the statements therein contained are true. ■ArA .' Sworn to before nae this '.:', dav of 19. Notary Public .'.' County. FORM No. 40, Certificate of Merger of the Union Steel Corporation by tjte Consolidated Boiling Mills, Inc. ,, (Pursuant to § 15, ■ Stock Corporation Law) Be, it knownths/t the undersigned Consolid^l;^^ ; ppUing Mills, Inc., ,13, a stock corporation duly organized and, existing under, the laws of /the State of , New Jfork (or, if a foreign corporation, uijder the ;la;w3 ,of. the, Stsite of • . , • ; :,. .,. ., ai^d authorized to ^o busjnefs in the, Stfite |0f,Ne-v5f Yq^k) ; , . That this corporation now lawfully owHs Eyll of the capital stock , pi the tjnioii Steel Corporation, which is a stock corporation organized under the laws of thi- Sitate of New York for. and engaged in business similar (or incidental) to that of this corporation; 63 I 994 coRPOBATioiJrs. That at a meeting of the Board of Directors of this corporation duly called and held on the . day of , 19. ., the following resolution was adopted : " Whereas, this corporation, the Consolidated Boiling Mills, Inc., now lawfully owns all of the capital stock of the Union Steel Corporation, organized under the laws of the State of New York and engaged in business similar (or inci- dental) to that of this corporation, and it is deemed expedient that this cor- poration sha,ll acquire and become, and be possessed of all the estate, property, rights, priviileges and franchises of the said Union Steel Corporation; now, therefore, be it Resolved, That the Consolidated fiolling Mills, Inc., merge such other cor- poration, and that hereafter the estate, property, rights, privileges and franchises of the Union Steel Corporation be held and enjoyed by this corporation and be managed and controlled by the board of directors of this corporation, and in its name, -without prejudice to any liabilities of such other corporation or the rights of any creditors thereof. Resolved, further, that the President and Secretary of this corporation be directed to cause a- certificate of ownership and of the adoption of this resolu- tion to be made in the name of the corporation, under its seal; and filed and recorded in the oflice of the Secretary of State of the State of New York and in the office of the clerk of the county of (here insert name of county in which the principal office of the possessor Corporation is located), and be it further Resolved, That the officers of this corporation be empowered and directed to do all other acts and things whatsoever, whether within the State of New York or elsewhere, which may be in any way requisite or proper for the full and com- plete accomplishment of said merger." . , . ■ . That this certificate is made pursuant to Section 15 of the Stock Corporation Law of the State of New Yoi;k, in triplicate, to the end that one original may be filed in the office oi the Secretary of State of the State of New York, one in the office of the Clerk of the County of , and one in the office of the corporation. Witness the seal and signature of this corporation, affixed by its President and attested by its Secretary, this day of , 19. . CONSOLIDATED ROLLING MILLS, INC., . By / , President. (Corporate Seal.) Attested by . . , Secretary. State op New Yokk, Count* of. . ..'.'. . ; . . . :l^ On this day of , in the year 19. ., before me personally came , to me known,- who, being by me duly sworn, did depose and say that he resides in , State of ; that he is the Presi- dent of the 'Consolidated Rolling Mills, Inc.,' the corporktion described in and which executed the foregoing instrument; that he knows the seail of said cor- poration; that the seal affixed to said instrument is suci corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. Notary Public, County. FORMS FOE CERTIFICATES, STOpiv CORPORATION LAW. 995 FORM No. 41. Certificate of Amendinent of Certificate of Incorporation of the . A. B. C. Company, Inc. .^, , (Pursuant to § 18^ Stock, Corporation Law) This is to certify that The A. B. C. Company, Inc., is a corporation duly organized under the Business Oorpoi'ations Law of the State of New York; ThaA pursuant to Section 1 8 of the Stock Corporation Law of the State of New York, the certificate of incorporation of said company is hereby altered in the following particulars, to T*it : First: The purposes of the corporation are extended by adding to the state- ment of objects a new piiralgrajih, to read as follows: "To engage in the busi- ness of manufacturing, purchasing or otherwise acquiring and selling or other- wise disposing of automobiles and motor vehicles of every class and descrip- tion, by whatsoever power or method propelled ; to lease, rent or let such vehi- cles; to maintain a general taxicab and automobile renting service." Second: The powers of the corporation are extended by adding to the certifi- cate of incorporation a new section, to be Section 10, to read as follows: "This corporation shall have power to purchase, acquire, hold and dispose of the stock's, bonds and other evidences (>f indebtedness of any corpbi*ation, domestic or foi-- eigiij and to issue in exchange therefor its stock, bonds or other obligations." Third: The provisions of the certificate of incorporation are extended by adding a new section, to be Section 1 1, to read as follows : "At all elections of directors, each stockholder shall be entitled to as many votes as shall equal the number of his shsires of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them ampng the number to be voted for, or; any two or more of them, as, he may see fit." ,, ,, , ■,, That such alterations .have been duly authorized by, a vote of a majority of thc! directors and also by vote of stockholders representing at least three-fifths of the capital stock, at a meeting of the. stockholders, called : for the purpose in the manner provided in Section 63 of the, Sl^ck Corporation La>v; , . 'J^at annexed hereto is. a copy ,, of, , the proceedings of such meeting, verified by the affidavit of one of the directors present thereat; i That the undersigned, John Doe and Richard Roe, are the President and the Secreta.ry, respectively, of, said corporation.:, ,'..:.■.'., Executed in triplicate this day of , 19. . President. ,,.,,, . i . ., .■ .^ ; . . . , , Secretary. State, OF NewYojjk., County. OF. 'I On this ' day of . . , 19 . . , before me personally came John Doe and Richard Roe, to me personally known to be the persons described in and who executed the foregoing certificate, and they severally duly acknowl- edged to me that they executed the same^ Notg,ry Public, :County of . ; . 9y6 CORPORATIONS. FORM No. 42. Copy of Miiiutes of Stockholders' Meeting to Amend Certificate of Incorporation' of ' tRe A. B. C. CoAipany, Inc. A special ineetiiif; of the stockholderB of the A. B. C. Company, Inc., was held at No. . . , Wall Street^ .in tha City , of Nev? York;, ou if,he : 4ay of ,. ,., 19. ., pursuant to nptlce duly giyen in the : manner prescribed , })y Section 63; of. the Stock, Corporation Law of the State .flf New .York, for the purpose of amtending th^ cert^fi•^ate of incorporation; , ; , ., . Such notice was in form and substance as foUoTVs:; ., , ..., ,, i , " New York, N. Y., ,, ., ,......, 19,;. Stockholders of tji*? A. B. C. Company, Inc., ,, " '' : '',,., .,,,', ' TAKE N.OXICE ,,.,... ' • ' .,■ , , ,. That a, special meeting, of the stockholders of the A. B. G. Company,' Inc., will be held at No,, , . ,.. ., Wall St., New York, N. Y., on the . . . . .■; day pf. ••..,. ,19... at 3 o'clock, ijii the .afternoon, ■;Eor, the .purpose of consider- ing and voting upon , a proposition to amend tlie certificate of , incorporation so as , to provide therein for conducting a general automobile business, a,nd t,p,, empower the corporatioji to purchase,, acquire, hold and 'dispose of the stocks, bonds .and other evidences of, indebtedness of other, corporations, and to issue in exchange therefor .its stock, bonds and ;other obligations, and to permit cumula- tive voting, ^ ,. ., .;• :: I ; JOHN I)OE> President. ,.. t , .1 .. RICHARB RQE,. Secrpta;ry.^ . ' Said notice was published' Once a "week for at least two successive weeks in the . . ; : a newspaper puhlished in the County of New York, that being the county in which this corporation's principal office is located, arid a copy of such notice wag duly mailed to each stockholder at his last kiiown poSt-office address at least two weeks befofe the meeting, or was persoiially served upon him at least fivfe days before the meeting. ••■'.• At the time and place fixed by the notice, Mr. John Doe, President (>f the c6r- poratlon, called the mie€tirig to order: and a call of the roll shrtwed that stock- holders representing shares of st'ofek were present in person or by proxy'." '.■■'■"- ' ' ' •' ' ' ■ ■'" ' - ' Upon motion, duly made, seconded and cafrifed ' by the afflrinaiive votes of stockholders representing .,..'; shares, being at least three-fifths of the capital stock, it was ■ . ^ Kesolved, That the certificate of incorporation of the A. B. C. Company, Inc., be altered in the following respects, to wit: First: That the purposes of the corporation be e-vtended by adding to the statement of objects a new paragraph, to read as follows : " To engage in the bu-;iness of manufacturing, purchasing or otherwise acquiring and selling, or otherwise disposing of automobiles and motor vehicles of ,every cla,ss a,nd de- 'scriptibn. by whatsoever power or method propelled; to lease, rent or let such vehicles; td maintain a general taxicab and automobile renting service.". . . Second: That the powers of the corporation be extended by adding to the certificate of incorporation a new section, to be Section 1&, to read as follows: "This corporatioii shall have power to purchase, acquire, hold and dispose of FORMS FOR CERTIFICATES, STQQlv .CORPORATION LAW. 997 the stcKfks, bonds . aiid ,, other evidences of jni^ebtedness ,Qf u^ny^ eorpora,tion, dpBiestjc Q,r foreign, g.nd , to, issue jop exchange thej'efor its, s|:ocbj,^,h(]|nda or other oti,ligation&." |. , ■ ,, , "' i, ,.,,.. Third: ,_'J['Jia^t the proyisions of . the certiflea|;e, oti incorporation be extencied by,>ddii>g|a new section, to,, be Se.etiqn,,!!, to read a3,,follpi^P|:|, "At all |p].e,ct,i,9ns of directors, each ,s1;pckiijoIder .shall, be entitled to as mau^ .vqte^, as sh,all equal the number of his shares of stock multiplied by the nuniber of directors, to be elected,, and that he, way cast all of sijch votes for a single director pr may dis- tribute them among thei nvunber to be ,yoted fpr, or anj twp or, ,npiore of them as he may ,ses,,fit," ,,, ,.j, ,.,, ,,., ... ,,,, , .,,,, ,, , ,,,.„ ,,■ ,,:,„ ;,,,,.,, That the Ppesi^ent,. and , Secretary , lie authorized and directed tp execute a-nd file an amended , certificate pf inco)•ppr£^tion,,for ,t,he purpose of caj-rying ,tJiis resolution .intp, effect. „, , ,^,^1! , ;,,, , ,, i, , ,, Upon motion, duly sejjpuded and carried, the, meeting adjpunied. , , (^igned),,, EICIJABJR.ROE, ,Secre't^Ty-; .State pjr Njsw; Yobiv, )•:';.,; \, , .- |. County OF New York, C*^'",. ,, ,, , ,, , .,, ,.,,, ,,;, .;,,,,; John Smith, being duly ' sworn, deposes And says that he is a ' stockholder and a director of The A. B. C. Company, Inc;, a New York corporation; that he was present at a special meeting of the Stbckholdel'S- of i such corpoi'ation held at No. '.r. .■:.:;■.•.' Wall Street, in the Gity of New York, drl> the •.'.;....'...' day of .:..:; 19.'.; that he has read; the ' -foregoing and has compared it -*ith the minuteS' entered 'by' the Secretary upori the records of the corporation ;■ that the foregoing is a true Copy of the proceedings of such meeting and 1 a : corredt transcript' cif such minutes; i ■ ''•■' • ■ ... ■1,1] Director. Sworn to before me this . ' ' ' ' :," ■■■■■ dayi of .'. .'. .-., 19. . , • ■■' ■,,.'■-,■,..,'; ■,-.■■ Notary Public, New York County. [,. FORM No. 43. ■ ■ " . i.u'j is; Certificate of Incorporation of a Business Corporatioii Authorised to Issue Shares Without Besignated Par Value and Shares with Par Value and Preferred as to Principal. (Pursuant to Section 19, Stock Corporation Law) Certificate of Incorporation of the L. B. Corporation. We. the undersigned, for the purpose of forming a corporation under Article 2 of the Business Corporations Law of the States of. New York, ;do hereby certify: First: That we are all of full age; that lat least two-thirds ' of us; viz.: John Doe and, Richard Hoe, are (Citizens, ol,the United, States,, and.tJiat art least :oiiei of us, viz.: .JohaiDoei, is a. resident: at, the iStarte,-pf New; York. , • ;;, Second: The name of the corporation shall he L. B. Corporation. 998 CORPORATIONS." Third: The purposes for which it is formed are, to inanufacture, buy, sell arid deal in clocks, Watches, chronometers, time locks and releases, time keeping, time indicating and time registering devices of all kinds, and to do all acts arid things suitable and proper in and about the prosecution of such business. Fourth: The number'of shares that may be issued is 1,200, of which 1,000, 6f the par value of $100 each, shall he preferred and 200 shall be common with- out nominal or par valtie. Fifth: The amount of stated capital with which the corporation will begin business is $500; and the corporation will carry on business with a stated capital which shall not be less than the aggregate amount of the preference to which all issued arid outstanding stock havirig a preference is to' principal' is entitled, and in addition thereto the attiount of $6 in irespeCt'to fevery share of stock issued and outstanding other than stock having a pref'ei^nce' as to ' prin- cipal, and such additional amount as from time to tipie may by resolution ' of the Board of Director^ of the corporation be transferred thereto. Sixth: The holders of the preferred shares shall be entitled to cumulative dividends thereon at the rate of seven per cent per annum on the 'par value thereof in priority to the payment of dividends on the common shares- After dividends at the aforesaid rate have been set aside for the holders of preferred shares, all remaining profits which tlie directors . may determine to apply in pay- ment . of dividends shall be distributed among the holders of common shares e&clusively. Upon dissolution, the holders, of preferred shares shall first be entitled to receive, out of the net assets of the corporation, the par value, of their shares plus accumulated; dividends; and all of. the assets, if any, thereafter re- maining, shall belong to, and be distributed among the holders of thei common shares exclusively. Seventh; The corporation may issue 100 of its common shares to Peter J. Taylor in full payment of royalty and of the right to the exclusive use, for a period of 'ten years, of his inventions covered by Letters Patent of the United States Nos and , covering an electrically operated time lock. ' ■•, . v ,, „: 1 ,,•;, ■■■ The corporation may issue and sell its shares without par value, other than the 100 shares to be issued to Peter J. Taylor as aforesaid, for such considera- tion as, from time to time, may be fixed by the Board of Directors. Eighth: The principal business office is to be located in the Borough of Man- hattan, City, County and State of i^ew Yflpk, , t Ninth: The term of duration shall be lOO years. Tenth:; The number of directors , shall be 3.. Eleventh: The names and post-office addresses of the directors, for the first •'■•'■'''"•''■'■'' ■■■■■' '"' ■ '■'"•'"■ year are: . . j. Names Post-office Addresses At least one Of such directoi-s, to wit: ., is a resident of the State of New York,' and a citizen of' the United States. ' ' Twelfth: The names and post-offiee addresses of the subscribers of this cer- tificate, and a statement of the number' of shares Which each agrees to take in the corporation are:' FORMS FOE CEBTIFtCATES, feTOCk OOEPOEATION LAW. 999 Number of Shares Names P. 0. Addreas Pfd. Com. John i>oe, 14 Wall St., N. Y. City 200 5 Richard Roe, 37 Wall St., N. Y. City ,100 5 John Waters, Troy, N. Y. 100 In Witness Whereof, we ^ave made and signed this certificate on the ., day' of '; ,^ ... ...'.', 19..,' _, ' JOHN DOE. , , , RICHARD IrOe. , , :' \ . , . JOHN WATERS. (Add acknowledgment.) FOUM No. 44. Clause for Certificate of Incorporation Which Provides for the Issuance of Shares Without Nominal or Par Value and Shares With Nominal or Par Value, Pteferred as to Dividends, hilt Without Preference as to Principal. The number of shares that may be issued by the corporation is 1,000; of i which 500 shall be of the par value of $5 each aind 500 shall be without nominal or par value; ■, -.'■■, - •:,.■■ The amount of stated capital with which the;.icorporationl will; ibegin businoss is $500; and the corporation will carry on business with a staiied capital con- sisting of the aggregate of the amounts received, by it as consideration for the issuance of its shares with no nominal orl par value, ^ the aggregate par value of all issued arid' outstanding shares, if any, having a nominal or par value, and such' additional amounts as from time to time may by resolution of' the board of directors of the corporation be transferred thereto. The holders of the preferred shares shall be entitled to receive cumulative dividends at the rate of 8 per cent , per annum before any dividends shall be. paid on the shares without par value, but shall not be entitled to any further par- ticipation in profits, and all dividends paid by the corporation in exicess of such dividends of 8 per cent per annum on the preferred stock, shall be distributed among the holders of shares without par Value 'Exclusively. Upon final distribu- tion of assets neither class of shares shall be preferred as to principa,!, but the entire net assets of the corp6ra.tion shall be distributed pr6' tata among the stockholders according to the number of shares'' held by each' irrespective: of the classto which such shares -.■fcelong. , ; , , ■ -:'-:■• , :,'; _,' , ,;; FORM No. 45. Certificate of Amendment to Increase Numher of Authorized Shares and Stated Capital. (Pursuant to § 22, Stock Corporation Law) , ,,, ,, We, the undersigned, John Doe and Richard Roe, hereby certify that the said John Doe' is the President (or a Vice-Pr«sddent) and the said Richard Roe is the Secretary (or TreasureT) of the J. iS. Corporation^ ' IPPO , ^^ CpE?ORATIONS. . That said corpm-ation proposes to amend its certifipate of incorporation liled in the office of tlie. Secretary of State on the 8th day of June, 1919, and in the office of the Cierk of New York County on "'the, !i!tli day of June, lO'ifl, ,by increasing the number of shares \v.lii'ch the coi-pgj-atibn may issue from 1,000 shares, of whicli'500 are of the par 'value of $100 each and are preferred as "t'p dividends and principal and 500 are common without nominal oj- par valuej ^ to 2,{)00 shares, of which SbO, of t!iie par valiie of $100 each, are ' to remain pre- ferred as to diyidpnds and principal the same as heretofore, and 1,500 are 'to be cpnimpn without nominal or par value, and by increasing the amount of stated capital witn which the corporation wUl carry on business from $52,500 to $57,500; so that the third and fourth sections of the certificate of incorpora- tion shall read as follows: ■ Third: The plumber of shares that may be issued by the corporation is 2,000, of which 500 shall be of the par yalue of '$100 each and shall be preferred as to principal to the extent of the par value thereof upon final distribution of ' the assets of the corporation, aifid 1,500 shall be' common arid 'shail be With- Dutnominal or par value;.; ,,,,, :;■>,:. .. .-.S. '.<, (■■!•..;..... , ■ v'/' i •:: ^n ./'Fourth: The amount ; of, icapital.jfitijy which, the corporatipn. will carry on business is $57,500." r . The said amendment has been duly authorized by a vote of a majority of the direeteifs and also by; the' vote !of the holders ' of at, least a majority of the outstanding shares tissued tiy; the "Corporation, at. a meeting of the stock- holders called for the purpose in the manner provided in Section 63 ;of the Stock Corporation Iiaw, as;is more fully shown by the copy oftheipiToceedinga of such meeting annexed hereto. ;. ., ,;■. In Witness Whereof, we have executed this certificate, in triplicate, under the seal of said corporation, this 2nd i day of July, 1921. ■ JOHN DOE, , (Corporate Seal) , , , , President. RICHARD BOB, Secretary. '(Add aeknowledgme!nt and Affidavit of Verification.) FOBM No. 46. Certificate of Proceedings of Stockholders' Meeting, to Amend Certificate of Incorporation Pursuant to § 22, Stock Corporation Law, to Increase the Number of Authorized Shares and Amount of Stated Capital. A .special meeting of the stockholders pf^.thg J. H. Corporation was held al Xo Street, in the City of Rochester, N. Y., on the 5th day of July, 1921, pursuant lo notice duly given in tlie manner prescribed by Section 63 of the Stock Corporation Law of, the State 3of New York, for the purpose of amending the certificate of incorporation pursuant to Section 22 of the Stock Corporation Law. "*' ' '" ' ' ' " " ' ' '' ' ' . yhe, following is, a, copy ,pf sai4 notice: ; ; , . . ,,..,;; ,-. ," Rochester,, N. y.y June 16,, 1921. Stockholders of the J. H. Coipora,tion FORMS FOR certificates; STOCK CORPORATION LAW. lOGl : . TAKE NOTICE That a special meeting of the stockholders of the J: H'J Corporation will be- held at No Stre'et, in ' the City" of Rochestsr, ' N. Y., on the Sth day of July, 1921, for the purpose of considering and voting upon a proposition to amend the certificate of incorporation so as to increase the number of shares which the corporation may issue from 1,000 shares, of which 500 are of lhe par value of $100 each and are preferred as to dividends and principal and 500 are common without nominal or par value, to 2,000 shares, of whicli 500^ of the par value of $100 each, are ' io Jeinaiil prSfMred jis to dividends aild 'Jirfn- cipal' the saibl6 as Tierettjfore'aiid 1,500 are to be commoil without nominal or par value, and tly increasiiig' ttie stmount of stated capital with which the coi"- poration will carry oil business from$52j560 to *$87i500; i ., . JOHN. DOE, President. •; ., . ,•! RICHAKD ROE, Secretary.'; Said notice was published once a week for at least two successive weeks in the i'.M ......ij a newspaper published in the County of Monroe, that being the county in which the principal office of the J. H. Corporation fis 'located; and a copy of such notice was duly mailed to each stockholder at his last known post-oflSice address at least two weeks before the meeting, or Jwas personally served upon him at least five days before the meeting. At the time and place fixed by the notice, Mr. John Doe, President of the Corporation, called the meeting to order, and a call of the roll showed that stockholders representing. ...,....,,,. shares of stock were present in person or by proxy. ■■., .. , , .,■ ,, , . j,.. Upon motion duly made and seconded, ' the following resolution was adopted, by the affirmative votes of, stockholders representing .....;..... ., shares, being at least a majority of the outstanding shares issued: by the corporation : , "Ilesolveoratibn; and that is the name under' which it was originally organised. ' - 2. The corporation was organized iin'der Article '2 of Chapter 12 of the Laws of ISOfli; kiiown as the "Business Corporations Law." 3. Its certificate of incorporation was filed in the Office of the Secretary of State on the 10th day of October, 1911, and in the ofBce of i'he Clerk of Erie County on the 11th day of October, 1>911. 4. The amount of capital stock i authorizeij by its certificate of incorporation was $100,000, which amount was increased to $200,000 by a certificate filed in the office of the Secretary of State on the 3d day of January, 1912, and in the office of the Clerk of 'Ek-ie County on the 4th day of January, 1912,. 5. The tax paid for the privilege of organization was $50. , . ,..,,, The tax paid for the privilege of increasing its capitaj stock as aforesaid was $50. ' ""^';' ;■ '"■ " 6. The capital stock has been divided into 2,000 shares of the par value of $100 each, of wliich 1,Q00 sharep are common and 1,000 shares are entitled to a preferential non-cumulative dividend at the rate of seven per cent, per annum, and, upon dissolution of the corporation, are entitled to payment, at par, before any assets of the corporation may be distributed among the holders of common stock. , 7. |Th^, number of common shares issued and outstanding is 500. The, number of preferred sha,res igsued and outstanding is 1,000. 8. The number of shares with uo nominal or par value that may henceforth be issued by the corporation is 2,000, all common. 9. 500 of the new shares without nominal or par value are to be issued- share for share, in exchange for the 500 shares of common stock lyith par value now outstanding. The 500 shares of common stock heretofore authorized, but unissued, are hereby changed to shares without par value and are included in the 2,000 shares men- tioned in paragraph numbered 9 of the certificate as the number of shares that may henceforth be issued. j ,, .;;;f,j 10. The corporation will carry on business with a stated capital consisting of the aJggregate amount of the preference to \which -all i issued and outstanding stock haying a preference as to principal is entitled, and in' addition thereto $5 in respect to every share of stock issued and outstanding other, than stock hav- ing a preference as to principal, and such additional amount as from time to time may by resolution of the board of directors be transferred thereto. 11. The Board of Directors is hereby authorized to issue and seU the authorized shares with no nominal or par value which are not issued in place pf out- standing shares of stock, for such consideration as, from time to time, may be fixed by the Board. ' ' • • ; ' ' - OOKPOEATIONS. In Witness Whereof, we have ' signed tfes ' instrument the 29th day of June, 1921. .^ . „ , . ' '"-^''^ ^^^^^^ '''^ '■ ^' -'' '- ■ JxkN lidE; '"^'*' ■■' '■^'^'^■■'■^ ■ . n ■• ; .: ;>iTi.O .K J moHARD ROE. , , JOHN SMITH, by his \, , , ' proxy, I'SbMAfe X DORAN. Note. — If the amendment is by written consent wifchouti a ineeting the I'er- tificait« ' ite to be: signed; by all I of' the stocskholders as .above,, and, duly ae)tnowl- edged, and an affidavit of the eustodi^ of the stock-book— Forni No. 49 is to be .aiwexed. , ; If the ameu,dment is by, vote at a meeting, the President or a Vice-President and the Se(^pta,ry, . or 'Iji;easurer, should sign and ad4 title <)f office after their signatures and shquld acknowledge execution and annex their affidavit— rPprni No. 50. FORM No. 49. Affidavit of ; Custodian of Stock-Book to be. Annexed to Certificate of Amendment When Signed by All of the Stockholders. (Pursuant to Fairagraph "a" 'Of §■ 24, .Stock Corporation- Law) State of New Yokk, ) ' ' " '" '' ' ' ' " ' County of Ekie, p''" , Peter; Jpp,es, being .duly a-vsjorn, deposes _ and says that he. reside^ at No. ..,.,,..... .i Delaware Avenue, ' in the.' City of Buffalo, N. Y.;' that lie is' the Secretary , and the custodian of the stock jiook of The a!' B. Corporation, the corporation mentioned and described in the foreging certificate' of amendmeiit; that he has compared the signatures to said instrument with the list of stock- holders in said stock book contained; that the persons who have executed said certificate, in person pT by proxy, constitute the holders' of rtedrd'ofall lif the shares of stock of said corporation, irrespective of dlaSs, issued and outstanding. •> i .It- .1 r>.v.-ii .V,-; ,. :i,.N :•: ,,.„,; •pKxEE'JO'WES; Sworn to before me this 29th < i" . ,: . , ■ . . ;. ... ■•"'clky of .Tune: 1921.'"' ' " ' '.-,.. , ..;, "■' ■ WTLLTASr WHITE, Notary Public, ' ■■ ■ ' i '■'•.'■-'■ ■!''■• Erie County. ' "■ ; : FORM No. 50. Affidavit of President (or a Vice-President) and Secretary (or Treas- urer) to be Annexed to Certificate of Amendment When Signed by Such Officers. ' ^ '.''■'''[.' '"."' '" "' (Pursuant to Paragraph ." b " of i§';24, Stock Corporation ,Liaw) ,,; ... Stati! or N^KNt York. I ' '"' '. ' ' ■ ' • '■■!''' CoTJNTt of:' .-•■j''**"' " '"" " -'"•"' ' '■ ■'■"■-"■' John Doe and Richard Roe, being severally duly sworn, eacli for himself, deposes and says that said John Doe is the President (or a Vice-President) and FORMS FOE OEETIFICATES^ ^TQCK CORPORATION LAW. .lOQS the said Richard Roe is the Secretary (or Treasurer) of The A. B. Corporatioji ; that said John Doe and Richard Roe have been authorized and directed to exeo^te and file the foregoing Amended Certificate by the votes, cast in person or. by proxyi of the holders of record of a majority of the shares then .out- standing,, irriespeqtive of any provision of the certificate of ineorporation ! pur- porting to d'eny, voting powers to the holders > of any class' of stock, at a meeting , called, and held upon written, notice mailed to, each. stockholder at: least twenty day^ befo):e: th^,, date set for, the meeting and published once a week for at least two. successive veeks in a i newspaper published and circulatiBig in the county wherein the principal office of the corporation is located; and that Bueh. notice did expressly state the purpose of the meeting to be that of amending the cer- tificate of incorporation of the corporation pursuant to Section 24 of the Stock Corporation Law, so as to permit the issuance of shares without pax value, and did state the terms upon which the outstanding shares of stock were to be exchanged for th,e ,new shares. JOHN DOB. RICHARD ROE. Sworn to before me this 29th ' day of June, 1921. . i ': '. WILLIAM WHITE, '■•'"■'■ '■■' - ' " .iJbtary Public, :'.•, ■■.';,■ '.'.'■.'i.;. :(■ Brie CouBty-li ' FOBM No. 51. Stockholders' Consent to Increase (or Reduce) Number of Directors of the A. B. C. Corporation. ' Purtuant to Sbction 26' of the Stock eofpOratioh Law; '^fii'thei' undersigned stockholders of The A. B. C. Corporation, a ' ebi-poration duly organized and existing undet- the La-WS of the State 'of New' York; do hereby coiieen-t that the number of dlrectbrs of Said corporatioii' b^ inWeased from the pi'efsent hiinilier, five, to seven;"' ' ...... , In Witness 'WTiereof, we have feulJscribed this consent in tripilcate, each on the date set opposite his signature hereto. ' 19. 19. 1&. 'l&. State of New Yobk, CoTTNTY or }' On this" ..:'.... day of ........... 19.., before me personally came ,1 r •.,'-■ '/' ['','■:..'•'. and , to me personally known to be the persons described in and who executed the for?goiilg consent, and tKey severally duly acknowledged to me that they had made and executed the same. "■' '■ " '•'" ' Notary Public, ............ Cpun-fej. lOOiS ' coRJbisA'tioirs. State 6f New York, County Of. .'.'. ...".'.'.. •I'. , being duly sworny deposfes and says^ that he is the Seoi'etary of The Aj iB*:C. Corporation, and as such oflScer' has lawful custody of the stock book of said corporation; that he has compared the signatures to the foregoing con- sent with the. names' 'entered upon' such stock book; that 'eafeh of the pSi^bns who have signed such 'Consent was at the time he' signed the same, and still is a stockholder in said corporation, and -that together they Constitute the holders of record. of the entire capital stock of said corporation issued and outstanding'.' . Sworn to before me this ..,....:. . day of , 19. . .■;■•■: . Notary Public, County. FORM No. 52. Transcript of Minutes of Stockholders' Meeting of the X. Y. Z Com- pany, Inc., Held for the Purpose of Increasing (or Reducing) Number of Directors. (Pursuant to § 26, Stock Corporation Law) A special meeting of the stocl^ljolders of the ,X. Y. Z. Company, Inc., was held at No. Street, in the city of , N. Y., on the day of .,.:'.■..;,,..,., 19, ;., in conformity with Section 26 of the Stock Corporation Law, on two weeks' notice in writing to each stoekhplder of record. Such notice stated that the meeting was called for the purpose of considering and voting upon a proposition to increase (or reduce) the number of directors, and wa& served personally (or was served by mailing a copy thereof to each stockholder at his last known post-office address). Proof of: due, service of the potice was filed in the office of the corpora-tion at the time of such meeting. . ] John Doe, President of the corporation, presided at the meeting,, and Richard Roe, Secretary of the corporation, acted as Secretary of the meetjng. A. B. moved that the following resolutipu be adopted : "Resolved, That the number of directors of the X. Y. Z. Company, Inc., be increased from three, the present number thereof, to five." The resolution was seconiffed by C. D. and duly adopted by the votes, cast personally or by proxy, of stockholders owning a majority of the stock of thu corporation, to wit, shares; the number of shares voted in the nega- tive being ' : Upon motion, the meeting: adjourned. (Signed) JOHN DOE, President, RICHARD ROE, Secretary. State or New York, 1 . , ,, , County of Erie, , f"*'' , . John Doe and Richard Roe, being duly sworn, depose and say and each for himself deposes and says,' that he, the said John Doe was president of the rOBMS POR CERTIFICATES, STOCK CORPORATION LAW. 1007 meeting of atockholdera of 1;he X. Y'. Z. Company, Int., held at Ko. . . . ... .... Street, in the city of , N. Y., on the day of ...:'.. ii. . . , 19. ., for the purpose of changing the numbei' of directors of the 'said corpora- tion, and that he, the said Eidhard Roe; was secretary of such meeting; tha't' he has compared the 'foregoing copy with the original' minute's of' Such meeting, and that the foregoing is a true and correct transcript of such minutes and of the whole thereof. Sworn to before me this . . . . day of , 19 . Notary Public, County^; FORM No. 53. Annual Report of Domestic Corporation. (Pursuant to §_ 34, Stocky Corporation Law) Pursuant to Section 34 of the Stock Corporation Law, the Com- pany, a corporation, organized' and existing under the laws of the State of New York, makes this report as of, the first day of January, 19... ,),..i First: The amount Qf its capital stock is $ , . ., and the proportion thereof actually issued is. $ , . , of which $ was issiied for property purchased. Second: The amount of" its debits does not exceed $.'.....'.... Third.: The amount of its assets at least eq^uals $...'....... Fourth: The following are the names and addresses of all of its directors: ..:'y. No .' :':'.'.: ."st.; ....:'.: .'.:■..'.. . . . : ::, n. y. :."'.' , No! , ; St., :..,..:. .■. :■;... .'. .'..., n. y. ....■;..:..;., n'o. .^ .. .^ st., ..:.: : ; . -.'n-'y. Fifth: The following are the names and addresses of all of its ofiicefs: ' , President, No St., N. Y. , Secretary, No. .,.,. St., ., N. Y. ....... , Treas'urer, No ,..'.'. St., , N. _Y. ,! Dated, this !. ." day of ,19.. ' ; Cfompkiijf. by ., ,- . , 'Secretary. FORM No. 54. Annual Report of Foreign Corporation. (Pursuant to' § 34, Stock Cor'poration Law) Pursuant to Section 34 of the' Stock Corporation Law, the Com- pany, a corporation, duly organized and existing under the Laws of the State Qf , and doing business within the State of New York, makes this report as of the first day' of January, 19. .. "■..■.■ 'First: The amount of its capitaf .stock is $. '. .,, and the proportion 10^ ' . . GOKPOJBATIOUSi P - ' thereof actvmlly ' issued is $ . . . . • . , of wbich, $ ., ,. was ; issued for property purehasedi . , Second: The amount of its debts, does i>ot e,xceiejl $ ■ Third: The amount of its assets at least equals $. . , -Fourth:; The following are the names and addresses of all its, directors: ■ ■■'•■• ;....:■., No. :.i. ..; ,St.y , : ,;-.i-- , No St ,....., ■., No St., , Fifth: The following are the names and addresses of all of its officers: , President, No St., .1. ,,.(...,•..,.,...,..,. . , Secretary, No St., . , ; . . , . 1, , Treasurer, No St., , Sixth: The > name of the personi designated in the manner prescribed by the Code of Civil Procedure, as a person upon whom process against the corporation may be served in the State of New York is Dated, this day of .... .^ .... , 19 . , .:■... , Uompany. ,, , , . by . : ,.....,..,..., Secretary. FOBU No. 55. Subscription for Partly Paid Shares. (Pursuant to §§ 53 arid 60, Stbck Cotrporatioil Law) In consideration of the issuaiice to me by The A. B. Corporation, organized under the liaws of the State of New York, of a certiiicate for the number and kind of shares of stock of said corpora,bion set opposite my sign3,ture hereto, receipt of which certificate is hereby acknowledged, I agree to pay for same at the price of $..... per share, ten per centum dowii, accompanying this subscription and the balance by installments of such amounts and at such times as the directors may, by resolution and notice mailed to rrie, require. In Witness Whereof, I have subscribed my name and post-office address hereto en the date set opposite my 8ignat,ure|. Nunilier' ' and kind Name P. 0. Address of shares Date John Doe Hudson, N. Y. 10 common Jan. 2, 1918 Richard Roe Athens, N. Y. 5 preferred Jan. 5, 1918 Note.— This form may be used for subscriptions to shares either with or with- ©ut a designated par value. • FORM No. 56, Certificate of Classification pf Capitjal Stock. (Pursuamt to, § 61 of the Stock Corporation Law) , Cejrtific^te of Classification .of Stock . of the ,.,.... ..,.| Company This is to certify, in conformity with Section 61, of the Stock, Corporat,ioB Law, that a meeting of the stockholders of , the ■■■■., Company was held FORMS FOE CERTIFICATJBS, ;STOCK CORPORATION LAW. 1000 at No. . , Street,, in the, City ot;. ., ,,N. Y., oiv, ithp.r, . .,. day of. .., 19.., at o,'cloek .. , . M., pursuant to notice, of which the following is a copy: ,, "Please take, notice that a meeting of the .stockholders of the Company will be; held, ^t 'No. Str^etj,.in the, City, of : . . ., N. Y., on the . .: 4ay of .,....,■;.. .,.,,19, ,., at ........... o'clock .. . M., for the purpose of considering and determining whether, any of the shares of stock of the corporation, which are now all common, shall be classified, and issued as preferred stock, and, if so,;what, proportion of the stock shall be so classified and what the preference shall be."-. The foregoing notice was served in the manner required for the annual meet- ing of the corporation, to wit, by, publication thereof, at ,least once in each week for two supcessiye, weeks immediately prepeding such flection, in the , a newspaper published in ,;the County of ,..,,........ ,..i-. ,■.-••■ i , that being the county in which the meeting was held, and by (here state the manner in which service was made to satisfy requiremeiits of the by-laws of the corporation). ,, , ;, , , , At the time and place specified in the potice, the meeting was called to order by the President of the corporation, and upon motion, duly seconded,, the fol- lowing resolution was offered for adoption : " Resolved, That the capital stock of t;he. Company, amounting to $ , divided into shares, all common, of the par value of $ each, be and the same is hereby, cla^p-ified, so that henceforth $ ,. . . thereof, consisting . of t.- ■ r ■■> r •■ • shares, of the pftr value of $...., each, shall be first preferred stock ; $ , consisting of shares, of the par value of $ each, shall be sticond pre- ferred stock, and $ , consisting of shares, of the par value of $ , each, shall be common stock, and the relative rights, privileges and preferences to which the holders of the several classes of stock shall be entitled, and the restrictions and limitations to which they shall be subject in respect thereof, are as follows: The holders of the first' iprefdrrfed Btock shall be entitled to have declared and set apart for their benefit, annually, o\it of surpliiS profits, a cumulative divi- dend of six per cent, per annum from the date of issue of their shares, before any dividend shall be declared on either the second preferred or common stock, but the holders of first preferred stock shall not be entitled to any other or further participation in profits; and upon liquidation of the affairs of the , cor- poration and distribution of its assets,, either by , dissolution or otherwise, the holders of the first preferred stock shall be entitled to receive , j)ayment in full of the par value of their shares, with accijmulated| diyidends, befor^ any pay- ment shall be made on account of the second preferred or common stock. First preferred stock shall not confer upon the holders thereof any right or privilege of voting for the election of directors,. or upon the adoption, amendment or repeal of by-laws, or upon any question whatsoever except as to matters concerning which the statute requires affirmative action by a specified proportion, in inter- est, of all of the stockholders. ,, , The second preferred stock shall not invest the hollders thereof with any preferential right to dividends, but ,the holders thereof shall participate pro rata, according to their holdings, with the. holders , of common stock in any and all dividends which may be declared out of surplus profits remaining after provision has been made for the payment of all dividends due on the first preferred stock; 64 iOlO COEPOBATlONS. but upon liquidation of tlie affairs of the corporation and distribution of its assets, either by dissolution or otherwise, and after the holders of all of the first pre- ferred stock then outstanding shall have been paid in ' fiill the par value of their shares and accumulated dividends, then the holders bf second preferred stock shall be entitled to receive but of the remaining net assets of the corporation the pir value of their shares before any distribution OJt assets shall be nlade to the holders of common stock. After such payment in full bf the par value of the second ' preferred stock, the holders of the comniOn stock shall "be entitled to receivfe payment' fdr their shares to the extent of the par value thereof; and if aifter' redemption of the common stock in full at :its paT valtie, there shall renlaih undistributed net assets, the entire amount thereof shall be apportioned ainong the holders of second preferred and common stock, pro' rata, according to their holdings,' with- out preference or discrimination as to class, and to the exclu'sioh of the holders of first preferred stock. ' • . ; ^ ("Resolved, further. That if, upon the written request of any holder of first preferred stock, the directors, by a two-thirds vote, shall authorize the exchange of sUch stock for common,, the exchange shall be on a basis, and at the rela- tive value of . shares of first jJref erred stock for .....'....! Shares of common stock.")* ■ . Up6n a canvass of the vote, it was found that votes had been cast in the afBrmative, and .' .' ......:'. in the negative. The President thereupon announced that the resolution had been adopted by the favorable votes of the holders of record of tvvo-thirds bf the capital stock, and the meeting adjourned. Made in triplicate, this day of . ■ • • > ' 19'. . , President ■ (or Vice-Prest.) ' , Secreta,ry '■ ■ ' " ' ■ ' (or AsSt. Secy.) * The paragraph in parenthesis may be included,, if desired, pursuant to the last sentence of § 61, S. C. L. State of New Yobk, coxtntt of ^|ss.: On this day of . . , 19 . . , before me personally came and , to me known and known to me to be the persons described in and who executed the foregoing instrument, and they thereupon severally duly acknowledged to me that they had made and executed the same for the uses an purposes therein set forth. Notary Public, Couhly. State op New Yoek, County of ]■ ..and ...'.; , being duly sworn, depose and say, and each for himself deposes and says, that he, thfe said .! ;., is. the President, (or Vice-President), and that he, the said ;........., is the Secretary (or Assistant FORMS FOR CERTIFId^fli^/'sTO'dK CORPORATION LAW. 1011 Secretary) of the Company; that he^'har r^ad the foregoing certificate of the proceedmgs qf a meptiiijg of t^e stoclchQ^ders of said corporation, ^nd knows the consents tfiereof, and that the statement's therein coritaiaed' are true. " Sworn to before me this . . v ; day of , 19. Notary Public, ■ . ; . ;. . . . . j County. FORM No. 57. Preference Clause With Sinking Fund and Redeaiption Provisions. ; The preferred :stock shall entitle its holder to receive each year a cumulative dividend at the rate of eight per cent, per annum, out of netiprofita, before any dividend' shall be declared om the common stock. Whenever, after payment of said dividend of eight per cent, on the preferred stock in any year, there shall remain net profits, one-fourth of such profits Shall be set alside'and deposited in a special sdiikiiig fWd ' accotint; beiftfre khy dividend shall be' paid 'upon the common stock. The directors shall apply thei sinking fund to the purchase of preferred stock at the lowest price at whi(!h it may' be offered, but in no case at more than $105 per share. If no shards of preferred stock be offei^ed for sale to the dotporatioh at or below the price of $105 per share, the directors may', at their option, allow the sinking fund to accumulate, or they may use any portion or all of it for the purchase of putstanding preferred stock by calling in such stock for redemption at the price of $105 per share plus siich further sum as, when added to the aggregate amount of all dividends paid on the stock called for redemption since the issuance thereof, shall be equal to eight, per cent, per annum on its par value for each year during which the stock has been isa.ued and outstanding. If the holder of any stock so called for redemption shall refuse or neglect to surrender the certificate of same upon the expiration of 30 .days' notice, by majl,.to the holder of record, the corporation may deposit t^e purchase price of the stock to the; credit of siich holder in any bank, or trust; copipany authorized to do businessi in the State of, New York, and upon such deposit,, made as aforesaid, and notice thereof mailed to the stockholder, his right to share in future profits of the corporation, by way of dividends or otherwise, or to par- ticipate in any distribution of capital, assets, shall cease and determine, and he shall have no other or further right or recourse against the Corporation on account of such stock.' The directors shall have full discretion to determine upon and select the particular shares to be called for redemption. 1012 COBPOBATJONS. , , , , FOEM Wo, 58. Change of Amounf of AutHorized Capital Stopk by Vote of a Majoiity of the Stockholders at a Meeting. (Pursuant to Sections 62, 63 and 64, Stock Corporation Law) Certificate of Increase (or Reduction) of Authorized Capital Stock , 1 1 f of the Company. This is to certify, in conformity with Sections 62, 63 and 64 of the Stock Corporation Law, that a meeting bf the sstockholders of the Com- pany was held at No Street, in the City of , N. T. on the day of , 19 . . , at o'clock . . . M. Such meeting was specially called for the purpose of considering and determin- ing whether the capital stock of the corporation should be increased (or reduced) ^°^ Xi: oT« Mac I Notice of the meeting, stating the time, place and object, and the amount of the increase' (or reduction), proposed, signed by th^j Pi:esident , (or a Viee-Presi- dent) and by the Secretary, was published once a week, for two successive weeks, in the ....'....:., ai newspaper pUbliShfed in ../.'..'.'!•.. County; that 'being the county ill which the principal office of the said corporation is located, and a copy of such no.tice was duly- mailed to each' stockholder or'm;ember at his lasti known jiopt-qffice address at least .two weeks before the meeting, or was i .personally served upon him a,t least fiye days before such meeting. ; ,, . , ; ,, , At the, time and place aforesaid a,nd spefiified, in,, the. notice, istppkhqlders appeared in person or by proxy in numbers representing . . ........ shares,, .being at least, a majority of all the shfj-jies o,f stock issiupd and outsitandjng,, and organized by choosing from their number the undersigned John Poe, as Chair- man, and the undersigned, Eichard Roe, as Secretary of the inciting. Upon motion, duly ■ seconded, a , vote , ,0|^ those , ,present in. person or by proxy was taken upon a resolution as follows: , , "Resolved, That the capita,!, stock of the .,..,. ..... Company be increased (or reduced) , to $„. , , to consist of, '. slja^es of the par value of $...'!.,... . each. "Eesolved, further, That the amount of capital over and above the amount of the reduced capital stock be returned to the stockliolders pro rata, at such timCs and in siich' manner' as the djfectctrs sll'all (ieterihine."'" ' '' ■ TJpOn a canvass of the votes, it was fOund tlikt'fetocfcholdfer^ owning a majority of ' the stock of the 'oorpoi'ation,' to' wit, ..'...'...'.'. Shares, had' voted iii the affirniative and that . . . .':.' . . . , 'shares had been voted iii the negative. ' The Chairman thereupon declared the resolution dUlji' sidopted arid the meet- ing 'adjourned. - "' ' ' '•■'••■-■• • •••■ ' ■■ , ■ . "We further certify: ■ ■'• • ■;■ !■ ■, '■■ • 'i' ... , i That the amount of capital stock heretofore authorized was l$.,yi.i. . ; . . . ^ ; ,; That '(;he proportion thereof actually, issued; is $.. .,; ,; • ,, j. , That the amount to , which., 1;he capital stock is increased (or reduced) is >'■ ;" ' ., ,,'.', ,'."'; FOEMS FOR CERTIFICA'TES, STOCK COBPOEATIOK LAW. I'OlS' That the whole amount of the aiscertained debts alid liabilities of the tor- poration ia $..'..'■.'.....* Made 'in triplicate, 'this .... . . . . i :''dhy of .'!.'. . :', 19. . "' " ' ' ' ' ' '' JOHN DOE, Ohairnjan.' *" ■"" •' ■ ' '■ RICHARD ROE, Secretary. * T^is statement of debts and liabilities is to be included only in case of a reduction. State of New York, 1 County of ,\'^" On this day of ...;:.;..., 19 . . , before me personally caine Johii Doc aiid' bichard Roe, td ihe Ijersohally known to be the persons described in and! who executed the foregoing certificate;' and they thereupon severally acknowledged to ine that thej^ executed the same. ' Notary Public, County. State 6f' New York, 1 ' ■ County OF. .. .• ,\^^" . ' ' ' ' '. John Doe and Richard Roe, being duly sworn, depose 'and say, and each for himself deposes arid sayW; that' he the said John Doe was the 'Chairman, and that he iihesaiii Richard Roe wsts the Secretary, of'the'ineeting of stockholders oi the .'...'.';.'... Company, held oh the .:....'. ..'.'^'day "of ..'.:.:.'. .'; Ift.'., for the pWrpose of in'cr'iising"(or r'ediiciiiig) the capital stock;' that he ha's reald the foregoing tei'tifieate of the '^jroceediiigs of such' nieetiiig and Icnows the con- tents thereof; tliat the statements pontaihed in said' certificate are true. ChaiTmaLn. Secretary. Sworn to before me this . . . . day of "., 19. FORM No. 59. Change of Amount of Authorized Capital Stock by Unanimous Written CoAseilt of Stockh'oliaers Witiilolif a Meeting. " ' ' (Pursuant to Sections 62, 6.3 anct 64, Sfeck Corporation 'Law) Stockholders' Consent to Increase ■ (or Reduce) Amount of Authorized Capital Stock •■,, : ;,," I of the .J Company. jPursuant to Seetiohs 62, 63 and 64 of the Stock Corporation Law, the' under- signed stockholders "o'i the CompaAy, a' New York corporation, do hereby consent that the amount of the capital stock which' the corporation is authorized 'to''f^sue''be increased' from $. .': '.'to' $....!'... .'.", and' that "the par value of the 'stid+es 'M' the additiotial stock hereby 'aiithorized"'b6"thef'gaili^ a« that of the shares lirevi'oiisly authorized, to wit, .$, ; eiifh',! 'so' that 1014 , , ,, 9oppoRATip.H;g.,7 ;;'•'. > ■; hereafter tlie total capital stock of , t,^e fiprporatiou shsJJ . be $,.,,...,...."., ,(fo-n- sisting of shares of the par value of $ each. ,, , .,, ,^ In Witness Whereof j we have set our hands to this instrunient . in triplicate, each on the date setnOpposUp his respective signature. ,;;,' ,,■; (Signatures) (Dates) , , 19.. • •■'■■.:■■.".';. ';VV..I.^J'.. ..'.■:'..;'., ':;'J^:.::'.,'i9.. , , 19:. State of New Yobk, } County OF ,i^^" On this .......... day of, , , 19.., before me personally came ■ • • ■ • .( : . .,..,....,,.., and , to me personally known and known to me to be the persons described in and, \^ho executed , the foregoing ins-trument, and they thereupon severally duly acknowledged to me that they executed the Notary Public, County. State of New York, ) GOITNTY OF fSS.: ; ■:.,-, being duly sworn, deposes and says, that, he is the Secretary of the : , Company, and as such officer has lawful custody of the stopk- book of the corporation; that he has compared the signatures to the foregoing consent with thp names entered upon such stock-book; that each of the persons who, have signed, such consent was at the time he signed the same, and, still is a stockhol4er in said corporation, and that together they constitute the holders of record of the entire capital stock of said corporation issued and outstanding. Sworn to before me this . . . . day of , 19. Notary Public, County. FORM No. 60. Change of Ni^mber and Par Value of.Shares of Stock. (Pursuant to Section 65 of the Stock Corporation Law) Certificate of Change of Number and Par Value * of Shares of Stock < ■ of the .' . : Company. This is to certify, in conformity with Section 65 of the Stock Corporation Law, that ,a meeting pf , the stockholders of the ........... Company was held at No. Street,, in the City of, , N. Y., on thp ^ ...,.,.. d,a,y.,pf , 19 . . , at .....,.,.. o'clock . . . M. Such meeting was specially called for , the purpose of considering and determining whether the number and par value of the shares of stock should, be changed from shares of the par value of $.,. ........ each 'o shares of the par value of $ each. FORMS FOR CERTIFICATESj^TOCK, CORPORATION LAW. 1015 Notice of the meeting, stating) the time, pjaee and object and the nature of the change of number and par value of sliare's proposed, signed by the President (or a Vice-President) and byjthe Sepretary, wag published once a week, for two successive weeks, in the , a newspaper published in County, that being the county in which the principal office of the corporation is located, and a copy of such notice was duly mailed to each stockholder or mem- ber at his last known post-office address at least two weeks before the meeting, qr was personally served upon him at least five days before such meeting. ,J\.t Jhe time and place aforesaid and specified iil the notice, stockholders appeared in person or by proxy, in numbers representing shares, being at least a majority of all the shares of stock issued and outstanding, and organized by choosing from their number the undersigned, John Doej as Chair- man, and the undersigned, Richard Roe, as Secretary of the meeting. Upon motion, duly seconded, a vote of those present in person or by proxy was taken upon Ijhe following resolution : " Resolved, That the number of shares of the capital stock of the Company be increased (or reduced) from to , and that the par value of such shares be increased (or reduced) from $ to $ each, so that hereafter the capital stock of the corporation, amount- ing to $ , shall consist of shares of the par value of $ each." Upon a canvass of the votes, it was found that stockholders owning at least two-thirds of the stock of the corporation, to wit, shares, had voted in the affirmative, and that shares had been voted in the negative. The Chairman thereupon declared the resolution duly adopted, and the meet- ing adjourned. Made in triplicate, this day of , 19 . . JOHN DOE, Chairman. RICHARD ROE, Secretary. State of Nevp- Yoek, ) County of j( ^^' ' On this day of , 19 . . , before me personally came John Doe and Richard Roe, to me personally known and known to be the persons described in and who executed the foregoing certificate, and they thereupon sev- erally duly acknowledged to me that they executed the same for the uses and purposes therein set forth. Notary Public, County. State of New York, 1 County of , j ^^' ' John Doe and Richard Roe, being severally duly sworn, depose and say, and each for himself deposes and says, that he has read the foregoing certificate of proceedings to change the number and par value of the shares of stock of the Company, by him subscribed and acknowledged, and knows the con- tents thereof; that the statements therein contained are true. JOHN DOE, Chairman. Sworn to before me this RICHARD ROE, Secretary. day of ... 19.. .. Notary Public, County. 1016 CORPORATIONS. FORM No. 61. Request for Statement. (Pursuant to Seetign 69, Stock Corporation Law) To Mr. .... .; Treasurer of the Company. We, the undersigned persons, owning collectively mofe than five per centum of the capital stock of the Coni'pany, and each owning the number of shares of such stock set opposite his signature hereto, do hereby request you to make and deliver to the imdersigned, .John Doe, at Street, in the City of , X. Y., within thirty days after the presentation of this request to you, a statement of the affairs of said Company, under oath, embracing a particular account of all it-a assets and liabilities, pursuant to Section 69 of the Stock Corporation Law of the State of New York. Dated at ! , N". Y , 19. , . . (Signatures) (No. of Shares) FOEMS FOR CERTIFICATES, . J'B^SrSP. CORP. LAW. lOl'i FORMS FOR CERTIFICATES UNDER TRANSPORTA TION CORPORATIONS LAW FORM No. 75. Certificate of incorporation of the Mohawk; Ferry Corporation. , The undersigned, for the purpose' of tiecominj; if corporation pursuani to Ai'fiele 2, Chapter 219, Laws of 1909^ ' entitled "An Act in Relation to Transportation Corporatioiis, Excepting Railroads, constituting' Chapter 63 of the Gonsolidp.J;ed Laws," for conducting aiid managing a ferry, do hereby certify that: Ffrst: We siire all of 'full 'age; at' ieast two-thirds of lis are 'pitizens of tW United Stat«s and at least one of us is a resident of the State of New York. Second : The hanie of the corporation is Mohawk Ferry Corporation. Third: Th6 ferry to be established siair run from the City of ., ., N. Y., to the Village of ..... ., in the Cbiinliy of .7;'. ..... '., N'- Y., anS return. , , Fourth: The corporation shall eXist for the term of fiftv yeaj-s. Fifth: The amount of the capital stock shall be ,$....... . .,, and shall con- sist of common shares of the par value of $ . . each. Sixth: The number of directors shall 1)6 Seventh; The names of the directors for 'the first year are:| , and ". . In Witness Whereof, we have executed this certificate, in triplicate, this day of ...: , 19.; ' ' ' ^ (Signatures.) (Add acknowledgment.) FORM No Aflftdavit of Payment of One-Half Capital Stock of the Mohawk Ferry Corporation. (Under i 3, Transportation Corporations Law) State OF 'New Yoekj I:,:'; ■'(' ;''•:■: ■■/ 'i/i:/! ■ ' ^'■'■.l,';' ■;.,•■ ... County of 'i "' : v John Doe and Richafd R6e,'''being duly sworn, depose and say, and each for himself deposes and says, that he is a director of the Mohawk""Ferry Corpora- tion; that the said John Doe and Richard Roe together coil stitut'e' a Wajority of the directors of such corporation; that at least ohe-half of the' capital stock of said Mohawk Ferry Corporation has been actually paid in. JOHN DOE. ■ RICHARD ROE. Sworn to before me, thi-s, ,...,.,.,,••■,,.,• • ,. , day'of '...;..,,.,.',;. 19; :,. ' ; - : , ,■ ;' Notary tublif, , ■, • ■ , ■ County. , , , 1018 COEPORATIONS. FORM No. 77. Certificate of IhcoFporation of the Suh Navigation Corporation. The undersigned, for the purpose of forming a corporation pursuant to Article 3 of Chapter 219, Laws of 1909, entitled "An Act in relation to Trans- portation Corporations, excepting Eailroads, constituting Chapter 63 of the Con- solidated Laws," as amended, do Hereby certify: ' First: We are all of full age; at least two-thirds of us are citizens of the tJnited States, and at least one of us is a resident of the State of New York. Second: The name of the corporation shall be Sun Navigation Corporation. Third : The specific objects for wliich it is to be formed are the building for its own use, equipping, furnishing, fitting, purchasing, chartering, navigating and owning steam, sail or other boats, ships, vessels or other property to be used in any lawful business, trade, commerce or navigation upon the ocean, or any seas, sounds, lakes, rivers, canals or oth,er waterways, and for the C8,rriage, transportation or storing or lading, freight, mails, property or. passengers thereon. Fourth: The waters to be navigated by its vessels other than it? ocean steamers are the bays, harbors, sounds and inlets of the northern, eastern and southern seacoast of the United State; the lakes, canals, rivers and other waterways of and bordering on tte United States. Fifth: The amount of the capital stock shall be $...., , to consist of shares of the par value of $ each. Sixth : The term of existence shall be 100 years. Seventh: The number of directors shall be Eighth : The names of the directors for the first year are : Ninth : The principal ofiice shall be situated in the City of , County of , N. Y. Tenth: The following is a statement of the number of shares of stock which each subscriber of the certificate agrees to take : ' Name Shares In Witness Whereof, we have executed this certificate, in triplicate, this day of , 19. . * (Signatures.) (Acknowledgment.) An aSidavit of at, least three of the directors must be annexed, to the fore- going certificate in the following form: State of New York, 1 County op. . , ( ^^' ' , and , being severally duly sworn, each for himself deposes and says : that he is one of the persons named in the foregoing certificate of incorporation of the Sun Navigation Corporation as a director for the first year; that ten per centum of the capital stock of said corporation has FORMS FOR CERTlFldATES, TEANSP. CORP. LAW. 1019 been in good fiith subscribed, and at least ten per centum of such subscription has been paid in cash. (Signatures.)' Sworn to before me this day of . .. . .., 19.; - i Uotafy Public, : Cbiinty. FORM No. 78. Certificate of Payment of One-Half Capital Stock. (Pursuant to § 12, Transportation Corporations Law) We, the undersigned, , and , together con- stituting a majority of the directors of. the Siui^ Navigation Corporation, do hereby certify, pursuant to Section ,12 of the Transportation Corporations Law, that pt least one-half of the capital stock of said corporation has been paid in ; tjjtat $. , .;. thereof was paid in property snd $ in cash. Dated ,19.. ' ' ■ .. ■„ m,i'. '■■■!-■ , (Signatures.) State op New Yobk, ] County of , f **" ' On this day of , 19 . . , before me personally came , and , to me known to be the persons described in and who executed the foregoing instrument, and they thereupon severally duly acknowledged to me that they executed the same. Notary Public, County. State op New Yobk, J County op ,Y^" John Doe and Richard Roe, being severally duly sworn, depose and say, and each fdr himself deposes and says that he, the said. John Doe, is the PresiHent (or Vice-President) and he, the said Richard Roe is the Secretary (or Treas- ure) of the Sun Navigation Corporation; that he has read the foregoing oeirtifi- cate of payment of one-half capital stock of said corporation and knows the contents thereof; that the statements therein contained are true. (Signatures.) Sworn to before me this '.'... .".'\ . . day of ,19.. Notary Public, M. . :'■( ■ . . '■ County. FORM No'. 79. Certificate of Inooi^poration of the Inter-Village Auto-Bus line, Inc. TKe undersigned, for the purpose oif becoming' a ccirppfatidn to establish, maintain and operate omrtibus routes for public use in the conveyance of pef- 1020 , , , GORPOEATJQW^., . sojis and propeytj', pursuant to Section 20. ^''^i'ffl® 4, Chapter 3J9,,Itaws of 1909, entitled "An Act in Relation to Transportation Corporations, Excepting Bail- roads, constituEing Chapter ,ft3 ,of the Cfonsolidated Laws," as amended, do hereby certify that: ' . ; , First: We are all of full age; at least two-thirds of us are citizens of the United States and at least one of us is a resident of the State of New York; Second: The name of the corporation shall be Inter- Village Auto-Bus Line, Inc. ; Third: The corporation shall continue for years; Fourth : The routes upon which it is intended to run as nearly as practicable are (insert statement of route);''' ''^ -■ jiCi Fifth: The number of (iir^ectors shall be Sixth: ITie haines of' 'the directors' for the'iirst year are: " ' ' ' 'fc^V'enth: The aindurit of thfecaipital stock shall be .$.......'1.^, which shall consist of . .'.'•..'. . .'.'. shares of th6''pai'' value' of $; . .' 'teach. Eiglith:' The place Of residence of each subscriber to this certificate aiid to the capital stock and the number of shares ' ' whicH he Ag'iiB'os to take in tKe corporation are as follows: ' ' Name Residence Shares / In Witness Whereof, we have executed this certificate, in triplicate, each on the date set opposite our respective signatures. , '.".' ''..'.';•'.'!...,' '..;■' 19.. , , , , 19.. ■•■■ > ■■., 19.. „, State of New York, 1 County of ,| '^^^ ' On this ,;,■•, day of . , " 19 , . , before m^ personally came , .......... and , to me, known and Icnown to me to be the persons described in and who executed the foregoing certificate of incorpora- tion, and ,they thereupon severally duly acknowledged to me that they executed the same. Notary Public, ,. . , County. FORM No. 80. Certiflcate of Alteration (or Extension) of Route of the Inter-Village Anto-Bus . Lj,u^. Inc. Tliii undtjrsigMd, directors .^f.lhe IiiJer-\'illa^B Auto-Bus Line, Inc., do hereby certify,' in ' cd'iiibrmity wifll' fe'efction 21, Article 4, 'CKaiptfef 219, tiawS 'of*'l909, entijtled ,'• An Act i,n ;-?ilation t(D Tranaportation Corporation^,, Excepting Il^il- roails, constituting Chapter 63 of the Consolidated Laws," that ,the directors at FORMS FOR CERTt'FifCATB^, 'i^RAlsrSP. CORP. LAW. 1021 a meeting iiuly called "and held' in th'e' village "of :■; N. Y:; on tho ■ • ■ : ^ay of • ; ■ •, 19. ., by a vote of two-thirds of their 'ininibt'r, decided to aiter'(or extend)' the foute (oi- routes)' designated in the certificate of incorporation, so that henceforth the route (or Voutes) iipon •which the omnibuses of the said liter- Village Auto-Blis Line, Inc., shall fm Willbe' as follows: , ' ' ■'•■■-':.■:: lYoin' the intersection ; of '1 '. ,■.'.';'. .'l I' Street and '. . Avenue, in the Village of N. Y., southerly along sa;id aVehue to its ihtersection with the Turnpike, thence westerly along said turnpike to the Oity of (etc., continuing the description, including the return route) . In Witness Whereof, we have made this certittcate, in triplicate, this ..;.;.... 'd»v of "..'"!.;'.'. ''':,'h:V " '' ' ' Jii !' ■ lilll State of New York, ] . "' , ' '■''.'■ County (3F. '...'.!.'."'.'. jf**''' ' '" " "'' • On this . . . . . '. .'i.i /I day of , 19.., before , me personally came , and , known to me to be the persons de- scribed in and who executed the foregoing cei-tificate, and they thereupon sev- erally duly acknowledged to me that they executed 1;lie same. , , Nptary Public, County. State of New York, County of. -•]■ , and ., being' diil'^ sivorii; depos'e and say, and each for himself deposes and says, that he is a director of yie Inter -Village Auto-Bus Line, Inc.; that he is acquainted with all of the directors of said cor- poration; that the persons who have signed the foregoing instrument constitute a iftajority of the directors of said corporation; that he has read the foregoing instrument and knows the contents thereof and that the statements contained therein are true. .'.'■•^ 'jK WiK'Xi S\vorn to before me this . . . . day of ..,19.. Notary Pu))Uc, , • Cimiity. FOKM No, 81, Certificate of Ineorpbration of Garnet Tramway Corporation, The undersigned, for the purpose of becoming a, corporation pursuaiit, to Article 5, Chslpter:219. Laws of 1909;, entitled "An,,4C|ti in Relation to Transpor- tation Corporations, Excepting Railroads, , c;onstituting ,phaptej- , 63 of the Ton- solidated Laws," for constructing, maintaining .a,i(d pperjitiiis an elevated tram- way, constructed of poles, piers, wires, rods, ropes, bars or chains, for the trans- 1022 , ; .,;,.. COEPOEAXIONS. portation .of .freight in susp.ended- buckets, caijs, or other receptacles, for hire, do hereby certify that: First:,, We are all of full age; at least two-thirds of us are citizens of the United, .States., ^nd, at .least .one of us i? a resident of , the State of New York. , Second: The name of|the, corporation is Garnet Tramway Corporation. Third: It shall continue fifty years. ,, Fourth :, The places from and to which such tramway i,s to be constructed, maintained and operated are as fpjlows: Fifth: The length .of such tramway s^hall be ............ Sixth: The name of each county in which it is intp,nded to be made is Seventh: The amount of the capital stock shall be $ , divided into shares of the par value of $ each. Eighth : The number of directors shall be Ninth: The names and places of residence of the directors for the first year are: Name .1.'^ ■ . 1.!^ Residence . Tenth: The place o.f residence of each subscriber hereto and the number of shares he agrees to take in the corporation are as follows: Name Residence - .-No. of Shares t ; " In;, Witness Whereof, Tverhave executed this instrument on this day of ..,,,.......,.,, 19. .,; , ,| , , , , , , , (Signatures) (Acknowledgment.,) ,,,, ,, FORM No. 82. Certificate of Incorporation of Producers' Pipe Line Corporation, The undersigned, for the purpose of becoming a corporation pursuant ,, to Article 6, Chapter 219, Laws of 1909, entitled, " An ' Act in Relation to ' Trans- portation Corporations, Excepting Railroads, constituting Chapter ©3 of the Con- solidated Laws," for constructing and operating for public use,'except in the City of New York, lines of pipe for conveying or transporting therein petroleum, gas, liquids or any products or property, do hereby certify that: First: We are all of full age; af ;least _t>v:o-thirds of us are citizens of the United States, and at least one of us is a resident of the State of New York. Seconds' The name of the corppration .sliall be PrQdu,cers', Pipe, Line Corpora- tion. Third: It shall continue for . . years. Fourth: The places from and to which the lines of pipe are to be con- structed, maintained and operated are: ; 1 ■Fifth: The length of the lines shall be FORMS FOE CEBTIFigATES, TEANSP. COEP. LAW. 1023 Sixth: The names of the counties through or into, which; the lines are to be constructed are Seventh : fhe amount of the capital stock shall be $ , . , to consist of . . shares of the par yalue of $. ..■,.,,.. • • . each. Eighth: The number of directors shall, be Ninth : The names and places of residenpe of the directors for the first year are: Name Eesidence Tenth: The place of residence of each subscriber and the number of shares he agrees to take are as follows: , <, Name Residence Shares In Witness Whereof, we have executed this certificate in triplicate,, this day of ,19.. (Signa,tures) (Acknowledgment. ) Annex Affidavit as follows: State of New York, ) County of , f ^^' " ....'......, .'..'. , and , being severally duly sworn, each for himself, deposes and says that he is one of the persons' named in the fore- going certificate of incorporation cif the Producers' Pipe Line Corporation as a director for the first year; that at least $1,'050 of stock for every mile of line proposed to be constructed or maintained and operated has been in good faith subscribed, and twenty- five per centum paid in money thereon; and that it is intended in good faith to construct, maintain and operate the lines of pipe men- tioned in such certificate; and that such corporation was not projected' or formed with the intent or for the purpose of injuring any person or corporation, nor for the purpose of selling or, conveying its franchise to any person or cor- poration, nor for any fraudulent purpose. i , , , ; (,Signa,tures.) Sworn to before me this day of ,19.. Notary Public, County of FORM No. 83. Certificate of Incorporation of the Metropolitan Gas & Electric Corporation. The undersigned, for the purpose of becoming a corporation pursuant to Article 7, Chapter 219, Xaws of 1909, entitled ,'' An Act in Relation to Transpor- tation Corporations, Excepting Railroads, constituting Chapter 63 of the Con- solidated Laws," do hereby certify that: First: We are all of full age; at least two-thirds of us are citizens of the United States, and at least one of us is a resident of the State of New York. 1024 ■ tJOKPORATldNS. Second: The name of tlie corpoi-ation shall be MelTopolitsin Gas and Electric Corporation. Third; The objects of the proposed Corporation are td manufacture and supply gas for lighting the streets and public and private buildings of cities. Villages and towns within this State, and ffir manufacturing ' and using electricity for producing light; heat and power, aiid in lighting streets, avenues', public parks and places, and public and private buildings of cities, villages and towns within this State, and to bore, drill, dig, mine, purchase or otherwise acquire natural gas, and convey, sell or distribute the same. • Fourth: The amount of ' its capital stock shall be $ •••■, which shall be divided into shares of the par value of $. . . . . . . .'. . each. Fifth: The term of existence of the corporation shall be fifty years. Sixth: The number of its directors shall be ' Seventh : The names arid places of residence of the dir&ctors for the first j'ear are: Name Residence Eighth : The names of the towns, villages, cities and counties in which the operations of the corporation are to be carried on are as ifolllows: (insert names) In Witness Whereof, we have executed this instrument, each on the date set opposite our respective signatures. ■•; ■ ,. (Signature) (Datei) .■..., '-, i 19.. . ., , ...,., -..,- . 19.. ... ,, , ^,19.. Si^ATE ,or New, Yobk, 1 , , ,,, ,, ,, , . COTINTY OF ,.(^''' ' ■• "On this ...'.".'.'..'.. "day' of ....'.;...'.,' 19.'. , 'before me personally came ',':.;'.;....., Eind ........... to me known arid known io me to be the persons described in and who executed the foregoing certificate, and they thereupon severally duly acknowledged to me that they had made and executed the same. Xotarv Public, County. FORM No. 84. Certificate of Incorporation of the Bethlebem Water-Works Corporation. The i^ndersigned, for ■fhe purpose .qf becoming a corporation purauant to Article 8 of Chapter 219, £^ws' of 19^9^ erititled! "An iict in relation to Trans- portation Corporations, Eiccepting' 'Railroads, constituting Chapter 63 of the Consolidated Laws," do hereby certify that: First: We are all of fiill age; at least twp-thirds of us are citizens of the United States, and at least one, of us is a resid0nt of tbe State of New York. , Second: The name of the corporation shall be Bethlehem 'Water- Works Cor- poration. Third: The amount of its capital siock aiall be $.........., divided into , . . .' shares of the par value of ifl. . . . each. FOEMS FOE CEETIFICATES, TKAWSP. COEP. LAW. 1025 Fourth: Its principal office shiall be locat^fl in the village of , N. Y. 'Fifth: The number of its directors shall be ,^ . Sixth: The names and places of residence of the directors- for the first year are: Name Eesidence Seventh: r The corporation is formed for the purpose of supplying water to the Village of Bethlehem, Town of , County of , New York, and to the inhabitants of said village. Eighth: The permit of the authorities pf such village, required by Section 80 of the Transportation Corporatipiisjiaw, has been granted, as more fully appears by the written instrument evidencing such permission, signed and acknowledged by a majority of the board of trustees of the village, hereunto annexed. Ninth: The following is a statement of the name and post-office address of each subscriber, and; of the; number of shares of stock which he agrees to take: Post-Office No. Shares Name. Address. Subscribed. In Witness Whereof, we have ex,ecuted this instrument, in triplicate, each on the date set opposite our respective signatures. (Signature) ' (Date) ■■: , , 19.. , , 19.. , ;;...,,.......:, 19.. State of New York, 1 ■ ■ ,. . County OF A^^" On this day of , 19.., before me personally came , , and , to me known to be the persons described in and who executed the foregoing certificate, and they thereupon severally duly acknowledged to me that they executed the same. '}■ Notary Public, County. State of New York, -County of. .....:...., and . . t-../-. , being duly sworn, , depose and say. and each for himself deposes and says, that he is one of the persons, n^med in the foregoing certificate of incorporation :of the Bethlehem Water- Works Cor- poration as a director for the', first year; that at least one-tenth of the capital stock stated in said certificate has been subscribed, and that ten per centum of such subscriptions have been paid to the directors in cash. Sworn to before me this ; .' .■■' ' . ' day of . . ..'.;'.;■.'.■, 1915j : ; Notary Public, County. 65 1026 COEPOBATIONS. FORJI No. 85. Permit of Village Trustees. We, the undersigned, trustees of the incorporated Village of Bethlehem, in the Town of .'. . ., County of , X, Y.. do herelay grant permission to . , , and , to form a corporation under the pro- visions of Article 8 of the Transportation Corporations Law, for the purpose of Supplying the said village of Bethlehem with water, and we consent to the filing of the annexed certiiAcate of incorporation of the Bethlehem Water- Works Corporation. In Witness Whereof, we have executed this iiistrument, in triplicate, each on the date set opposite our respective signatttfesi ' ■■ • (Signature)' (Bate) ■ ' : ...■ .:. ....,■...'.:. .. .., 19. . :••• :...:......, ............ 19.. ■■■ :.., :, 19.. A Majority of the Trustees of the Village of Bethlehem. State of New York, 1 County of , f ^^' ' On this day of , 1915, before me personally came • , , and , to me personally known to be the persons ■ described in and who executed the foregoing instrument, and they thereupon severally duly acknowledged to me that they executed the same. Notary Public, County. I hereby certify that , , and , the persons who have signed and acknowledged the foregoing permit, constitute a majority of the trustees of the Village of Bethlehem. ' ' Clerk of the Village of Bethlehem. (Seal) FOEM No. 86. Certificate of Incorporation of the Jamesville Telephone Lines, Inc. The undersigned, for the purpose of becoming a corporation for constructing, owning and using a line of electric telephone wholly within (or partly beyond) the limits of this- Sta^, pursuant to Article 9' of Chapter 219, Laws of 1909, entitled " An Act in relation to Transportation Corporations, Excepting Rail- roads, constituting Chapter 63 of the Consolidated Laws," do hereby certify that: First: We are all of full age; at least two-thirds of Us are citizens of the United States, and at least one of us is a resident of the State of New York. Second: The name of the corporation shall be Jamesville Telephone Lines, Inc. Third: Its general route shall be as follows: Beginning at a central exchange in the Village of. , along Main Street, westerly,: to its intersection, with the highway known as the Road, thence northerly along said road to the hamlet of , thence westerly along the highways and over public FORMS FOE CERTIFICATES, . TEANSP. CORP. LAW. 1027 and private lands and waters to the Village of , with branches run- ning to public and private buildings of all kinds along and in the vicinity of such route (continue the description,). Fourth: The points to be connected are the cities, villages and hamlets of (insert names), and intermediate and adjacent points and places in the coun- ties of and , in the State of New York. Fifth : Its capital stock shall be $ Sixth: The capital stock shall be divided into shares of the par value of $ each. Seventh: The term of its existeiice shall be (perpetual). Eighth: The number of its directors shall be Ninth : The names and residences of its directors for the first year are as follows: Name Residence Tenth: The name and post-office addresses of the subscribers and a statement of the number of shares of stock which each agrees to take in the corporation are as follows : Name. P. 0. Address. Shares. In Witness Whereof, we have executed this instrument, in triplicate, on the dates set opposite our respective signatures. (Signature) (Date) , •■•■■ ■•, 19.. , 19.. , ,19.. State op New York, ] County of > j ^" ' On this ; . . . . day of : , 19 . . , before me personally came . . ! ., and , to me known and known to me to be the persons described in and who executed the foregoing certificate, and they thereupon severally duly acknowledged to me that they executed the same. Notary Public, County. FOEM No. 87. Certificate of Incorporation of Red Creek Bridge Corporation. The undersigned, for the purpose of becoming a corporation for constructing, maintaining and owning a bridge across a stream of water, as more particularly hereinafter described, pursuant to Article 10 of Chapter 219, Laws of 1909, enti- tled "An Act in Relation to Transportation Corporations, Excepting Railroads, constituting Chapter 63 of the Consolidated Laws," do hereby certify that; First; We are all of full age; at least two-thirds of us are citizens of the United States, and at least one of us is a resident of tlje State of New York. 1028 CORPORATION'S. Second : The name of the corporation shall be Red Creek Bridge Corporation. Third: Its term of duration shall be 50 years. Fourth : The amount of Its capital stock shall be $ , divided into shares. Fifth: Tie number of directors shall be Sixth: The names of the directors for the first year and their post-office addresses are as follows: Name Post- Office Address Seventh: The location and plan of the proposed bridge are as follovps: . Eighth: The name and post-office address of each subscriber and a statement of the number of shares of stock which he agrees to take are as follows: Name Address Shares Ninth: Annexed hereto and made a part hereof is an affidavit of three of the directors named herein that one-fourth of the amount of the capital stock has been subscribed and that five per centum of the amount so subscribed has been paid in cash. In Witness Whereof, we have executed this certificate, in triplicate, this day of , 19 . . (Signatures) (Add Acknowledgment.) Annex Affidavit in the following form : State of New Yobk, 1 County or A"^" , , and , being severally duly sworn each for himself, deposes and says that he is one of the persons' named in the foregoing certificate of incprporation of the Red Creek Bridge Corporation as a director for the first year; that one-fourth of the capital stock of said proposed corporation has been subscribed, and that five per centum of the amount so subscribed has been actually paid in cash. (Signatures) Sworn to before me this day of .,, 19 . . Notary Public, County of FORM No. 88. Certificate of Incorporation of Harbor Freight Terminal Company, Inc. The undersigned, for the. purpose of becoming a corporation pursuant to Article 10-A of Chapter 219, Laws of 1909', entitled "An Act in Relation to Transportation Corporations, Excepting Railroads, constituting Chapter 63 of the FORMS FOR CERTIFICATES, TRANSP. CORP. LAW. 1029 Consolidated Laws," as amended by Chapter 778, Laws of 1911, do hereby certify that: First: We are all of full, age.; at least two-thirds of us are citizens of the United States,' and at least one of us is a resident of tlie State of New York. Second: The name of the corporation shall be Harbor Freight Terminal Com- pany, Inc. Third: The objects of the, corporation shall be the supply, maintenance and operation of freight terminal facilities — including docks, wharves, bulkheads, basins, tugs, floats, lighters and other shipping and wharfage and lighterage for the receipt, delivery, storage or handling of freight; terminal ways for initial or final local transport of freight received for shipment or delivery in or from the locality in which the business of this corporation shall be carried on; terminal stations and stores for the receipt, storage, handling, protection and preservation of freight; terminal warehousing; freight collection, delivery and e3q)ress service to and from terminal docks, terminal ways, terminal stations, terminal stores and warehouses- of and for^ freight for transport, handling, storage, warehousing, ' car- riage, manufacture or use thereby, thereat or in such locality; terminal factory facilities, including, room, power, heat, light and machinery fdr the use, manu- facture, handling, display, sale and shipment of such supplies, materials- and products as at such locality shall' or may be received or shipped as freight from or by any terminal wharf, way, station, store, warehouseman, manufacturerj or carrier doing business at such locality; and equipment' for such docks, ways, stations, stores, warehouses, service and factories. Fourth: The amount of its capital stock shall be $. . . .',• to consist of shares of the par value of $ each. Fifth: The number of directors shall be- . -. i . . Sixth: .The names and places of residence of the directors for the first year are: Name Residence Seventih: The following is a statement of the place and:limits of the locality in which such corporation shall do business: y. . . .■^: r.,. In- Witness Whereof, we have executed this certiflcatei in , triplicate, this ...day of ,19.. • - . , (Signatures) : , (Acknowledgment.) 1030 CORPOEATIOJfS. MISCELLANEOUS CORPORATION FORMS FORM No. 95. Agreement to Form Corporation and Take Stock. This agreement, to which each of the undersigned has become a party on the date set opposite his signature, Witnesseth; That in consideration of the mutual promises and covenants herein contained each of the undersigned agrees with each and every other subscriber hereof as follows: First: That he will join and participate with the other parties hereto in the organization of a corporation pursuant to Article IV of the Transportation Corporations Law of the State of New York, for the purpose of operating a line of motor driven omnibuses for ipublic use in the conveyajice of persons and prop- erty in, through, from, to and between the city of , in the county of , and the hamlets and villages of , and , in the county of , all in the State of New York ; over and along such routes as may be determined upon in the manner hereinafter provided. Second: That he will attend a meeting of the parties hereto to be held at No Sitreet, in the city of . . , N. Y., at o'clock . . . M., on the day of , 19 . . , for the purpose of selecting a, name for the corporation, fixing the number of its directors, choos- ing a board of directors for the first year, deciding upon the number of years the corporation is to continue, the loealtion of its principal office, and, as nearly as may then be practicable, the route or routes over which its omnibusses shall be operated, and for the further purpose of executing a certificate of incorpora- tion in conformity with the statute hereinbefore referred to, and of transacting such other business pertaining to the organization of the corporation as may then appear proper. Third: That if he fails, from any cause, to attend such meeting, he shall none the less be bound by any action duly taken thereat germane to the subject of this agreement. Fourth: That he will take the number of shares of stock set opposite his signature to this instrument and pay the par value of same, in cash, to the treasurer of the conporation as follows: Fifty per cent upon issuance and deliv- ery of the certificate of stock to him within thirty days after the filing of the certificate of incorporatiqp in the public offices designated by law for that pur- pose, and the remaining fifty per cenit at such time or times as the board of directors may require by resolution and notice to the subscribers, but such re- quirement shall be uniform and pro rated among all of the subscribers accord- ing to the amounts of their several subscriptions. Fifth: That the amount of the capital stock of the corporation shall be Twenty Thousand Dollars, divided into Eight Hundred shares of the par value of Twenty-five Dollars each. ( If any of the stock is to be preferred, state the amount thereof and the nature of the preferences.) SixJth: It is further agreed that upon the organization of the proposed corpo- ration, it may, by resolution of its board of directors, adopt and become a party to this agreement, and shall thereupon be bound to issue and deliver its shares MISCELLANEOUS CORPOEATION FORMS. 1031 of stock to the several subscribers hereof according to the' terilis of these pres- ents, and may sue or be sued in respect thereof. ' Provided, however, and this agreement is upon the express condition that it shall not become effective or binding upoii atly party hereto, Otherwise than as a continuing offer subject to acceptance, until it shall have been signed by five or more persons whose aggregate subscriptions shall amount to not less than Five Thousand Dollars. Provided, also, and this agreement is upori the further condition that such mininium number and amount of subscriptions be obtained before the date hereinbefore fixed 'for the meeting of the subscribers, and that such meeting be held, and the certificate of iiicorpoi-atiori be rflside arid filed, all not later than the day of : . , ' 19 . . . Excepting; however, and it is hereby agreed, that three or more of the parties hereto assembled at the time and iplace of the meeting aforesaid, may, by a iriajority vote; adjourn the same to any pther day within a period of not mora than two weeks, and that any five or more of the parties hereto shall constitute a quorum for the transaction of any and all business at the first or any adjourned meeting. Witness our hands. Amount of Signatuje Number of shares subscription Date John Doe 40 $1,000 Jan. 1, 19 . . Richard Roe 20 500 Jan. 3, 19 . . FORM No. 96. Minutes of Meeting to Form Corporation. A meeting of the subscribers to the annexed agreement to form a corporation, was held at the place and time fixed thereby, to wit: at No. ........ St., in the City of , N. Y., at o'clock . . . M. on the day of , 19. . The following persons were present: (Insert names.) The meeting was called to order by Mr. John Doe, who announced that it was held for the purpose of forming a corporation pursuant to an agreement which he then read aloud, being the same agreement above mentioned, hereto annexed and marked " A." Upon motion, Mr. John Doe and Mr. Richard Roe were elected Chairman and Secretary, respectively, of the meeting. ' . The Chairman then,, intrpduced Mr. John Smith, Attorney at Law, who told the meeting that at the instance of Mr. Doe he had prepared a tentative draft of a certificate of incorporation, which he then read aloud. After discussion, the following resolution was adopted by unanimous vote: "Resolved, That the per'soils here assembled, w^ho are subscribers of the agree- ment to forni an omnibus corporation which has been read to this meeting,' for the purpose of carrying out the terms of such agreement, hereby adopt the name ' Intervillage Bus Line, Inc.,' for the corporation, and declare: that the Corpora- tion shall continue fOr fifty years; that the route upon which it shall opjfrate, as nearly as is now practicable to determine it, is (here describfe route, stating termini or that it is to be a belt line, and naming streets and roads over which the busses will run) ; tha;t the number of directors shall be five; that the di- 1032 , •,, , ,coBPOBATioiirs,. ,,^ recftors for the first year shall be (insert names and addresses) ; that the amount of the capital stock shall be $20,000, divided into 800 shares of the par value of ^5 each, as provided i;i the, agreement aforesaid, aiid tlrat five or more of the subscribers of such agreement, here assembled, forthwith sign and execute the draft of certificate of incorporation which has been rea,d to this meeting by Mr. Smith, and , that Mr. Smith be and he is hereby directed to file the cer- tificate, when sp executed, in the public offices designated by law, for that pur- pose, and to attend to all, othpr legal proceedings and details attendant upon the conjpletion of , the prgapization of the corporation." Pursuant to . such resolution, the certificate of incorporation >vas thereupon d,uly signed and acknowledged, in triplicate, by the requisite number of qualified persons, and one of such triplicate^ is hereto annexed, marked " B." The meeting then, ^dJQur,^ed.,, ,Dat«d ..,19.. V JOHN DOE, Chairman. RICHARD ROE, Secretary. FORM No. 97. Proxy for First Subscribers' Meeting After Filing of Certificate of Incorporation. Know all men by these Presents, that I, Jane Doe, a subscriber (or ah in- corporator of, and a subscriber ) for shares of the capital stock of the Company, a New York corporation, do hereby constitute and appoint John Doe as my proxy io attend a meeting of the incorporators and subscribers to the capital stock of said corporation, on the day of , 19. ., or ah'jf continuation' thereof, by adjournment or, otherwise, with full power to vote and act for me and in my name, place and sitead, in the same manner, to the same extent and with the same effect that I might do were I personally present thereat, giving to said John Doe full power of substitution and revocation. Dated at , N. Y., this :. day of .. ... ... 19.. In the presence of FORM No. 98. AssignHient of Subscription for Stock. I, John Doe, having heretofore duly, subscribed for one share of cojnmon (or preferred) stock of, the A. B. Corporation, do, by these presents, in considera- tion of one dollar, the receipt of which is hereby apknowledged, sell, assign and transfer to Richard Roe, all of my right, title and interest in and to said sub- scription and share of stock, and direct entry of this transfer upon the books of the corporation and the issuance of a stock certificate in accordance herewith to the transferee, his successor, assignee or nominee, upon delivery and surrender of this instrument to said coirporation. Dated at , this day of , 19 . MISCELLANEOUS COBPOEATIOST FOEMS. 1033 FOEIff No. 99. Waiver of Notice of Incorporator's Meeting. The undersigned subscribers of the certificate of incorporation of the ....;.,.... Company, Inc., -which was filed in the office of the Stecretary of State of New York on the day of , 19 , ., and subscribers to the capital sitock of said company, hereby waive notice of the first meeting of the incorpo- rators and subscribers to stock and consent that the same be held o^i the • , ■ ■ • day of , 19 . . , at o'clock ... M., in Room No. .,! of the Builfling, No. St., City of , N. Y., and hereby authorize the transaction at such meet- ing of any and all business appertaining to the adoption of By-Laws, to the organization of the corporation and to such other matters as may lawfully be considered thereat. Datei , 19. . (Signatures.) FORM No. 100. Waiver of Notice of First Meeting of Directors. The undersigned hereby waive (s) notice of the first Meeting of Directors of the A- Bl' Corporation, and c.onse,nt(B) thait the same be held at '2 o'clock P. M., on the day of .,19,.,at .,. St., in the City of . . . , , N. Y., and thait any and all lawful business be transacted thereat. Dated ,19.. Director ( s ) . FORM No. 101. letter Offering to Sell Business to Corporation. 32 Broad St., , N. y:, September , 19. . A. B. Corporation, , N. "i. Gentlemen: ... I hereby offer tp sell to you, as a going concern, the entire pap«r manufactur- ing business now condupted by , me, .including good will, bills and accouiits re- ceivable, contracts, lists of customers, trade secrets, trade names and marks, brands, formulae, patent rights, licenses, stock on hand and in trade, machin- ery, fixtures, equipment and all other personal, property whatsoeyer, tangible or intangible, owned by me and used in or about the business aforesaid, all pf which is more fully described by the enclo^ed inventory which, is made, by ref- enoe,, a part h&repi; and including, also, all ,o;£ the real property ^nd rights and interests in real property, ■pw^ed by one and used in or about such business, which real property, rights and interests are described in the abstract of title 1034 CORPORATIONS. to certain mill properties lying on the south side of Street, in the village of , County of , Jf. Y., which abstract is enclosed herewith and made, by reference, apart hereof. The consideration for the foregoing to be the sum of $75,000, payable as follows: First, by your assumption of the montgage for $20,000, plus accrued interest, now outstanding against the mill properties, and of the debt secured thereby. Second, by your assuniption of the unsecured debts, which do not amount to more than $15,000, incurred by me m the conduct of the business. Third, by the issuance to ine of a sufficient number of shares of stock of the A. B. Corporation, at the par value thereof, to make up the balance of the pur- chase price. This offer to continue for a period of twenty days from the date hereof, sub- ject to acceptance within that period, and acceptance may be conditioned upon approval by your counsel of title to the properties and of the form and suifieieney of the instruments of sale, transfer, conveyance and warranty to be delivered by me. Yours, etc., JOHN BROWN. FORM No. 102. Minutes of First Meeting of Subscribers to Stock After Filing of Certificate of Incorporation. Pursuant to the waiver of notice prefixed to these minutes, a meeting of the subscribers to stock of the A. B. Corporation was held this day at 10 o'clock A. M., in the law office of John Smith, at No. 32 Broad St., in the City of , N. Y. Mr. John Doe was elected Chairman and Mr. Richard Roe -was elected Secre- tary of the meeting. A majority of the incorporators, constituting also the subscribers to a majority of the subscribed shares of stock of the corporation, were present, in person or by proxy, as follows: John Doe, in person, 5 shares Richard Roe, in person, 5 " Thomas Jones, in person, 3 " Jane Doe, by her proxy, John Doe, 1 " The proxy of Jane Doe, marked " 0," is annexed hereto. The Chairman announced that one of the triplicate original certificates of incorporation had been duly filed in the office of the Secretary of State on the day of , 19 . . , and one in the office of the Clerk of the County of ! ., on the day of ..:......., 19. . The remain- ing original certificate was produced at the meeting and is prefixed to these minutes, marked " A." Pursuant to request by' the Chairman, the Stecretary read to the meeting a draft of proposed by-lavsfs, and, ilpon motion duly seconded and carried by the affirmative votes of persons representing subscriptions to shares, it was MISCELLANEOUS COKPOBATION FOEMS. 1035 "Resolved, That the proposed by-laws, as read by the Secretary, be adopted, and tley are hereby made the by-laws of this corporation, and further Resolved, That the Chairman and 'Secretary make and sign a notation upon such by-laws that they are the by-laws adopted at this meeting a;nd that when so certified they be prefixed to the minutes." The said by-laws, certified in compliance -with the foregoing resolution are hereunto annexed, marked " B." The Secretary read to the meeting a communication from Mr. John Brown of ., N. Y., offering to sell to the corporation, for the consideration of $75,000, the certain tract of land therein described, together with the mills, machinery and other appurtenances thereon and thereto belonging, and together also, with the good will of the paper manufacturing business now conducted by him and all of the property, real and personal, used in and about such business and included in the inventory submitted with such communication. Upon motion, duly carried, the Secretary was ordered to file Mr. Brown's letter and the accompanying inventory with the minutes of this meeting. They are accordingly hereto annexed, marked " D." Upon motion, duly seconded, the following resolution was carried by the affirmative votes of subscribers representing shares. " Resolved, That it is the sense of this meeting that the business and prop- erties offered for sale by Mr. John Brown, and described in the letter and in- ventory received from him are necessary for the use and lawful purpose of this corporation and are reasonably worth the sum of $75,000, and further "Resolved, That the directors be, and they are hereby authorized to purchase such properties, if they consider it advisable to do so, and to pay for the same in substantial conformity with the terms proposed by Mr. Brown, to wit: By the assumption of the mortgage of $20,000, plus accrued interest now standing against the real property and of the debt secured thereby ; by the assumption, also of the unsecured debts incurred by Mr. Brown in the prosecution of such busi- ness, in an amount not to exceed $15,000, and by the issuance of a sufficient num- ber of shares of stock of this corporation, at the par value thereof, to make up the balance of the purchase price of $75,000." The meeting then adjourned. Dated ,19.. JOHN DOE, RICHARD ROE, Chairman. Secretary. FORM No. 103. Minutes of First Meeting of Directors, The first meeting of the Board of Directors of the A. B. Corporation was held this day at No. St.. in the City of . . ., N. Y., at 3 o'clock P. M. Present were Messrs: ' The meeting was organized by the election of Mr. John Doe as Temporary Chairman and Mr. Richard Roe as Temporary Secretary. 1036 CORPOEATIONS. The Secretary read a waiver of notice of tlie meeting signed by Directors J. D., R. E. and T, D., -wliieh is annexed to these minutes, marked " A." The minutes of the first meeting of subscribers to stock, and the, by-laws adapted thereat, were produced, and by unanimous vote, the reading thereof was omitted. The following motion was carried by unanimous vote: "Resolved, That the salaries of the officers of the corpoi-ation be at the rate of the following sunls per annum, payable in equal monthly instalments : President • $ Vice-President Secretary Treasurer , General Manager Tjpon appropriate motions, duly made and unanimously carried, officers to serve vmtil the next annual meeting were elected as follows: President J. D. Vice-President ... , B. S. Secretary . . .R. E. Treasurer • ■ G. M. General Manager P'. B. Upon motion, duly carried, it was' " Resolved, lliat the First National Bank of , N. Y., is hereby desig- nated as the depositary of the funds of the A. B. C. Corporation, and is authorized, until further notice, to honor checks made in the name of the corporation, signed by its President and , countersigned, by its Treasurer; smd. further "Resolved, That the Secretary furnish said bank with a certified copy of; this resolution." Upon motion, it was unanimously ■' Resolved, That in the judgment of this Board the paper manufacturing busi- ness and properties offered for sale by Mr. John Brown in his letter addressed to this corporation under date of , 19. ., annexed to the minutes of the first meeting of subscribers to stock and now before this meeting, are neces- sary for the use and lawful purposes of iihis corporation, and are of the value of $75,000'; and further " Resolved, That such offer be, and it is hereby accepted, subject to the ap- proval by counsel for thi^corporation of title to the properties and of the form and sufficiency of the instruments of sale, transfer, conveyance and warranty tendered by the vendor, and further ; " Resolved, That the officers of the corporation be authorized to do all acts and things proper to carry out the transaction, including the assumption of the unsecured debts incurred by Mr. Brown in the conduct of the business in an amount not to exceed $15,000, the execution of suitable instruments for the as- sumption of the mortgage of $20,000, plus accrued interest and of the debt secured thereby, and the issuance of a sufficient number of shares of stock, at par, to complete payment of the purchase price. ' ' Upon motion, duly carried, it was MISCELLANEOUS COKPORATION FORMS. 1037 "Resolvedj That Mr. K. R. and Mr. P, T; be and they are hereby appointed inspectors of election to act at the first election of directors and at all meetings of the stockholders priot thereto. ; • Upon motion, duly carried, it was' - ■ " Resolved, That, pursuant to Section 53 of the Stock Corporation Law, books of subscription to fill up the capital stock be opened at the principal ofiice of the corporation, after giving notice of not less than five days, personally or by mail, to each person who has already subscribed to stock." The resignation of Mr. T. D. as a director was received and accepted, and, upon motion, it was • ■ ' ' ! "Resolved, That Mr. C. F. be elected as a director to fill the vacancy caused by the resignation of Mr. T. I>." The resignation of Mr. T. D. i'shereto annexed,' marked " B." Upon motion it was uiianiinously " Resolved, That this Board appoint an executive committee to consist of three directors, each of whom shall continue as a member of such committee until his successor is appointed, which committee may exercise, during the interval be- tween meetings of the board, the ordinary powers of the board of directors in and about the management of the corporation's business, but such powers shall not extend to the declara,tion of dividends, the appointment or removal of of&- oers, the borrowing or lending of money or to the sale or conveyance of real property, and further i " Resolved, That Messrs. J. D., R. R. and P. T. be and they are hereby ap- pointed as members of such executive committee." The meeting then adjovirned. JOHN DOE, RICHARr) ROE, ' Chairman of Meeting and Secretary of the Meeting and President of the Corporation. of the Corporation. FORM No. 104. Certified Copy of Resolution Designating Depositary. "Resolved, That the First National Bank of . . ■. , N.'Y., is hereby designated as the' depositary of the funds 'of the 'A. B. Corporation and is au- thorized, until further' notice, to honor cheeks made in the name of the corpora- tion, signed by its President and countersigned by its Treasurer; and further " Resolved, That the Secretary furnish said bank with a certified copy of these resolutions." I R. R., do hereby certify that I am Secretary of the A. B. Corporation ; that I have compared the "foregoing copy with the resolution duly, adopted by the board of directors of said corporation at a meeting held on the ........... day of 19. ., and entered in the minutes thereof; that said copy 'is a true and boi-rect transcript of the whole of said resolution. In Witness Whereof, I have hereunto set my hand and affixed the seal of said cdrpbration, this :......:.. day of , 19 . . R. R., (Seal) ' Secretary. 1038 CORPORATIONS, FORM No. 105. Notice that Partnership Has Been Dissolved and Succeeded by a Cor- poration. Tioy, N. Y., Jan , 19.. Artisans Supply Co., , Elmira, N. Y. Gentlemen : Please take notice that the copartnership between John Doe, Richard Roe and James T. Smith, formerly doing business in this city under the name Doe & Company, has been dissolved this day. Its plant, assets, good will, unfilled orders and debts have been taken over and assumed by the J. D. R. Manufactur- ing Co., Inc., a New York corporation of which the members of the former firm have become officers. Respectfully yours, JOHN DOE. RICHARD ROE. JAMES T. SMITH. J. D. R. MANUFACTURING CO., INC., By JOHN DOE, Pres. Note. — To relieve those who were partners from liability for subsequent acts of the other former members of the firm, the above notice should be mailed 'to all persona with whom it had dealingfs. A similar notice, not addressed to any particular person, should be published, vmder the head line " Notice of Dissolu- tion," in a newspaper of the city or' county where the business was conducted. FORM No. 106. Treasurer's Bond (Individual Sureties). Know all men, that we, John Doe, as principal, and Richard Roe and James Smith, aa sureties, all residing in the City of Troy, N. Y., are held and firmly bound unto the Land Development Company, a corporation formed under the laws of the State of New York, its successors and assigns, in the sum of Twenty- five Thousand Dollara ( $25,000 ) , to be paid to said corporation, its successors and assigns, for which payment, well and truly to be made, we do bind ourselves jointly and severally by yiese presents. Witness our hands and seals this day of , 19 . . Whereas, the aforesaid John Doe has been appointed Treasurer of the aforesaid corporation, and it is contemplated by the parties hereto that in the course of his duties as such officer he will have possession, custody or control of monies and properties of said corporation or of others for the safe keeping and return of which the said corporation shall be liable, and the by-laws of aaid corporation provide that its treasurer shall furnish a bond before entering upon his duties, now the consideration of this obligation is that the said Land Development Com- pany will permit the above bounden John Doe to enter upon and perform the duties of the office of Treasurer, and The Condition of this obligation is such that if the said John Doe shall faith- MISCELLANEOUS COBPOBATION FORMS. 1039 fully perform the duties of Treasurer of said corporation during the term for which he has been appointed or any continuation thereof by reason of holding over or a reappointment, , and shall, immediately upon ceasing to hold such office, or sooner, whenever and as from time to time required and requested, render to said corporation a true statement and account of all moneys and things of value of said corporation, or of others for the safe keeping and return of which the said corporation shall be liable, as shall have come into or under his possession, custody or control, and shall pay and deliver to his successor in office or the aforesaid corporation or its legal representative, all moneys, properties and things of value in his possession, custody or control and due from him to said corporation, then this obligation to be void, otherwise to remain in full force and effect. , Principal. (Seals.) , Surety. . , Surety. ( Acknowledgment. FORM No. 107. By-Laws of ARTICLE I. STOCK^0LI>ERS ' MEETING. § 1. Annual meeting. The annual meeting of stockholders for the election of directors and the transaction of such other business as may properly come before it shall be held at the office of the corporation in the City of , N. Y., on the second Monday in January of each and every year at 3 o'clock in the afternoon. The Secretary shall serve personally or by mail, not less than ten nor more than twenty days before such election, a written notice thereof upon each person who appears upon the books of the corporation to be a holder of (common) stock. If mailed, it shall be addressed to a stockholder at his ad- dress as it appears on such books. The Order of business shall be as follows: 1. EoU call. 2- Proof of notice of meeting. 3. Reports of officers. 4. Election of Directors. 5. Miscellaneous. § 2. Special Meetings. Special meetings of stockholders, other than those regulated by statute, may be called at any time by a majority of the Directors. Written notice of such meeting, stating the. purpose for which it is called, shall be served personally or by mail, not less than five nor more than twenty days before the date set for such meeting. If mailed, it shall be directed to a stock- holder at his address as it appears on the stock book. No business other than that specified in the notice shall be transacted at any special meeting of stock- holders. § 3. Waiver. Notwithstanding any provision of the foregoing sections 1 and 2, a meeting of the stockholders may be held at any time and at any place within 1040 COEPOEATIONS. the State of New York, ;and any action may be taken thereat, if notice and lapse of time be waived in writilig by every stockholder having the right to vote at such meeting.' ' . ,- ' : §•4. Quorum^ The presence, in person or by proxy, of the holders of a majority of the outstanding stookeiititled' to vote shall be 'necessary to ■ constitute a quorum for the transaction of business, except at meetings held foi'the election of directors, but a lesser number may adjourn to some fu,ture time not less than six nor more than twenty days later, and the ■ Secretary shall thereupon mail notice of at least three days to each stockholder entitled to vote who was absent from such meeting. ■ . i' '. §' 5. Closing Stock Boolis.- The Directors may prescribe a period not exceeding twenty days, prior to any meeting of stockholders, during which no transfer of stock on the books of the corporation may be made. I 6. Voting. All voting at stockholders' meetings shall be by bS,ll6t, each of which shall state the name of the stockholder voting and the number of shares voted by him, and, if oast by proxy, the name of the proxy. ARTICLE II. Directors. § 1. Term of Office. The Directors shall tie elected at the annual meeting of the stockholders for the term of one year by a plurality of the votes cast, but any director so elected shall be subject to removal before the expiration of his term, by vote of the holders of a majority of the otitstanding stock. Vacancies in the Board, occurring between annual meetings shall be filled for the unexpired por- tion of the term by a majority of the remaining directors. § 2. Duties and Powers. The Board of Direqtors shall have the control and management of the affairs of the Corporation, and may adopt such rules and regu- lations for the conduct of their pieetings and the management of the corpora- tion as they may deem proper, not inconsistent with lays^ or these by-laws. § 3. Meetings. Meetings of the Board shall be held whenever called hj the President upon dug notice to every Director. The Secretary shall call a special meeting whenever two directors request him, in writing, to do so. The Directors may meet and transact business at any time and place and without notice, provided every member of the Board shall be present. ARTICLE III. OrncBRS. , ; § 1. Election. The Boardjpf Directors, immediately after the annual meeting of the stockholders, shall elect from their number a. President and, a Vice-Presi- dent and shall also elect a Secretary and a Treasurer. They may elect an Assistant- Treasurer, a General Manager and, such other of&cers as the , needs of the corporation may, from time 'to time, require. ' All officers shall serve for one year -or until the next annual election of directors, subject to the power of the Directors to, remove any officer, at pleasure, by majority vote. § 2. President. The President shall preside at all meetings of the Board of Directors, and shall act as temporary chairman at, and call to order, all meetings of the stockholders. i I-Ie shall sign the certificate of stock; sign and execute all contracts in the name, of the corporation (except contracts to which MISCELLANEOUS CORPORATION FORMS. 1041 he is individually a party, which contracts Shall be signed, in the name Of the corporation, by the Vice-President) ; and, subject, to the approval of the Board of Directors, have general supervision of the affairs of the corporation. ., • i § 3. Vioe-Fresident. The Vice-President shall, in the absence or. incapacity of the President, perform the duties of that ofS.cer. § 4. Secretary. The Secretary shall , keep the minutes of the meetings of the directors and stockholders; shall attend to the serving of notices of meetings of the Directors and stockholders ; shall afBx the seal to all certificates of stock when signed by the ^President and Treasurer, and to such other papers as ma^ require it ; shall have charge of the certificate book and stock book, and of such other books and papers as the Board may direct ; - shall attend to such correspondence as may be assigned to him, and shall perform all the duties incidental to his office. § 5. Treasurer. The Treasurer shall have the care and custody of all the funds and securities of the corporation and shall deposit the same in the name of the corporation in such bank or banks as the Directors may designate. He shall sign all checks, drafts, notes and orders for the payment of money. He shall at all reasonable hours exhibit his books and accounts to any director upon application at the office of the company during business hours. He shall sign all certificates of stock signed by _ the President. He may be required by the Board of Directors to give such bonds as they shall determine for the faithful per- formance of his duties. § 6. Assistant Treasurer. The Assistant Treasurer may also hold other office in the corporation, except that of President or Vice-President. He shall per- form such duties as may be assigned to him by the Treasurer. He may be re- quired by the Board of Directors to give such bonds as they shall determine for the faithful performance of his duties. § 7. Other Officers Other officers shall perform such duties and have such powers as may be assigned to them by the Board of Directors. § 8. Limitation on Fower to Contract Debts. No officer of the corporation shall have power to bind it for the payment of any debt or obligation in excess of $1,000 without first obtaining authority from the Board of Directors. ARTICLE IV. Capital Stock. § 1. Fayments. All payments for stock in the corporation shall be received by the Treasurer. § 2. Certificates. Certificates of stock shall be bound in a book, shall be numbered and issued in consecutive order, shall be signed by the President or Vice-President and Treasurer, under the Corporate Seal, and in the stub of each certificate shall be entered the name of the person owning the shares represented thereby, the number of such shares and the date of issue. All certificates exchanged or returned to the corporation shall be marked cancelled with the date of cancellation, by the Secretary, and shall be immediately pasted to the stubs in the certificate books from which they were detached when issued. § 3 Transfers. Transfers of shares shall only be made on the books of the corporation by the holder in person or by power of attorney duly executed and witnessed and filed with the Secretary of the corporation and on surrender of the certificate of such shares. 66 1042 COBPOEATIONS. § 4. Restriction on Dividends. No dividend in excess of six per cent per annum shall be declared or paid on the common stock while any bonds or notes of the corporation are outstanding. ARTICLE V. Amendments. These by-laws may be repealed or amended by vote of two-thirds of the stock of the corporation at any duly called regular or special meeting of the stockholders. ARTICLE VI. Seal. The seal of the corporation shall be circular in form and shall bear the name of the corporation, the numerals " 19 . . " and the words ' ' New York ; ' ' thus Endorsements. We, the undersigned, Chairman and Secretary of the first meeting of the in- corporators and subscribers to stock of the , held on the day of , 19.., do hereby certify that the foregoing by-laws of said corpo- ration were adopted at the meeting aforesaid by unanimous vote. Chairman. Secretary. FORMS FOR SPECIFIC OBJECTS OF BUSINESS CORP. 1043 FORMS FOR SPECIFIC OBJECTS OF BUSINESS CORPORATIONS FORM No. 120. Accounting. So far as authorized by the la\\* under which this certificate is drawn; to keep, examine, inspect and audit the books and accounts of others; to devise and install financial, accounting, checking, correspondence, filing and other office and business systems; to take inventories; make appraisals; prepare balance sheets ; to 'compile statistics as an aid to the officers oi corporations and other persons in the making of reports and statements required by tax laws; to do all such things and perform or supply all such services as are commonly done, performed or supplied by efficiency engineers or business management experts;' to warrant the accuracy of the work done or services performed by it. To do all 'things proper, incidental and conducive to the accomplishment of the foregoing purposes. FORM No. 121. Advertising. To design, write, prepare, place, publish and display, in any and every manner, advertisements and publicity devices and innovations of all kinds for itself or for others; to print, publish and distribute newspapers, books, pamphlets, maga- zines, periodicals, handbills, pictures, cartoons, posters, display car4a; to arrange for the placing of advertisements in publications of all kinds; to do bill posting; to manufacture, install, supply, maintain and operate billboards, signboards and illuminated signs; to give or arrange for the giving of demonstrations and ex- hibitions for advertising purposes; to supervise the preparation and production of moving picture advertisements and publicity devices; to do a general adver- tising, press agency and publicity business in all its branches, and to make all contracts and do all things proper, incidental and conducive to the complete attainment of such purposes. FORM No. 122. Agency, General. To act as agent (other than fiscal or transfer), attorney in fact, factor or broker, on commission or otherwise, for individuals, co-partnerships, joint-stock associations, or corporations, foreign or domestic, including governments or gov- ernmental authorities; to aid and assist, promote and conserve the interests of and afford facilities for the convenient transaction of business by its prin- cipals and patrons in all parts of the world. 1044 CORPORATIONS. FORM No. 123. '■,'''''':''.■■ 'iij ■ Agency, Insurance. J-'';. ':"•■'■'' 'i\ To act as agent for insurers of life, healtli and property against loss or damage of any kind from any and all causes. ' To conduet agencies for the placing and writing of casualty, automobile liability, employers' liabilil^ and other liability insurance of all kinds. To act as intermediary in the msking of treaties of rein- surance. To act as agent for bonding, surety and title guaranty companies. To investigate and report upon tlie cause and extent of insured losses ; to adjust, and to act as agent in the payment of same. To attend to the collection of pre- miums on policies issued by its principals, and to the cancellation, alteration and extension of policies and other - contracts made by them, when and as author- ized and directed. To do any and all things incidental to, or suitable for the complete accomplishment of the foregoing purposes. FORM No. 124. Agency, Mercantile. To acquire, collect, preserve, arrange and supply to others having an interest therein, information concerning ,t;he antecedents, occupation, reputation, financial condition and business standing of persons, firms, associations and corporations; to warrant the accuracy of the information so furnished; to undertake the col- lection of bills and accounts for its patrons; to furnish lists of persons, firms, associations and corporations, eiigaged in paa-ticular lines of enterprise; to pub- lish and distribute trade directories, : reference :books, market reports and let- ters, business reviews, and all kinds ■ of literature designed primarily for the use and assistance of persons engaged in commercial and financial pursuits. FORM No. 125. Agency, Forwarding. To act as forwarding, shipping, freight and passenger agdht; clearance and custom-house broker; to do .any and all things, as agent for or intermediary between shippers or passengers and carriers, which may seem calculated to pro- mote their interests or convenience and which this corporation may lawfully do. FORM No. 126. Agency, Real Estate. As principal, agent or broker, and on commisgioh or otherwise: to buy, sell, exchange, lease, let, grant or take licenses in respect of, imprpve, develop, repair, manage, maintain and operate real property of every kind, corporeal and in- corporeal, and every kind of estate, right or interest therein or. perta-ining thereto; to plan, design, construct, improve, repair, raze and wreck buildings. FORMS FOR SPECIFIC OBJECTS OF BUSINESS CORP. 1045 structures and works of all kinds, for itself or for others ; to buy, sell and deal in building materials and supplies; to advance loans secured by mortgages or other liens on real estate. To act as loan broker. Generally to do everything suitable, proper and conducive to the successful conduct of a real estate and real estate agency business in all its branches and departments. FORM No. 127. Air Craft. To design, manufacture, assemble, build, 'repair, maintain, operate, lease, let, purchase, sell and deal in air craft of every kind and description, by whatever power actuated and by whatever agency or method sustained and stabilized, including balloons, dirigible or otherwise, aeroplanes, hydroplanes, hydro-aero- planes and all kinds and types of vehicles, mechanisms and devices now known or which may hereafter be discovere^^ or invented for navigating the air, for purposes of pleasure, commerce, warfare or otherwise. To carry, convey or transmit, as, when and where lawful, goods, passengers, mails and intelligence, by means of air craft. To conduct experiments on its own account and for others. To take out, acquire and operate under letters patent, or to license others to operate under such letters controlled by it.- To build, acquire, maintain and operate plants, works, stations, depots; hangars, aviation fields, and all other conveniences and appurtenances appropriate to its business. To design, manu- facture, purchase, sell and trade in, and to install :upon air Craft, weapons and armor or other protective coverings; apparatus for measuring height and dis- tance, determining location and direction, and for signalling or communicating in any way. ■ FORM No. 128. Ammunition, To formulate, compound, manufacture, purchase, sell and deal in black and nitro powders for guns, blasting or other purposes, dynamite, guncotton, fire- works and volatile, gas-forming, inflammable and explosive substances, materials and compounds of all kinds, whether for mining, military, sporting, commercial or other uses; shot, bullets, shrapnel, shells, casings, armor piercing and other projectiles, torpedoes, mines, bombs, grenades, cartridges, priiners, detonators, fuses, wads, loading and reloading tools, and all kinds of implenients, supplies and accessories for firearms, ordnance and devices for causing explosions. FORM No. 129. Apparel. To buy, sell and deal in clothing, headwear, footwear, gloves and wearing ap- parel of any and every kind, whether ready or custom made, for men, women and children; umbrellas, parasols, canes, traveling : supplies and accoutrements, and geinerally to carry on the business of men's, women's and children's tailors, clothiers and outfitters. 1046 eORPOEATIONS. FORM No. 130. Arms. * To design, invent, manufacture, assemble, repair, install, purchase, sell, let, import, export and deal in arms, guns and ordnance of all kinds, whether for military, naval, commercial, sporting or other purposes, and all parts, acces- sories, ammunition and supplies for same; ammunition hoisting, carrying and storing apparatus; shields, armor and protective coverings of all kinds; range finding and sighting devices; motor trucks, armored cars, motor driven gun carriages, tank cars and turrets; caissons, and ammunition wagons and vehicles of all kinds. FORM No. 131. Art Shop. To design, create, manufacture, purchase, repair, restore, reconstruct, exhibit, sell and generally deal in, as principal or agent, on commission or otherwise, pic- tures, ornaments, statues, carvings, china, pottery, glasswares, jewelry, articles made from precious and other metals, tapestries, rugs, furniture, antiques; works of art of every class, kind and description, and copies or reproductions thereof. To do interior decorating, to supply advice, plans and materials for the decoration and furnishing of houses, rooms, apartments and private and public buildings of all kinds; and to supply the services of experts in and about the same. To manufacture, buy, sell and deal in art materials and artists and cabinet- makers' supplies of all kinds. FORM No. 132. Bakery. To bake, manufacture and purchase, sell and deal in bread, pastries, biscuits, crackers, cakes, pies, tarts and foods of all kinds for human consumption in which flour or meal is used: To purchase, for its own use or for speculative purposes, to sell and deal in wheat, flour and other foodstuffs of all kinds, for immediate or future delivery, and either upon its own account or as agent for others. FORM No. 133. Brewing. To manufacture, brew, purchase, sell and generally deal in, at wholseale and retail, under such restrictions, regulations and conditions as may be imposed by law, beer, ale, porter and all kinds of alcoholic and non-alcoholic malt liquors; to carbonize potable waters a;nd beverages of all kinds; to carry on a general bottling business. FORMS FOR SPECIFIC OBJECTS OF BUSINESS CORP. 1047 To take out and do business' under licenses and permits, State and Federal, for the sale of liquors. To purchase, for its own use or otherwise, to sell and generally deal in brewers' supplies, materials and products of every kind and description. FOKM No. 134. Srick taking. To purchase or otherwise acquire, maintain and operate brick yards and clay beds. To manufacture, buy, sell and deal in bricks of all kinds whether for building, paving or other purposes. To manufacture any products that may be made from clay or earth of any kind. To acquire, own and employ all and every kind of real and personal property, including transportation equipment and facilities suitable for its business. FORM No. 135. Bridge Building. (See Structural Steel) FORM No. 136. Brokerage. (See Securities Brokerage; Merchandizing) FORM No. 137. Building. (See Real Estate) FORM No. 138. Building Materials. To manufacture, purchase, quarry, mine, dig, cut, .sa,w, or otherwise acquire, prepare, sell and deal in all kinds of cement, plaster, . mortar, lime, sand, gravel, hair, brick, granite, marble, natural and artificial stone, concrete blocks, lumber, tin, slate, tile, roofing, pipes, electrical supplies, and builders', plumbers', con- tractors' and engineers' supplies, materials, tools, machinery and equipment of every kind. FORM No. 139. Butcher. (Sec Meats) 1048 COEPOKATIONS. FORM No. 140. Canvas Goods. To design, manufacture, buy, sell, let for hire and deal in tents, awnings, tar- paulins, tent-flies, ground cloths, tent screens, hammocks, cots, camp chairs and stools, bags, pack cloths, knapsacks, haversacks; canvas, linen and cotton cloth- ing, shoes, hats and caps, leggings and gloves; belts, webbifig, floor crash; wagon, automobile and machine covers; artists' canvases; theatrical scenery supplies and equipment; flags and bunting; sails and sail cloth; deck covers; canvas canoes and boats; rope, twine, cordage and tackle blocks; material and supplies of all kinds for coloring, water-proofing and fireproofing textile fabrics. FORM No. 141. Carpets. To design, manufacture, repair, .clean, purchase, import, sell and deal in, as principal or agent, carpets, rugs,' mattings, oilcloths, linoleums, and all kinds of floor coverings, wall hangings, draperies, tapestries, curtains, goods and materials for interior furnishings and decoration, and all, things incidental or accessory thereto. FORM No. 142. Chemicals. To manufacture, compound, refine, distil, treat, prepare, analyze, synthetize, produce, buy, sell, import, export, and in every way deal in chemicals, drugs, medicines, pharmaceutical supplies, materials and products; dye-stuffs, paints, colors, oils, varnishes and their ingredients; to do all things incidental or cus- tomarily appertaining to the chemical, drug and pharmaceutical business and trade, as manufacturer, wholesaler or retailer. FORM No. 143. Concrete Mixers. Manufacturing, repairing, buying and selling concrete mixers, tilting drum mixers, stationary mixers, road paving mixers, continuous mixers, hand mixers, hoists, power press brick m^hines, crushers, elevators, belt conveyors, revolving screens, tile machines, block machines, sidewalk tools, tile cars, brick cars, pumps, engines, boilers, motors and all kinds of machinery, tools, supplies and materials for builders and contractors. FORM No. 144. Confectionery. To acquire, own, maintain and operate plants, kitchens, machinery, stores, parlors, counters, soda fountains and other places, equipment, facilities and con- FORMS FOB SPECIFIQ OBJECTS OJF BUSINESS COBP. 1049 veniences for the making, producing, preparing and vending, at wholesale or retail, of candies, chocolates, ice creams, sherbets, bisques, bouillons, fresh and preserved fruits, and all kinds of light refreshments, dainties, sweetmeats, soft drinks and non-alooholic beverages. To buy, sell and deal in any of the foregoing, or ingredients, materials, sup- plies, tools, machinery and apparatus used in the making, preparation, vending and delivery thereof. FORM No. 145. Cblitracting. To make estimates for itself and for others. To bid upon, enter into and carry out contracts for the grading and making of roads, walks, paths, rail- roads; the construction of bridges, buildings, piers, wharves, fortifications, power plants and developments, transmission lines, tunnels, subways, draiiiage and irrigation systems. To do architectural, buildiiig, structural, construction, erec- tion, surveying, dredging, shbrihg, wrecking, salvage, electrical and engineering work of every kind and description whatsoever; and in every part of the world. To manufacture, mine, quarry, or otherwise produce, buy, sell and deal in build- ing materials, and all kinds of materials, supplies and equipment foi- masons, carpenters, builders, electricians, engineers and contractors. To acquire, use, employ, sell and deal in all suitable means, apparatus, machinery, contrivances, equipment and facilities for prosecuting its business. FOBM KTo. 146. Dairy. To acquire by purchase, or to produce, and to sell,, milk and eggs; to preserve the same by refrigeration, condensaiiqn, evaporation, chemical or mechanical treatment or process, or otherwise; to make, buy and sell cheese, butter, butter- milk and everything that can be made or derived from milk or eggs; to pas- teurize, sterilize or otherwise treat milk, foods and beverages, for the purpose of freeing them from substances and organisms injurious to health; to certify and warrant the purity of its products; to acquire and operate factories, plants and machinery for the aforesaid purposes and for making cans, bottles, boxes, cartons, crates and containers of all kinds; to establish, acquire and maintain stations, depots, gathering and delivery routes, and systems, equipment, facili- ties and conveniences of sill" kinds for gatliering, storing, working upon and handling its materials and supplies, and for advertising, marketing, distributing and delivering its products. FORM No. 147. Department Store. To manufacture or otherwise produce, purchase or otherwise acquire, sell, let and deal in goods, wares, merchandise and personal property of any and every class, kind and description, which a corporation of this kind may lawfully acquire, hold, dispose of and deal in. 1050 CORPORATIONS. To furnish the services of designers, costumers, decorators, caterers, demon- strators, hairdressers, barbers, manicurists, and to supply such other personal services and attendance as may be lawful for a corporation of this kind. To do all of the things and carry on all of the several lines of busineiss and operations commonly conducted by department stores. FORM No. 148. Detective Agency. To furnish the services of waitohmen, guards, detectives, escorts for women, process servers, messengers, us.hers, bill collectors, investigators and collectors of information. To devise, put into operation and conduct ways, systems and methods for the prevention and detection of crime and the apprehension and arrest of criminals, for the recovery of lost or stolen property, for the finding of missing persons, documents or goods, for investigating and reporting upon the antecedents, habits, character, doings, reliability, credit or financial condition of persons, firms, asso- ciations or corporations. Generally to do all things commonly done by private detectives and by credit and mercantile reporting agencies. FORM No. 149. Distillery. Under such supervision, regulation and conditions, and subject to such restric- tions as may be imposed by State and Federal laws, to carry on the business? ot manufacturing, buying, selling, distilling, rectifying, blending, bottling, ware- housing and generally treating, handling and dealing in vifhiskies, gins, rums, brandies, cordials, wines, spirits, alcohol and alcoholic liquors of all kinds. To manufacture, compound, prepare for market and sell malt, malted drinks and foods, and all products and by-products of the distilling or malting business. FORm No. 150. Dredgiijg, Wrecking and Salvage. To carry on a general dredging, wrecking and salvage business. To do either upland or under water excavating, dredging, filling, reclaiming and construction work of all kinds. To search for, locate, rescue, raise, repair and restore to the owners, or turn to account in any lawful manner, vessels, cargoes and marine or other property of all kinds which Inay have been lost, sunk, grounded or in anywise damaged or incapacitated on land or water. To build, construct, move, raze and repair buildings, plants and structures of all kinds, private or public, and either above or below the surface of the water or of the land. To buy, sell and deal in new and second-hand building materials, metals and junk. To acquire, operate, sell and deal in tools, machinery, equipment and means of transportation suitable for the prosecution of the foregoing business. FORMS FOB SPECIFIC OBJECTS OF BUSINESS CORP. 1051 FORM No. 151, Drug Store. To manufacture or otherwise produce, purchase, compound, prepare and sell all kinds of drugs, chemicals, medicines; physicians' and surgeons' supplies and instruments; crutches, artificial limbs, splints, rubber goods and all supplies, appliances and conveniences required by invalids; paints and the ingredients thereof, dyes, colors, soaps, cosmetics, perfumes, toilet supplies, tobacco in all forms, ices, confectionery, and soft drinks. To fill prescriptions; maintain news stands, and in general do everything pertaining to the drug store business. FORM No. 162. Dyeing. To cleanse, renovate, restore, mend, repair, bleach, dye, tint or color wearing apparel, house furnishings, cloths, textiles, fabrics, straws, papers, leatheirs, furs, feathers, wools, cottons, linens, silks, threads, yarns and all kinds of fibres, fibrous substances and things made from any of the foregoing. FORM No. 153. Electricians, To design, devise, invent, manufacture, install, remove, repair, inspect, report upon, buy, sell, handle and deal in,' machinery, plants, apparatus, appliances, accessories, equipment, supplies, meajis and materials, of all kinds, for the gen- eration, production, transmission, transformation, accumulation, storage, dis- tribution, supplying, application and utilization of electricity for any and all purposes. To solicit, bid for, enter into and perform contracts for the doing of electrical work and the furnishing of electrical machinery, appliances, acces- sories, materials and supplies of all kinds. FORM No. 154. Express and Transfer. To solicit and receive passengers, baggage, goods, wares, merchandise and per- sonal property generally, for carriage or transportation, and to carry, forward, ship, transfer and deliver same by any means, method, agency or intermediary that a corporation of this kind may bp authorized to use or employ for such purposes. To acquire, maintain and operate waiting rooms, officers, warehouses, vehicles and all other equipment, conveniences or facilities suitable and, proper for the prosecution of its business. To carry passengers and goods in or upon its own vehicles, or to cause them to be transported by others under contract or arrangement with it. But it is not the purpose of this corporation to operate any railroad, water craft, pipe line, stage or omnibus line as a carrier for hire. To act as freight, passenger and ticket agent or broker for steamship and rail- road companies, and other carriers of passengers or goods. To act as agents for insurers of life or propctty. 1052 COBPOBATIONS. To conduct information bureaus for , travelers, shippers and others. To print, publish, sell and distribute nlajfS; gihie books, route books, hotel directories, time-tables and other literature deigned to piromote the convenience of travelers. To organize and conduct tours; furnish guides and personal attendance to its patrons. EOBM No. 155. Farming. To acquire farm properties and other real estate, by purchase, lease, or other- wise, to improve and develop the same, and thereon to plant, sow, cultivate and harvest grains, hay, forage, vegetables, fruit, flowers and all kinds of farm pro- duce and products of the soil. To breed, raise, buy, pasture, prepare for market, exhibit, sell and deal in live stock of all kinds^ To engage in dairying and the poultry, pigeon, pet stock and mjjrket gardening business. To operate green- houses, hot beds and cold irames for the raising of plants, shrubs and flowers. To acquire and maintain shops, stores, stalls, market stands, peddling and deliv- ery vehicles, and routes and all, other conveniences and equipment suitable for the vending of its products. In general, to conduct in all their several depart- ments and branches the business of farmers, fruit growers, dairymen, stock raisers, gardeners, nurserymen and florists, and to do everything incidental or conducive to the lull accomplishment of the foregoing objects. FOAM No. 156. Farming Machinery. To design, manufacture, install, purchase, sell and trade in taiinlng and agri- cultural machinery, tools, apparatus^ equipment and supplies of all kinds; horse drawn and motor trucks, cars and vehicles; tractors, motors, engines, windmills, pumps, silos, private water supply and sewage disposal systems, heating, light- ing and refrigerating plants and appliances, andj generally; all kinds of ma- chines, devices, conveniences and siippliea for farm, garden, dairy or house- hold use. FORM No.. 157. Farm Produce. As principal, commission merchant or agent: to buy, store, sell, ship, import, export and deal in fruit, grain, hay, straw, nursery stock, plaiits, vegetables, roots, milk, butter, che6se, 6ggs, p6\iltry, livestock arid meats of all kinds; feeds, fertilizers, seedsj spraying mixtures;' farm implements, machinery, supplies and products of all kinds; to evaporate, can and preserve fruits and vegetables; to manufacture fruit juices and vinegar; to biiyj sell and deal in canned aiid evap- orated fruits and vegetables, fruit juices and viiiegar. FORM No. 158. Fire Extinguishing Equipment. To design, invent, manufacture, buy, sell and install fire fighting, controlling, extinguishing and preventing apparatus, devices, appliances, machines, chemicals, FORMS FOR SPECIFIC OBJECTS OF BUSIlilESS CORP. 1053 compounds and preparations, including hosiB and hose carts, ladders and ladder trucks, pumps, compressed air tanks, cheniical tanks and wagons, fire engines, motor and horse drawn vehicles of all kinds for use by firemen and public safety officers; firemen's tools, clothing and equipment; fire, smoke and gas ma,sks; fire escapes; fire alarms; automatic sprinklers; to conduct experiments for the pur- pose of discovering new means of preventing and extinguishing fires. ¥OBM No. 159. Fireproofing. To design, discover, invent, installj put into operation and furnish, means, methods, systems, processes and treatments for rendering, building and other materials and substances, fire proof or fire resisting. To manufacture, purchase, or otherwise acquire, sell and deal in fireproof or fireproofing, fire resisting and fire extinguishing materials, substances, chemicals, compounds, formulas, appli- ances, machinery, apparatus. Systems and processes of all kinds. To conduct a general fireproof construction and installation business in all its branches.' FORM No. 160. Fishing. To purchase, or to take by fishing, harpooning, digging, dredging, diving or otherwise, fish,' whales, clams, oysters, lobsters, shrimps, crabs, scallops, mol- luscs, Crustacea, pearls, coral, shells, sponges, foods and substances of all kinds from any of the salt or fresh waters of the virorld. To dress, cure, preserve, pa.ck, store and market all kinds of foods and other substances taken from the water. To manufacture, buy, or otherwise acquire, sell and deal in oils, whalebone, ambergris, articles made from shells, fertilizers, glues, isinglass and other marine products or things made therefrom. To manufacture, buy and sell materials and supplies of all kinds for the use of fishermen, mariners or shipowners. To build, manufacture, purchase, lease, maintain, operate, let, sell and dispose of all kinds of watercraft, marine and riparian property, buildings, plants, ma- chinery, appliances, equipment and facilities suitable for the complete accom- lishment of the foregoing objects; but not to carry lading, freight, mails, prop- erty or passengers by water for hire. FORM No. 161. Florist. To engage in the business of propagating, growing, harvesting, buying, selling and dealing in, at wholesale and retail, flowers',' ferns, palms, shrubs, plants and vegetable growths of all kinds. Tp make and . perform contracts for designing, arranging and furnishing floral pieces and floral decorations of all kinds. To acquire, by purchase, lease or otherwise, hold, improve, develop, let, sell and gen- erally deal in real properties of all kinds and tights and interests therein. To build, maintain and operate greenhouses, hot beds, cold frames, cella,rs, storage plants, equipment for transporting its products' and suppliefs, stores, stands and other places for the marketing of its goods, wares and products. 1054 COKPOBATIONS. FORM No. 162. Fuel. To purchase or otlierwise acquire, sell and deal iu, as principal or agent, on commission or otherwise, and at wholesale or retail, coal, coal briquettes, coke, oil, gasoline, wood or other kinds of fuel. To purchase, construct, rent or other- wise acquire, control, maintain and operate, elevators, trestles, bins, coal pockets and all kinds of storage and transportation facilities, apparatus, conveniences and equipment suitable for the conduct of its business. FORM No. 163. Furniture. To design, manufacture, assemble, buy and sell furniture and furnishings of all kinds, whether of metal, wood or other substances, for use in dwellings, offi- ces, public buildings, conveyances or elsewhere. To upholster, repair and refinish furniture. FORM No. 164. Furs. To take and acquire by trapping, hunting, purchase, barter or otherwise; to tan, dress, dye, bleach, subject to process, trim, manufacture and fashion into wearing apparel or robes or rugs or other finished products; furs, fur skins, and the skins and hi^es of animals, birds and reptiles of all kinds. To establish, maintain and conduct fur buying and trading posts', stations and depots, tur raising farms and .tracts of land for the propagating and raising of wild animals, birds and reptiles. To manufacture, buy, sell, work and deal in oil, fat, horn, bone, offal, hair, fertilizers, animal products of every kind and all things madvi wholly or partly therefrom. To manufacture, buy, use and sell chemicals, barks, drugs, compounds and all things necessary or incidental to the prosecution of the foregoing business. FORM No. 165. Garage. To store, care for, repair, let, operate for hire, buy, sell, e.Kohange and deal in motor vehicles of all kinds, and to furnish parts, accessories, supplies, fuel and power for such vehicle^ To deal in wearing apparel, route books, maps, trunks, suit cases and traveling conveniences for motorists. FORM No. 166. Glass Factory. To manufacture, buy and sell gluss and the ingredients thereof, and all things made wholly or partly therefrom. To treat, blow, mould or otherwise shape, color, stain, set, cut, polish, grind, frost, etch and otherwise work in or upon glass, glassware and glass products of all kinds and for whatsoever purposes designed. FOEMS FOR SPECIFIC OBJECTS OF BUSINESS CORP. 1055 FORM No. 167. Gloves. To manufacture, buy, sell, import and export, gloves, mittens, handbags, belts and novelties, whether made from leathers, skins, furs, woolens, cottons, linens, silks or other textile fabrics, or from any other substances or materials. To buy and sell, treat, dress, tan, dye, cut and prepare for use, hides, skins, furs and leathers of all kinds. FORM No. 168. Jewelry. To design, manufacture, purchase or otherwise acquire, repair, engrave, cut, stamp, set, and generally work with and upon, and to sell, let and deal in jewelry, gems, precious and semi-precious stones; cameos; gold, silver, platinum and other wares, plate, utensils, ornaments and articles; time pieces; pocket books, hand bags and leather novelties of all kinds; umbrellas, parasols, canes; personal furnishings and travelers' supplies and equipment; china, glass and porcelain wares; novelties of all kinds; optical goods and supplies; and gen- erally to do all things and to carry on all lines of trade common to the jewelry business, wholesale, retail or manufacturing. To do all of the foregoing as prin- cipal or agent, on commission or otherwise. FORM No. 169. Hotel. To acquire real property by purchase, lease or otherwise; to erect, repair and maintain hotel buildings, garages, stables and other structures thereon. To conduct a general hotel, restaurant and cafe business. To establish, maintain and operate news stands, tobacco counters, theatre ticket agencies, barber shops, hair-dressing and manicuring parlors, garages, stables, boat and bathing houses. To buy, sell, deal in and let for hire, automobiles, horses, carriages, boats and other conveniences. FORM No. 170. House Cleaning. To clean, renovate and disinfect houses, offices and public and private build- ings and places of every kind and description; to furnish the services of window, house, oflSce and building cleaners, chimney sweepers, steeiple jacks and other workmen. To manufacture, purchase, lease, sell, let and operate for hire, vacuum cleaners and other cleaning, renovating and disinfecting machinery, ap- paratus, supplies and materials of all kinds. 1056 COEPOEATIOlirS. FORK No. 171. Holding Company. To acquire by subscription, purchase or otherwise, to hold for investment or for re-sale; to sell, pledge, hypothecate and in all ways deal with: stocks, scrip, bonds, consols, debentures, mortgages, notes, trust receipts, certificates of in' debtedness, interim receipts and other obligations and securities of corporations, private, public, quasi-public or municipal, foreign or domestic. To collect the interest and dividends on its holdings and the principal thereof when due. To do all things suitable and proper for the protection, conservation or enhance- ment of the value of stocks, securities, evidences of indebtedness or other proper- ties held by it, including the exercise of the right to vote thereon. To bid upon and purchase at foreclosure or other sales, whether public or private, real prop- erty and rights or interests therein of all kinds. This corporation may, pursuant to Section 52 of the Stock Corporation Law, purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and issue in exchange therefor its stock, bonds or other obligations. FORM No. 172. Knitting Mills. To manufacture and sell underwear, gloves, mittens, stockings, -cravats, sweat- ers, clothing and knit goods and fabrics of all kinds, from yarn or threads made of wool, cotton, silk, linen or other substance or material. To acquire by pur- chase, lease or otherwise; to use, maintain and operate, and from time to time sell, let or dispose of, all plants, machinery, equipment and conveniences, real estate and personal property, requisite for the accomplishment of the foregoing objects. FORM No. 173. Laundry. To cleanse and renovate clothing, cloths and fabrics of all kinds by washing, steaming, bleaching, starching, ironing, dry clleaning or otherwise. To do repair- ing, dyeing and disinfecting. To conduct a barbers' and office towel supply busi- ness. To acquire, maintain and operate real estate, plants, machinery, apparatus and equipment of all kinds requisite for the .prosecution of its business. FORM No. 174. Leather Goods. To manufacture, buy, sell, dye, stain, buff, polish, emboss,' stamp, burn, treat, handle and work in leather, skins, fabrics, papers, rubbers, and composition sub- stances of all kinds. To design, manufacture, bily and sell, at wholesale or retail, suit cases, trunks, sample cases, travelling bags, handbags, pocketbooks, Avallets, bill rolls, jewel cases, table covers, book covers, robes', wall coverings, pillow covers, saddlery, harnesses, gloves, clothing, headgear, footwear, puttees, POEMS FOE SPECIFIC OBJECTS OF BUSINESS COKP. 1057 ^ings, belts and belting, valves, vehicle covers, lioods, tops and curtains, straps, sole leather, string leather, rawhide, materials and supplies for shoe- makers, harnessmaliers, upholsterers, and. leather workers of all kinds. To make, buy and sell any and all things made wholly or in part from leather, imitation leather, 'substitutes for leather, oilcloth, paper, papiermache, canvas, mohair. FORM No. 175. Lumber. To acquire, by purchase, lease or otherwise, timber lands and real property or interests therein generally. To cut, haul, drive, saw, plane, store, prepare for market, buy, sell and deal in logs, lumber, shingles and wood of all kinds. To conduct the business of forestry, reforestation, logging and the production of lumber, bark, pulp wood, ipulp and all other products of the forest. To estab- lish and maintain logging camps, and in connection therewith to conduct stores for the purchase and sale of goods, wares and merchandise. To maintain and operate saw mills, planing mills, lumber yards, and all conveniences and equip- ment suitable for the storage, handling, carriage and delivery of the supplies and products of the corporation. FORM No. 176. Lunch Rooms. To sell prepared foods and drinks of all kinds; to do a general restaurant and lunch room business; and in. connection therewith to maintain and conduct stands for the sale of newspapers, magazines, tobaccos and confectionery. FORM No. 177. Machine Shop. To acquire, by purchase, lease or otherwise, equip, maintain and operate a general machine shop. To design and manufacture tools, machinery, boilers, engines, motors and all things made wholly or partly from metals. To do repairing, welding, brazing, soldering, polishing, moulding, casting, pattern-making, blacksmithing, lacquering, enameling, metal stamping and cutting, electrical work of all kinds. To engage in all kinds of mechanical and electrical engineering and manufacturing business. FORM No. 178. Meats. To raise, purchase, catch or otherwise acquire, and to slaughter, all kinds of animals, poultry, game and fish, suitable for food; to dress, prepare for use, pack, salt, smoke, can, or otherwise preserve, store and market, meats, poultry, game, fish and other foods. To manufacture, buy, sell and trade in all of the ordinary supplies, products and by-products of the slaughtering and meat-packing business. To manufacture fertilizers, soap, glue, gelatine. To cut, purchase, store and sell ice. To do a general cold storage and warehousing business. To acquire and employ all suitable means, equipment and facilities for carrying on its business and for transporting its' supplies, materials and products. 67 1058 COEPORATIONS. FORM No. 179. Merchandising. To conduct a general merchandising and t!:iding business, ajid for the accom- plishment thereof to buy or otherwise acquire, hold, sell or otherwise dispose of, deal and trade in, as principal, agent or broker, goods, wares, merchandise and personal property of every kind and description, except bills of exchange, at wholesale or retail and on commission or otherwise. To ac<]uire, maintain and operate all buildings and other real property, trans- portation and other facilities and conveniences, suitable for use in and about the prosecution of its business. FORM No. 180. Metal Furniture. To design, manufacture, buy, sell and install metal furniture, furnishings, fix- tures, fittings and equipment of all kinds for use in offices, stores, shops, vessels, hotels, hospitals, libraries, residences, and public and private buildings, structures, vehicles and conveyances of all kinds; more especially to manufacture and deal in desks, tables, cabinets, lockers, filing cases, counters, closets, safes, ceilings, panels, walls, beds, cots, stands, operating tables, invalid carriages and all other articles and things made from sheet steel, sheet brass, aluminum, or from tubing made of iron, steel or brass, or from metal of other kinds or forms. FORM No. 181. Millinery. To design, manufacture, display, buy a.nd sell women's hats and head coverings and ornaments of all kinds and all things, supplies and materials that may be used in the making thereof. FORM No. 182. Milling. To purchase grains of all kinds, and to fi;'''"tli roll, bolt, sift, process, steam, bake, cook or otherwise treat cereals of all kinds, either on its own account or for others. To deal in, as principal, agent, commission merchant, broker or otherwise, grains and all products and substances made or derived therefrom. To build or otherwise acquire, maintain and operate, flour and feed mills, ele- vators, warehouses, factories, plants, transportation facilities, machinery, plants, apparatus, appliances and equipment of every kind suitable for the prosecution of its business and the marketing of its products. FORM No. 183. Mining. To engage in the business of mining, quarrying, extracting, boring for, pump- ing or otherwise acquiring ores, metals, minerals, natural oils, and other sub- stances derived from the earth or water; to crush, stamp, smelt, amalgamate, refine and in all ways treat, prepare for market and utilize and sell the FORMS FOB SPECIFIC OBJECTS OF BUSINESS CORP. 1059 same. To conduct, or help others to conduct prospecting, exploring, testing and experimenting enterprises. To buy, lease or otherwise acquire, sell, let, dispose of and generally deal in real property and all estates, rights and interests therein of every kind. To obtain, work, develop, sell, license to others, let or dispose of claims, rights, privileges, concessions and grants suitable for its busi- ness. To construct, lay out, maintain and operate mines, plants, camps, stores, depots and all storage and transportation facilities and equipment requisite and proper for the prosecution of its business. FOKM No. 184. Motor Vehicles. To design, manufacture, assemble, repair, purchase, exhibit, demonstrate, sell, let and dea,l in automobiles, motor trucks, trailers, motor cycles, cycle cars, motor tricycles, motor boats, air craft, and all kinds of vehicles, machines and con- trivances for the transfer, carriage or transportation of goods, passengers or mails, whether propelled by gas, electricity, steam or other power; motors, engines, chasses, bodies, tires, lighting and starting systems, and any and all parts, acces- sories and supplies for motor vehicles, boats and air craft of all kinds. FORM No. 185. Music Store. To buy and sell, at wholesale and rptail. musical instruments of all kinds and the parts thereof and accessories thereto,' printed music, literature relating to the art of music, sound reproducing machines and contrivances and records for same. FOUM No. 186. Optician. To design, manufacture, assemble, buy and sell, spectacles, monocles, eye- glasses, lorgnettes, opera glasses, field glasses^ marine glasses, telescopes, micro- scopes, watch crystals, photographic and other lenses, scientific instruments and apparatus made wholly or partly from glass; together with all parts of, or accessories to any of the foregoing. To grind, polish, cut, shape and. fit glap"? for all purposes. FORM No. 187. Paint Manufacturing. To manufacture, grind, mix. compound, purchase and sell, colors, dyes, pig- ments, stains, paints, varnishes, shellacs, fillers, enamels, turpentines, spirits, dryers, leads, zincs, oils, pitch, tar, putty, chemicals and all substances, supplies and materials used in the paint and color trade. 1060 CORPOKATIONS. ' FORM No. 188. Fainting and Faperhanging. To caiTy on the general business of painting, varnishing, shellacing, enameling, staining, oiling, priming, and otherwise coloring, tinting, papering, decorating, weatherproofing or coating, outside or inside surfaces of buildings, water craft, vehicles, machinery and other structures, articles and things of all kinds for which such treatment may be suitable. To manufacture, mix, compound, buy, sell and deal in paints, wall papers, varnishes, shellacs, enamels, waxes, stains, colors, pigments, dyes, turpentines, dryers, japans, leads, zincs, gildings, gold leaf, oils, whiting, putty, crack and crevice fillers, oakum, calking, sandpaper, glues, pastes, steel wool, brushes, scrapers, blow-pipes, ladders, scaffolds, ropes, tackle, saw-horses, buck-horses, and all other materials, supplies, machinery, tools, appa- ratus and equipment suitable for the use of painters, decorators and paper hangers. FORM No. 189. Paper and Pulp. To manufacture and deal in all kinds of paper, paper goods, products and by products, pulp, papier mache, and articles made wholly or partly of paper, pulp or fibre. To manufacture, buy, sell and deal in all materials and supplies used or useful, directly or indirectly in and about the manufacture of paper, pulp, and paper and fibre products of all kinds. To engage in lumbering, logging, forestry, mining and quarrying businesses and operations of all kinds and in all their respective branches. To acquire, hold, maintain and operate saw mills and lumber yards. FORM No. 190. Photograph Studio. To make and produce pictures, portraits, likenesses and representations of per- sons, landscapes, scenes and things of all kinds, either by the use of cameras and other mechanical and chemical aids and devices or otherwise. To conduct a general art studio and ateliex. To employ and furnish the services of persons skilled in all branches and departments of the pictorial arts. To deal in photo- graphic and artists' materials and supplies and in pictures and works of art oi all kinds. To deevlop, print, tone, finish, mount and frame films, plates and pictures for others. To do moving picture studio, interior and out-door work of all kinds. FORM No. 191. Plumbing. To do plumbing, water, gas and steam fitting of all kinds. To invent, design, manufacture, buy, sell, install, inspect and repair, heating, cooling, ventilating, water supply, lighting and sewage disposal systems, appliances, apparatus, raacbin- FORMS FOB SPECIFIC OBJECTS OF BUSINESS CORP. 1061 ery, equipment, materials and supplies of all kinds. To make and furnish plans, apeeifications and estimates of coat for work and materials of the kind above described. To acquire, by competitive biilding or otherwise, make and perform contracts pertaining to any or all of the foregoing business. To deal in scrap metal and junk. FORM No. 192. Plumbers' and Steamfitters' Supplies. To manufacture, buy and sell plumbing, steamfitting, and gasfitting materials and supplies of all kinds; Sanitary and ventilating devices and contrivances; heat- ing and refrigerating apparatus and systems. FORM No. 193. Provisions. To manufacture, buy, store, prepare, . sell and deal in, at wholesale or retail, groceries, teas, coffees, spices, meats, fruits, vegetables, provisions and beverages of all kinds, household, farm, garden and dairy furnishings, implements, products and supplies of all kinds. FORM No. 194. Publishing and Printing. To print, bind, publish, circulate, distribute, buy, sell and deal in, books, pamphlets, circulars, posters, newspaperfl, magazines, literature, music, pictures, tickets, cards, advertisements, letter and bill heads, envelopes, legal, commercial and financial forms and blanks of every kind. To acquire, by purchase or other- wise, turn to account, license the use of, assign and deal with, copyrights and intellectual properties of every kind. To carry on a general printing, engraving, lithographing, electrotyping and publishing business in all the branches thereof. FORM No. 195. Real Estate Improvement.* To acquire by purchase, lease or otherwise, improve and develop real property. To erect dwellings, apartment houses and other buildings, private or public, of all kinds, and to sell or rent the same. To lay out, grade, pave and dedicate roads, streets, avenues, highways, alleys, courts, paths, walks, parks and play- grounds. To buy, sell, exchange, lease, let, hold for investment or otherwise, use and operate, real estate of all kinds, improved or unimproved, and any right or interest therein. * Note. — A corporation formed for the pui-pose of developing or improving real property may, for certain objects, acquire title by condemnation. See Sec. 16, Bus. Corp. Law. 1062 COKPOEATIONS. FORU No. 196. Road Construction. To make estimates upon, bid for, procure, perform and carry out contracts for grading, draining, building, paving, macadamizing, repairing or improving in any manner, roads, streets, highways, railroads, ways, paths, walks, parks, bridges and other conveniences, plants and works of all kinds and description, whether public or private. To manufacture, mine, quarry, mix, prepare, purchase or otherwise acquire, and to use, lay, sell or otherwise dispose of or deal in bricks, tiles, a,sphalt, stone, gravel, sand, cement, oils, bituminous substances and all other materials and supplies used or' which may be used in road construction and the general con- tracting business. To manufacture, purchase, rent, use and dispose of all machinery, tools and apparatus necessary or convenient in and about the prosecution of its business. FORM No. 197. Roofing and Sheet Metal. To manufacture, purchase, .pell, and deal in, apply, lay, construct, install and repair roofing, whether of tin, copper or other metal, slate, wood, tile, paper, tar, slag, gravel, composition, or other substance, and all kinds of roofing materials and supplies, cornices, ventilators, smoke pipes and stacks, dust collectors, leaders, gutters, valleys and all parts and things used in the construction of buildings; to manufacture, work and deal in sheet metal and copper and all things made wholly or partly therefrom. FORM No. 198. Rubber Goods. To grow, buy or otherwise acquire, sell, import and export crude rubber; to treat and prepare the same for market. To manufacture, buy, sell and deal in all kinds of goods, wares and articles made wholly or in part from rubber. To acquire, by purchase or otherwise, treat, compound, combine, use and sell all kinds of chemicals and substances entering into the manufacture of rubber goods and products. To acquire, maintain and operate suitable transportation facili- ties, warehouses, manufacturing plants, laboratories, salesrooms and other con- veniences and equipment for carrying on the foregoing business. FORM No. 199. Safes. To design, manufacture, assemble, install, repair, buy and sell, safes, strong boxes, vaults for the safe keeping of money, papers and valuables, burglar and thief alarms and traps, time locks and clocks, electrical and mechanical devices, and all kinds of machines, appliances, apparatus, systems and equipment for the prevention of crime, the apprehension and capture of criminals and the restraint of prisoners. FORMS POR SPECIFIC OBJECTS OF BUSINESS CORP. 1063 FORM No. 200. Securities Brokerage. To acquire, by purchase or otherwise, hold, sell or otherwise dispose of, pledge, hypothecate, and deal in and with, as principal, agent or broker, and on com- mission or otherwise, stocks, bonds, notes, mortgages, trust receipts, interim receipts, consols, warehouse receipts, certificates of ownership, investment securi- ties and choses in action generally, excepting bills of exchange, and in the course of its business to make advances on behalf of, and lend money to its patrons and others. FORM No. 201. Ship Building. To design, lay down, build, inspect, overhaul, repair, buy, let, sell and deal in, demonstrate, exhibit, and to operate for trial or experimental purposes, boats, ships, vessels, submarines, hydroplanes, hydroaeroplanes, floats, buoys, barges, rafts, scows, tugs, dredges, pontoons, and every kind of vehicle, machine, struc- ture, contrivance or device now known or hereafter discovered for use upon or beneath the surface of the water, whether mobile or stationary and whether intended for pleasure, commerce, warfare or otherwise; but this corporation is not to carry lading, freight, mails, property or passengers for hire. 'To manufacture, buy, sell and install furnishings, equipment, apparatus, armor, armament, munitions, fuel, food, machinery and supplies for any of the fore- going. To conduct a ship-chandlery business. To construct, purchase, lease or otherwise acquire, maintain and operate, ship- yards, ways, docks, dry-docks, wharves, piers, basins, warehouses and other water front properties. To do a salvage and wrecking business. FORM No. 202. Ship Chandlery, To manufacture,- buy, sell and deal in canvas and other textiles and things made therefrom, sails, tarpaulins, rubber goods, waterproof and water-resisting wearing apparel and materials, clothing of all kinds, ropes, cables, cordage, blocks, belts, oakum, tow, calking materials of all kinds, paints, varnishes, resins, pitch tar, turpentine, spirits, chemicals, drugs, lubricating oils, fuel oils, coal, gasoline, naptha, kerosene, marine engines and motors, electrical apparatus and goods, marine glas.ses, telescopes and optical goods, navigators and scientific instruments for determining' direction, location, temperature, time, weather, depth of water or for other purposes, maps, charts, books and stationery, nets, seines, fishing tackle, foods, arms, ammunition, life preservers, machinery, tools, and, in general, every kind of supplies, appliances, apparatixs, stores, conveniences and equipment suitable for use by shipowners, boatowners, fishermen, sailers, mariners, or upon or in connection with boats, vessels or marine property of any kind. 1064 CORPORATIONS. FORM No. 203. Shirt Factory. To manufacture, prepare, buy, sell, export, distribute and otherwise deal in and with shirts, collars, cuffs, underwear and other wearing apparel. To weave and manufacture cotton goods, silk goods, linen goods and any and all fabrics Of every kind and nature whatsoever, including all and every branch of preparation for dyeing, bleaching, finishing ajid making up of the same, and the sale thereof, and generally to weave, manufacture, prepare, dye, bleach, finish, purchase or otherwise acquire goods, wares and merchandise suitable for the use or manufacture of shirts, collars, cuffs, underwear or kindred articles, and of every manner of wearing apparel, and to export, sell and generally market and dispose of the same, and any and all articles and things in which, or in the production or preparation of which, any product or commodity used in the manufacture or preparation of any or all of the articles or things aforesaid, is an ingredient or a factor; and also any materials, supplies, commodities or products which may be used in or in connection with the manufacture, prepara- tion, production or use of any of the articles or things aforesaid. FORM No. 204. Soaps and Cosmetics. To manufacture, buy and sell soaps for laundry and toilet use, toilet creams, rouges, grease paints, cosmetics, lip salves, hair dyes, perfumes, face powders and lotions, nail polishes, bleaches, dentifrices and toilet supplies and accessories of all kinds. To buy, import, manufacture, extract, refine, compound, treat, prepare, use and sell animal fats, vegetable oils, potash, lye, pawdered talc, essences, colors, dyes and chemicals of all kinds. To employ suitable means and methods for advertising and marketing its products. FORM No. 205. Sporting Goods Store. To buy, sell, exchange, let for hire and deal in, at wholesale or retail and as principal or agent; firearms and their appurtenances; ammunition; fishing rods, tackle and bait; boats and canoes;, ice boats; siiowshoes; skates; sleds; electrical goods; cutlei-y; compasses; tents; decoys'; blankets; footwear, headwear, cloth- ing; goods, supplies and equipment of all kinds for hunters, dog owners, trap and target shooters, eampeft, fishermen, explorers, prospectors, timber cruisers, lumbermen, surveyors and engineers; for golf, croquet, tennis, baseball, football, basketball, hockey and polo players, athletes-, yachtsmen, canoeists, swimmers, archers, trappers, campers, motorists, travelers, and for all persons pursuing out- of-door sports, recreations or callings of any kind. FORM No. 206. Stationery. To manufacture or purchase, and to sell, writing papers, envelopes, blotting papers, book papers, tissue papers, cards, and paper of every kind and for all FORMS FOR SPECIFIC OBJECTS OF BTTSINESS CORP. 1065 purposes. To do printing, stamping, engraving, lithographing, stereotyping, elec- trotyping, bookbinding and publishing of all kinds. To design, print or other- wise make, buy and sell, printed forms for legal, commercial and other instru- ments, books of all kinds, whether printed or blank, calling cards, correspondence cards, business cards, invitations, announcements, holiday cards, souvenir post- cards, calendars, valentines, favors, programs, and art stationery of every kind. To deal in desk furnishings, seals, paper fasteners, pens, pencils, crayons, inks, ink stands, typewriters, carbons, manifolding machines and devices, rulers, filing oabinets, writers' supplies, novelties, toys, new'spapers, magazines and everything pertaining to the stationery business. YOUM No. 207. Summer Resort. To acquire real estate by purchase, lease or otherwise and to develop and fit up the same for summer resorts ^ajid recreation purposes; to own, operate and maintain hotels and restaurants, boat "houses, bath houses and beaches, water toboggans, gymnasia, speedways, coasters, motordromes, theatres, moving pic- ture and other shows, dancing pavilions, and amusement devices of all kinds and descriptions. FOBM No. 208. Steam Boilers and Fittings. To manufacture, install, repair, buy and sell steam and water boilers, tanks, tubs, hop jacks, jacketed kettles and steel water arches; stocks, flues, breachings, steel plate work, grate bars, castings, forgings and steam and water fittings; to conduct a general iron, steel, foundry, machine shop and sheet metal business. FORM No. 209. Structural Steel. To manxifacture, purchase, mine or otherwise acquire, sell and generally deal in, iron, steel and metals of evexj kind, and all things and articles made therefrom without limitation or restriction. Particularly to manufacture steel products designed for use in the construction of buildings, bridges, piers, and other struc- tures, railroads, cars, ships, and for any and every other purpose whatsoever. To acquire and operate manufacturing plants, power sites and developements for its private use; coal fields, oil wells, ore beds and all kinds of mining prop- erties; blast furnaces, rolling and stamping mills, coke ovens; private trans- poration equipment and facilities, and, generally, real and personal property of all kinds suitable to the accomplishment of its purposes. FORM No. 210. Tannery. To acquire, by purchase or otherwise, sell, exchange and deal in, dress, tan, treat, dye, and in all ways prepare for market or for use, hides, pelts, skins and 1066 COKPOBATIONS. furs of all kinds; to furnish, buff, treat, dye and in all ways work upon, leather of all kinds; to manufacture leather goods and articles made wholly or partly from the skins or furs of animals; to mp,nufacture and market glue and any or all products or by-products of the tanning business. FORM No. 211. Taxi Service. To maintain and operate motor vehicles of all kinds for the carriage and transportation of passengers or goods for hire upon the land; except that it shall not maintain or operate any stage coach or omnibus route or any line of rail- way or railroad. To buy, sell, exchange, repair and deal in motor vehicles and parts, accessories and supplies for same. FORM No. 212. Tea, Coffee and Spices. (Premiums given with purchases) To grow, purchase and sell, at wholesale or retail, import, export, cure, roast, polish, grind, extract oils and essences from, treat, subject to process, pack, store, distribute and deliver, tea, coffee, cocoa, chocolate and spices. To produce, manu- facture, compoimd, prepare, buy and sell gi-oceries, provisions, condiments, salt, baking powders and all materials and supplies used in the culinary art; kitchen and household utensils; wares made of china, porcelain, terra cotta, clay, glass, wood; tin, granites, enamel, brass, copper, iron, steel, aluminum, silver, gold or other substance; silver and gold-plated ware; jewelry, gems, ornaments; articles of wearing apparel; toys, tools, cutlery, lamps; textile fabrics, laces, embroideries and dry goods of all kinds; furs; floor and wall coverings; pictures, statuary, bronzes, bric-a-brac; cameras and photographic supplies; firearms, fishing tackle, tennis, golf and other sporting goods; soaps, cosmetics, perfumes, powders and toilet articles and supplies of all kinds; drugs and chemicals; brushes, brooms, carpet sweepers, vacuum cleaners, window and door screens, paints and var- nishes; furniture; household, farm and garden supplies; and, generally, goods, wares and merchandise of every kind. To give checks, stamps, coupons or other tokens to customers with sales and to redeem the same either by payment of money or by giving in exchange goods, wares, merchandise, tickets for entertam- ments or transportation, or any other valuable consideration. FORM No. 213. Textiles. To conduct the business of wtaiiug aiiti otherwise manufacturing cloths, fabrics, garments and textiles of every name, nature, kind and description, whether from wool, cotton, linen, silk or other material or substance. To acquire by purchase, lease or otherwise, all real and personal property suitable for its business, and to maintain, operate, let or dispose of the same, from time to time, as may appear conducive to its interests. To carry on any manufacturing oi merchandising business incidental to the foregoing. FORMS FOR SPECIFIC OBJECTS OF BUSINESS CORP. 1067 FOKM No. 214. Theatrical. To carry on, in all of its departments and branches, the business of producing theatrical, musical, operatic, moving picture and other entertainments, including lectures, pantomimes, ballets, pageants, spectacular effects, tableaux, exhibitions, ca,barets, and amusement devices, features and ideas of all kinds. To acquire copyrights, licenses, or other rights to or in plays, films, dramas, dramatizations, musical compositions and intellectual properties of all kinds. To purchase, lease or otherwise acquire, to let and sell real estate. To acquire, erect, furnish and equip, maintain and operate, theatres and other buildings or structures. To manufacture or otherwise acquire scenery, costumes and stage properties of all kinds. To acquire, fit up, maintain arid operate studios, laboratories, photo- graphic and other equipment for the making and production of moving pictures of all kinds. To make all contracts and do Wl thifngs suitable and conducive to (he accomplishment of the foregoing objects. FORM No. 215. Tires. To design, manufacture, acquire by purchase or otherwise, sell and deal in tires, whether of rubber, canvas or other fabric, composition, metal or other substance, for the wheels of vehicles of all kinds, and whether such tires be solid, or rendered resilient by confined air, springs or other means; shoes, casings, treads, inner tubes, valves, rims, pumps, cements, patches, patching and vulcaniz- ing materials, and all other parts of, supplies for, and accessories to, vehicle tires. FOBM No. 216. Tobacco. To grow, purchase or otherwise acquire, import, export, cure, treat, pack, store and sell tobacco of all kinds. To manufacture cigars, cigarettes', pipe tobacco, chewing tobacco, snuflf, tobacco soaps, insecticides, spraying mixtures, and all products made wholly or in part from tobacco- To manufacture, buy and sell pipes, cigar holders, humidors, ash trays, smokers' sets and smokers' supplies and accessories of all kinds. To acquire, maintain, operate and dispose of farming properties and planta- tions, manufacturing plants, shops ajid machinery, stands and stores for the mar- keting of its goods; to advertise its products, and to do all things necessary for the convenient prosecution of its business. FORM No. 217. Tool Making. To design, manufacture, assemble, buy and sell; knives, razors, axes, saws, shears, chisels, files, augurs, drills, planes; cutting and abrading tools, apparatus and machinery of every kind; surgical, dental and scientific instruments; dies, punches, stamps, hammers, anvils, calipers, gauges, rules, squares, compasses, 1068 CORPOBATIONS. vises, levels; tools, machinery, applianceis and equipment of all sort^ for carpen- ters, machinists, blacksmiths, pattern makers and other artiaana. To manufac- ture, treat, prepare, buy, sell and deal in metals of all kinds, bone, ivory, horn, woods, celluloid, leather, and all of the component parts of c.utlej-y, tools and machinery. . FORM No. 218. Tracking. To carry on a local freight and baggage transfer business; to move house- hold goods, pianos, safes, and goods, vfares and merchandise of all kinds from place to place by means of horae-dravi'n or motor trucks and vans, for hire. To buy, sell, exchange, use and deal in horses, wagons, trucks, motor vehicles and other equipment, apparatus and machinery convenient for use in and about its business. To carry on, in comiection with the foregoing, a general stevedoring, freight handling and warehousing business. FORM No. 219. Warehousing. To purchase, build, lease or otherwise acquire buildings, elevators, docks, wharves, piers, floats and other structures and equipment, and to maintain and operate the same for the general warehousing, in cold storage or otherwise, of goods, wares and merchandise for hire. - - To acquire, by purchase, lease or otherwise, and to sell, let or otherwise dispose of. real es.tate, chattels real, water rights, concessions, privileges and licenses. To cut, harvest, manufacture, buy, store, use for refrigerating or other pur- poses sell and generally deal in, ice, both natural and artificial. To design, manufacture, purchase, or otherwise acquire, install, maintain, oper- ate or sell, refrigerating, ice-maJcing, cooling and heating plant systems, machin- ery, apparatus, equipment, materials and supplies of all kinds. To issue warehouse receipts; advance loans on the security of goods on deposit and generally to do all acts and things usual in the business ol ware- housing. To do a general carting trucking, local express, freighting and moving busi- ness by means of horse-drawn and motor trucksi and vehicles or other suitable means. To do the work of longshoremen and stevedores. To furnish the services of experts to taete, sample or inspect teas, coffees, tobaccos, spices, provisions, beverages, goods and merchandise of all kinds; to certify to the quality of commodities thus tasted, sampled or inspected, and to> warrant the accuracy of such certifications. PROCEDUBAL FORMS. 1069 PROCEDURAL FORMS. FORM No. 250. Complaint Against Directors for Waste of Corporate Funds. SUPREME COURT— Washington County. David J. Hanna, Suing for Himself as Stockholder, and All Other Stockholders of the People's National Bank of Salem, New York, in like situation, who shall choose to make themselves parties to this action. Plaintiff, vs. The People's National Bank of Salem, New York, Charles Lyon, William C. Larmon et al.. Defendants. >179 N. Y. 107. The plaintiff, complaining in behalf of himself and all others the stockholders of the People's National Bank of Salem, New York, in like situation as himself, who shall, in due time, come in and seek relief by and contribute to the expenses of this action, by Lansing & Holmes, their attorneys, allege upon, information and belief, as follows : I. That the defendant, the People's National Bank of Salem, New York, is a corporation and banking association organized about the 1st of January, 1884, under and by virtue of the Act of Congress of the United States, approved June 3rd, 1864, and known as the National Banking Act, and the various acts amend- ing and extending the same, and that from the period of said organization until about the month of November or December, 1893, the said People's National Bank of Salem, New York, transacted a general banking business at the village of Salem, Washington County, N. Y.; that on or about the month of October, 1893, said banking association became insolvent. II. That the capital stock of said bank was $50,000, divided into shares of the par value of $100 each. That the plaintiff at the time of said insolvency and suspension of said bank, was the owner and holder of ten shares of its capital stock of the nominal value of $100 each. III. That at the time of said suspension of payment by the said bank, the said bank was insolvent and its liabilities so far exceeded its assets as to entirely absorb its capital stock, and that the property and assets of said banking asso- ciation were entirely inadequate to pay the satisfied debt and liabilities over and above its liabilities to shareholders upon account of capital stock, and that the comptroller of the currency having so ascertained and determined, and having decided that it was necessary in order to pay the same, to enforce the individual liabilities of the shareholders of said banking association,^ as provided by the said acts of congress, directed that an assessment be made upon all the share- holders of said bank, including the plaintiff, to the full extent of the whole 1070 COBPOBAXIGNS. amount of their stock therein, at the par value thereof, in addition to the amount invested in said shares. That by reason of the liabilities of said bank, and the said assessment made necessary thereby as aforesaid, the shareholders of said bank, including the plaintiff, were required to pay the amount of said assessment or suffer loss by the sale of their said stock, for the purpose of paying the amount of said assessment, and that this plaintiff's said stock was sold by said bank in satisfaction of said assessment and became wholly lost to him while other stockholders actually paid the said bank the full amount of their said assessment and retained their stock. IV. That one Robert M. Stevenson, from about the year 1884, until the said suspension of payments by said bank, was the cashier of said bank, and that the insolvency of said bank was caused by the defalcations, willful misconduct, gross neglect and inattention to the duties of his office of the said Robert M. Steven- son while acting as such cashier, from about the year 1 890 until the suspension of said bank. That for a considerable period prior to the suspension of said bank, the said Robert M. Stevenson loaned the funds of the bank in large amounts to various persons who were irresponsible, without taking an}' adequate security for such loans and without proper inquiry into the solvency of either the makers or of the endorsers upon notes which were discounted by him at said bank. That said loans were made and paper discounted in large amounts to one Benjamin G. Long, who was one of the pretended customers of said bank. That the said Long was a non-resident of the State and was a travelling agent engaged in the sale of musical instruments, upon credit, for which he took notes in various sums of numerous irresponsible persons and upon endorsing the same, the said Stevenson, without inquiry or knowledge of the solvency of said makers of said notes, and even of their places of residence, or whether such persons had exist- ence or not — for numbers of them were fictitious — discounted said notes until the bank held in the aggregate such paper of the nominal value of about $35,000; being more than three-fifths of the capital stock of the bank; that said notes were substantially worthless, loaned practically upon the credit of said Benjamin G. Long, who was not known to have any property in this State or elsewhere, and who was, at the time, actually insolvent ; ' that various other additional loans of a like character were made to various persons, which were a total loss to tho bank and involved loss altogether of an amount equal to its entire capital stock. V. That at the time the aforesaid loans were made and of said suspension of said bank in 1893, the defendants herein, other than the defendant corpora- tion, were directors of said bank and constituted a portion of the Board of Direct- ors thereof, each of said directors having been theretofore duly elected a director and having accepted such office and trust, and having acted therein; and the said defendant directors have been annually re-elected directors of said hank down until the present time, and now constitute a majority of the directoi-^ of said bank, which consists of nine persons, whose names are as follows: (Insert names of directors.) VI. That the said misappropriation and loss of funds of the bank through the discounting of said paper and the loaning of said money in large amounts to irresponsible persons of funds of said bank by said cashier, were caiised by and were attributable to, and were the consequence and result of gross negligence, inattention to duty and misconduct of said directors. Including the defendants in this action, in the discharge of the duties of their said office. VII. That at the times said loans were made as aforesaid, the directors of PKOCEnUBAL FORMS. 1071 said bank, including the defendant directors, failed and neglected to exercise any proper or reasonable control or supervision over the said cashier; that sub- stantially the direction and management of said bank was left to said cashier; and no effective system of examination was provided calculated to detect mis- conduct upon the part of the officers of the bank, or to protect the interest of the -bank in the management of its business. VIII. That the accounts of the said Robert M. Stevenson, as cashier, on the books of said bank, if inspected, would have led persons of ordinary prudence to learn, or, at least, to suspect or believe that he was using the funds of the bank in reckless and unsafe enterprises and imperilling the capital of the bank, and plaintiff alleges that the defendant directors herein knew or had reason to suspect and believe that the cashier of said bank was grossly negligent in his management of its affairs in making the loans aforesaid and in otherwise hand- ling its funds, and they neglected and violated their duty as directors, to the shareholders of the bank, including plaintiff, by willfully retaining the said Robert M. Stevenson in his position as cashier, knowing him to be an untrust- worthy officer, and by omitting to exercise any proper or customary supervision or restraint over said cashier as aforesaid. That the said Robert M. Stevenson is dead, having died not 'long after a criminal inquiry had been made into his management of the affairs of said bank. IX. That the reason said bank has not been requested to bring this action, and has been made a party defendant herein is, because that all of its present directors, namely : ( naming directors ) , with the exception of Joseph B. Stone, were directors of the bank at the time and times said cashier was engaged in the wrongful acts and miscondifct which led to the insolvency and suspension of said bank, and were themselves guilty of gross negligence and misconduct in connection with their supervision and management of the conduct of the said cashier and of the funds of the bank which led to its loss. X. That by reason of the premises said defendants were guilty of negligence and misconduct in their office as directors of said bank, whereby the plaintiff suffered damage to a large amount. XI. That the shareholders of said bank are numerous, and some of them are unknown to the plaintiff and cannot be ascertained by him, and, therefore, plain- tiff sues for the benefit of all shareholders who may choose to join in this suit. Wherefore, plaintiff prays that this .court decree that the defendants who were directors as aforesaid, are individually responsible to the plaintiff for all losses resulting to the plaintiff as such shareholder from the directors ' negli- gence and misconduct in office as aforesaid, and that an account be taken of the damages suffered by the plaintiff and by the other shareholders of said banking association who may in due time join in this suit, by reason of the said negli- gence and misconduct in office, and that the several plaintiffs have judgment against the defendants who were directors as aforesaid for the respective amounts in which, upon said accounting, they shall appear ;to have respectively suffered damage in the respects aforesaj.d; and that such other relief in the premises, as may be just, be granted, with costs and disbursements of this action. . LiANiSIlifG AND HOLMES, ' Attoriieys for Plaintiff. 1072 COBPOBATIONS. FORM No. 251. Complaint Against Directors for Fraud and Concealment. SUPREME COURT— County of New York. Martin Cassidy, Plaintiff, vs. F. Blaut, Frederick Uhlms Ronald T. McDonald, Defendants. , _, „, ^ J^^' . , ^,^, ^ y 170 N. Y. 505. .Joseph F. Blaut, Frederick Uhlmann and The plaintiff, complaining of the defendants, respectfully shows to the court and alleges upon information and belief: First: That at all the times hereinafter mentioned to the time of its dissolu- tion, the Madison Square Bank was a domestic stock monied corporation and hank organized and engaging in business under the laws of this State, and having its place of business in the City of New York. Second: That at said times hereinafter mentioned the defendants were direct- ors of said Madison Square Bank, and one Samuel Cohen was a regular depositor in said bank, and had been for a long time previous, and as such had been accus- tomed from time to time to deposit monies in said bank. Third: That prior to and on and after the 8th day of August, 1893, the de- fendant Joseph F. Blaut was the president of said Madison Square Bank, and the defendants Frederick Uhlmann and Ronald T. McDonald were directors con- stituting a committee having the charge, management and direction of said bank, and the defendants were officers and agents of said bank, and the said defendants were in actual control of said bank, and managed and directed the affairs thereof. Fourth: That on the 8th day of August, 1893, and at the time aforesaid, thp said Madison Square Bank was by the direction and with the knowledge of the defendants and each of them open for the regular transaction of its business, and the said defendants and each of them then and there for the purpose of induc- ing and intending to induce depositors to deposit money in said bank, and in violation of their duties to such depositors, and in violation of the statute in such case made and provided, kept the said bank open, and directed, permitted and allowed the said bank to be and remain open for the purpose of receiving deposits and for the regular transaction of business, and the said defendants and each of them then and there for the purpose and with the intention afore- said represented to the depositors in said bank that the said bank was solvent and could lawfully and properly accept deposits from such depositors. Fifth: That the representation aforesaid was false and the defendants and each of them knew it to be_false; that on the 8th day of August, 1893, and at the time aforesaid, the said Madison Square Bank was in fact hopelessly in- solvent, and the defendants and each of them knew that the said bank was hope- lessly insolvent, and knew that the said bank could not lawfully or properly accept deposits from the depositors in said bank. Sixth: That on the 8th day of August, 1893, and at the time aforesaid, thb said Samuel Cohen, believing that the said Madison Square Bank was solvent, and relying upon the representations of the defendants aforesaid, in good faith deposited in the said bank certain monies, to-wit: The sum of one thousand and twenty ($1,020) dollars, and the said Madison Square Bank then, with the con- sent of the defendants and each of them, and by the direction and procurement and upon the instigation of the defendants and each of them, and the defendants PROCEDUEAL FORMS. 1073 then and there wrongfully concealing from and omitting to make known to the said Samuel Cohen the fact of the insolyency of said bank, accepted the said deposit of one thousand and twenty ($1,020) dollars. Seventh: That at said time said Madison Square Bank was insolvent to the knowledge of tfie defendants and each of them, and that the defendants and each of them tfhen and there received said deposit knowing that said bank was in- solvent, contrary to the form of said statute. Eighth: That shortly thereafter and on or about the 9th day of August, 1893, and because of its insolvency aforesaid, the said Madison Square Bank closed its doors and notified the public that it would not receive deposits or pay money to creditors or depositors, and because of such insolvency the Superintendent of the Banking Department of the State closed the said bank and took possession of its assets, and on or about the 10th day of August, 1893, because of such in- solvency an action was duly begun in the Supreme Court by the Attorney-General in the name of the People of the State against the said Madison Siquare Bank for a dissolution of the said bank on the ground of its insolvency; that tempo- rary receivers of the property of said bank were duly appointed by order of this court and thereafter duly qualified; and that thereafter and on or about the 22d day of November, 1893, judgment was duly rendered, dissolving the said bank and forfeiting its corporate rights to the privileges and franchises, and permaT nent receivers of the property of said bank were duly appointed and have since duly qualified. That the said- bank never resumed business, and that by reason of the insolvency and closing and dissolution of said bank the said Samuel Cohen has been unable to recover any part of the aforesaid deposit of one thousand and twenty ($1,020) dollars made in reliance upon the false and fraudulent repre- sentations of the defendants aforesaid, excepting only the sum of five hundred and ten ($510) dollars. Ninth: That by reason of the premises said Samuel Cohen was damaged in the sum of five hundred and ten ($510) dollars. Tenth: That, heretofore and prior to the commencement of this action, the aforesaid claim and the cause of action hereinbefore set forth were duly assigned to the plaintiff, who is now the owner and holder thereof. Eleventh: That by reason of the premises the plaintiff has been damaged in the sum of five hundred and ten ($510) dollars. Wherefore, the plaintiff demands judgment against the defendants for the sum of five hundred and ten ($510) dollars, -with interest from the 8th of August, 1893, together with the costs and disbursements of this action. HAROLD NATHAN, Plaintiff's Attorney. FORM No. 252. Petition to Set Aside Election of Directors. SUPREME COUKT— New York County. In the Matter of the Petition to Set Aside 1 the Election of Directors of George^ Matter of Ringler, 145 App. Div. 361 Ringler & Company. J The petition of Anna Hachemeister and J. Edward Jetter, as administrators with the will annexed of Henry Hachemeister, deceased, and J. Edward Jetter as 68 1074 CORPOKATIONS. substituted trustee under the will of Henry Haohemeister, deceased, and of Anna Haehemeister individually, respectfully shows to this court: That your petitioners are stocfcholders in the corporation of George Ringler & Co., a corporation duly organized under the laws of the State of New York, and that your petitioners Anna Haehemeister and J. Edward Jetter, as , administra- tors with the will annexed of Henry Haehemeister, deceased, are holders and owners of three thousand (3,000) shares of stock of G§prge Ringler & Co., a corporation whose entire capital stock consists of six thousand (6,000) shares of stock of the par value of one hundred dollars ($100) a share, and that your petitioner Anna Haehemeister individually is the holder and owner of five (5) shares of stock of the said George Ringler & Co. That Henry Haehemeister, in his lifetime, was the owner of the aforesaid three thousand shares (3,000) of stock held by your petitioners as such administrators with the will annexed. That said Henry Haehemeister died on the 5th day of July, 1907, leaving a last will and testament, by which he devised and bequeathd his entire estate to the executors named therein, William G. Ringler and Hon. Leonard A. Giege- rich, in trust. That annexed hereto is a copy of the last will and testament of Henry Haehe- meister, deceased. That the said will of Henry Haehemeister was duly filed in the Surrogates' Coiirt, New York county, and duly admitted to probate by said Surrogates' Court, and letters testamentary duly issued to William G. Ringler, the said Leonard A. Giegerich not having qualified, but having duly renounced as such executor. That the said William G. Ringler died on the 23d day of January, 1910, and that on January 28, 1910, Anna Haehemeister, one of your petitioners, was duly appointed administratrix with the will annexed of the estate of Henry Haehe- meister, deceased, and thereafter on the 3d day of February, 1910, J. Edward Jetter, one of your petitioners, was duly appointed coadministrator with the will annexed of Henry Haehemeister, deceased, and thereafter your petitioners both duly qualified by filing a bond approved of by the Surrogates' Court, New York county, and since have been acting as such. That thereafter J. Edward Jetter, one of your petitioners, was appointed sub- stituted trustee under the will of Henry Haehemeister, deceased, and duly quali- fied as such by filing a bond approved of by the Surrogates' Court, New Yor'. county, and thereafter the stock owned by Henry Haehemeister, deceased, was exchanged by the said corporation for a certificate for three thousand (3,000) shares of stock in the name of your petitioners, Anna Haehemeister and J. Ed- ward Jetter, as administrator with the will annexed of Henry Haehemeister, deceased. That in the month of August, 1907, William G, Ringler, by gift, transferred certificate No. 338 of said corporation to Anna Haehemeister individually, your petitioner. That the principal place of business of said corporation is located at No. 203 East 92d street. Borough of Manhattan, City of New York, and your petitioners further state that on the 30th day of October, 1909, there was assumed to be held at the office of said corporation, by virtue of the by-laws, an election of directors, and the following persons, were assumed to be elected directors thereat, to wit: William G. Ringler, George F. Trommer, Arthur Strauss, Anna Haehe- meister and Isaac Kugelman, and claiming to be directors by virtue of said al- leged election said persons organized a board, and assumed to act as such, and PEOCEDURAL PORMS. 1075 that hereto annexed and marked Exhibit "A" is a copy of the record of said alleged election taken from the minute-book of said corporation. That said alleged election and the proceedings, acts and matters touching the same were illegal and invalid for the following reasons: That at such election there were elected George F. Trommer, Arthur Strauss and Isaac Kugelman, as such directors. That under the General Corporation Law of the State of New York, and under the certificate of incorporation of said George Ringler & Co., and the by-law!> of said corporation, it is necessary that a director, in order to be qualified as such, own at least one share of said stock of said corporation. That the said Isaac Kugelman, Arthur Strauss and George F. Trommer, at the time of said election, were not the owners of any stock, except that they held merely the record ownership of the same on the books of said corporation. That the said stock recorded on the said stock-books as being held by Isaac Kugelman, Arthur Strauss and George F. Trommer, did not belong to them, but belonged to and was the property of William G. Ringler. That subsequently the said William G. Ringler died on the 23d day of Jan- uary, 1910. That said William G. Ringler left a last will and testament, which was duly filed in the Surrogates' Court, New York county, and thereafter the said will was duly admitted to probate by the Surrogates' Court, New York county, and in the said will the said William G. Ringler appointed George F^ Trommer and George Ehret, Jr., executors of his last will and testament, and letters testa- mentary were duly issued to the said George F. Trommer and George Ehret, Jr., on the 16th day of February, 1910, That subsequently, on the 28th day of February, 1910, there was assumed to be held a monthly meeting of the trustees of George Ringler & Co., and at such meeting it appears that said board of trustees assumed to elect George F. Trom- mer as president of George Ringler & Co., and George Ehret as vice-president. That annexed hereto and marked Exhibit "B" is a copy of the record from the minutes of the corporation of said meeting. That thereafter an adjourned meeting of the board of trustees was assumed to be held on the 4th day of March, 1910, and John T. Wilson was assumed to be elected director in place of Anna Hachemeister, one of your petitioners. That annexed hereto and marked Exhibit "C" is a copy of the record of said meeting. That said John T. Wilson is not qualified to act as such director, inasmuch as John T. Wilson is not an owner of five ( 5 ) shares of stock, except merely that he is the record holder thereof upon the stock-book of the corporation and that in fact the said stock belongs to the estate of William G. Ringler, deceased. That the said election of said Wilson as director was also illegal, by reason of the fact that he was not such owner of said stock, at the time of said election, except as record holder thereof, as af orestated. That the said election was also illegal inasmuch as the said Anna Hache- meister never was removed as such director. That she was duly elected such director at the meeting held on the 30th day of October, 1909, and never resigned as such, and has been a director since 1909, nor was she ever legally removed or ceased -to act as director, and she is still an owner and holder of five (5) ■shares of stock ;of the said corporation. That the said five (5) shares of, stock were delivered- by Anna Hachemeister to William G. Ringler in his lifetime, for B8ferk)eeping, and that without her knowledge) consent or acquiescence, the five 1076 CORPOKATIONS. (5) shares of stock were, in or about the month of March, 1910, cancelled by George Ehret, Jr., and George F. Trommer, without authority on her part, ex- changing said stock certificate in her name, which stock certificate was No. 338 of the stock of George Eingler & Co., for stock certificate" No. 344, and that there- after the said stock certificate No. 344 was exchanged by said executors for stook certificate No. 345, in the name of George Ehret, Jr., and, that the said Anna Hachemeister never ceased to be a stockholder of said corporation. . . That annexed hereto is a copy of the sections of the by-laws relating to the ownership of stock for the election of trustees, and filling of vacancies in the board of trustees. The present stockholders of record are George F. Trommer and George Ehret, Jr.,' as executors of William G. Ringler, deceased, 2,975 shares; George Ehret, Jr., 5 shares; John T. Wilson, 5 shares; Isaac Kugelman, 5 shares; Arthur Strauss, 6 shares; and your petitioners as administrators with the will annexed, and J. Edward Jetter, as trustee of Henry Hachmeister, deceased, 3,000 shares. Annexed hereto is a copy of the certificate of incorporation of said corporation. That your petitioners did not discover all the facts set forth herein until on or about the 1st day of August, 1910, and have made this application upon the earliest opportunity. That on or about the 1st day of August, 1910, in an action brought in the Supreme Court, Richmond county, by Anna Hachemeister, plaintiff, against George Ringler & Co., George F. Trommer and George Ehret, Jr., individually and as executors of the last will and testament of William G. Ringler, deceased; Isaac Kugelman, Arthur Strauss and John T. Wilson, defendants, to cancel the said transfers by George F. Trommer and George Ehret, Jr., and to restrain the negotiation of said stock, an answer was interposed by all of the defendants. In which it was alleged that the stock of George Ringler & Co., prior to the 17th day of February, 1910, while standing in the name of George F. Trommer five (5) shares, Isaac Kugelman five (5) shares, Arthur Strauss five (5) shares, did not belong to the aforesaid Trommer, Kugelman and Strauss, and the same allega- tion is set forth in the amended answer served on the 23d day of August, 1910, upon the attorneys for Anna Hachemeister, the petitioner herein, in said action. It is also admitted by the pleadings in the said aetion, and by the affidavits submitted upon the motion for an injunction restraining the negotiation of the said stock transferred to George Ehret, Jr., as aforementioned, that John T. Wilson is not the beneficial owner of the stock held in his name. That in said action a motion has been granted, restraining the negotiation of the said stock issued as aforesaid to George Ehret, Jr., and said motion was granted on September 14, 1910, and an order has been signed by Mr. Justice Putnam, who heard said motkin. That your petitioners are aggrieved by and complain of such elections of trus- tees and officers of the corporation as held on the 30th day of October, 1909, and February 28, 1910, and March 4, 1910, and the proceedings, acts and matters touching the same, and allege that the value of their stock has been injuriously affected by the acts of said persons assuming to act as directors, by virtue of said illegal proceedings. Wherefore, the petitioners pray that such elections held on October 30, 1909, February 28, 1910, and March 4, 1910, may be declared by this court to be ir- regular and of no effect, and be set aside, and the offices of all such directors be declared to be vacated, and that all persons assuming to be directors and trus- tees cease to act as such, and that a new election for the directors and trustees PEOCEDURAL FORMS. 1077 of such corppra,tion he ordered by this court, and that inspectors for such elec- tions be appointed by the court, and for such further relief as right and justice may require. An order to show cause is asked for, on the ground that a speedy determina- tion of the proceeding should be had, so that the present ineligible directors are ousted from their ofjSces at the earliest opportunity. No previous application has been made for the annexed order to show cause. Dated, New York, September 27, 1910. (Signature and verification.) FORM No. 253. Petition to Change Name. SUPREME COURT— Delaware County. In the Matter of the Application of The Security Mutual Fire Insurance Com- pany of Delaware County, N. Y., to . change its Corporate Name ' to " Security Mutual Fire Insurance Company J To the Supreme Court of the State of New York: The petition of The Security Mutual Fire Insurance Company of Delaware County, N. Y., respectfully shows : First. That your petitioner is an insurance corporation duly incorporated and existing under and pursuant to the laws of the State of New York, with its principal office in the village of Delhi, Delaware County, N. Y., and that it has no other business office except in Delhi aforesaid. Second. That the present name of your petitioner is The Security Mutual Fire Insurance Company of Delaware County, N. Y., and it proposes to assume the corporate name of Security Mutual Fire Insurance Company. Third. That the reasons for such change are that the present name is un- necessarily long and awkward and does not properly express the territorial juris- diction of the corporation. That, when the corporation was originally organized it had authority to write insurance policies only on property located in the County of Delaware, but its authority has since been extended so that it is now authorized to write policies on property located in any county of the State, excepting those counties comprising the city of Greater New York. That the words "of Delaware County, N. Y.," have become and are superfluous. Fourth. That on the 12th day of January, 1920, the Board of Directors of your petitioner duly authorized this petition for the change of corporate name, by a resolution of such directors duly adopted in the following language: Be it resolved, that the corporate name of the Security Mutual Fire Insurance Company of Delaware County, N. Y., be, changed to Security; Mutual Fire Insur- ance Company. Be it further resolved, that the Secretary of the Company be, and he hereby is, authorized and directed, in the name of the company, to take such proceed- 1078 CORPORATIONS. inga as may be required by law to effect such change of corporate name; and that he be, and he hereby is, authorized and directed to sign and verify all necessary papers to that end. Fifth. Upon information and belief that the name Security Mutual Fire In- surance Company is not the name of any other corporation authorized to do busi- ness in the State of New York, and it is not the name so nearly resembling the name of any other corporation as to be calculated to deceive. Sixth. That the proposed change of name and this petition is approved by the Superintendent of Insurance of the State of New York, which approval is hereto annexed and made a part of this petition. Wherefore, your petitioner a«ks that the name of your petitioner he changed to Security Mutual Fire Insurance Company, and for such other and further relief as may be proper. THE SECURITY MUTUAL FIRE INSURANCE COMPANY OF DELAWARE COUNTY, N. Y. by . Secretary. Attorney for Petitioner. Office and P. 0. Address, Delhi, N. Y. (Attach verification and certificate of superintendent of insurance.) FORM No. 254. Order Changing Name. (Title) (Caption.) On reading and filing the petition of The Security Mutual Fire Insurance Com- pany of Delaware County, N. Y., verified the oth day of February, 1920, asking for the change of its corporate name to Security Mutual Bire Insurance Com- pany; the certificate of Hon. Jesse Phillips approving such change; and proof by affidavit of R. P. Mcintosh, editor of The Delaware Republican, showing due publication of notice of this application in said Delaware Republican for three successive weeks; and it appearing to the satisfaction of this court that said petition is true and that there is no reasonable objection to the change of name proposed and that the petition has been duly authorized and that notice of the presentation of the petition hits been duly made ; Now, therefore, on motion of Arthur F. Curtis, attorney for the petitioner, no one appearing in opposition thereto; it is Ordered that the said The Security Mutual Fire Insurance Company of Dela- ware County, N. Y., may be, and it herebj' is, authorized to change its corporate name to and to assume the name of Security Mutual Fire Insurance Company, on the 1st day of July, lf)20. It is further ordered that this order shall be entered and the papers upon which it was granted shall be filed, in the Delaware County Clerk's Office within ten days after the date hereof. It is further ordered that, within ten days after the entry of this order, a certified copy thereof shall be filed in the office of the Secretary of State of the PROCEDURAL 'FORMS. 1079 State of New York; and a certified copy shall also within such time be filed in the office of the Superintendent of Insurance of the State of New York. It is further ordered that, within ten days after the entry of this order, a copy thereof shall be published in The Delaware Republican, a newspaper pub- lished at Delaware, in said County of Delaware, once in each week ior four suc- cessive weeks. Justice Supreme Court. FORM No. 256. Petition for Leave to Sell Real Estate. ALBANY COUNTY COUEff. In the' Matter of the Application of Evan- 1 gelical Lutheran Church of the Redeemer ^ of Albany, N, Y., to Sell Real Estate. j To the County Court of the County of Albany : The petition of the above-named corporation respectfully shows: First. That its name is the Evangelical Lutheran Church of the Redeemer, Albany, N. Y., that its trustees are ten (10) in number, to wit (naming them) ; that the said Rev. H. Douglas Spaeth is the president, Henry A. Bonhey is vice- president, Henry Hahn financial secretary, John W. Bamer treasurer and Ed- ward Osborn recording secretary, and that all of them reside in the city and county of Albany. Second. That the object or purpose of the incorporation of your petitioner is that of a religious purpose; that it was incorporated under chapter eO of the Laws of 1813; with the amendments thereof, on the 13th day of March, 1899, by a certificate which was duly recorded in the clerk's office of the county of Albany on the 2d day of April, 1889, in Book 3 of Incorporations, page 226, and that said corporation was so formed for the purpose of conducting religious services under the form of government and doctrines of the Evangelical Lutheran Church. Third. That the real property which the said corporation desires to sell is situated in the city and county of Albany and is bounded and described as follows: (Insert description.) Fourth. That the interest of said religious corporation will be promoted by a sale of the said parcel of land for the reason that the said strip of land is now unoccupied and unproductive, and the purchase is. willing to covenant to keep the said parcel of land free and clear for the mutual benefit of himself and this corporation and the enjoyment of said parties for light and air of said parcel of land ; that said parcel of land is of irregular , shape and is valuable, mainly, to said corporation because of the advantages Of light and air to be had there- from, while said remaining and adjoining premises on the east are occupied by said corporation for its uses as a church and parsonage, and upon which its said church and parsonage stand. Fifth. That such sale has been .authorized by a vote of at least two-thirds of the trustees of said corporation at a meeting thereof, duly called and held, a 1080 CORPORATIONS. copy of which resolution granting such authority is hereto annexed; that such sale was also approved at a meeting of the members of the congregation, held on the 28th day of April, 1908. Sixth. That the market value of the remaining real property of the said corporation is at least twelve thousand dollars ($12,000), the cash value of its personal assets is at least one thousand dollars ($1,000), and that the total amount of its debts and liabilities does not exceed the sum' of fifty dollars ($50), of which amount none is secured. Seventh. The offer to purchase the said above-described parcel .of land was made by Henry C. Hewig and Mary Hewig, his wife, who agree to pay therefor the sum of two hundred and twenty-five dollars ( $225 ) , subject to the condition that neither of said parties during the time or period that said corporation shall own, use or occupy the adjoining premises on the east, for religious or parsonage purposes, shall or will erect any building upon the said premises or use the same for the purposes of any business, trade or manufactory, or suiBfer or permit rubbish, ashes, boxes or any refuse whatever to be deposited or to remain on said premises, and that said corporation purposes to Use the said sum of two hundred and twenty-five dollars ($225), realized from such sale, for the general expenses of the corporation and for addition to the building fund. Eighth. Said corporation, therefore, asks authority of this court to sell the real estate herein described to Henry C. Hewig and Mary Hewig, his wife, for the sum of two hundred and twenty -five dollars ($225), subject to the condi- tions aforesaid. Signatures of the ten (10) trustees. (Joint and several verification by said trustees.) FORM No. 256. Resolution of Board of Trustees to Sell Real Estate. At a meeting of the board of trustees of the Evangelical Lutheran Church of the Redeemer of Albany, N. Y., held on the 3d day of June, 1908, the following resolution ofl'ered by Mr. John Reineck, more than two-thirds of said trustees being present and voting therefor, was adopted. Resolved, That the Evangelical Lutheran Church of the Redeemer of Albany, N. Y., sell and convey to Henry C. Hewig and Mary Hewig, his wife, for the sum of two hundred and twenty-five dollars ($225), a strip of land three (3) feet wide lying along and next adjacent to the east line of the premises now owned and occupied by said Hewig and wife, subject, however, to the condition that neither said gi-antees, nor their survivor, heirs or assigns, during the period that said grantors shall own, use or occupy said adjoining premises on the east for church, religious or parsonage purposes, shall or will erect any building upon said premises or use the same for any business, trade or manufacture, or suffer or permit rubbish, ashes, boxes or any refuse whatever to be deposited or remain on said premises. Resolved, That the Rev. H. Douglas Spaeth, the president, and John W. Bamer, the treasurer, of the said corporation, be and they are hereby authorized to execute a deed of said premises on the part of said corporation and affix its corporate seal thereto. PROCEDURAL FORMS. 1081 FORM No. 257. Order Authorizing Sale of Real Estate. (Caption and title.) On reading and filing the petition of the Evangelical Lutheran Church of the Redeemer, Albany, N. Y., duly verified, by which it appears to the satisfaction of the count that the interest of the said corporation will be promoted by a sale of a strip or parcel of land lying along its western boundary to Henry C. Hewig and Mary Hewig, his wife, for the sum of two hundred and twenty-five dollars ($225). Now, on motion of David A. Thompson, attorney for said corporation peti- tioner, it is Ordered, That the Evangelical Lutheran Church of the Redeemer of Albany, N. Y., a religious corporation, is hereby authorized to sell the I'eal property described in the petition to Henry C. Hewig and Mary Hewig, his wife, for the sum of two hundred and twenty -five dollars ($225), subject to the conditions in said petition mentioned, and the trustees of said corporation are further directed to dispose of the proceeds of said sale by applying the same for the general expenses of the corporation and for addition to the building fund. The following is a description of the property hereby authorized to be sold. (Insert description.) GEORGE ADDINGTON, Albany County Judge. FORM No. 258. Deed with Recitals. This indenture, made this 16th day of November, in the year 1910, between the North Baptist Church and Congregation of the City of Troy, a religious corporatioii duly incorporated under and by virtue of the laws of the State of New York, located in the city of Troy, Rensselaer county. New York, party of the first part, and Edward H. Lisk, of the same place, party of the second part. Whereas, the party of the first part, at a meeting of its qualified members, held at itheir meeting-house in the city of Troy, N. Y., pursuant to a public notice given at one regular service of the church at each of the two Sundays next preceding said meeting, the object, time, and place of such meeting being distinctly started in said notice, the members of said party of the first part duly consented to the sale of the real estate hereinafter described, and duly author- ized and directed its trustees to make application to the court to sell the same; and, whereas, the said trustees have authorized a sale of said real estate by a volte of at least two-thirds of its trustees, at a meeting thereof, duly called and held; and, whereas, upon the petition of said trustees pursuant to such author- ization, an order of the Supreme Court was duly made permitting the party of the first part to sell said real estate. Now this indenture witnesseth; That the said party of the first part, pur- suant to the provisions of said order, and in consideration of the sum of seventy- five hundred dollars ($7,500), lawful money of the United States, paid by the party of the second part, does hereby grant and release unto the saidr party of the second part, his heirs and assigns forever, all that tract or parcel of land: (Deseripltion.) This conveyance is made subject to a mortgage for five thou- sand dollars ($5,000), with the interest diie and to grow due thereon, covering 1082 CORPORATIONS. the premises herein described, made and executed by the North Baptist Church and Congregaition of the City of Troy to the Hudson River Baptist Asaociation North, dated the 14th day of November, 1910, and recorded in Rensselaer county clerk's office on the 15th day of November, 1910, which mortgage and the bond to secure which said mortgage was given, the said party of the second part hereby assumes and agrees to pay as part of the consideration and purchase price of the premises above described, and the said party of the second part also assumes and agrees to pay the State and county taxes levied or to be levied on said premises for the year 1910, together with the appurtenances and all the estate and rights of the party of the first part in and to said premises. To have and to hold the above granted premises unto the said party of the second part, his heirs and assigns forever, subject to the mortgage for five thousand dollars ($5,000), with the interest due and to grow due ithereon, and the State and county taxes for the year 1910, above mentioned. In witness whereof, the said The North Baptist Church and Congregation of the City of Troy has caused these presents to be signed, sealed, executed, ac- knowledged, and delivered in its name and behalf by Otis G. Clark, its president. In presence of WM. C. GORDON, THE NORTH BAPTIST CHURCH AND CONGREGATION OF THE CITY OF TROY. By OTIS G. CLARKE, as President. (L. S.) STATE OF NEW YORK, 1 County of Rensselaer, City of Troy, On this 16th day of November, 1910, before me personally came Otis G. Clarke, to me known, who being by me duly sworn did depose and say that he resided in the city of Troy, Rensselaer county, New York; that he is the president of the North Baptist Church and Congregation of the City of Troy, the corporation described in and which executed the above instrument; that the said corpora- tion has no corporate seal, and that he signed his name thereto by order of the board of trustees of said corporation; WM. C. GORDON, Com. of Deeds, Troy, N. Y. FORM No. 259. Petition for Led.ve to Mortgage Real Estate. To the Supreme Court of tljf State of New York: The petition of the North Baptist Church and Congregation of the City of Troy, N. Y., respectfully shows: First. That the petitioner is a religious eorporation, and that its corporate name is the " North Baptist Church and Congregation of the City of Troy." That it is managed by trustees. That the whole number of its trustees is nine- Th^t the names of the trustees and their places of residence respectively are as follows: (Insert names.) That the names of its principal officers and their places of residence are as fol- lows: (Insert names.) Second. That the business of the petitioner, and the object of its incorpora- tion, is to enable its members to meet for divine worship and other religious ob- PROCEDURAL FORMS. 1083 seryances, and the establishment and maintenance of a church for the further- ance of such objects, and that it was incorporated under and pursuant to an act of the Legislature of the State of New York, entitled "An Act to Provide for the Incorporation of Religious f?'ocieties, passed April 5, 1813" That its location and legal residence is in the city of Troy, New York. Third. That the petitioner is the owner of certain real property, a descrip- tion of which by metes and bounds is as follows; (Description.) Fourth. That the interest of the corporation will be promoted by the mort- gaging of the real property above specified, and that a concise statement of the reasons therefor is as follows: The corporation is indebted in the sum of five thousand dollars ($5,000), that the corporation has no Hioney or other resources outside of the real estate above described and the real estate on which its church building stands, and the chattels and personal property which constitute the furniture and furnishing of its said church building, with which to pay said 'indebtedness, and it is necessary that the payment of said indebtedness should be provided for by the giving of a mortgage as a security for the loan of that amount, thereby extending the time of payment sufficiently to enable said corpo- ration to acquire means to pay and cancel said indebtedness without sacrificing its property interests. Fifth. That said niortgage has been authorized by a vote of at least two- thirds of the trustees of the petitioner, at a meeting thereof duly called and held, and a copy of the resolution granting such authority is made a part hereof, and reads as follows : " Whereas, the members of the North Baptist Church and Congregation of the City of Troy, N. Y., have authorized and consented that the trustees of said corporation mortgage the following described property of said corporation, viz.: (description), for a sum not to exceed five thousand dollars ($5,000), that being the amount required to pay debts incurred in the administration of the temporal affairs of said corporation; and, whereas, said corporation is indebted in the sum of five thousand dollars ( $5,000 ) , and whereas the Hudson River Baptist Asso- ciation North has agreed to accept a mortgage on the aforesaid property as security for the loan of five thousand dollars ( $5,000 ) , and the bond of said corporation, said bond and mortgage to contain the provisions and conditions hereinafter set forth. " Resolved, at least two-thirds of said trustees being present and voting unani- mously for this resolution, that the trustees of the North Baptist Church and Congregation of the City of Troy authorize, and they do hereby authorize the making of a mortgage upon and covering the real estate hereinbefore described and the delivery thereof to the Hudson River Baptist Association North, for the sum of five thousand dollars ($5,000), and the making and delivery of a bond to accompany said mortgage; that said bond be drawn to bind said corporation in the penal sum of ten thousand dollars ($10,000), and both said bond and mort- gage to be conditioned for the payment of the sum of five thousand dollars ($5,000), to the said Hudson River Baptist Association North, their successors or assigns; at the expiration of five (5) years from the date of the making and delivery thereon, with interest thereon at the rate of five per cent (5%) per annum payable semi-annually, which bond and mortgage shall also contain the usual interest, insurance, taxes, and assessment clauses, the said corporation to have the privilege of pa;ying on account of said principal sum on any semi- annual interest da;y any sum not less than five hundred dollMs ($500), and that ®tis G. Clarke, the president of the board of trustees, be authorized to make and 1084 COEPOKATIONS. execute said bond and mortgage and deliver the same to the Hudson River Bap- tist Association North, on behalf of this corporation and its trustees." Sixth. That the market value of the remaining real property of the petitioner is twenty-five thousand dollars . ($25,000) . That outside of the furniture in its church building, which stands upon such remaining real property, the petitioner has no personal property. That the cash value of said furniture is twenty-five hundred dollars ($2,500). That the total amount of the debts and liabilities of the petitioner is five thousand dollars ($5,000), and the same is unsecured- Seventh. That the r application proposed to be made of the moneys realized from such mortgage is as follows: to provide for the payment of said indebted- ness of five thousand dollars ($5,000). Eighth." That at a meeting of the qualified members of the petitioner held at their meeting-house in the city of Troy, N. Y., on the 8th day of February, 1910, pursuant to a public notice given at one regiilar service of the church on eaqh of the two Sundays next preceding said meeting, the object, time, and plac^ of such meeting being distinctly stated in said notice, the members of said corpo- ration duly consented to the mortgaging of the property of said corporation, and duly authorized and directed the trustees of the petitioner to mortgage its real estate by a resolution unanimously passed at said meeting. That a copy of the resohition evidencing such consent thereto and direction is made a part hereof and reads as follows: " Resolved, That the board of trustees of the North Baptist Church be author- ized and empowered to raise either by giving a mortgage or by note of trustees a sum not to exceed five thousand dollars ($5,000), the above amount being required to pay debts incurred in the administration of the temporal affairs of the church." Wherefore, the petitioner demands that an order may be made granting leave to the said corporation to mortgages. the real estate hereinbefore described for the sum of five thousand dollars ($5,000), and authorizing and empowering said corporation to execute and deliver a bond and mortgage executed in the name of said petitioner to the Hudson River Baptist Association North, upon the real estate hereinbefore described, for that purpose, which bond and mortgage shall contain all the conditions and provisions hereinbefore set forth in the resolution of the trustees, » copy of which appears in this petition. Dated, Troy, N. Y. (Signature and verifications.) •FORM No. 260. Order Granting Leave to Mortgage Real Estate. (Caption and title.) Upon reading and filing the petition of the North Baptist Church and Con- gregation of the City of Troy, for leave to mortgage certain of its real estate,. which petition was dated, duly verified and signed on this 14th day of Novem- ber, 1910, by Otis G. Clarke, Don C Woodqock, James A. Dorrance, William F. Gurley, Philander Pollock, Halbert D. Hull, William A. Sherman, Stephen D. Sweet and Edward W. Douglas, comprising the whole number of the trustees of the petitioning corporation, from which petition it satisfactorily appears that the members of the corporation have duly consented to the mortgaging of itg PROCEDURAL FORMS. 1085 real estate, and that such mortgage has been authorized by a vote of at least two-thirds of the trustees of the corporation at a meeting thereof duly called and held, and that the interest of the corporation will be promoted by the mort- gaging of the real property specified in the petition; that said petition complies with the provisions required by law relating to the application to mortgage the real estate of a corporation. Now, after due deliberation upon the matters set forth in said petition, and after hearing Edward W. Douglas, of counsel for the petitioning corporation, aind upon his motion, it is Ordered, That the prayer of said petitioner be granted, and that the petitioner be and it hereby is given leave to mortgage the real estate described in said petition for tte sum of five thousand dollars ( $5,000 ) , and it is further Ordered, That the petitioner execute, duly acknowledge, and deliver to the Hudson River Baptist Association North, the corporation named in said petition, a bond and mortgage, which mortgage shall cover the real estate owned by said corporation described in the petition, the petitioner to be bovtnd in said bond in the sum of ten thousand dollars ($10,000), and both said bond and mortgage to be conditioned for the payment of the sum of five thousand dollars to the said The Hudson Eiver Baptist Association North, their successors or assigns, at the expiration of five (5) years from the date of said bond and mortgage, with interest thereon at the rate of five per cent (5%) per annum, payable semi- annually, with the usual interest, insurance, tax, and assessment clauses therein, the petitioner to have the privilege Of paying on account of said principal sum on any semi-annual interest day, any sum not less than five hundred dollars ( $500 ) ; and it is further Ordered, That the proceeds of said bond and mortgage shall be applied for the purposes mentioned in the petition. Enter in Rensselaer countv. FORM No. 261. Petition by Non-consenting Stockholder for Appraisal of Stock on Sale of Property and Franchises of Corporation. SUPREME COURT— Kings County. In the Matter of the Application of James J. Ennis for the Appointment of Ap- I praisers, etc., The Federal Brewing Company. To the Supreme Court of the State of New York: The petition of .Ja,mes J. Ennis respectfully shows and alleges: First. That the Federal Brewing Company is a domestic stock corporation, duly organized, and existing, under and by virtue of the laws of the State of New York, and that its principal place of business is located in the borough of Brooklyn, within the second judicial department. Siecond. That your petitioner is the holder and owner of forty-five (45) shares of stock in said corporation of the par value of four thousand five hundred dollars ($4,500). 1086 OOEPORATIONS. Third. That heretofore, and on or about the 27tk day of April, 1907, at a meeting of the said corporation, a resolution was passed, authorizing the officers thereof to sell and transfer to the New York & Brooklyn Brewing Company all the property, rights, privileges, franchises and assets of the said Federal Brewing Company, and that thereafter the said property, pursuant to said resolution, was sold, transferred and conveyed to the said New York & Brooklyn Brewing Company. ^ Fourth. That your petitioner was present at the said meeting and voted ^vith the minority against the adoption of the said resolution, and objected to said sale and transfer. Fifth. That thereafter, and on or about the 16th day of May, 1907, and within twenty (20) days after the said meeting, your petitioner caused aliotice in writ- ing, subscribed by him, to be served upon the said Federal Brewing Company, as appears by the affidavit of James F. Fisher, hereto annexed, demanding the payment of forty-five (45) shares of the par value of one hundred dollar,s ($100) each; copy of which notice is hereto annexed and made a part hereof. Sixth. Your petitioner further states that sixty (60) days have not elapsed .since the said meeting. Seventh. That the New York & Brooklyn Brewing Company is a stock corpo- ration, organized and engaged in a business of the same general character as the Federal Brewing Company. Eighth. Your petitioner therefore prays that an order be made, appointing three (3) persons to appraise the value of your petitioner's stock and designate the time! and place of their proceedings, as shall be deemed proper,, and also direct the manner in which payment of your petitioner's stock shall be made to him pur.suant to the statutes of the State of New York, in such case made and provided. JAMES J. ENNIS, Petitioner. Dated, Brooklyn. N. Y., June 14, 1907. (Add verification.) (Annexed hereto were affidavits of persons, other than petitioner, stating facts in support of his petition.) FORM No. 262. Notice of Objection to Sale of Property and Franchises. Please take notice. that I, the undersigned, the owner and holder of forty-five (45) shares, certificate No. .^., of the Federal Brewing Company, of the par value of one hundred dollars ($100) each, not voting in favor of the sale pro- posed at the meeting of stockholders, held April 27, 1907, do hereby object to the sale by you of all the property, rights, privileges and franchises or any interest therein or part thereof to the New York & Brooklyn Brewing Company, or to Frank Reynolds, or to any other corporation or person; and I do hereby serve notice upon you that I demand the payment of my stock. This notice is served upon you pursuant to the statute in such case made and provided. Dated, Brooklyn, N. Y., May 16, 1907. Yours, &o., JAMES J. ENNIS, Stockholder. PEOCEDTJRAL FORMS. 1087 To the Officers and Directors of the Federal Brewing Company: (Annexed hereto affidavits of service of above notice on the Federal Brewing Company by delivering the same to the president of said company, personally, and also by delivering a copy thereof to a person then at, and in charge of, the office of said Federal Brewing Company.) FORM No. 263. Order Granting Application and Appointing Appraisers to Appraise Stock on Sale of Corporate Property and Franchises. (Caption and title.) On reading and filing the notice herein, dated June 14, 190* that a motion would be made at a Special Term of the Supreme Court to be held in and for the county of Kings, at the court house in the borough of Brooklyn, City of New York, on the -ZSth day of June, 1907, at the opening of said court or as soon thereafter as counsel can be heard, for an order appointing three persona to appraise the value of the petitioner's stock pursuant to the statute in such case made and provided, and for such other and further relief as to this court may seem just and proper, the petition of James J. Ennis, verified June 14, 1907 ; the affidavit of Richard A. Eendick, verified June 14, 1907 ; the affidavit of James F. Fisher, verified June 14, 1907, and the notice thereto annexed, and the affidavit of Samuel E. Kelly, verified June 14, 1907, and it appearing that said petition, and the papers upon which it was ba^^d, was served on the Federal Brewing Company on June 20, 1907, and after hearing Francis A. MoCloskey, .Esq., of counsel for James J. Ennis, in support of said motion, and Thaddeus D. Kenne- son, of counsel, in opposition to said motion, and the Federal Brewing Company opposing said application on the ground that it was not made within the time within which such an application must be made under the statutes of the State of New York, and due deliberation having been had, now, on motion of Francis A. MoCloskey, Esq., attorney for James J. Ennis, the petitioner herein, it is Ordered, That the said motion be and it hereby is in all respects granted; and it is further Ordered, That John W. Weber, Esq., Samuel S. Whitehouse, Esq., and Julian D. Fairchild, Esq., be and they are hereby appointed appraisers to appraise the value of the stock of the said petitioners and the 31st day of July, 1907, at two o'clock in the afternoon of that day, and such other times as the majority of the said appraisers shall fix, are hereby designated as the time of their proceed- ings; and that the office of S. S. Whitehouse, Esq., of No. ... Montague street, and such other place or places as the majority of the said appraisers shall fix, are hereby designated as the place of their proceedings; and it is further Ordered, That any vacancy in the board of appraisers, hereby appointed, occur- ring by the refusal or neglect to serve, or otherwise, shall be filled by this court upon five (5) days' notice; and it is further Ordered, That the said appraisers, or any two (2) of them, shall estimate and certify to this court, in writing over their signatures, the value of the peti- tioner's stock as of the 27th day of April, 1907, the time of the petitioners dissent; and it is further Ordered, That the manner in which payment of the said stock shall be made by the said Federal Brewing Company to the said petitioner is hereby directed 1088 COBPOEATIONS. to be in cash within fifteen (15) daya after tlie confirmation or approval by this' court of the report, estimate and certificate of the said board of appraisers; and it is further Ordered, That the board of appraisers shall deliver one (1) copy of their report, estimate and certificate to the Federal Brewing Company, and another to the petitioner; and it is further Ordered, That the charges and expenses of the said board of appraisers shall be taxed under the direction of this court, and shall be paid by the Federal Brewing Company, and it is further Ordered, That when the said Federal Brewing Company shall have paid the amount of such appraisal, together with the costs, charges and expenses herein provided, the petitioner shall cease to have any interest in the stock described in the said petition, and in the corporate property of the said Federal Brewing Company, and that the said stock may be held and disposed of by the said Fed- eral Brewing Company; and it is further Ordered, That the petitioner and the board of appraisers may apply at the foot of this order for any other relief as may be just and proper; and it is further Ordered, That all proceedings on the part of the petitioner under this order shall be and they hereby are stayed pending the determination by the Appellate Division of the Supreme Court, second department, of an appeal from this order, by the Federal Brewing Company ; provided, however, that this stay may be vacated' unless the Federal Brewing Company shall take an appeal, perfect the same and place the same for argument upon the first calendar for appeals from orders during the October, 1907, term of said Appellate Division. Enter : S. T. M., * Justice Supreme Court. Granted, July 11, 1907, Chas. T. Hartzheim, Clerk. (The foregoing order was affirmed by said Appellate Division on the 10th day of January, 1908, and by the Court of Appeals on the 2d day of June, 1908. Matter of Ennis v. Federal Brewing Co., 123 App. Div. 691, 192 N. Y. 570.) FORM No. 264. Complaint in Action for Sequestration. SUPREME COURT— ulster County. • The Kingston National Bank ^ vs. > The James Cement Company. J The complaint of the above-named plaintiff respectfully shows to this court, that the said plaintiff is both a domestic and foreign corporation, created under the laws of the Sitate of New York, and the laws of the United States of America; that the defendant is a domestic corporation created under the laws of the State of New York. Tlie complaint further shows that on or about the 15th day of January, 1902, PROCEDURAL F.ORMS. 1089 the above plaintiff recovered against the above idefendant a final judgment in this court for the sum of $794.98, virhieh said judgment was rendered against th .• said defendant, which is a corporation created under the laws of the State of New York, for a sum of money, and the action in which the judgment was ren- dered was -founded upon the. promissory notes of the said rdefendant overdue, and which were held and owned by the said plaintiff; that said judgment was duly entered in the Ulster county clerk's office, and the-- judgment-roll therein duly filed in said clerk's office; that the execution, in duje and regular form, has, since the entry of said judgment, been duly issued to the sheriff :of the sn.'d county of Ulster, and has since been' duly returned wholly unsatisfied; that the said defendant transacts its general business in sEtid. county of.Ulster', and its principal, office is located in the town ofEsopua-in said county of Ulster; that plaintiff, therefore, demands the judgment of this .court sequestrating, the prop- erty of the said defendanty and. for a just and iair distribution thereof and of the. proceeds thereof among its fair ,and honest creditors, in , the order and in the proportion prescribed by law, in case of the voluntary dissolution of a corpo- ration; and that a temporary receiver may; be appointed, pending this action, of the property aind icfflects of the defendant, and that the final judgment to be entered herein may direct the appointment of. a permanent receiver herein of said property and effects, or for such further or other judgment or relief or decree as may be just and agreeable to equity. . : R. BERNARD, Plaintiff's Attorney. FOEM No. 265. Judgment in Action for Sequestration. {•Caption.) — — : N The Kingston National Bank ] The James Cement Company. The summons and complaint herein, having been duly served on the defendant January 15, 1904, and being also duly served on the attorney-general of the State of New York on .January 17, 1904, a copy of ■ which said summons and complaint is hereto annexed, and more than twenty days having plapsed since such servic'. and no answer or demurrer or appearance having been interposed by said defend- ant or said attorney -general ; and whereas, on January 25, 1904, after due notice to the said defendant and to said attorney-general, by an order of this court, granted at a Special Term thereof. Aiaksk Humphrey was diily appointed the temporary receiver of said defendant, and duly gave the bond required by said order, and has entered upon the discharge of his duties: Now, on motion of E. Bernard, the attorney- of said plaintiff, it is hereby ordered, adjudged and decreed, the attorney-general of the^ State of New York having, had due notice of the ap- plication for judgment, and a copy of this proposed, judgment haying been served upon him and he making no objection hereto, that the goods, property and effects of the said defendant be sequestrated, and for- a just and fair distribjition. thereof and of ' the proceeds tlieveof among -the fair and honest creditors of thedef.endant, in the order and in the i;propor.tion: prescribed by law in case of, the yoluntary 69 1090 cokpobatiojsts. dissolution of a corporation; that said Amasa Humphrey, of said city of Kings- ton, be and he hereby is appointed the permanent receiver of the defendant and its stock, property, franchises, bonds, contracts, things in action, and effects of every kind and nature, with the usual powers and duties, according to the laws of the State, and the practice of this court, upon his executing and acknowledg- ing in the usual form, and filing with the clerk, for the county of Ulster, a bond to the people of the State of New York in the penal sum of $20,000, with at least two sureties, freeholders or householders of the State of New York, who shall severally justify, conditioned for the faithful discharge of the duties of receiver, and for the due accounting for all moneys or property of every kind received by him as such receiver, which bond is to be approved as to its suffi- ciency and manner of execution by a justice of this court; that upon said filing, so approved, said receiver proceed forthwith to collect and receive the debts, demands and other property of said defendant, and to preserve the property and the proceeds of the debts and demands collected, to sell, dispose of, and convert into money all other property, real and personal, of said defendant, to collect, receive and preserve the proceeds thereof, and to maintain any action or special proceeding for either of those purposes; that the defendant, its directors, oiB- eers, agents and servants, and all persons whomsoever, having notice of this judgment, be and they are hereby enjoined from in any manner interfering with said receiver in the discharge of his duties as such, and from collecting any of the debts or demands, and from paying out, disposing of, or in any way inter- fering with, transferring or delivering to any person any of the money, property, or effects of the said defendant, except to deliver the same to the said receiver; that, on the demand of said receiver, the said defendant deed, convey, transfer, set over, assign or sell to said receiver, any and all its property, real and per- sonal; that the said receiver shall deposit all funds of the defendant coming in his hands not needed for immediate disbursement in the Ulster County National Bank of Kingston, N. Y. C. R. INGAIyLiS, Justice Supreme Court. FORlffl No. 266. Complaint in Action for Dissolution. SUPREME COURT— Herkimer County. The People of the State of New York ^ vs. y E. Remington it Sons. The plaintiff in this action, by Denis O'Brien, attorney-general, as and for their complaint herein, upon information and belief, allege: That in or about the year 1861, the said defendant was organized and incorpo- rated as a manufacturing corporation, under the Act of the Legislature of the State of New York, passed February 17, 1848, entitled "An act to authorize the formation of corporations for manufacturing, mining and mechanical purposes," PEOOEDUBAL FORMS. 1091 and the acts amendatory thereto, under the corporate name of E. Remington & Sons, and that ever since its incorporation it has heen and is now located and doing business at Ilion, Herkimer county. New York, under said corporate name; that since its incorporation as aforesaid, the said defendant has been extensively engaged in the manufacture and sale of firearms arid other articles; that for some years last past the said defendant has been embarrassed financially in its said business; that more than a year ago it became and was_ unable to pay and discharge its debts and liabilities in full as they become due, and became and was insolvent; that for at least one year last past the defendant has been, and has remained, and is now, unable to pay and discharge its debts and liabilities as they become due, or in full, and during said year has been, and has remained, and is now insolvent; that for at least one year last past the said defendant has been unable to pay and discharge its notes and other evidences of debt, and during said year has neglected to pay and discharge its notes and other evidences of debt, and is now unable to pay and discharge the same; that the said defend- ant is the owner and has in its possession a large quantity of real and personal property; that it is largely indebted to divers persons, firms and corporations, some of which indebtedness is past due; that it cannot dispose of its said prop- erty to pay such indebtedness, and it is not and will not be able to pay the same. That several suits for debts due have been commenced against the said defend- ant, and the time for obtaining judgments therein will expire in a few days; that if such judgments are allowed to be obtained and executions issued thereon, the property of the defendant will be levied on and sold at a great sacrifice, as plaintiffs verily believe, and such judgment creditors will obtain a preference over the other creditors of the defendant, and such other creditors will be greatly injured by the sacrifice of the defendant's property upon forced sales upon such executions; that the said defendant, in its present condition of financial em- barrassment and insolvency, is not able to and cannot continue its corporate business, and that it is for the best interests of the creditors and stockholders that the corporation be dissolved and a receiver be appointed and its property distributed among its creditors according to law. Wherefore the plaintiff demands judgment: First. That the defendant corporation be dissolved and its rights, privileges and franchises forfeited. Second. That a receiver of the property and effects of the corporation be appointed pursuant to the provisions of the statute, with all the power and authority conferred by law, and subject to all the duties and liabilities imposed upon receivers in such cases. Third. That the defendant, its trustees, directors, managers and other officers be restrained by injunction, during the pendency of this action, from collecting or receiving any debt or demand, and from paying out or in any way transferring or delivering to any person any money, property or effects of the said corpora- tion, except by express permission of the court; and from exercising any of its corporate rights, franchises and privileges of the corporation, except by express permission of the court. Fourth. That the plaintiffs may have such other and further judgment or relief in the premises as may seem to the court proper to grant. Fifth. That the plaintiffs recover the costs of this action. D. O'BRIEN, Attorney-General, Plaintiff's Attorney. 1092 GOEPORATIONS. ^, FOEM No. 267. Complaint in Action for Dissolution. SUPREME COURT--Couiity of Queens. The People of the State' of New YorTc vs. The Mutual Brewing Co. i The People of the State of New York, the plaintiff in this action, by Theodore E. Hancock, Attorney-General, for complaint herein, allege upon information and belief the following facts constituting their cause of action:. First. At the several times herein referred to, the defendant The ^ Mutual Brewing Company was and still is a domestic manufacturing corporation' diily ■ organized under the laws of the State of New York, under and by the corporate name above mentioned, and has its principal plate of business at College Priint. in the county of Queens, in said State. Second. That the defendant has become insblvent aiid is unable to pay its debts in full, and has violated tne various provisions of the statutes and the acts amendatory thereof by or under which it was incorporated, and the 'acts of the I^egislature binding upon it. That the debts and, liabilities of the said defendant exceed the total amount of assets and the value of all its property by' over $50,000.00; , and that said- defendant has been and remained insolvent for more than two years last past. Third. That the defendant The Mutual Brewing Company,- haS neglected and refused for more than one year last past, and still neglects and refuses, to pay and discharge divers and Various of its notes and other evidences- of debt. - Wherefore, the plaintiff demands judgment dissolving' the' defeiidant corporation and forfeiting its corporate righis, privileges and franchises, and perpetually enjoining and restraining the defendant, its trustees, officers, agents and receiv- ers from exercising any corporate powers,' privileges and franchises, and' from transferring, disposing of, and in any manner interfering with its property and assets, and the plaintiffs pray that during the pendency, of this action an order may be granted restraining, the defendant, its officers and agents, from transact- ing any corporate business or in any manner transferring, disposing, of or inter- fering with any of its property or assets, and that a temporary receiver of such property and assets be appointed with all the powers and duties, of, temporary receivers in such cases, . and that an injunction order, restraining creditors and all , persons from commencing any suit or proceeding aga.inst , the .defendant, , or taking any proceeding in any action already commenced, may be granted, and that upon the dissolution of, the defendant, a permanent receiver of its property and assets be appointed, with all the rights, powers, duties and liabilities of- permanent receivers in such cases,;' and, that the pla,intiff may have such other and further relief as to the court may seem just and, proper to, grant, with the costs of this action. .-. T. E. HANOOGK, Attorney-General, Plaintiff's Attorney. PROCEDURAL VoRMS. 1093 FORM No, 268. Judgment in Action for Dissolution. At' a Special Term of the Supreme Court of the State of New York, held at the court house in White Plains, N. Y., on the 16th day of May, 1890. Present— Hon. J. 0. Dykman, Justice. The People of the State of New York, Plaintiff, vs. The Mutual Brewing Company, Defendant. The summons and complaint in this action having been duly Servi^d on the de- fendant, The Mutual Brewing Company, ■ Now, upon I'eading and filing said sum- mons and complaint, together with due proof of service thereof on the defeindunt and on motion of T. E. Hancock, Esq., Attorney-General, and J. Newton Ficro, Esq.; of counsel for the plaintiff, and after hearing Stanley W. Dester, repre- - senting Albert Schwill & Co., claiming to be creditors of the receiver in opi)Osi- tiou, and after hearing C. J. Hall and W. W. Tompkins, representing' C. F.Tiel- jen, trustee, and the West Side Bank and S. K. Nester. r, . It is adjudged' and decreed that the defendant The Mutual Brevving Conipany, be and same is hefeby dissolved, and its' corporate rights, pfi'vileg'es and fran- chises foifeited;- and that a fair and jiist distribution of ' the' property thereof, and of the proceeds thereof, among its fair and honest creditors, in the order and in the proportion prescribed by law be had. And it is further adjudged and decreed that the defendant The MTitual Brew- ing Company, its trustees, directors, managers and other officers, attorneys and agentsy be and each of them hereby is forever restrained and enjoined from exer- cising any of the corporate franchises,' powei-s, rights or' privileges' of the defend- ant, and from collecting or receiving' any debts or derdands belonging to or held by the defendant; and-from paying out or in any manner interfering with, trans- ferring or delivering to any person- any of thfe deposits, mmiey^, securities, pfdp- «rty or effects of the said defendant, or held by it.. ' ' ' That Edward Duffy be, and he is hereby continued"as receiver of all the prop- erty and effects, real and personal, of the' said (roi'pdtation Me Mutual B'rewing Company, and of all the property held by it, and that he is hereby appointed permanent receiver thereof with the usual pbwert' and dutiefs enjoyed and exer- cised by receivers according to the practice of this court, and of the statute in such case made and provided, and he is hereby authorized to take possession of and Beqiiestrate the property, things ' in action and effects, real 'and perkohal, of the defendant herein, arid to take and hold all property lield by or in 'the possession 'Of said defendant corporation, subject to provisions hereinafter made. And it is further ordered and decreed, that the said receiver shall take title to su'ch property and sell the same as now subject to the mortgage upon real estate belonging to The Mutual Brewing Company made by it in favor Of Cor- nelia Li ■ Marshall, for the sum of fifty thousand dollars and Interest, and also subject to a certain iiibftgage upon a certain other portion of the real 'estS,te belonging to said Mutual 'Brijwing Company, which Tnortgage "bears date 'the 9th day of December, 1891, and upon which by a decree of the Supreme Court made 1094 COKPOKATIOJTS. in an action in whicfi Christian F. Tietjen, as trustee, was plaintiff, and Tha Mutual Brewing Company and others, defendants, there was adjudged due by said decree on the 13th day of February, 1896, the sum of $28,753.83; and also subject to the lien of a certain chattel mortgage made by the said Mutual Brew- ing Company on the 2d day of December, 1891, upon certain personal or chattel property of the said Mutual Brewing Company, and by which by the said decree so entered on the 13th day of February, 1896, has been declared to be a fii'st lien upon the chattel property therein described; and subject also to the" lien upon the personal property of The Mutual Brewing Company, which the West Side Bank and Samuel K. Nester have obtained by virtue of the issuing of executions upon the several judgments in favor of the West Side Banli and Samuel K. Nester against The Mutual Brewing Company, subject to the right of the said creditors to proceed under the decree and executions as heretofore by order of the court has been granted to them. The said Edward Duffy, as receiver, after givipg three weeks' public notice of the time and place of said sale by publishing such notice twice each week for said three weeks in a newspaper published in the county of Queens, and in one newspaper published in the city and county of New York, be, and he hereby is, authorized and directed to sell at public auction at the brewery of The Mutual Brewing Company, in the village of College I'oiiit, Queens county. Long Island, New York,- all the property and assets of The Mutual Brewing Company, and of one Edward Duffy, as receiver of The Mutual Brewing Company, appointed in the action of Paul Halpin v. The Mutual Brewing Company and others. That the sale of the assets of The Mutual Brewing Company, or receiver thereof, as herein provided, shall be subject to the liens hereinbefore specified. It is further adjudged and decreed that such further application may be made to this court under the provisions of this decree or order as the receiver may be advised is proper and necessary for his instruction in the management and conduct of his trust. It is further adjudged and decreed that no application shall be made to any court, nor shall any action of the court be asked or suffered by the receiver relative to or in any way connected with the duties of said receiver, or the funds or assets of the defendant above mentioned, or their transfer, sale or delivery, unless notice of such application be first given to the attorney-general of tlie State of New York, and copies -of all orders made or procured shall be promptly served on the attorney-general as required by law, and full power, is hereby con- ferred upon the said receiver to institute and maintain actions and suits at law in any court or courts having competent jurisdiction for the collection of debts due to the defendant and the enforcement of any rights relating to the said corporation, its property and assets. It is further adjudged and decreed, that all money of said defendant, not needed for immediate disbursement, be immediately deposited by said receiver in People's Trust Company, Brooklyn, to the credit of said receiver, to be held by said last mentioned company subject to the further order of the court, and said money so deposited, as aforesaid, with said company shall not be delivered over by it, except subject to and in pursuance of the order of this court. And it, is further ordered, that all persons whosoever and especially creditors of said defendant, except C. F. Tjetjen, the West Side Bank and S. K. Nester, be enjoined and restrained from commencing any action or proceeding against said defendant, or from taking any further proceedings in any action or proceed- PROCEDUEAL FORMS. 1095 ing already commenced, except where leave of the court has been hereinbefore granted. And it is further adjudged, that the plaintiff recover of the defendant The Mutual Brewing Company the sum of one hundred dollars costs and disburse- ments of this action, which said sum the said receiver is hereby directed to pay to the attorney-general. And it ia further ordered, adjudged and decreed, that the sale of the assets of such corporation shall be forthwith made and the receiver be and he hereby is authorized to continue the business until the sale thereof as hereinbefore pro- vided, and that the receiver may charge such property as is not covered by the said liens to an amount not exceeding three thousand dollars for the purpose of preserving the property and carrying on the business, such charges to be sub- ject to and subordinate to said liens. (Signed.) J. 0. DYKMAN, J. S. C. FORM No. 269. Complaint in Action to Annul Corporation. SUPREME COURT— State of New York. The People of the State of New York ^ vs. L The North River Sugar Refining Company. I The People of the State of New York, by their attorney-general, upon leave of court duly granted in this their complaint, on information and belief allege; 1. For a first cause of action, that defendant is a corporation created and or- ganized under and pursuant to the act of the Legislature of New York passed February 17th, 1848, and entitled "An act to authorize the formation of corpo- rations for manufacturing, mining, mechanical, and chemical purposes," and the acts amendatory thereof; that defendant's certificate of incorporation filed on or about the 10th of February,: 1865, declares its name to be " The North River Sugar Refining Company," its place of business in the City of New York, and its object the manufacture and sale of sugar, syrups and molasses. That in violation of law and in abuse of its powers and in the exercise of privileges and franchises not conferred upon it, defendant, on or about the first of October, 1887, in the City of New York, together with the other subscribers thereto, en- tered into and became a party to and carried out the following agreement, namely : (Insert agreement.) That thereafter and under and pursuant to the provisions of said agreement, the capital stock of defendant was transferred to said board " The Sugar Refin- ing -Company," and in lieu thereof certificates were issued by said board. That pursuant to said agreement such of the parties thereto as were not then incorpo- rated became corporate bodies and their' capital stock was transferred to said board and certificates issued in lieu thereof; that the greater part in number and value of said certificates is owned by the members of said board; that by meanfi 1096 COBPQKATIONS. of said agreement a-nd the powers thereby conferred upon the ■ said board, said lx)ard monopolizes the manufacture and sale of refined sugar in the State of New York, and is enabled to control at will the production and price of said sugar in said State and in -.the United States. That_ in exercise of the powers coaf eired by said agreement, said board, controls the. action .of defendant ajjd the otber corporations, parties to said agreement in the conduct 0|| their business and con trols a;jd regulates the production and price of refined su^ar in the State of New York and, in the United States. That in -the exercise oi said powers said board has limited the production and increased . the price of said sugar in said State and in, said United State*, and that said agreement constitutes a dom- . bination to do an act injurious to trade and commerce, to which combination defendant is a party. , r, , ... , ' _ • .s-.' •■ 2, For another and separate cause of action, plaintiffs repeating: the allega- tions of the preceding count, aver that fur and during the year 188S, defendant wilfully • neglected and omitted, and still wilfully neglects and omits, .to make, lile and publish any reports as prescribed and required bj' section twelve of the act by and under which defendant was created a corporation. 3. For another and separate cause of action, plaintiffs repeating the allega- tions of the first above count, kver that in December, 1887, defendant went out of business and ,ce,a?e.d its operations and thenceforth to.tjie present time omitted and neglected to refine or manufacture or sell sugar, syrups or molasses, and Jias failed and still fails to do any business or to exercise its powers. Wherefore, plaintiffs demand judgment that defendant, The North River Sugar Refining Company, be dissolved, its charter vacated and its corporate existence annulled. That it be enjoined from acting as a corporation, and a receiver of its prop- erty be appointed, and for such other and further relief as may be appropriate, with costs. ■■-'-•'-■'.'■ CHARLES F. TABOR, Attorney-General, Plaintiff's Attorney. FORM iSTo. 270, Petition and Schedules in Proceedings for Voluntary Dissolution. In tiio Matter of tlie Vbluntarv Disso- | lutifin of the Combustion Utilities Com- v pany. * j To the Supreme Court of the State of New York, County of New York: The petition of Paul R. Jones, Frank W. Fruauff, Warren W. Foster, Louis F. Musil, Charles T. Brown and Carl B. Gilbert respectfully shows to this court: 1. That your petitioners : are a majority of- the directors having the manage- ment of the concerns of the Combustion Utilities Company, a corporation organ- ized and. existing under and by virtuei of the laws of the State of New Y.oi"k, to wit, under the Business Corporations Law. 2. That your petitioners have discovered thatthe stock, effects and other prop- erty, of said cor|)orati6h are not sufficieiit to pay all juat demands for which it is liable or to afford a reasonable security to those who may deal with it. That PBOCEDUEAL FOBMS. 1097 the same axe not sufficient to longer carry on the business of the corporation or carry out its charter purposes. That the stock of the corporation is equally divided into not more than two independent Ownerships or interests; and that one-half of the stock of the corpo- ratib'n is owned by persons favoring the course of part of the directors and one- half thereof is owned by persons favoring the course of the other directors. That your petitioners ■ deem it beneficial to tie interests of the stockholders that the corporation should be dissolved, and are induced to desire its dissolution for the reasons stated in the precediiig paragraphs, and for the furthsr reasons stated forthwith, namely, that the corpofatibri is now doing and has done no business nor has it been able to do business for over one year past, and has been for a much longer period insolvent and is now so hopelessly insolvent (as more particularly appears from Schedule "A" Hereto annexed and made a part of the petition) that it is neither practical nor possible to resume "business; that the corpbration has no moneys with which to pay State or city taxes as the same may- become due; that the stock of the corporation is equally divided into not more than two independent ownerships or interests; that all efforts on the part of one of said interests to induce the other to co-operate in the furtherance of the charter purposes of the corporation have failed, and instead of co-operating the said other interest (though often requested) for more than a year last past has remained away from the stockholders' meetings and thereby has successfully prevented special a:nd annual meetings of stockholders, and still continues in like manner to prevent The holding of the same; that, though regularly called from time to time, no annual meeting of stockholdfefs has ever been held because of the non-attendance of a majority of the stockholders at any such meeting; that by reason of the imiction of the said other interest, all endeavors to continue the business of the ' dbrpbration have been thwarted,' and the credit of the corpora- tion has been so far affected as to render impractical if not impossible the re- sumption of business; that the directors representing the owners of one-half of the stbck "have neglected and refused to attend meeting,, though duly and regu- larly notified; that the corporation was organized for the development and iti- stallation of crtain patents and processes, and the installation thereof has not been successful, and the corporation has been subjected to many claims for damages, and suits have been threatened thereon as Hereinafter appears from Schedule " A.'' 3. That the principal office of the said corporation is located at 60 Wall street, Borough of Manhattan, New York City. 4. That your petitioners have hereunto annexed and made a part of this peti- tioii a schedule marked "A," containing a statement of the matters required by chapter 23, article 9, section 174, of the Consolidated Laws, as far as your peti- tioners know or have the means of knowing, the same. Wherefore, your petitioners pray for the final order of this court dissolving the c6rp6ratioh and appointing a receiver of its property and effects, and for such other arid further relief as may seem just and proper. Dated, " (Add verification.) Petitioners. ScnEDtTLE " A." 1. A full and true account of all the creditors of the cbrpciration. Combustion Utilities Company, and of all unsatisfied engagements entered into by, and sul)- sistirig against the 66rpoi;ation, are as follows: (Recitals.) 1098 CORPORATIONS. 2. A statement of. the name and place of residence of each creditor, and of each person with whom such engagement was made, and to whom it is to be per- formed, is as follows: (Recitals.) 3. A statement of the sum owing to each creditor or other person specified in the last subdivision, and the nature of each debt, demand or other engagements is as follows: (Recitals.) 4. A statement of the true cause and consideration of the indebtedness to each creditor is as follows: (Recitals.) 5. A full, just and true inyentory of all the property oi the said Combustion Utilities Company, and of all the books, vouchers and securities relating thereto, is as follows: (Recitals.) 6. A statement of each incumbrance upon the property of the said corporation by judgment, mortgage, pledge or otherwise: (Recitals.) 7. A full, true and just account of the capital stock of the corporation, specify- ing the name of each stockholder, his residence, the number of shares belonging to him, the amount paid in on his shares and amount still due thereupon: ( Recitals. ) FORM No. 271. Petition in Proceedings for Voluntary Dissolution. (Title.) To the Supreme Court of the State of ^few York: The petition of John B. Hackett, Alrick M. Mann and Edward A. Grenzbach, constituting all the directors of the J. B. Hackett Company,. respectfully shows: 1. That J. B. Hackett Company is a corporation organized under the Business Corporations Law of the State of New York, and that its principal place of busi- ness is located in the city and county of New York. 2. That your petitioners constitute all the directors of the said corporation. Their names and residences are as follows; John B. Hackett, Richmond Hill, New York City; Alrick H. Mann, Richmond Hill, New York City; Edward A. Grenzbach, No. 214 West 122d street, Manhattan, New York City. 3. That the purposes for which said corporation was organized was the manu- facture and sale of grates and grate bars and high-grade steam specialties. The amount of its authorized capital stock is fifteen thousand dollars ($15,000). The amount issued and outstanding is eight thousand five hundred dollars ($8,500), of which one thousand dollars ($1,000) is in the company treasury. 4. That your petitioners have discovered that the stock, effects and other prop- erty of said corporation are not sufficient to pay all just demands for which it is liable or to afford a reasunable security to those who may deal with it. That the business for the last two years has shown a steady loss, the loss for the year ending December 31, 1909, being about two thousand two hundred dollars ( $2,200 ) . That the assets of the said corporation do not, exceed in value six hundred and sixty -three dollars and thirty -nine cents ($663.39), and that the amount due creditors is over three thousand four hundred dollars ($3,400), mak- ing a deficiency of over two thousand five hundred dollars ($2,500). That the creditors are pressing for payment. That the corporation is without funds to pay them, and that unless a receiver is appointed to take possession of and preserve the assets of the corporation and divide them equally among the creditors, they will be seized and sold in some legal proceeding instituted for the PBOCBDUBAL FOBMS. 1099 benefit of one or more creditors and plobably sacrificed. That for these reasons your petitioners deem it beneficial to the interests of the stockholders that tne said corporation should be dissolved. 5. That by resolution of the board of directors of said corporation passed Jan- uary 10, 1910, these iacts were recited and the officers and directors of the corpo- ration were directed to institute proceedings for the voluntary dissolution of the corporation and for the appointment of a receiver of its assets, to insure their' 'distribution among the different creditors and to prevent such assets being seizeu by legal proceedings in actions which may be brought by any of such creditors. 6. That your petitioners have annexed to this petition a schedule marked " Schedule A," which in its different subdivisions contains the statement required by the provisions of the General Corporation Law, as far as your petitioners know or have the means of knowing the same. Wherefore, your petitioners pray for a final order of this court dissolving the said corporation and appointing a receiver of its property and effects, and for an injunction restraining the institution and prosecution of any action at law against it, and for the appointment of a temporary receiver of "its property until the hearing and determination of such proceedings and the appointment of a permanent receiver. Dated, (Add verification.) Petitioners- (Here insert schedules.) FORM No. 272. Order to Show Cause Before Referee with Injunction in Voluntary Dis- solution Proceedings. (Title.) (Special Term Caption.) On reading and filing the petition of John B. Hackett. Alriek TT. Mann and Edward A. (Jrenzbach, director of the J. B. Hackett Company, a corporation organized' under the Business Corporations Law of the State of New York and having its principal of&ce at 5-7 Beekman street, in the Borough of Manhattan, City of New York, duly verified by the petitioners on the 11th day of Jaiiuary, 191Ci, and the schedule thereto annexed ; from which peti- tion it appears that the case is one of those specified in section 170 of the Gen- eral Corporation Law; and it further appearing to the satisfaction of the court from said petition that the said corporation is insolvent; and on reading and filing notice of this application dated January 12, 1910, with proof of due service thereof and of the said petition and schedule, and of a copy of this order upon the Attbrriey-Gerieral ; and after hearing George W. Wingate, Esq., of counsel for the petitioners, and the Attorney -General not opposing; now, on motion of Winga,te & Oullen, attorneys for the petitioners, it is Ordered, that all persons interested in said corporation show cause before this court, before Daniel F. Cohalan, Esq., who is hereby appointed referee for that purpose, at his office No. 2 Rector street, in the Borough of Manhattan, City of New York, on the 15th day of Mafch^ 1910, at 2 o'clock in the afternoon, why the said corporation should not be dissolved; and it is further Ordered, that a copy of this order be published at least once a week for three 1100 CORPOKATIONS. weeks immediately preceding the timeffixed hereia for showing cause, in the New York, Law Journal of New York, wliieh paper is published in; the eity and county of New York; and it is further , ;, ; Ordei-ed, that until the hearing and determination of this application all credit- ors of said corporation be and they are hereby enjoined from, instituting any action or Ipgal proceeding against said corporation, or interfering with its prop- erty: and assets. ■ ..-'■: .*• ■. Justice of the Supreme Court. rORM No. 273. Order to Show Cause, Appointing Temporary Receiver, etc., in Volnn- tary Dissolution Proceedings. (Special Term Capiion. ) In the Matter of the Voluntary Disso- lution of the Buffalo Exposition Com- pany. Upon reading and filing the petition of {Jeofge F. Brooks and Robert Walter, duly verified on j- the SQth.day of June, 1909,. whereby .it appears that .the said petitioners constitute a majority of the directors of the Buffalo Exposition Com- pany, that the said company is a corporation organized under and existing by virtue of the laws of. the State of New York, and that said company is doing business at Buffalo, Erie county, N. Y. ; that said company is insolvent, and its property is not sufficient to pay all its just debts for whicli it is, liable and to afford reasonable security to those w.ho deal witji it ; that said company owns a lease of real estate and certain personal property, consisting, of exposition booth, improvements, etc., a,nd is indebted to divers persons in large amounts, the, greater pa,rt of which is .past due,, an(^|,said company is ,beii)g pressed for payment and has no available funds with which to pay its debts and carry on its business, and is unable to procure funds therefor; that actions are about to be commenced against the said company by|^ts creditors,, for the collection of debts against the saiid .company and a lien Jias been filed. .against the property of the said com- pany, and that if the property of the company is levied upon and sold under execution, said property will be exhausted and there will not be enough, to satisfy claims of creditors in full and that it will be beneficial to. the interests of the creditors and stockholders that the said company be dissolved and jts property placed in the custody of the court, and said petition further containing a schedule showing, the assets and liabilities of the said corporation, and- other matters re- quired by statute to be shown, and also stating reasons why an injunction should be granted restraining the creditors from suing the said corporation, and it also appearing that it will be for the best interests of the stockholders that a tem- PEOOEDUBAL FORMS. 1101 porary receiver, asked for therein, bpi. appointed to conduct the business of the company in his discretion, subject to the order of the court; and upon reading and filing the proof of service of notice of this application -upfon the Attorney- General of the State of New York, and said Attorney-General ;Qf the State oi New York appearing in open court by his representative. Waiter F. Heifhelna, of the city of Buffalo, N. Y., it is ,, , ■ Ordered, that all persons or creditors interested in said Buffalo Exposition Company, show cause before William G. Kilhoffer, who is hereby appointed referee for that purpose, at his office No. 308 Brisbane Building, in the city of Buffalo, N. Y., on the 1st day of September, 1909, at ten o'clock in the forenoon of that date, why the said corpofalSon should not be dissolved pursuant to the rule and practice of this court; it 'ia further- Ordered, that a copy of this order be published in tlie Buffalo Express, a news- paper published' in the city of Buffalo, N. Y., and in the Buffalo News, a news- paper published in the city of Buffalo, N. Y., once a week in each of the three weeks immediately precfedirig the said 1st day of September, 1909; it is further Ordered, that all creditors interested in the said corporation be and they are hereby enjoined and restrained from commeiicing any suit against the said cor- poration, and from further prosecuting aiiits already commenced; and it is further Ordered, that Eugene Warner of the city of Buffalo, N. Y., be and he is hereby appointed temporary receiver of the said corporation, pursuant to section 182 of the General Corporation Law, and that such temporary receiver immediately take possession of the property and effeetSj real and personal of every nature, kind and description, of said corporation, and hold and administer the same according to law, and that before the said receiver takes possession of such prop- erty or enters upon the discharge of his duties, he execute and file with the clerk of Erie county a bond to the People of the State of New York, in the penal sum of twenty- five thousand dollars ($25,000), conditioned for the fa'ithful dis- charge of his duties as such receiver, said- bonds to be approved by a justice of this court i , it ia further . . • ■ , . . - Ordered, that the Columbia National Bank be and the same is hereby desig- nated as the place of deposit, wherein the funds of the said corporation not needed for immediate distribution shall be deposited; it is further Ordered, that such temporary receiver in the performance of the duties of his trust act in all things subject to the order pf this court;, it, is further Ordered, that said temporary receiver have permission and he is hereby au- thorized and empowered to continue and carry on the business of the said com- pany, in the conducting of entertainments, expositions, etc., until the further qrder of the court, provided, however, that no indebtedness shall be incurred by said temporary receiver for that purpose, except the necessary help and sup- plies, without the further order and express authority of this court; and it i» further -;-■■- (Ordered, that the receiver above named be empowered to borrow the sum of three thousand , dollars ($3,000), in his discretion, such sum so borrowed to be a lien on the funds of the receiver, coming in his possession. Granted, Dated, , 1911. : , Special Deputy Clerk. 1102 COKPOKAtlONS. FORM No. 274. Notice to Attorney-General in Voluntary Dissolution Proceedings. SUPREME COURT— New York County. In the Matter of the Application of the J. B. Hackett Co. for Voluntary Dissolu- tion. Sir. — Please take notice that on the petition of the directors of the, J. B. Hackett Company, verified January 11, 1910, and the schedule thereto annexed, copies of which are herewith' served upon you, we shall apply at a Special Term, Part II thereof, of the Supreme Court to be held in and for the county of New York, at the County Court House in the borough of Manhattan, City of New York, on the 17th day of January, 1910, at 10:30 A. M., for an order requiring all persons interested in said corporation to show cause why the said corpora- tion should not be dissolved and an injunction granted against the Institution or prosecution of any action against said corporation, a copy of which proposed order is served upon you herewith. , Dated, January 12, 1910. - '' Yours, etc., WINGATE & CULLEN, Attorneys for Petitioners. To Edward R. O'Malley, Esq., Attorney -Greneral. FORM No. 275. Referee's Report in Voluntary Dissolution Proceedings. (Title.) To the Supreme Court of the State of New York: Pursuant to an order of this court made and entered herein on the 20th day of January, 1910, requiring all persons to show cause before me, as referee, why the above-named corporation should not be dissolved, I do hereby respectfully report to this court as follows: I first took and subscribed the oath prescribed by law, which said oath is hereby annexed. Upon the reference before me I have been attended by Laurence H. Doorly, Esq., of counsel for Wingate & GuUen, Esqs., attorneys for the petitioners, arid no person or persons appearing in oppositibii, 1 thereupon' proceeded with the hearing and determination of the matters referred to me by said order, and have heald and exarnilied the witness arid considered the testimony and evidence pro- duced by and on behalf of the petitioners, which' testimony duly subscribed by the witness is hereto annexed; and upon said testimony and evidence I do hereby determine and report the facts as follows: First. That notice of this hearing was duly served upon the creditors of the J. B. Haclcett Co., and advertiaenient of aforesaid order to show cause duly com- plied witli. PBOCEDXTBAL FOEMS. 1103 Second. The J. B. Haekett Co. is a domestic stock corporation, oiganized and existing under the Business Corporations Law of the State of Xew York, its certificate of incorporation having been filed in the oifioe of the Secretary of State on the 31st day of August, 1907. Third. The general purposes for which said corporation was organized are to engage in the sale of steel specialties, steam valves, grate bars and steam traps. Fourth. The authorized capital stock of said corporation is fifteen thousand dollars ($15,000), of which eight thousand five hundred dollars ($8,500) was issued and one thousand ($1,000) of the same returned to the company as treasury stock. Fifth. The number of directors of said company is three and the names of the said directors are as follows: J. B. Haekett, Alrick H. Mann and Edward A. Grenzbach. Sixth. The petition herein was signed and verified by a majority of said ■directors, to wit, all of the same. Seventh. That the petitioners are the owners of all the outstanding capital stock of the company. Eighth. I find that the allegations set forth in the said petition for dissolu- tion are true, and that the stock effects and other property of said corporation are not sufficient to pay all just demands for which it is liable, and I deem it beneficial to the interest of the stockholders that the corporation shall be dis- solved and that such dissolution will not be injurious to the public interests. Ninth. The following is a statement of the effects, credits and other prop- erty, and of the debts and other engagements of said corporation: The company owns no real estate and transacted business at an office. .- Statement of Liabilities. Bills Payable^Note discounted Nov. 3, 1909, 3 mos. Title Guarantee & Trust Co., Brooklyn branch (since making of the petition taken iip by and held by an indorsBr, H. F. Haekett) : $300 00 H. F. Haekett, loan April 24, 1909 500 00 ,J. B. Haekett— Money loaned $675 00 Salary as president . 618 50 1,293 50 New England Roller Grate Co. — Goods purchased i .. . . ; ■■■^. ... . . ..; 47 20 John .J'.: . Lindstrpm^77 . . , , ,, .,.,[,:;■..-, . , Goods purchased . . 189 87 Watts Kegulator Co. — Goods purchased 267' 79 The Kelly I'drV. & Mach. Co.— Goods purchased 112 72 Cooke- Wilsoii Electric Supply Co.^ Goods purchased (subject^ to allowance) ' .329 14 Engineers' List Publishing Co.^- '*■"■' 'iidvertisin^ . '. : \. ;";."V; 286 47 Smith Bros. Publishing Co. — Advertising 16 00 1104 COEPOEAirONS. Dougherty Fdry. Co.— . Goods purchased ,. i, ;,..,....,.. , . .52 38 Westinghouse Electric & Mfg. Co.-^ ^ :: . ■.., Claim arising from return of goods purchased^ — claim being ad- justed . . i .: ..t 7 22 Euhland & Whiting Co. — > Lease of office to May 1, three (3) months at .$30 90 00 Florence John, stenijgrapher and clerk — Wages for remainder of January, three :(3) weeks at .$S 24 00 Total $3,516 29 StTATEMENT OF ASSETS. Cash on hand, or in bank $153 22 Accounts due: . : ; ; , Meyer Ice Machine & Engineering Co., 1 Montgom- ery street, Jersey City, N. J. ....... $52 50 Port Richmond Hygienic Ice & Cold Stge. Co., Port Richmond, S. I., N. Y , 50 00 W. G. Wild, Hunting, L. I 68 75 New Western Hotel, 47th street and Madison ave^. nue, N. Y 3 00 D. L. Holbrook,. Point Pleasant, N. J., or No. 17 Battery place, N. Y , 5.1 00 225 26 Stock on hand $52 05 Sundry office flxtures 223 09 275 14 Total , $65.3 61 I, therefore, respectfully recommend that the prayer of the petitioners be granted, and that a final order herein be granted dissolving the said jCorpqration. Dated ., 1910. Referee. , FORM No. 276. Notice of Filing Referee's Report in Voluntary Dissolution Proceedings. (Title.) Please Take Notice, that the report of Daniel F. Cohalan, Esq., appointed referee by order of this court, dated the 20th day of January, 1910, a ^copy of which is hereto annexed, was filed in the office of the clerk of this court, in the County Court House, borough of Manhattan, City of Ne>y York, on the 14:th day of April, 1910. . To the Attorney-General of the State of New York. (Service of a copy of the above notice of filing and of annexed report of referee is this day admitted.) Dated, , 1910. PBOCBDUEAL FORMS. 1105 FOEM No. 277. Notice of Motion to Confirm Report of Referee and for Order of Dissolution. (Title.) ' Please Take NotiSe, that upon the petition herein verified the 11th day of January, 1910, the order to show cause granted therieon the 20th day of Jan- uary, 1910, and the report of Daniel F. Cohalan, Esq., referee herein, dated the 13th day of April, 1910, and filed in the office of the clerk of this court on the 14th day of April, 1910, copies of Which are herewith served upon yduj and upon all the papers and pr_ Ordered, that all parties interested in the Knoxboro Canning Company, be and they; are hereby enjoined from' in any way using, controlling, interfering with or incumbering the said company's property, and from collecting any debts due said company, or paying olit any money belonging to said company, until the further order of this court; it is further ' ' Ordered, that the petitioners recover their costs and disbursements of this proceeding, and "that the amount thereof be paid by the said receivers out of the moneys that niiy Come into their hands, the samfe to be taxed by the clerk. ■ Enter: ' ' ' ' FORM Wo. 280. ' Order Appointing Temporary Receiver in Sequestration. (Caption.) The Kingston National Bank ; -' ,vs..^ , , ■ , The James Cement Company. On reading and filing the complaint herein, duly verified January 15, 1887, and the notice of motion herein, with proof of the service of said complaint and said notice of motion on the defendant herein, and on Denis O'Brien, attorney- general of the State of New York; Now, on motion of E.. 'Bernard j' the. attorney for the ahove plaihtifl, no one a;ppearing in Opposition thereto, it is ordered that Amasa Humphrey; of the city of Kingston, be and he hereby is appointed receiver of the defendant, the' James Cement Company, its stock, bonds, property, fran- chises, contracts, things in action and effects of every kind and natur?, with the usual powers and duties according to the law^ of this State, and the piac- tice of this court, upon his executing and acknowledging, in the usual form, and filing with the clerk (ft this court, for the county of Ulster^ a bond. to the people of the State of New York in the penal sum of $r5iG00, with At least two sufficient sureties, freehdlders or householders of fche State of New York, who shall severally justify, conditioned for the faithful discharge of : their duties and for all moneys 6r property of eVery- kind received by him as such receiver, which bond is to be approved as to it« suflBciency, form and manner of execu- tion by a justice of this ctturt. Second. That, Upon filing said bond so approved, said receiver proceed forth- with to collect and receive the debts, demands and other property of said corpo- ration, and to preserve the property and the proceeds of the debts and demands collected, to sell or othertvlse dispose of the property, or to do any other act or thing in regard to said property, or in his oflBce as receiver, as hereinafter PKOCEDURAL, FORMS. 1109 directed by this coiirt, to collect^ receive and preserve t;he prppeeds, and tf May, 1910, the receiver compromised the claim held against William Pugh for live hundred dollars ($500), amount unpaid on his subscription to the capital stock of the Inland Lumber Company, and accepted in payment thereof his notes for two 1114 CORPORATIONS. hundred and fifty dollars ($250) and the assignment of twenty-five (25) shares of the preferred, stock of the Inland Lumber Company held by him. That on or about the 1st day of June, 1910, the receiver compromised the claim against William J. Hood by accepting his notes for one hundred dollars ($100). That in and by an order made at a -Special Term of this court held on the 24th day of October, 1910, the receiver sold at public auction on the 5th da,y erf November, 1910, said judgment of four thousand five hundred and eighty-nine dollars and ten cents ($4,589.10) held by him as receiver against Frances F. Whitehill and at the same time offered and sold seven promissory notes mad-J by William Pugh, dated May 20, 1910, each in the sum of twenty-five dollars ($25); three promissory notes made by William J. Hood, dated June 1, 1910, two in the sum of twenty dollars ($20) each and one in in the sum of ten dollars ($10). That said notice of receiver's sale was duly advertised and posted in three public, conspicuous places in the city of Greneva, as is more fully shown by the affidavit of publication and posting hereto annexed and marked Exhibit " E." That at said sale the receiver realized from the sale of said judgment the sum of seventeen dollars ($17) ; from the seven promissory notes made by Williajn Pugh the sum of one hundred and six dollars ($106), and from the three promis- sory notes held by William J. Hood the sum of thirty-seven dollars ($37), making a total of one hundred and sixty dollars ($160). That after my appointment as such receiver of the above-named corporation I gave notice of such appointment as follows, viz.: (Recitals.) By printing such notice once a week for three successive weeks in a newspaper within the county in which the corporation has its principal office of business, to wit; The "Geneva Daily Times," a newspaper published in the city of Geneva, in said county of Ontario, as appears by the affidavit of publication hereto annexed and marked " B." 6. Stehedule "1" hereto annexed contains a full, accurate and true account of all moneys and property received or collected by me, with all of which I am chargeable. 7. Schedule '2" hereto annexed contains a full, accurate and true account of all disbursements made by me, showing the balance of money in my hands. 8. That a notice for the presentation of my account as receiver of the above- named corporation, a copy of which is as follows, viz. : Notice to the Creditor^ and all persons interested in the Inland Lumber Company, of Geneva, Ontario county and State of New York. Take Notice, that a full and accurate account of all the proceedings |>f George W. Foster, as receiver of the above-named corporation, on oath, wnl be presented to the Supreme Oourt of the State of New York, at a "Special Term thereof to be held at the city of Rochester; N. Y., on the 14th day of November, 1910, at ten o'clock in the forenoon of that day, or as soon thereafter as counsel can be heard, and a motion will then and there be made that the same be allowed and decreed to be final and conclusive upon all the creditors of the said corporation, and upon all persons who may have claims against it upon any open or subsisting engagement, and Upon all the stockholders of such corporation, and tliat said receiver he author- PEOCEDTJEAL FORMS. 1115 ized to pay a final dividend, and upon proof of the payment thereof that he be discharged and his bond vacated, and for such other or further order as the court may deem proper. Dated, Receiver of the Inland Lumber Ck). was duly published as prescribed by law by printing such notice at least onece a week for three successive weeks in the "Geneva Daily Times," being a news- paper published in tlie county in which the principal office of said corporation is located, with the affidavit of publication of said last-mentioned notice which is hereto annexed and marked " C." That the notice of the presentation of my account as receiver of the above-named , corporation was duly served upon Hon. Edward R. O'Malley, Attorney-General, Albany, N. Y., also upon The Title, Guaranty & Surety Company of Scranton, Pa., and the affidavits of service of said notices are hereto annexed and marked " D." 9. That no money, property or effects, other than stated in said schedules, have come into my hands or possession and that no appearances by any attor- neys have been received by me or served upon me. 10. That no accounts or demands against said corporation or any open or subsisting contracts with said corporation have been delivered or presented to me except as hereinafter stated. That the only creditors of said corporation are the stockholders thereof. 11. Schedule "3" hereto annexed contains the name and residence of each creditor other than stockholders and the amount found due him according to his proved claims. 12. Schedule "4" hereto annexed contains the name and residence of each stockholder and the amount and kind of stock held by him in said company. 13. I know of no creditors interested in the assets of said corporation other than the said creditors mentioned in said Schedule "3" and the stockholders of said company as set forth in Schedule "4," all of which is respectfully sub- mitted. Dated, ( Add verification. ) Receiver. Schedule " 1." A statement of all receipts during the time of my receivership; (Insert state- ment of receipts with date and name of party.) Schedule " 2." Disbursements. (Insert amounts paid with date and description of disbursement.) Schedule " 3." The following is a statement of all creditors, their residence, and the amount due them : ( Insert statement. ) Schedule " i." The following is a full, just and true account of the capital stock of the Inland Lumber Company, specifying the name of each stockholder, his recidence and the number of shares belonging io him. (Insert statement.) 1116 GOBFOBATIONS. FOEM No. 286. Order Discharg^ihg Temporary Receiver. (Title.) {(Special Teini caption) A motion having been made in tlie above-entitled action by the temporary receiver herein for an order granting liim his fees and commissions for himself and his attorney herein in the above-entitled matter, discharging and canceling his bond heretofore given herein, discharging himself Sis such temporary" receiver, and authorizing him to^ pay 6ver to Frank L. Barnett, the receiver of the above- entitled corporajtion now adjudicated a bankrupt in the United States District Court for the Western District of New York, said Frank L. 'Baniett, having been appointed receiver of said bankrupt by the United States "District Court and having duly qualified; afid it appearing to the satisfaction of this court that said -temporary receiver herein should be allowed the siim of seventy-fivo dollars ($7S) foi- and on account of his services and commissions and those of his attorney in addition to the sum of two dollars and thirty cents ($2.30), the amount paid out by him for filing the papers herein with the county clerk. Now, on readiig and filing the petition of Eugene L. Falk, verified the 29th day of November, 1910, and the exhibit thereto annexed, and the affidavit of Edward 0. Schlenker, the attorney for the temporary receiver' herein, verified the 29th day of November, 1910, and after hearing Ed\»ardC. Schlenker, Ksq., attorney for the temporary receiver herein, and Frank L. Barnett, appearing in person, and Walter F. Hofhoins, Esq., representing the Attorney-Geiier.nl' of the State of NeW York, not objecting' thereto. Now, «h motion of Ed-ward C. Schlenker, Esq!, attorney for the temporary receiver, it is Ordered, that Eugene L. Falk retain the sum of seventy-five dollars ($75) for and as his fees ahd commissions and the allowance of his attorney as tem- porary receiver in thte at)OVe-ehtitled matter, and the further use of two dol- lars and thirty cents ($2.30), the amount paid out and which Will necessarily be expended' in the filing of the required papers and orders in the county clerk's office in the above-entitled matter; it is further Ordered, that after deducting the said sum of seventy-seven dollars and thirty iits ($77.30) he is hereby authorized and empowered to pay over to Frank L. Barnett as receiver of the Buffalo Gum Company, an alleged bankrupt, which proceedings are nmv pending in the District Court of the United States for the Western District of New York, the balance remaining in his hands, vi?. : Two hundred and sixty dollars and thirty-two cents ($260.32) ; it is further Ordered, that said Eugene L. Falk, upon paying over to the said Frank L. Barnett the sum of two ^hundred and sixty dollars and thirty-two cents ( $260.32 ) , the balance remaining in his hands as such temporary receiver, be and he hereby is discharged as such receiver; it iS'.- further ... Ordered, that the bond given by him in the above-entitled matter which was I'vteuted by the United States Fidelity &. Guaranty Company for the sum of twenty thousand dollars ( $20,000 ), which, said sum . ^as , recorded in the ^office of the clerk of the county of Erie on the 29th day of Qotobeir, 1910, be eind ,tlie hame hereby is canceled and discharged, and the said bonding company relieved from further liability upon said undertaking. Granted, , , Dated, :: : Justice SYipreme Court. PEOCEPURAL FORMS. 1117 FORM No. 287. Order Discharging Temporary Receiver and Canceling Bond. (Title.) (Special Term caption.) An application having been made for an order reducing- the amount of the bond given by the temporary receivers in the abpve-entitled action, and due notice of this application having been, given to all the parties interested in said matter, and it having loeen made to appear to. the satisfaction of the court that a permanent receiver has heretofore been appointed, and that said receiver dul)' qualified, upon reading and filing the petition of .Joseph A. Stone, verifled the 12th day of July, 1910, and the notice of motion together witli the admission of service 'thereof, and after hearing Eugene L. Falk, Esq., counsel for Joseph A. Stone and Eugene Warner, tempoi'ary receivers, and no one appearing in opposition thereto, it is Ordered, that Joseph A. Stone and Eugene W'arner, temporary receivers in the above-entitled matter, pay over to Eugene L. Dominick all moneys .which tliey have in their hands as such temporary receivers in the above-entitled mat- ter amounting to the sum of one thousand four hundred and fifty-si.K dollars and eighty cents ($1,456.80); and it is further Ordered, that upon the turning over of said inbneys said temporary receivers are hereby discharged from all liability and accountability, and that the bond- ing company issuing the indemnity bond for said receivers be and it is hereby discharged and relieved from all liability of whatsoever kind on account of said bond or otherwise. Granted July 8„ 1910. PERRY E. WURST, Special Deputy Clerk. FORM No. 288. Petition for Instructions as to Bringing Suit. In the Matter of the Inland Lumber Company. Fii'sl. The petition of George W. Foster respectfully shows to the court: That lie is the receiver of the liiland Lumber Company, - Geneva, Ontario county, in the State of New York, having been duly appointed by an order of this court made in the above-entitled proceedings at a , Specia,! Term thereof held at the court house in the city of Rochester on the 10th day of January, 1910, and which said order was duly entered in the Ontario county clerk's office on the 11th day of January, 1910. ' Second. ITiat your petitioner has duly given b6nd provided for in and by the terms of said order so appointing him as such' receiver as aforesaid, which said bond was duly approved as to form, manner of execution, and sufficiency, and duly filed in the Ontario cotinty clerk's office on the 11th day of January, 1910. That Frances F. Whitehill of Brookville, Pa.; William J. Hood of Rochester, N. Y., "and William Pugh of Rochester, N. Y., are each indebted to the Inland ' Lumber Company, the said Frances F. Whitehill' in the siiiri of four thousand five hundred dollars ( $4,500 )', the said William J. Hood in the sum of four hundred and ninety dollars ($490) ''arid 'the skid William Pugh in the slim of 1118 COEPORATIONS. four hundred and ninety dollars ($490), the same being for unpaid subscriptions to the capital stock of the said Inland Lumber Company; that said debtors refused to pay the same; that in the petitioners' judgment said claims are honest and collection should be enforced. Wherefore, your petitioner prays for the advice and direction of this honor- able court in the matters hereinbefore set forth and that he may be authorized to bring suit against the said Frances F. Whitehill, William J. Hood and Wil- liam Pugh or any one of them for the amount due from each one and to proceed with the same in such manner and in such court as counsel may advise. That no other or former application has been made for this or any similar order or relief. Dated, Receiver. , Attorney for Receiver. (Add veriileation. ) FORM No. 289. Order Permitting Receiver to Bring Suit. (Title.) (Special Term caption.) Upon reading the petition of the receiver of the Inland Lumber Company, with proof of due service on Hon. Edward R. O'Malley, the Attorney-General, of the copy of the petition and proposed order and notice of motion for this time and place, and on motion of W. S. O'Brien, attorney for the receiver, it is Ordered, that the said George W. Foster, receiver, be and he hereby is author- ized and empowered and directed to take such action against Frances F. White- hill of Brookville, Pa.; William J. Hood of Rochester, N. Y., and William Pugh of Rochester, N. Y., or any one of them for securing the payment of the amount due from each to the said Inland Lumber dimpany us may seem best to counsel. FORM No. 290. Petition for Leave to Continue Business. In the Matter of the Buffalo Gum Company. To the Supreme Court: The petition of Eugene L. Falk respectfully shows to tlii, court : 1. That he was appointed temporary receiver in the above-entitled proceeding by an order of this court dated on the 25th day of October, 1910. 2. That he immediately entered upon his duties as such receiver and qualified as directed in said order and has ever since and still is acting as such tempo- rary receiver. 3. Your petitioner further shows that the business of said corporation con- sists of the manufacturing and sale of chewing gum. That there are at the present time a number of unfulfilled orders and contracts, and that there is now on hand perishable property which should be made up into the finished product and sold. That said orders which are now unfulfilled and which are PROCEDUBAL FORMS. 1119 daily coming in can be filled at a profit according to your petitioner's belief. That the good will of said business demands that the business of said corpora- tion should be continued and its orders fulfilled so that the same may be sold for the largest possible amount, and unless such business is continued and the orders filled the good will of the business will deteriorate. 4. Your petitioner further shows that by reason of the foregoing facts he verily believes that it will be for the best interest of creditors to permit him to carry on said business and fill the orders now on hand. Wherefore, your petitioner asks for an order authorizing him to continue such business. Dated, Petitioner. (Add verification.) FORM No. 291. Order Authorizing Continuance of Business. (Title.) (Special Term caption.) On reading and filing the petition of Eugene L. Falk, verified the 28th day of October, 1920, asking for an order permitting him to continue business of the above-named corporation and it appearing to the satisfaction of the court that it will be for the best interest of creditors that said temporary receiver be given an order permitting him to carry on said business, and upon reading and filing due admission of service of the notice of this application, and the Attorney-General of the State of New York appearing in open court by his repre- sentative, Walter F. Hofheins, of the city of Buffalo, N. Y., and not objecting thereto, and after hearing Edward C. Schlenker, of counsel for the petitioner, and due deliberation having been had thereon, Now, on motion of Edward C. Schlenker, Esq., attorney for petitioner, it is Ordered, that said temporary receiver have permission and he is hereby au- thorized and empowered to continue and carry on the business of said company of manufacturing and selling chewing gum and all other matters incidental to said business until the further order of this court, provided, however, that no indebtedness shall be incurred by said temporary receiver for that purpose ex- cept the necessary help and supplies without the further order and express authority of this court. FORM No. 292. Order G-ranting Leave to Receiver to Issue Certificates. (Title.) (Special Term caption.) An application having been made by Eugene Warner, temporary receiver of the Buffalo Exposition Company in proceedings for the voluntary dissolution of said corporation, for an order authorizing said receiver to borrow the sum of three thousand dollars ($3,000) and issue his certificate therefor, and upon reading and filing the petition of Eugene Warner, verified the 9th day of July, 1909, and Eugene Warner appearing and stating in open court that in his opin- ion it would be advisable to borrow said sum of three thousand dollars ($3,000) 1120 OOEBOKATIONS. and continue the business, which in his opinion cpuld be made to pay; that he had cut down the running .fexpenstes of said business, and that the attendan-Of had been very good for the last , and past week) and that he had advertised to continue the business; and it appearing to the satisfaction of the court thiit in order to continue said business it is necessary that the receiver bo authorized to borrow said sum, and that unless said loan be authorized the assets of said corporation, which consists of the buildings on .said property, will be of little or no value, whereas if said, business is conducted said Duildings may be of greater Value,, and will, inure to the benefit of the general creditors of the Buffalo E.xposition Company, and it further appearing that since the said business has been conducted at a gain, and that unless the receiver is authorized to borrow money said business must be discontinued, in which event the creditors of said Buffalo Exposition Company would receive nothing, and after hearing Eugene L. Faulk, counsel for the receiver, in support of said application, and Walter F. Hofheins, representing the Attorney-General of the State of New Yorlc, con- senting thereto, Xow, on motion of Eugene L. Falk, attorney for said receiver, it is hereby Ordered and decreed, that the said Eugene Warner be and he hereby is author- ized to issue and deliver his certificate as receiver to the person, firm or corpora- tion for the sum of three thousand dollars ($3,000) for moneys to be advanced by said person, firm or corporation to the said receiver. Said certificate shall be a first lieu upon all and singular the property of the said Buffalo Exposition Company. The certificate -under this order shall,, be countersigned by the clerk of the court, and shall be Bubatantially in the following form: " This is to certify that Eugene Warner, receiver of the Buffalo Exposition Company, as such receiver and not individually is indebted unto or the bearer hereof, in the sum of three thousand dollars ($3,000) payable on or before the, 1st day of September, 1909, with interest from the date hereof at the rate of 6 per cent per annum, out of the assets of the Buffalo Exposition Company." The said certificate is by the terms of said order a first lien on all and sin- gular ,the property of the Buffalo Exposition Company, owned by it at the date of said order appointing Eugene Warner receiver, or thereafter acquired by said receiver,, and upon the income thereof, and is prior in right to all other claims other than the actual expenses necessary in and incidental to the said receiver- ship. Granted, Dated, • Special Deputy Clerk. FORM No. 293. Notice of Motion for Order Extending Powers of Temporary Receiver and Directing Sale of Property. (Title.) Sir: , ■'.■■'. Please take notice that upon tlie papers and proceedings herein, and upon a petition, a copy of which is herewith served upon you, a nurtion will be made PROCEDURAL FORMS. 1121 at a Special Term of the Supreme Court to be held at the city hall, in the city of Kingston, on the sixth day of April, one thousand eight hundred and ninety- five, at the opening of the court on that day, or as soon thereafter as counsel may be heard, for an order extending to the temporary receiver herein sundry powers and duties of a permanent receiver and granting him leave to sell sundry personal property held by him as such receiver, and for such other or further relief or order as to the court may seem just. Dated. Saugerties, N. Y., April 5th, 1895. Yours, etc., EDGAR M. HAINES, Attorney for Receiver. To Hon. Theodore E. Hancock, Attorney-General. FORM No. 294. Petition for Order Extending Powers of Temporary Receiver and Direct- ing Sale of Property. (Title.) The petition of Howard Gillespy, respectfully shows to the court: First. That he is the teniporary receiver of the Sheffield Manufacturing Com- pany of Saugerties, Ulster county, in the State of New York, having been duly appointed by an order of this court made in the above-entitled proceeding, at a Special Term thereof, held at the city hall, in the city of Albany, on the first day of April, one thousand eight hundred and ninety-five, and which said order was duly entered in the Ulster county clerk's office on the 2d day of April, one thousand eight hundred and ninety-five. iSecond. That your petitioner has duly given the bond provided for in and by the terms of the said order so appointing him as receiver as aforesaid, which said bond was duly approved as to form, manner of execution and sufficiency by Mr. Justice Parker, on the second day of April, one thousand eight hundred and ninety-five, and which said bond was duly filed in the Ulster county clerk's office on the said second day of April, one thousand eight hundred and ninety- five. "Third. That your petitioner has duly qualified and entered upon the dis- charge of his duties as such receiver as aforesaid. " Fourth. That % virtue of his appointment your petitioner has become pos- sessed of no real estate, but did become possessed of a large amount of personal property, consisting of blank books of various forms and sizes; flat paper used in the preparation and manufacture of such blank books, leather folded stock, envelopes, pasteboard boxes of various forms and sizes ; writing pads and tablets of various sizes, kinds and weights; articles used in printing and for the preparation of covers for books; pads and tablets; packing boxes and materials used in their construction; fifty shares of the capital stock of the Barclay Fibre Company and sundry machinery s^iid fixtures which are covered by a mortgage which has been foreclosed and is in judgment; various accounts receivable, 71 1122 CORPORATIONS. L sundry open accounts upon the ledgers of J. B. Sheffield & Son; leases covering the premises occupied by the company at Saugerties, New York, and their offices in New York; and an employe's liability policy in the Travelers' Insurance Company; sundry accounts called "suspense accounts," which are regarded of little or iio value; books of the corporation and insurance policies covering the stock and property of said corporation. Fifth. That in and by the order appointing your petitioner, he was author- ized to continue operating the shops and works of said corporation to the extent that he might deem it wise, prudent iind necessary for the purpose of preserving the assets of said corporation and the market value of its property. Sixth. That your petitioner, pursuant to the powers so delegated to him, has continued to operate the said works. That there are at least tvro hundred and flft.y people in the employ of the said company, with a weekly payroll of about fifteen hundred dollars. That the paper and book trade at the present time is exceptionally dull; that there is no prospect, as petitioner believes, of immediate improvement; that in petitioner's opinion the assets of the receiver would be materially depreciated by the continuation on the part of the receiver, of the manufacture of blank books and pads at the present time; that it would be unwise to shut down the works of the said company by 'reason of the fact that it would depreciate the value of its property in its entirety, because of the inability of your petitioner to supply the trade with the orders which are received almost daily for the filling in of odd numbers and sizes of blank books. Seventh. That a judgment of foreclosure, as your petitioner is informed and believes, has been docketed in the office of the clerk of the county of Ulster, against all of the machinery owned by said corporation in an action in which Charles A. Sjaulding, as trustee, for sundry bondholders, is plaintiff, and the said Sheffield Manufacturing Company is defendant. Eighth. That your petitioner is informed and believes that the machinery is about to be advertised for sale at a very early date, and if so would leave him without the means or appliances of continuing the business, or compel him to. rent the said machinery, provided the said arrangements could be made. That in addition to the uncertainty as to the result of said foreclosure sale, the rental of the machinery would prove an additional expense altogether, that it is probable that the business could not be carried on, certainly for any length of time in so uncertain a condition, excepting to the detriment of the stock- holders and all persons interested in the affairs of said corporation, as credit' ors, bondholders or stockholders. That as this petitioner is informed and believes, the committee appointed on behalf of a large majority of the stockholders, bondholders and creditors of said corporation, representing all but a small percentage thereof, is ready and pre- pared to purchase all the assets of said corporation at a fair price. That it is the opinion and judgment of this petitioner that a better price for the property and assets of said corporation can be acquired by a sale of all the assets as herein prayed for at the present time and under existing circumstances. Your petitioner, therefore, prays that he may be given the powers of a perma- nent receiver so as to sell the personal property above referred to, and that he PR0GEDX7RAL FOKMS. 1123 may sell all the personal property in his hands at the earliest practicable moment, having due regard to the rules and practice of the court in the prem- ises. • Dated Saugerties, Jf. Y., April 5th, 1895. HOWARD GILLESPY, Peritioner. FORM No. 295. Order Extending Powers of Temporary Receiver and Authorizing •Receiver to Sell. At a Special Term of the Supreme Court of the State of New York, held at the Court House, in the City of Kingston, on the 6th day of April, 1895. (Title.) Upon reading and filing the petition for the appointment of the receiver and the order appointing him, also the petition of said temporary receiver, verified on the 5th day of lApril, 1895, which proposed order and a notice of motion for this time and place, with proof of the due service on Hon. Theodore B. Han- cock, the Attorney-General, and on motion of Edgar M. Haines, the attorney for said receiver, G. D. B. Hasbrouck, appearing for the Attorney-General, it is ordered, First. That said Howard Gillespy, the temporary receiver of the said Shef- field Manufacturing Company, be and he hereby is granted the power and au- thority for, and is subjected to the duties and liabilities of a permanent receiver. ■■ •---•-l"^ :Second. That the said receiver be and he hereby is authorized, empowered and directed to sell at public auction all the personal property coming into his hands as such receiver as aforesaid, including all accounts, bills receivable and accounts receivable. Third. That before making said sale, said receiver give at least fourteen days' : public notice of the time and place of said sale by posting notices hereof in at le3,st three public places in the village of Saugerties, Ulster county, in the State of New York, where said personal property is located, and also by publishing . notice thereof for two weeks in the "Saugerfies Post," a newspaper printed in the county where said property is located and where said sale is to be made. Fourth. It ia further ordered that the said receiver may accept .in lieu of cash upon said sale, the voucher, receipt or acquittance of any creditor or any committee of trustees, of all or any of the creditors of said corporation, for such sum or sums as would be represented by the said creditors upon a distribu- tion of the proceeds of said sale, ratably and proportionately among ^11 of the creditors of said corporation, after deducting the costs, charges and expenses of said sale. The said receipt, voucher or acquittance to stand and be in lieu of a similar cash amount which would be distributed or be paid as a dividend to such creditor and the amount of such receipt, acquittance or voucher is to be charged to such creditor as a payment for the amount received by them. Enter: ALTON B. PARKER, I , ■ J.- S. C. 1124 CORPORATIOlfS. FORM No. 296. Petition for Instructions as to Sale of Real Estate. NEW YORK SUPREME COURT— Kings County. People of the State of New York ys. Granite State Provident Association. To tlie Supreme Court of the State of New York ; The petition of Edwin E. Dickinson respectfully shows to this honorable court: First. That heretofore and on or about the 28tli day of March, 1896, in the above-entitled action, an order was duly granted and thereafter entered in the office of the clerk of the county of Montgomery, appointing your petitioner temporary receiver of the above-named defendant Granite iState Provident Asso- ciation, and providing, among other things, that upon the filing, and approval of a bond in the penal sum of two hundred thousand dollars ($200,000), your petitioner should take possession of all the assets of said defendant in the State of New York. iSecond. That thereafter and on the 6th day of April, 1896, yoiir petitioner duly executed and delivered a bond, with the American Surety Company as surety, and the same, upon due notice to the attorney-general, was duly ap- proved by a justice of this court, and thereafter and on the 10th day of April, 1896, filed in -the office of the clerk of the county of Montgomery. Third. That thereafter and on the 2d day of July, 1896, an order was made and granted in the above-entitled action whereby the venue or place of trial of such action was changed from the county of Montgomery to the county of Kings, and that said order was thereafter and on the same day entered in the office of the clerk of Montgomery county. Fourth. And your petitioner further shows that the above-named defendant, G-ranite State Provident Association, is a foreign corporation organized and existing under and pursuant to the laws of the State of New Hampshire, and formerly engaged in the business of a national building and loan association. Fifth. That your petitioner further shows that among the assets which came into your petitioner's hands, as receiver aforesaid, was a piece of real estate in the village of Flushing, Queens county, New York, and more particvilarly de- scribed as follows: (Insert description.) Sixth. And your petitioner further shows that such property was subject to a first mortgage for threfl thousand five hundred dollars ($3,500). Seventh. And your petitioner further shows that heretofore and on the 7th day of July, 1896, he obtained an order of this court authorizing and empower- ing him to sell and dispose of the real estate vested in him as receiver and formerly belonging to the Granite State Provident Association, which said order is hereto annexed and marked Exhibit A. Eighth. And your petitioner further shows, that under and by virtue of such authority, he did on or about the 27th day of August, 1896, agree to sell the premises in question to one Edward Richardson, for the sum of four thou- sand dollars (.$4,000), to be paid as follows: PEOCEDUBAL FORMS. 1125 At the time of executing the contract, in cash $100 . 00 By the purchaser assuming payment of a mortgage for $3,500 .... 3,500-. 00 At the time of the delivery of the deed to the aforesaid premises. . 400.00 Total $4,000.00 and it was furthermore agreed that the said purchaser should pay any and all assessments for the year of 1896 which were then or might thereafter become due. And he furthermore agreed to assume and pay any and all fees and charges or commissions of any agent or agents, broker or brokers who might have nego- tiated such sale. Ninth. And your petitioner further shows th.it he has received the part payment of one hundred dollars ($100) above mentioned, and is ready and willing to deliver the deed to the premises in question, but that the said Edward Richardson, the proposed purchaser, is unwilling to take title on the ground that the order hei'einbefore referred to, a copy of which is hereto annexed and marked Exhibit A as aforesaid, does not -grant unto your peititioner suflSoient power to sell and dispose of the propex-ty in question and give a good and mar- ketable title. Wherefore, your petitioner prays for the advice and directions of this honor- able court in the matters hereinabove set forth, and that he may have leave to carry out the sale above mentioned and for that purpose to execute any and all necessary deed or deeds as he may be advised by counsel learned in law are right and proper. ■ That no other or former application has been made for this or any similar order . or relief . EDWIN E. DICKINSON, Temporary Receiver. Lexow, Mackellar & Wells, ■ <. '■' Attorneys for Receiver. FORM No. 297. Order Authorizing Receiver to Sell Property. (Oaption.) People of the State of New York vs. Granite State Provident Association. On leading and filing the notice of motion herein, and the petition of Edwin E. Dickinson, temporary receiver of the Granite State Provident Association, thereto annexed, verified ..the 31st day of December, 1896, and proof of service of such notice of motion, petition and the proposed order to be entered thereon, on the Attorney-Genfi-?;al. of the State of New York, and the attorney for the defendant, and after hearing T. Tileston Wells, Esq., of counsel for the receiver, on behalf of the motion, and ;.,,;: on behalf of the 1126 COKPOEATIONS. Attorney-General of the State of New York, Now, on motion of Lexow, Mackellar & Wells, attorneys for Edwin E. Dickin- son, temporary receiver of the defendant Granite State Provident Association, it is Ordered, that Edwin E, Dickinson, temporary receiver of the Granite State Provident Association, be, and he 'hereby is, authorized and empowered to sell to E. Richardson the premises situate at Flushing, Queens county, more par- ticularly described in his petition, whereon ttis order is made, verified the Slst day of Deeeitiber, 1896, for the sum of four thousand dollars ($4,000), to be paid in the manner more particularly shown in the petition aforesaid, and for that purpose to execute any and all necessary deed or deeds of the premises in question as may be proper to convey title to said E. Richardson. Enter in Kings county. FORM No. 298, Agreement by Receiver with Counsel. In the Matter of the Rochester Non-Rust j Tinware Company. ( Memorandum Of Agreement, made this 50th day of June, 1910, by and between Arthur Warren, as permanent receiver of the Rochester Non-Rust Tinware Com- pany, a domestic corporation located at Rochester, N. Y., of the first part, and Christopher C. Werner and George H. Harris, composing the firm of Werner & Harris, practicing attorneys in the city of Rochester, N. Y., of the second part, witnesseth : Whereas, the party of the first part hereto was on the 25th day of June, 1910, appointed permanent receiver of the said corporation in a voluntary proceeding for dissolution thereof, and he having duly qualified is ' now acting as such permanent receiver. Now, tlherefore, it is agreed that said party of the first part does hereby employ the parties of the second part as his counsel as such receiver of said corporation, and he hereby agrees to pay the said parties of the second part as and for their compensation as attorneys for such receiver the value of such service not to exceed five per cent (5%) of all sums of money that shall come into his hands as such receiver. This agreement is made subject to the approval of the Supreme Court and shall expire in eighteen months from the date hereof unless sooner terminated. Said parties of the second part shall render all necessary legal services to the said receiver in said dissolution proceedings, and the payment of such services shall be made upon the final accounting of the said receiver and upon the ap- proval of the said Supreme Court. In Witness Whereof, ithe parties hereto have hereunto set their hands and seals the day and year first above written. ARTHUR WARREN, (L. S.) As Receiver of Rochester Non-Rust Tinware Co. CHRISTOPHER C. WERNER, (L. S.) GEORGE H, HARRIS. (L. S.) PROCEDTJRAI; FORMS. 1127 FORM No. 299. r- — Order Approving Agreement by Receiver with Counsel. (Title.) (Special Term caption.) Upon reading and filing the proposed agreement herein between Arthur War- ren as receiver of the E)oches.ter Non-Rust Tinware Company, a corporation, and Christop'her C. Werner and George H. Harris, composing the firm of Werner & Harris, cousellors-at-law, of Rochester, N. Y., dated, June 30, 1910, the order appointing said Arthur Warren receiver granted on the 25th day of June, 1910, and the papers upon which said order was granted, all on file in the Monroe county clerk's office, and on motion of Werner & Harris, attorneys for said receiver, it is Ordered, that said agreement between Arthur Warren, as sucli receiver, and said Warren & Harris, his counsel, be and the same is hereby approved. All payments on account of such agreement shall only be made at the final accounting herein and upon the order of approval of this court. FORM No. 300. Notice of Motion for Order to Prove Claims. SUPREME COURT— Queens County. The People of the State of New York, Plaintiff, vs. )- The Mutual Brewing Company, Defendant. Please take notice, that upon all papers and proceedings in this action, and the judgment herein, and also upon the annexed petition of Edward Duffy, the permanent receiver of the Mutual Brewing Company, sworn to July 3d, 1896, we shall move this court at a Special Term thereof, to be held at the county court house in the city of Brooklyn, county of Kings and iState of New York, on the 28th day of July, 1896, at 10 A. M., for an order in the form of an order of which a copy is hereto annexed requiring all the creditors of the corporation mentioned to exhibit and prove their claims and thereby make themselves parties to this action, and requiring publication of notice of such order, as pro- vided for in section 303 of the General Corporation Law, or for such other or further relief as to the court may seem meet. Dated, New York, July 23d, 1896. Yours, etc., DURNIN & YATES, Attorneys for the Receiver. To Hon. Theodore E. Hancock, Attorney-General. 1128 COEPOEATIONS. FORM No. 301. Petition for Order Eequiring Creditors to Prove Claims. SUPREME COURT— Queens County. The People of the State of New York, Plaintiff, vs. The Mutual Brewing Company, Defendant. To the Supreme Court of the State of New York: The petition of Edward Duffy, as permanent receiver, under the judgment in this action entered on the 19th day of May, 1896, respectfully f?howa to this court : First. That your petitioner says that this action was commenced by the People of the State of New York, to secure a judgment for the dissolution of the defendant, The Mutual Brewing Company, and for a distribution of its assets among its creditors, and that on or about the 19th day of May, 1896, judgment was entered in this action which recited the service of the summons and com- plaint, and upon motion of counsel for plaintiff, it was adjudged and decreed, among other things, that The Mutual Brewing Company be, and it was there- by dissolved and its corporate rights, privileges and franchises forfeited. And it was further decreed that a fair and just distribution of its property and of the proceeds thereof be made to its fair and honest creditors in the order and in the proportion provided by law. Second. That by said judgment in this action, your petitioner, who had previously been appointed temporary receiver -herein, was continued as such re- ceiver of all the property and effects, real and personal, of said corporation, and was made permanent receiver thereof with the usual powers and duties enjoyed and exercised by receivers according to the practice of this court and of the statute in such cases made and provided. And it was also adjudged and decreed, that the receiver might make further application to the court as he might be advised for his Instruction in the man- agement and conduct of his trust. Third. Your petitioner further says that there has not been any order in this action requiring the creditors of the said corporation or of your petitioner, as such receiver, to exhibit and prove their claims, or to make themselves parties to this action, as required by section 303 of the General Corporation Law. Wherefore, your petitionelf pray s that an order be made herein requiring all the creditors of the said corporation to exhibit and prove their claims and there- by make themselves parties to this action in such a manner and in such a reasonable time, not less than six months from the time of the first . publication of the order, as the court may direct, and providing that the creditors who make default in so doing shall be precluded from all benefit of the judgment and from any distribution which may be made thereunder, excepting as provided by law, and that notice of such order be directed to be given by publication as required by section 303 of the General Corporation Law; and your petitioner says that there has not been any previous application for this order now asked for. EDWARD DUFFY. PKOCEDUKAL FORMS. 1129 FORM No. 302. Order Kequiring Creditors to Prove Claims. The People of the State of New York, Plaintiff, vs. The Mutual Brewing Company, Defendant. (Caption.) A motion having been made on behalf of Edward Duffy, the receiver of the Mutual Brewing Company, herein, for an order requiring all the creditors of said corporation to exhibit and prove their claims and thereby make themselves par- ties to this action, and requiring notice of such order, as provided for in section 303 of the General Corporation Law, and for such other and further relief as to the court may seem meet, Now, aft«r hearing Durnin & Yates, upon behalf of said receiver, in support of the motion, and upon due proof of service of the within petition, notice of motion and proposed order herein upon the attorney-general, Now, upon motion of Durnin &, Yates, attorneys for said receiver, it is Ordered, that all the creditors of The Mutual Brewing Company exhibit and prove their claims against the said Mutual Brewing Company or against the said receiver, and thereby make themselves parties to this action, and that they so exhibit and prove such claims with Edward Duffy, the receiver of the said corporation, at his place of transacting business, at the office of Durnin & Yates, his attorneys, No. 20 Nassau street, in the city of New York, within six months from the 14th day of August, 1896, and It is further ordered, that the creditors who make default in so doing shall be precluded from all benefit of the judgment herein, and from any distribution which may be made thereunder, except as provided in section 303 of the General Corporation Law, and It is further ordered, that notice of this order be given by publication in the following papers, to wit: In the Queens County Review, published at Freeport, Long Island, and in the Flushing Journal, published at Flushing, and for the fol- lowing length of time, -to wit: Once a week for six weeks. It is further ordered, that all claims be proven by the presentation of vouchers accompanied by the affidavit of the party or one of the parties interested, or the agent of said party or parties having knowledge of the facts that the whole amount of the debt shown in said vouchers is just and due from the corporation aforesaid, or from said receiver of the corporation named in the voucher over and above all set-offs and counterclaims, with liberty to said receiver to contest any of the claim so proven as he may be advised, and that the said receiver may apply, if necessary, to the court for instructions in regard to any of the claims that may be contested. Enter. N. H. 0. . " Justice. 1130 OOBPOEATIONS. FOEM No. 303. Notice to Creditors to Prove Claims. SUPREME COURT— Queens County. The People of the State of New York, Plaintiff, vs. The Mutual Brewing Company, Defendant. In pursuance of an order duly made in the above-entitled action, by Hon. N. H. Clement, one of the justices of said court, on the 28th day of July, 1896, notice is hereby given to all creditors of the said corporation, to wit: The Mutual Brewing Company, and of said Edward Duffy as receiver of said corporation, that they are hereby required to prove their claims with Edward Duffy, receiver of said corporation, at his place of transacting business, at the office of Durnin & Yates, his attorneys, Xo. 20 Nassau street, in the city of New York, within six months from the 14th day of August, 189(>; and that all creditors who make de- fault in so doing shall be precluded from all benefit of the judgment herein, and from any distribution which may be made thereunder, except as provided in section 303 of the General Corporation Law, and that all claims be proven by presentation of vouchers accompanied by an affidavit of the party or of one of the parties interested, or an agent of said party or parties having knowledge of the facts that the whole amount of debt shown in said vouchers is justly due from the corporation aforesaid or from said receiver to the creditor named in the voucher over and above all set-offs and counterclaims, with liberty to said re- ceiver to contest any of the claims so proven as he may be advised, and that said receiver will apply, if necessary, to the court for instructions in regard to any of the claims that may be contested. bated, New York. July 31st, 1896. DURNIN & YATES, Attorneys for Receiver, 20 Nassau street. New York City. Edward Duffy. Receiver. FORM No. 304. Receiver's Notice to Pay Debts and Present Claims. SUPREME COURT. • The People of the State of New York, j Plaintiff. vs. ?- The Mutual Brewing Company, Defendant. Notice is hereby given by the undersigned, Theodore F. Hamilton, receiver, of the abovP-nnnierl rlpfendant, the Hudson Valley Knitting Company, that PROCEDURAL IfORMS. 1131 he has been duly appointed the permanent receiver of said defendant, and has duly qualified as such and entered upon the performance of his duties, and that, pursuant to law, said receiver requires. 1. All persons indebted to said defendant, the Hudson Valley Knitting Com- pany, to render an account of all debts and sums of money owing by them., re- spectively, to said company, or to the receiver of said company, at the office of Edgar T. Brackett, in the town hall, in the village of Saratoga Springs, N. Y. (the place where said receiver transacts his business as such), by the 15th day of January, 1897, and to pay the same. 2. All peteons having in their possession any property or eflfects of such de- fendant, the Hudson Va.lley Knitting Company, to deliver the same to the under- signed, such receiver, by the said 15th day of January, 1^97. 3. All the creditors of such debtor, the defendant, the Hudson Valley Knitting Company, to deliver their respective accounts and demands tb the undersigned eaid receiver, at his said place of doing business, the said office of Edgar T. Brackett, in the town hall in the village of Saratoga Springs, N. Y., by the 15th day of January, 1897. 4. All persons holding any open or subsisting contract of such corporation, to present the same in writing, and in detail, to said receiver at the said office of Edgar T. Brackett, in the town ball in the village of Saratoga Springs, N. Y., on or before the said 15th day of January, 1897. Dated, November 23, 1896. THEODORE F. HAMILTON, Receiver of the Property of the Hudson Valley Knitting Company. Edgar T. Brackett, Attorney for Receiver. FOEM No. 305. Notice by Receiver of Meeting of Creditors. (Title.) To all whom it may concern: Take notice that the undersigned, permanent receiver of the above corpo- ration, appointed by decree entered in the office of the clerk of New York county, on the 5th day of May, 1910, in this proceeding, hereby calls a general meeting of the creditors of said corporation to be held on the 12th day of August, 1910, at 2 o'clock in the afternoon, at my office, room 418, No. 2 Rector street, borough of Manhattan, New York city. Dated, 1910- -- , Receiver. 1132 COEPOKATIONS. FORM No. 306. Report and Account of Receivers. NEW YORK SUPREME COURT— Kings County. People of the State of New York ^ vg. ^ Granite State Provident Association. I To the Special Term of ithe Supreme Court of the State of New York, held in and for the County of Kings : I, Edwin E. Dickinson, temporary receiver of the Granite State Provident Association, do hereby render the following account of my proceedings as tem- porary receiver of said association from the time of my appointment to October 1st, 1896: By an order of this court, bearing date the 28th day of March, 189'6, and filed in the oflSce of the clerk of Montgomery county, on the 4t(h day of April, 1896, I was appointed temporary receiver of all the pi-operty, things in action and effects, real and personal, of said corporation, and of all the property held by it, with the usual powers and duties enjoyed and exercised by receivers accord- ing to the practice of this court and the statutes in sudh case made and provided. It was provided by said order that before entering upon the duties of my trust I should execute and deliver, with sufficient sureties, a bond to the people of the State of New York in the penal sum of two hundred thousand ($200,000), dol- lars, conditioned upon tihe faithful execution of my trust, and upon filing such bond, duly approved, I was authorized and directed to take possession of all the property, real and personal, of said corporation. On the 10th day of April, 1896, I filed in the office of the clerk of the county of Montgomery my bond in the manner and form provided for in said order, the same having been duly approved upon notice to the attorney-general- As soon as practicable after my qualifications as temporary receiver, I availed myself of the provisions of law allowing this court to authorize me to more fully protect the property of said assQciation, and that I applied for and obtained an order bearing date the 16th day of April, 1896, authorizing and directing the superintendent of banks to pay and deliver to me all moneys, funds, bonds and mortgages depesited with him, and that in pursuance and by virtue of said order the superintendent of banks did thereafter deliver to m© bonds, mort- gages and casli of the par or face value of one hundred thousand ($100,000) dollars, and that I did also obtain various other orders, as is more particularly shown in the schedule hereafter following, marked "Schedule No. 59." That by an order bearing date the 21st day of July, 1896, the venue or place of trial of the above-entitled action was changed from Montgomery to Kings county. That at the time I qualified as receiver as aforesaid the books and evidences of property in this State were in the possession of David A. Taggart, Esq., the assignee or receiver appointed by the Supreme Court of the State of New Hamp- shire, but that I was able to obtain access to such books and to make copies of the same as far as they related to the property of the association in this Stite, and that I wai also able to obtain the bonds, mortgages and other papers PKOCEDURAL FOEMS. 1133 relating to the property and investments of the association in this State; that I have proceeded to collect all the moneys due said association as far as pos- sible, and have deposited the moneys received by me and belonging to said asso- ciation, in the bank of the Manhattan Company, New York City, in complia;nce with the terms of the order aforesaid, i Annexed to this account, and marked " General Statement, No. 1," is a sum- mary Sitatement of the assets of the Granite State Provident Association, as shown by my inventory heretofore filed. This is followed by "General Statement, No. 2," shiowing the cash received and disbursed by me. This again is followed by " General Statement, No. 3," showing the assets re- ferred to in my inventory as required by collections and other causes. This again is followed by " General Statement, No. 4," showing the liabilities of the association in tihis State at the time of my appointment as receiver. This again is followed by "General Statement, No. 5,"^ showing the present condition of the liabilities of the association in this State. All the items referred to in the several general statements above mentioned are shown in detail by schedules, which said schedules are severally signed by me and made a part of this account. Dated, New York, October 1, 1898. All of which is respectfully submitted. ^ , EDWIN E. DICKINSON, Temporary Receiver. (Annexed schedule and verification.) FORM No. 307. Order of Reference as to Interlocutory Account. ( Cap'tion ) ^ People of the State of New York | vs. y Granite State Provident Association. j Edwin B Dickinson, tempm-ary receiver of the Granite State Provident Associa- tion having presented to a Special Term of this court an account^ of the ad- ministration of his trust as temporary receiver of the said Granite State Provi- dent Association, from the 28th day- of March, 1896, the date of his appointment a uch temporary .receiver, to the 30th day of Seiftember, 1896 inclusive, a.id on reading and filing the said account, together with proof of notice of^presenta- tion hereof, and also proof of service of such account and a copy of this order nnl the Atbornev-General of the State of New York; the American Surety Com- L^'thel-X'on receiver's bond; Philip Carpenter Esq., attorney for the T7J:aIZ Pranite State Provident Association; and J. Newton FierO, Esq., at- J:S;rt?r;d A^^Tagg^rt, etc., and also proof of the filing of s.id account 1134 OOKPORATIONS. in the office of the Superintendent of Banks of the State of New York, and in the office of the Attorney-General of the State of New York, and after hearing C. W. Francis, Esq., deputy attorney-general of the State of New York, on behalf of the people of the State of New York, and T. Tileston Wells, Esq., on behalf of Edwin E. Dickinson, temporary receiver of the Granite State Provident Association, Now, on motion of Lexow, Mackellar & Wells, attorneys for Edwin E. Dickin- son, temporary receiver of the Granite State Provident Association, it is Ordered, That Walter N. Gill, Esq., counselor at law, be, and he hereby is, appointed referee to take and state the accounts of the temporary receiver herein, and to state and report to this court the amount properly payable to the attorneys and counsel for the said temporary receiver as expenses incurred for costs, fees and allowances for services duly rendered by them to the said temporary receiver and for disbursements made by them, and to ascertain and report the commissions properly payable to the temporary receiver for and on account of his services as stated in said accounts, and it is further Ordered, That not less than two days' notice of the hearing before the referee be given to the attorney-general, and the attorneys for the other parties, and that the referee shall take such testimony as shall be presented by either party, and report his determination, together with the testimony so taken by him, to thi^ court in writing with all convenient speed, and it is further Ordered, That hearings before said referee may be held either in New York or Kings counties. Enter in Kings county. » FORM No. 308. Report of Referee on Interlocutory Accounting. NEW YORK SUPREME COURT— Kings County. People of the State of New York ] vs. y. Granite State Provident Association, j To the Special Term of tl^ Supreme Court of the State of New York: I, Walter N. Gill, the referee duly appointed by an order of this court, bear- ing date the 2l3t day of November, 1896, and entered in the office of the clerk of the county of Kings, on the 23d day of November, 1896, to take and state the accounts of . Edwin E. Dickinson, as temporary receiver of the Granite Sitate Provident Association, and to state and report to this court the amount prop- erly payable to the attorneys and counsel for the said temporary receiver, as expenses incurred for costs, fees and allowances for services duly rendered by them to the said temporary receiver, and for disbursements made by them, and to ascertain and report the commissions properly payable to the said tepiporary receiver for and on account of his serviced as stated in said accounts, do hereby respectfully report as' follows : PBOCEDUEAL FORMS. 1135 First. That on the 27th day of November, 1896, the day appointed for the first hearing, Messrs. Lexow, Mackellar & Wells, attorneys for the temporary receiver, produced and filed with me n notice of said hearing, with proof of service of the same upon the attorney-general ; Henry C. Wilcox, Esq., attorney for the American Surety Company, the surety on the receiver's bond; Philip Carpenter, Esq., attorney for the defendant the Granite State Provident Asso- ciation; and J. Newton Fiero, Esq., attorney for David A. Taggart, Esq., as- signee, etc., and that said notice, with admissions and proofs of service, is hereto annexed. Second. That before proceeding to hear the testimony, I took and subscribed, in writing, the statutory oath as such referee, which is hereto annexed. Third. That the plaintiffs appeared on the hearing before me by Clarence W. Francis, Esq., deputy attorney -general of the State of New York; the temporary receiver, by Messrs. Lexow, Mackellar & Wells (Messrs. Clarence Jjexow, T. Tiles- ton Wells and Louis B. Van Gaasbeek, of counsel) ; the defendant Granite State Provident Association, by Philip Carpenter, Esq. (Mr. Jonathan C. Ross, of counsel); and David A. Taggart, Esq., assignee, etc., by J. Newton Fiero, Esq.; and that there were no other appearances. Fourth. That I have read and examined the accounts vouchers, statements and orders, and have heard the proofs and arguments submitted by the respective parties and thereupon I do find and report as follows: I. That on the 21st day of November, 1896, the said temporary receiver pre- sented, and that thereafter and on the 23d day of November, 1896, filed in the ofl&ce of the clerk of Kings county his accounts setting forth in detail all his acts and proceedings as such receiver and of the' administration of hjs trust from the date of his appointment to the 30th day of September, 1896, inclusive. II. That no objection or exceptions to the said account have been filed in the oflice of the clerk of the county of Kings as more fully appears from his cer- tificate hereto annexed. III. That said account was also produced before me and put in evidence, together with the original vouchers supporting and verifying the same. IV. That on the 21st day of November, 1896, the said temporary receiver pre- sented at a Special Term of the Supreme Court, and thereafter on the 23d day of November, 1896, filed in the oflice of the clerk of Kings county with and as a part of his said account, an itemized bill rendered to him by Messrs. Lexow, Mackellar & Wells, for services and disbursements made by them as attorneys - and counsel for the said temporary receiver on matters pertaining Jto the re- ceivership, during the period covered by the said temporary receiver's account- ing and to the 30th day of September, 1896, inclusive, amounting to the sum of six thousand three hundred and eighty-eight dollars and eighteen cents ($6,388.18). That said attorney's bill and account was produced before me and put in evidence and three disinterested witnesses were examined in explanation and support thereof in addition to the- testimony of Messrs. Wells, Mackellar anji Lexow, and no testimony in opposition thereto was offered by any party to this proceeding;! : ,. ;; ; ■ : ; ;: V. That I have examined in detail "4 certificate of amendment pursuant to § 24 of the Stock Corporation Law to change to shares : 1003 of incorporation, business corporation authorized to issue sliares without designated par value and shares with par value and preferred as to principal. 997 clause for certificate of incorporation which provides for the issuance of shares without nominal or par value and shares with nominal or par value, preferred as to dividends, but without preference as to principal ; 999 GENERAL INDEX See Index to Forms, ante p. 1149. 11163] GENERAL INDEX See Index to Forms, ante p. 1149. [References are to pages] The sections of the Consolidated Laws quoted in the text are given in the index. Ibe forms are indexed in general index as well as in a separate index which will be found on page 1149. The abbreviations for the statutes are as follows: Business Corporations Law: B. O. L. General CSorporation Law: G. O. L. Stock Corporation Law: S. 0. L. Transportation Corporations Law: Trans. 0. L. General Business Law : G. B. L. Civil Priaetice Act: C.P. A. . A Abatement and continuance: Faee action not to abate on change of corporate name (G. 0. L., § 65) . . , . . , 540 flyppointment of receiver as abating action 556 change in name not to aibate (G. C. L., § 66) 64 representative action 256 Abutting owners: • > rights and remedies of abutting owners as to construction of telegraph, or telephone lines ..•..-; • 866 Account books as evidence 80 Accounts and accounting. (See also Dissolution; Eeceivers.) permanent receiver (G.C. L.,r § 311) 671 receivers (G. 0. L., § 268) 704 Acknowledgment: certificate of incorporation 24 Actions by and against corpotation. (See also Foreign Corporation.) appearance voluntarily 543 amending pleading or proceeding by substitution of new name of, cor- poration (G. 0. L., § 65) 540 abatement; appointment of receivers a^ ?ibating,,actiojn. 556 change of name not to abate action (G. Q. L., § 65) , 540 books and records: _ , , , , , : ;, . compelling production on trial (C. P. A., § 413) . . . '. 550 personal attendance of officer on whom sutopoena duces' feclim served. (C. P. A., § 414^. ;'..'. i.'.':^".. . !';V ...::......:..■... . 550 productioii of corporate books and records'on trial (C. p. A., § 411) 550 oprpprate existence, vfiien proof of unnecessary (Rules of Oiyil Practice, ■ Rule 9'3);:/......^'---'--'----------------^V;'.'...i. ..].;.... 550 alleging in complaint (Rules of Civil Practice, Rule 93) . ..' 537 defense of usury proiiibited (G. B. L., § 374) : .'. : . , ; 556 1166 GENERAL INDEX. Actions by and against corporation — Co'ntinued: dissolution: Page directors as trustees (G. C. L., § 35) 559 effect on pending action 558 effect on right of corporation to sue and be sued (B. 0. L., § 5) . . . 560 right to sue and be sued thereafter (G. C. L., §§ 35, 221 ) 559 examination before trial: affidavit for examination of defendant corporation 548 corporation cannot be examined through person who has ceased to ibe officer 548 employee, examination of (G. P. A., § 289) 546 extent of right 547 foreign corporation, order for 549 ofScers who may be examined (C. P. A., § 289) 546 officers cannot be examined apai't from examination of corporation . 548 order for examination, curing defect 549 order for examination of defendant corporation 549 production of books and paipers (C. P. A., § 296) 548" right to examine corporation before trial ( C. P. A., § 289 ) 546 extension of time to plead on promissory note against corporation (Rules of Civil Practice, Rule 86) ■. 552 injunction suspending business of corporation and restraining officers from performance of duties- (G. 0. L., § 305) ; 561 libel, right to maintain action for 555 officers and agents may be compelled to testify in certain actions (G. C. L., § 301) 562 orders: injunction order, manner of service (C. P. A., § 883) . . 546 manner of serving on corporation (C. P. A., § 798) .......;! 546 officers on whom order may be served ( 0. P. A., § 798 ) 546 service on corporation generally (C. P. A., § 798) 546 parties : substituting receiver in pending action 556 substitution of receivers or directors on dissolution. 558 directors as parties on dissolution (G. C. L,, § 35) 559 place of trial: corporation deemed resident of county where principal office is located, as stated in certificate of incorporation 541 railroad company, risident of every county through which road runs . 542 trustee in bankruptcy of corporation resident of county where bankrupt had principal office 542 where corporation has several places of business. '. 542 pleadings : answer, history and construction of statute requiring verified answer in answer in action on note or contract for payment of money absolute. . . . 552-555 corporate existence, alleging in complaint (Rules of Civil Practice, Rule 93). . 537 allegation of existence no part of cause of action.'. 538 answer must be verified, and contain specific allegations that GENEBAL INDEX. 1167 Actions by and againat coiporation — Continued: ■' '' 'Pag© corporation is not such (Rules of Civil Practice, § 93) . . . . 550 failure to allege waived by not raising in answer 539 need not be proven unless answer contains affirmative allega- tions that it is not corporation 538 sufficiency of allegation. 538 denial of corporate existence not sufficient to raise issue 550 denial of lack of knowledge or information sufficient to form a belief does not raise issue of corporate existence 551 extension of time to corporation to answer in action on promissory note or contract for payment of money absolute (Rules of Civil Practice, Rule 86) , , 552 misnomer, how taken advantage of 540 mistake in corporate name, effect 539 specific allegations that plaintiff is not corporation must be con- tained in answer in order to raise issue. 551 usury, defense of prohibited (G. B. L., § 374) 556 waiver of mistake in corporate name . . 539 real property, action to compel determination of claim to 555 receiver, effect of appointment of 556 service of process: ,. . assistant treasurer, service on invalid;. .........,,,...;. 544 cashier, service on (C. P. A., § 228) ....,,..., 542 cashier, who is - , 544 clerk of corporation, service on (C. P. A., § 228) 542 construction of statute 543 de facto officer,, service on 544 director, service on (C. P. A., § 228) . ., , 542 dissolution, services on officers thereafter 543 managing agent, seirvice on (0. P. A., § 228) 542 managing agent, who constitutes , • • • ■ : 545 no person within section 228 of Civil Practice Act, upon whom service may be made (G. C. L., § 102) 543 order for substituted service (C. P. A., § 231) , 543 particular officers, service on ; 544 president, service on (C. P. A., § 228) ,;,..-• 542 personal service generally (C. P. A., §228)............,, 542 purpose of statute ., . . . 543 pu^licp,ticin, service by (C. P. A., § 230) ,•••.■.• • . • 543 resigned officer. . . .. .................. .] 544 secretary,, service on (C. P. A., ,f 228) 542 service need not be made while officers acting officially. 543 substituted service (C. P. A., §§ 230, 231) 543 treasurer, service on (C. P. A., § 228) 542 voluntary appearance 543 • stay of proceedings in action collusivel^^ broijightrby, directors against corporation .(G, C. L., p 33) . , ,,,^ . , . . , 561 supplementary proceedings.,.^. ... . . .^ 563 usury, application of statute prohibiting 556 1168 GENERAL INDEX. Actions by and against coiporaticm — Continued: verification of pleadings : ^^ fage answer in action on note or contract for payment of money absolute, necessity for (O. P. A., § 252) 552 by whom made (Rules of Civil Practice, Rule 99) 540 director, right to verify i . . . .".'. .'. 540 general manager, right to verify '. '*.' 540 presidemt after resignation 540 vice-president, by .....; 540 voluntary appearance. . . 54.S Admissions and declarations by members of corporation, effect (C. P. A., § 340) -...-. 530 Adoption of promoter's contract 38 Advertisements, untrue and misleading (Penal La-w, § 421) 146 Affidavit to be annexed to petition, in voluntary dissolution (G.C L., § 175) 594 After-acquired property, validity of mortgage covering. ....!......... .442-444 Age, incorporators to ibe of full age (G. C. L., § 4) .'....... ; 14 Agents of corporation: appointment by directors (S. C. L., § 30) '.'',.' 327 compensation. . '. . ..........;'..... .....'... 351 criminal liability of agent acting for certain foreign corporations not authorized to do business in this State (Penal Law, § 663) 759 general authority of officers to engage. :'. 505 promoter as .- 33 Agreement for reorganization, contents (S. C. L., § 10) 99 to consolidate corporation (B. C. L., § 7) 85 to form corporation 33 to form corporation and take stock, see Form No. 95. as constituting parties partners 35 specific performance. '. ....';'... 39 Alteration of stock certificates, effect (Pers. Prop. Law, § 177) 136 and repeal of charter by legislature v. ....... 52 of by-la*s. . . 76 Amendment: affidavit of custodian of stock-book to be annexed to certificate of amendment when signed by all of stockholders, see Form No. 49. president and secretary to be annexed to certificate of aniendinent when signed by such officers, see Form No. 56. by-laws; .... .... .... • 76 certificate of amenduient of certificate of incorporation, see Form No. 41. amendment of certifiijate of incorporation to Correct infoimality and eliminate unauthorized matter, see Form No. 10. amendment pursiitot to § 24 of Stock Cofporatidn JjILw, see Form No. 48. ■ '' ■ '■'■'• • ■..-'■• incorporation (G. C. L., § 7) .'.... 46 to alter and extend business (S. C. L., § 18) . . . ..'....... 48 to correct legal informalities and omissions. .. .'r^ ........... .'.; 47 to change to shares without nominal or par value (S. C. L., § '24)'. . 49 to express true object and purpose (G. C. L., | 1) ':.". . . . . ' 46 GENERAL INDEX. Xl!59 Amendment — Continued: defect that may be cured by amending certificate of inborporation '" (a. c. L., § 7);.........:. ;:.;:..::....,....:.,..,.. « schedules annexed to petition in voluntary dissolution proceeding (G. C. L., § 189) .........•.....'......... ; 594 Annual report of corporation to secretary of state (S. C. L., § 34) . . , 4Z2 construction of statute and reports thereunder i . . . . ' 422 domestic corporation pursuant to § 334 of Stock Corporation Law, see Form No. 53. foreign corporation, pursuant to § 34 of Stock Corporation Law, see^ Form No. 54. ■ requisites of report . . .> , ,,..,. 422, 423 when corporation relieved from filing report ■ . ; i . . 424 Annulment of corporate charter. (See Forfeiture of Franchise.) Appeal, order granting leave to attorney-general to commence action for forfeiture of franchise .■..,.... 657 Appearance. (See Actions By and Against Corporations.) Appraisal: dissolution of moneyed corporation (G. C. L., § 152) 640 dissolution, property in hands of receiver (JG. C. L., § 310) ...;.'. 634 property in hands of receiver (G. C. L., § 310) 686 stock of non-consenting stockholder on voluntary gale of property and franchise (S. C. L., § 17) , 469 stock of non-consenting stockholders on consolidation, method......... 90 stock of stockholders not consenting to consolidation (B. C. L., § 8) . . . . 89 Approval of certificate of extension of existence of corporation (G. C, L., § 3'9) ....,l......l ......;.....!..]...., 43 Assessment of fully paid shares of capital stock 113 Assets: liability of directors and ofScers for wrongful distribution 395 unissued shares not assets ,. .; 105 unpaid subscriptions as 165 Assignment: by officer or stockholder of claim against corporation while insolvent or in contemplation of! insolvency. 452 for benefit of creditors ; • by foreign corporation ^ . a 724 presiden-t does not have general power to execute ■.....-; :■, ..: 499 without preferences . .■...' .■; . j;';'. i . . . 463 in contemplation of insolvency (®. C. L., § 66) ..... .■. .:. ..... 44.S Attachment ; - ' ' ' action on undertaking given in attachment proceedings against ' vessel (O. P. A., §§ 932, 933) ■■.'.'. . .■. . .■; .'. :..'..". ..;... .:■. •. :', . ... 847 annulment of attkoiiment on foreign vessel (O. P. A., § 937) . . . ■ 848 aipprai^al of attached domestic vessel ( Trans. C L., J 66 ) 846 claim of third person to attached domestic vessel (0. P. A.,§ 928) .... 846 discharge of attachment on doniestie vessel (C. P. A., § 931) j.t. 847 disehai^e of attachment oil foreign vessel (C. P. A.; § 936) . ;: 848 domestic vessel, subsequent attachment against (G. P. A, § 961) . i ; i i . 846 1170 GEi^EEAL i^raix. Aitachment — Continued: " 'Page exteneion of time for undertaking to prevent release of foreign vessel (C. P. A., I 966) . . . . . 849 foreign corporation, showing necessary to secure attaohment in action against. . '......'...........:...:. 783 goods in vessel (C. P. A., § 920) 846 issuance of attachment in action against foreign corporation (C. P. A., i 903) 782 pledgor's interest in stock 194 proceedings to discharge attachment on vessel ( 0. P. A., § 957 )....... 848 sale of foreign attached vessel (C. P. A., § 938) 848 sale of domestic or foreign attached vessel where claim not mode (C. P. A., § 939) 848 shares of stock (Pers. Prop. Law, § 174) ; 192 shares of stock, creditors remedies to reach certificates (Pers, Prop. Law, § 175 ) , , 192 subsequent attachment of foreign vessel after release for failure to give undertaking (C. P. A., § 963) 849 undertaking on claimi to foreign attached vessel ( G. P. A., § 935 )...... 847 undertaking under junior attaoliment for release of foreign vessel (0. P. A., § 962) 849 unpaid stock subscription in foreign corporation, attachment in action against corporation (C. P. A., § 914) 739 valuation of foreign attached vessel on claim of third person (0. P. A., § 934) 847 Attorney and client: application of statute prohibiting corporation from practicing law. ... 418 construction and purpose of statute prohibiting corporation from prac- ' ticing law. ..'......■: 416 corporation prohibited from practicing law 414 criminal liability where corporation practices law (Penal L., § 280) . . . 415 dissolution of corporation, effect on authority of attorney 558 employment of counsel by receiver of moneyed coi-poration (G-. O. • L., § 154) 641 payment of claims by attorney defending action for dissolution .... 637 general authority of oBHoers to engage , 506 purchasing sihares as within prohibition against purcjiasing ibonds, etc.. to bring action .-. ; 171 receivers,, change of counsel , 682 compensation of coun^l ..'.... 682 employment of counsel by (Gr. C. L., § 242) 681 numiber of counsel that may be employed by (Rules of CSvil Prac- tice, Rule ISO)., 682 who may be employed as counsel , 682 test for determining wheth^- corporation is practicing law 418 voluntary dissolution, lialbility of directors for services of attorney. . . . 591 Attorney-general: , action to forfeit franchise of corporation (G. G. L., | 304) 655 actions to enjoin fraudulent practices in respect to corporate, stocks and bonds (G. B. L., § 352)....,. ,...,..,.,.........,.. 143 application to remove receiver and for an accounting (G. C. L., § 311) , 664 GENERAL INDEX. 1171 Attorney-general— Continued; Page service of papers on (G. d. L., § 312) ''. 624 dissolution, action for (G. 0. L., § 102) 619 forfeiture of corporate francliise, action by direction of legislature (G. 0. L., § 130) .. 646 notice by receiver of intention to make report, service on (G. C. L., § 249) ,.;,..■. ;;.....,.. 694 of application for miodifieation of injunction 627 of proceeding for voluntary dissolution of corporation, service on (G. €. L., § 312) 696 papers to.be served on attorney-general in sequestration action (G. C. L., § 312) 568 receiver, application for removal {Gt. C. L., § 311) 670 application to compel accounting by (G. C. L., § 268) 704 removal or suspension of directors and officers, actions for (G. C. L., § 304). 379 report by receiver, service of copy on (G. C. L., § 248) 694 right to bring action for oflHoial misconduct of officers and directors (G. C. L., § 91 ) . , 377 sequestration, copy of proposed judgment to be served oil (G. C. L., i'3i2).' . ...: ; ■:''. '.'........... 568 usurpation of corporate office, franchise or rig'ht, action against usurper (C. P. A., §. 1208) ,. . . ., . 710 when must bring action for dissolution (G. C t/., § 304) '. 621 when must bring action for official misconduct of officers and directors. 379 B Bankruptcy. (See also Insolvency.) action by trustee where property illegally conveyed while corporation insolvent '.' 468 president does not have general authority to execute petition. . 499 transfers by corporation within four months of bankruptcy 464 Banks and banking: corporation not organized subject to banking laws prohibited from ex- ercising powers of bank (G. 0. L., § 22) 413 liability of bank accepting cheeks of corporation for deposit to officers personal account 514 report of receiver, service of copy on superintendent of banks (Q. C. L., § 248)..!............'.'. ;.:.,.. 694 Bicycles to be taken a,s baggage on steamboats (Trans. C, L., § 14) 845 Bills and notes. (See also Officers and Agents.) ' ^ '_' accommodation paper, power of corporation to execute. . . . . : ' 473 answer in action on note 6r contract for payment of money absolute against corporation must be verified (C. P. A., § 2^2) 552 authority of officer of corporation to execute ajvd transfer generally. . 509 endorsement by secretary of business corporation. ..... .' 50.1 execution of promissory note 526 liability, of oJBScer on implied warranty where he makes promissory note without authority 511 manager does not have authority to execute 510 1172 GENERAL. INDEX. Bills and notes — Cotinued: ?age promissoTy note executed in individual name of officers 526 proof of authority of president to make 524 ratification of president's act in signing. 510 treasurer of business corporation has no implied authority to ; make .... 501 Blank assignment and power of attorney transferring shares of stock.... 177 Bona fide holder, person taking paper executed by corporation in favor of officer is not 512 Bondholders agreement on reorganization (S. C. L., § 10) 98, 99 Bonds: consideration for bonds (S. C. L., § 55) ; . . 479 conversion of corporate bonds into stock (S. C. L,, § 6) . . .-.■■. .-...• 434 coupons for unpaid interest as depriving bond of negotiability 483 criminal liability of agents for fraudulent issue ot bonds (Penal Law, § 662). . :■ :;;.. ;:... ; 142 definition ;'. .... 478 enforcement ....'...... 482 fraudulent practices in respect to bonds (G. B. L., § 352-3S9) .142-146 guaranteeing bonds of other corporation of which corporation owns entire stock (S. 0. t., §8)'.". . .'. L 477 interest coupons, action to recover on 483 cutting from bond does not affect character 483 interest not recoverable on while held, by owner 484 nature of , , . . : 483 issuing for less than par value 479 for money, labor done or property received (S. C. L., § 55) 479 in consideration of stock returned unauthorized 479 to pay scrip dividends not authorized ...'... 479 lost interest coupons, actions on 484 must be disposed of for purpose for which issued 481 negotiability generally. , . . . , 482 of interest coupons '. 483 stipulation rendering bonds non-negotiable 482 unpaid coupon will not deprive bond of. 483 permanent receiver of moneyed corporation on dissolution (G. C. L., § 151) .......:. 639 pledging to secure payment of pre-existing debt. '. 479 power of corporation to guaranty bonds of other corporations (S. C. L., § 8) ,....*....... 477 pre-emptive right of subscription not preserved by § 6, S. C. L. . . '. . . . . 481 receiver (G. 0. L., § 225) . . . . ... ......... .i'. . . .'. . . . . . ..... I'l. i ! . .6^5 rescission of contract of subscription '. i'. 481 sale, officer authp4zed to sell. ..'.'... ; 480 stock as distinguished from bond's. '. .'. . '. 478 treasurer's bond, see Form No. 106. trust mortgage to secure bonds...! i:;....!" 485 trustee. '..'...... 485 unanimous consent to guarantee bonds of other' corporations (S. C. L., § 8) ..:... 477 GENKBAl, INDEX. 1173 Paga Books. (See also Actions By and Against Corporations; Foreigii ' Cor- porations.) account books as evidence '.'. ^ 80 action for penalties for failure to keep or exhibit lies .with people. . 78 ;. compelling production on trial (C. P. A., § 413) 550 delivery of corporate books and papers by qutgping ofaoers,. mandamus to compel ,......, , 23X distinction between right :to inspect general and stock book , 221 foreign corporation, duty to keep stock book and permit inspection (S. 0. L., § 33) .,, 725 inspection, criminal liability for refusal to permit (Penal Law, § 66ff) . 393 inspection of general books, affidavit on which order will be granted 229 basis of right of stockholder to inspeict. :.;..;... 223 eireumstamces entitling stockholders to inspect. 225 circumstances under which iflspection will be denied 227 directors and oifieers, absolute right of 230 directors and officers, right to assistance 230 executor and administrator of stockholders 228 mandamus to enforce stockholders' rights 225 officers and directors, absolute right of i !.. ' 23t) pledgee as stockholder whero stock is in name of pledgor! . ' 229 pledgor, right to inspect 228 proof necessary for issuance of mandamus order 325 right, depends on common law principles. 226 right of stockholder to inspect 223 right of stockholder to inspect as depending on purpose 224 right pergonal to stockholder 228 statute in reference to inspection of stock books d.id not effect right to inspect general books ,..,,...., 226 stockholder becoming such for purposes of inspection only 229 stockholders, denial where stock book does not show applicant to be. . , . : ^.!.... 228 when inspection wiU be denied 227 who entitled to inspect, generally 228 inspection of stock book by creditor or stockholder (S. C. L., § 32) 221 demand that will support action for penalty,. 232 denial of right where purpose, is ulterior. . . ... . . ...,. . ....... 223 identifieatiton of person demanding as stockholder 222 nature of right, ■.,.» •••••, 222 penalty for refusal of inspection (8. C. L., | 32) . . . , 232 penalty for refusal, amount of recovery 233 penalty for refusal, pleading. .^, 233 purpose of inspection '.' 222 refusal to permit inspection, what does not amount to 232 time during day when books maybe inspected.........'.. ii . > 223 when penalty not waived. ;;.....<. i .u. .n . . . . . . 233 maintenance of books of account and stock book (S. C. L., § 32) 77 1174 GBKEBAL IlfDEX. Books — Continued ; Page mandamus to compel production of books for, examination by stock- holder (S. C. L., § 32) ..:..!;.'.. r. . . .''.". 77, 221 mandamus to compel outgrowing officers to deliver corporate books and papers j 231 mandamus to compel surrender to rightful officers 279 minute books as evidence. 79 penalty for failure to keep books (S. 'C. L., § 32) .' 77 penalty for failure to keep books as required by statute (S. C. L., § 32) . 231 for refusal to allow inspection required by statute (S. 0. L., § 32) . 232 for refusal to exhibit books (S. C. L., § 32) 77 personal attendance of officer on whom subpoena duces tecum served (0. P. A., § 414) 550 production of corporate books and records on trial (C. P. A., § 411) . . 550 on examination before trial (C. P. A., § 296) 548 relief from subjoena duces tecum (C. P. A., § 411) 550 stock book ajB evidence generally (S. C. L., § 32) 78 as evidence of ownership for purposes of dividends 199 making extracts therefrom (S. 0. L., § 32) 221 Burden of proof, action to enforce liability of directors for corporaite acts and debts 403 Bus line, when common carriers 858 Bus line corporation. (See Stage Coach' Corporation.) By-laws: alteration 76 amendment '. 76 change in number of directors, by-laws requiring consent of more than majority invalid 315 construction and effect '. . '. 76 election of directors, by-law that majority of stock present at meeting shall constitute quorum does not apply 318 election of directors, regulating (G. C. L., § 11) 318 inspection by stockholder 231 limitation of authority of officer or agent, effect on rights of third person 494 publication ; 75 publication of by-laws regulating election of directors 318 power of corporation to make ( G. C. L., § 11) 407 power to make by-laws (G. C. L., § 34) 74 regulating transfer of stock, 'Validity (Q. C. L., § 11) 174 repeal 76 validity of by-laws providing for forfeiture of stock for non-payment. 160 validity of particular by-laws 74 c Cancellation: of stock . certificates wrongfully issued- .,;,,.,.. 126 of subeeriptien by fraud , 153 G|\|s;|iEAL INDEX. 1175 Capital stock. (See also Subscription to Stock; Transfers of Sliares.) Page amount on reorganization (S. C.iL., § 10) 99 < assessment of fully paid shares .- 113 attachment or levy on shares (P. P. L., § 174) 192 certificate of payment of one-half 114 of payment of one-half of capital stock, see Form No. 23. certificates : alteration, effect of (P. P. L., § 177) 126 cancellation of certificates wrongfully issued 126 consideration (S. C. L., .§55) ... .'.'.. 132 consideration, right to seir stock at less than par 132 consideration, stock to be full paid where given for property (S. C. L., § 55) 132 constitutionality and construction of statute providing for issuance of new certificate in place, Of one, lost or destroyed 129 criniinal liability of officers or agents for fradulent issue of stock or bonds (Penal Law, § 662) 142 definition (P. P. L., § 183) 189 fraudulently issued certificates, rights of holder 140 fraudulent issue of certificates in excess of number of authorized shares ■ . 127 fraudulent practices in respect to corporate stocks (G. B. L., i§ 352-359) ,.; 142-146 forged certificates, rights of holder 140 forged or fraudulently issued certificate, liability of corporation. . . 138 issuance of certificates in excess of number of shares authorized. . 127 procepdings to compel 126 to represent stock (>S. C. L., § 50) 123 law, not to be construed to allow corporation to practice (B. C. L., § 2a) 16 levy on stock certifieate (0. P. A., § 915) • • • • 124 liability of corporation for fraudulent or wrongful issue by officer or agent. . . .;.,.... ,. ■ 518 liability of offieera and directors for false certificate (S. 0. L., § 35) '. ■■■:■., 401 lost or destroyed certificates, issuance of new certificate (S. C. L., § 67). . . ■.•■•,■■-, 128 1 notice of application for new certificate. ......:• 131 pleadings and proceedings to , compel issuance of new certi- ficate 129 proceedings to cpjn/pel issuance of new certificate (Pers.Prop. L., § 178). . ;•, 128 procedure on application for new certificate (S. C. h-, § 68) . . 130 proof on application to compel issuance of new certificate. . . . 131 nature of. ^23 negotiability • • 124 effect of Personal Property Law 191 where assignment is blank 179 of voting certificate 125 1176 GENEEAL INDEX. Capital stock — Continued: ' "Page no par value, requiaitra of certificates for prieferred shaires (S. 0. L., § 19) ' 126 over issue of shares 127 pledged by agent of owner wroi^fully. 125 presumption that stock was issued for valuable oonsideration 124 property as consideration ( S. C. L., § 55 ) 132 value fixed by directors a.s oonclusive (S. 0. L., § 55) ....... . 132 refusal of president to sign, remedy of stockholder '.'_ 123 requisites of certificate for share without nominal or par value (S. 0. L., § 19).... 126 rights of ' holder of spurious certificate . ]/. 140 specific performance of contract to issue stock certificate 126 change of amount of authorized capital stock by unanimous written consent of stockholders without meeting, see Form No. 59. by vote of majority of stockholders at meeting, see Form No. 58. numiber and par value of shares of stock, see Form No. 60. classification: classifying stock into preferred aiid eonunon after incorporation (S. C. L., '§ 61) 108 oonsideration : agreement to pay for services in stock when services rendered, validity. 136 creditors, right to inquire into value of property given for stock . . . 106 difetetors, liability for issuing stock without consideration 137 excessive valuation of property given as consideration. ...... .133, 288 future services as consideration 136 labor as consideration (S. G. L., § 55) 132, 135 lawful purpose, defined 135 note not good consideration 132 promoter, stock issued in payment for services 136 property, excessive valuation 133 judgment of directors as to value as conclusive. 133 that may be given as oonsideration 132 rights and liabilities arising out of issuance of stock without con- sideration^ . . . 137 right where property excessively valued 134 services and labor. . ; . . . 135 validity of stock issued without considei^tiori in hands of third person • : 137 valuation of property transferred to Corporation for stock 134 AVhat constitutes property 134 contract fo:i' sale ".....': 186 creditors rights 106 definition :..'... 105 distinction between capital stock aad capital .•.'■... 105 dividends not to impair 201 division into preferred and common stock (S. C. L., § 61) 108 employees, issuance of stock to (S; 0. L., § 62a) . . . ; 112 false statement inducing purchase, essential element of cause of action . 372 GBBTiiBAL INDEX. 1177 Capital stock — Continued: Page false statement inducing purchase of stock, liability of offlcens and directors , 371 false statement inducing purchase, measure of damages. 374 ferry eorporatioM, pay^g in. one-half ibefore commencing business (Trans. C. L., § 3) .'...'.... !.. .7.'. . .\ . . . . . ! 809 forfeited stock, cancellation where not reissued (S. C. L., § 54) 159 forfeited stock, reissuance ^S. O. L., § 54) 15!) fraud in increase (Penal L., § 661) .'. . ! 17 inCTease or reduction- certificate as to deists , and liabilities to be annexed to certificate amendment reducing' amount of stated capital, see I'orm No. 47. of increase or reducti(>n ( S. C, § 64) ......: .'.V. ;"....'..... , 118 forfeiteid stock, increase where stock forfeited reduces capital be- low minimum (S. O. L., § 54) .'.' . . ..;'.". . V 160 fraudulent increase, right of stockholdei' tb avoid 119 liabilities of stockholders (S. C. L., § 62) ..:...'...:'; ... 114 liability of original holders where increase'd capital hot paid in. . 122 manner of increase '. ."^ .'.:...'.:'.':':: .['\ ...''.'.. .'I ''.'.':. 115 manner of increasing or reducing ('S. C. L., § 63) ':''. . 117 new stock, right of stockholder to prbportionate shares. 120 no par value, increase or reduction of shares Of capital (S. C. L., I 22)-. :. ..V:. ■.:.-'. ..;•.:.'.■..■; 122 notice of stockholdS^a" meeting (S. C. 'L., § 63) . . .< . . : 117 organization tax. . i . : : : 115 principle governing reduction of capital stock -. i 116 reduction, relative rights of stockholders not to be affected, s ...... . 116 right to increase or reduce ( S. C. L., § 62 ).-... t 1 14 stockholders' meeting (S. O. L., § 63) ; .:.r, 117 stockholders' meeting, conduct (S. C. L., §-64) .■. . 118 issuance of stock to em,ployees (S. 0. L., § 62a) 112 prior to filing certificate illegal.. .[.........-• 172 liability of directors for debts of cor-imration issuing stock without nominal or par value incurred before capital paid in (S. C. L., §. 20). 400 lien of corporation on shares (Perg. Prop.., L., § 176) 113 nature of property in shares 105 new issue, right to subscribe to , , 1,48 no par value : ; , : amount of capital and of shares without nominal or par value (S. O. L., § 23) '.......!.!.....,.,.....,...,..,.-. Ill right to sell shares at fair market value (S. C L., § 19) ]<11 shares to be considered fully paid and non-assessable (S. O. L., § 65) ..^.'.';^;'...'.'..'..l.^ ''.....'.?;..'. Ill value of shares issued withojit nominal or par value^ (S. C. L., § 19). , llj partly paid stock, dividends on (S. C. L., § BO) ; , . . eo4 issuance (S. C. L., § 60) . . : 113 par value, change in pa^ valu^ of shares ,('S. C. L., § 65) Ill paying in capital sticjck before commencing business (df. C. L., § 3). .|. , 411 paymeiit, failure to pay in one-half within one year as ground for dis- solution (B. C. L., § 5)......'. .....:'.. .,.'...,. ..y... 619 1178 GENERAL, INDEX. Capital stock — ^Oontinued: Page forfeiture, secretary cannot forfeit 503 power of corporation to purchase its own stock 48-5 preferred stock, agreement between stockholders and corporation .... 319 exdiange of preferred for common (S. €. L., § 61) 108 general right to divide stock into preferred and coiiiraou 219 right to issue 108 statement of preferences in certificate (B. C. L., § 2) 18 validity of statute permitting issuance of preferred stock on con- sent of two-thirds stockholders 110 purchase of stock of other corporation, application of statute 428 when power exists (S. C. L., § 152) 4®6 restrictions on doing business where stock not paid in. 114 shares unissued are not assets 105 value of (B. iC. L., §. 2) .' 18 without nominal or par value, amendment of certificate to change to (S. 0. L., § 24) ., 49 specific performance of contract to sell shares 187 subscription, collection of amount diie on stpck ,9u,bscrlption in seques- tration action (G. C. L., § 113) 570 induced by fraudulent representation S6 recovery of amount due on subscription by receiver (G. C. L., § 244). 689 rescission for false statements in prospectus. 36 time within which capital stock must be paid in 113 transfer, see "Transfer of Shares." trust fund doctrine 106 unissued stock of corporation 1 06 value, how established 187 Certificates of authority for foreign corporation to do business within state. (See Foreign Corporation.) Certificate of incorporation. (See Incorporation.) Certificates of stotk. (See Capital Stock.) Certiorari: not to issue to review action by secretary of state in accepting im- proper name 57 Change: in par value of shares of capital stock (S. C. L., § 65) . . Ill in number of directors, see Directors, of name, see "Name." * Charter: alteration and repeal "by legislature. '. 52 construction of provisions in 408 Chattel mortgages, filing mortgage covering both real and personal property (Lien Law, § 231) .....'.' 445 Checks: liability of person taking check on unauthorized endorsement of agent. 513 liability of third person for accepting corporate check in payment of officer's obligations , 514 wrongful use by officers and agents 513 GENEKAL INDEX. 1179 Page Cities, construction of pi]E>e line 'througli (Trans. C. L., § 46) 852 Citizen: . , aa including corporation 4 corporation existing in two states 4 national bank as 11 two-thirds of incorporators to be (G. 0. L., § 4) . 14 Civil rights, penalty under Civil Rights Law for unlawful use of corporate name .:.:.... fiS Classification of corporation: publle and private ■ 8 statutory classification (G. C. L., § a) 8 College, list of word "college" in corporate name restricted (Education L., § 66) '. ..; : ...' : &6 Combinations and monopolies prohibited [S. 0. L., § 14) 94 purchase of stock of other corporation 438 Commissioner of deeds, power to take acknowledgment to certificate of incorporation '. .' . . .- . ; »5 Common carriers, stage coach, when common carrier within Public Service Commission Law (Trans. C. L., §§ 24, 3i5) ....... '. . .7. 85S Compensation of ofScers and directors. (See Rigihts, Duties and Liabilities of Directors and OflBcers.) Complaint in action to enforce stockholders' liability. (See Stockholders' Liability.) ^ Condemnation of lands: development or improvement corporation (B. C. L., § 16) . ., 431 freight terminal corporation, power to acquire property (Trans. C. L., § 157) , 814 pipe Tine corporation, condenmatiqn of real property by (Trans. C. L., § 43) ., : 8i51 real property by tramway corporation (Trans. C. L., § S&) 876 telegraph and telephone corporations, land for construction of lines (Trans. C. L., § 103) 863 waterworks company, property for (Trans. C. L., § 84) ., 901 what constitutes public use in reference to condemnation for telegraph and telephone corporations.. 865 Conflicting laws: General Corporation Law and other laws (G. C. L., § 331) 5 Stock Corporation Law and other laws (G. C. L., §; SSI) . . 5 Consideration for stock. (See Capital Stock. )> Consolidation: actions to enforce liability of old corporation, parties 93 agreement to consolidate (B. C. L., § 7) . .' 85 agreement for consolidation, see Form No. 4. agreement, suibmission to stockholders (B. C. L., § 8) .87 appraisal of stock of stockholders not consenting (B. C. L., § 8) . . .89. 90 approval of agreement by two-thirds of stockholders (B. 0. L., § 8) ... , 87 certificate of secretary of state as proof (G. O. L., § 9) : 88 combination effecting monopoly prohibited (S. 0. L., § 14) . . 94 1180 GENERAL INDEX. Consolidation — Continued: Page corporations that may be consolidated (B. 0. L., § .7) 85 creditors, agreement between consolidated corporation cannot aflfeet rights 93 rights of creditors of old corporation (B. C. L., § 11) 91 right to pursue either old or new corporation 93 distinction between merger and consolidation. 82 effect of consolidation : ■ ■ • ■ • 8S pending suit 92 fredgbt terminal corporation (Trans. C. L., § 157) 814 filing agreement (B. C. L., § 8) 87 gas and electric light corporations (Trans. C. L., § 61) . . , 817 manner of consolidating corporations (B. O. JJ,, § 7) .85 meeting of stockholders to pass on agreement (B. C. L., § 8) 87 monopoly, what constitutes ?4 name of consolidated incorporation (Cr. C. L., § 6). . 53, 55, 87 nature of business to be conducted not to be stated in agreement. . , . . 87 non-consenting stockholders, appraisal and purchase of stock (B. C. L., § s). . , . \ :...... ^ :......' 89 rightjto interest on appraisal. . . . , ." 91 oral agreement void 86 organization tax . ....". '87 powers of consolidated corporations (B. C. L., § 9) 89 dependent on charters of constituent companies '. . . . 87 proof of consolidation (G. C. L., § 9) 44, 88 qualification of consolidators (G. C. L., § 4) -14 signers of agreement . '. 80 rights of stockholder^ not consenting to oonsolidsitiort (B. O. L., § 8).. 89 suibmission of agreement to stockholders (B. 0. L., § 8) 87 telegraph' and telephone corporations (Trails. C. L., § lOi) . . . ..'. . : . . . 874 transfer of property of old corporation to consolidated corporation (B. C. L., § 10) . . 89 turnpike, plank roEtd and bridge corporation (Trans. C. L., § 138')-. . . . 8'78 Constitutional law: -i citizen as including corporation. . .". . 4 statute regulating actions by non-resident against foirelgn corporation. . 777 validity of statute permitting issuance of preferred stock on consent of two-thirds stockholders .K' ....:.. 110 Construction: of corporation laws (G. C. L., § 331) . ,.....' ."> General Corporation Law not to affect special act (G. 0. L.; § 3) .... : ' •' fi Constructive notice, contents of certificate, purchaser chargeable with ... . 179 Contempt, enforcement of judgment in action for official misconduct of officers or directors 391 Contents of certificate of incorporation (B. C. L., § 8) 18 Contracts. (See also PoTvers of . Corporation ; Ultra Vires.) admissibility in action against corporation 508 between directors and corporation, remedy of corporation 3*C rescission by corporation.'. .....;. . i 3i9B validity generally .TO-t GBNBBAIi INDEX. 1181 Contracts — Continued: Pago validity where openly made 367 construction of contracts for right of way for telegraph and telephone lines S67 corpptations .having comnion directors, between. 337 effect of ultra vires contracts 530 general manager, authority to make 505 liability of corporation oh contract by promoters 37 liability of corporation on contracts of predecessor . jy 475 promoter's contract, liability of corporation . . . ^ . .^ . . . '. 37 sale of stock 1&6 ultra vires contracts, defined 538 Contributio'ns between stockholders 381 Co-operative corporation: amendment of certificate (B. C. L., § a9) 909 annual report to department of farms and markets (B. C. L., § 36) . . . 911 application of Business iCorporatiohs Law, General Corpotation Law and Stock Corporation Law (B. C. L., § 37) .:.,... 909 capital stock, corporation to have first right to purcdiase at par (B. C L., § 30) 910 par value (B. C. L., § 30) 910 certificate of incorporation (B. C. L., § 3&) ^ 908 certificate of incorporation, amendment (B. C. L., § 39) 909 certificates of stock not to be issued until .fully paid (B. C. L., § 30) .... 910 "co-operative" not to be used in corporate n&,me except in certain oases (B. Q L., § 38) -909 definition (B. C. L., § ,35) -908 directors, number and election (B. C. L., § 38) 909 dissolution (B. C. L., § 35) 911 dividends (B. C. L., § 34) 911 earnings, apportioning (B. C. L., § 34) 911 excessive dividends, criminal liability (B. C. L., § 38) ;...... 912 existing co-bperative corporations or associations, accepting provision of statutes regulating co-operative corporations (B; C. L;, § 37) 912 incorporation (B. C. L., § 36) ' 908 name to include "co-operative" (B. C, L., § 38) 909 officers, number, election and qualification (B. C. L., § 38) 909 officers, removal (B. C-. L., § fl») 909 purchasing business of other corporations or persons, pOwer (B. 0. L., § 33). . ':.■:.'........■... : : '.: 910 purposes for which corporation may be organized (B. 0. L., § 36) 908 reserve funds (B. C. L., § 34) .'.' '. . ; . 911 stock and stockholders (B. O. L., § 30) . 910 stockholders meeting, each stockholder entitled "to one vote (B. C. L., §30) •■• 91B written vote of aibsent stockholders (B. O. L., § 30) . . 910 subscriptions to stock in other corporations (B. C. L:, § 33) 910 traftsfer of stock not to be made without consent of corporation ' (B. C. L., § 30) 910 violation of statutes, criminal liability (B. C. L., § 38a) 918 1182 GENERAL INDEX. Page Co-partners, etockholders as 7, aso Copies of books of foreign corporation as evidence in actions against (C. P. A.. § 374) 732 Corporate franchise, existence, extension of existence of turnpike cor- poration (Trans. C. L., § 153) ' 878 Corporate laws, power of legislature to alter or repeal (N. Y. Const., art. 8, § 1) '■ :...'.... T Corporations tax. (See Taxation.) Costa: security in actions by receiver 673 security for costs by foreign corporation bringing action (C. P. A., §§ 1533, ISaS) 7ft8 usurpation of corporate office, franchise or rights, costs against cor- poration, action for (C. P. A., § laSO) 712 County court, place of business of corporation for determining jurisdiction 73 Coupons. (See Bonds.) Creation of corporation, power of state to create R Credit, power of corporation to loan credit 17.'? Creditors: action for official misconduct against directors and officers, bringing in creditors to prove claim (G. C. L., § 303) 388 action for official misconduct, general creditor oannot maintain 380 assignment for beneiit of creditors .' 734 without preferences 463 attachment or levy on shares of stock (Pers. Prop. Law, § 174) : 192 bringing in creditors to prove claims in action for sequestration of cor- porate property (G. C. L., § 303) .-. 566 definition 363 directors and officers as creditors of corporation . 35'3 dissolution, bringing in creditors to prove claims (G. 0. L., § 303) 638 staying action by after commencement of action for dissolution (6. C. L., § 303) 627 forfeiture of franchise, bringing in creditors to prove claim (G. O. L., § 315) 659 injunction staying action by creditors (G. C L., § 303) 660 inspection of stock books (S. C. L., § 33) , 331 meetings of creditors of insolvent corporation (O. C. L., § 353) 695 notice by receiver to crediror to present claim (G. C. L., § 350) 688 notice to creditors to present claims on dissolution of moneyed cor- poration, publication and service (G. C. L.; § 155) 541 official misconduct, action by creditor as representative 381 prohibited transfer of corporate property by directors, rights of credi- tors (S. C. L., § 66) 396, 397 relation of consolidation corporation to old and new creditors 9S remedies to reach stock certificates (Pers. Prop. Law, § 175) 193 representative action based on illegal transfers while corporation in- solvent 465 rights of creditors of old corporation on consolidation (B. 0. L., § 11). 91 GENERAL INDEX. 1183 Creditors — Continued : Page rights of creditors in reference to capital stock 106 right to maintain action for dissolution (G. C. L., § 102) 619 right where corporations merged 84 sale of corporate property without provision for creditors, liability of directors 358 trust fund doctrine 363 wrongful distribution of assets by directors, rights of creditors 395 Crimes: advertisements, untrue and misleading (Penal Law, § 421) 146 corporation practicing law (Penal Law, § 280) 415 directors and officers, criminal responsibility for corporate sicts 404 "director" defined (Penal Law, § 667) 393 foreign corporation, criminal liability of agent acting for certain for- eign corporations not authorized to do business in this State (Penal Law, § 663) 759 fraud in increase of capital stock (Penal Law, § 661) 17 fraud in organization of corporation (Penal Law, § 660) f6 fraudulent issue of stocks or bonds, liability of officers or agents (Penal Law, § 662) 142 indictment, exhibiting false cash book to bank examiner 17 intent, liability of corporation for crimes involving intent 715 liability of corporation for crimes : 715 official misconduct, criminal liability for (Penal Law, § 664) 391 official misconduct of officers and directors, agents or employees (Penal Law, § 665) 392 official misconduct, what constitutes (Penal Law, § 664) 391 pipe line eorporatioui misconduct of officers and agents (Penal Law, § 669) . . : i 855 political contributions, criminal liability of officers and agents par- ticipating in (G. C. L., § 44) 536 presumption of knowledge of corporate condition in criminal prosecution for official misconduct (Penal Law, § 667) 393 punishment of corporation 716 Crossings, tramway corporations (Trans. O. L., § 33) 876 Cumulative voting. (iSee also Incorporation.) cumulative voting at stockholders' meeting (G. 0. L., § 34)' 268 D Damages: in action to enforce directors or officers liability for corporate acts and debts ^O* basis of damages in' action based on false statement inducing purchase of stock 374 breach of contract for sale of stock 189 Debts: liability of corporation for debts of predecessor 475 power of corporation to contract (S. 0. L., § 6) 433 1184 GENERAL INDEX. Debts-^Continued: Page reatrictions on incurring debts ibefore stock paid in (B. 0. L., J 3, S. C. L., § ao) : :..........;.. 411 within meaning of statute fixing stockhoMefs' liability 292 Deceit, action against promoters based on false representations in pi'bspectus 37 Deeds: of trust, see "Mortgages." with recitals, see Form No. 258. De facto corporation: definition 30 distinction between corporation created directly by legislature and those organized under general laws , 31 estoppel . to deny corporate existence 32, 45 legalizing corporation : : . '.'. 13 liability of corporators as partners 30, 32 relation to third persons , 3® rights, duties and liabilities. 31 unconstitutional statute, corporations organized under 31 user as essential element 30 De facto directors. (See Directors.) Defenses: pleading defense of ultra vires ,. ,.j, . .,..,.". 535 usury (G. B. L., § 374) , ,,!,;.,.. .,.,,^,. . . , 556 Definition: , ;;, ,, i ,. : , , business. ■••••■ •• • 411 capital stock ; . , . , 202 certificate (Pers. Prop. Law, § 183) ,, 18'9 certificate of incorporation (G. C. L., § 3) 18 co-operative corporation (B. C. L., .§ 35) 908 Corporate Law (G. C. L., § 3) 6 corporation. . ;. .,. . . . . 1 corporation as used in statute prohibiting defense of usury (G. B. L., §374) 55€ . corporators. . . 33 creditors. . . ,.,..,.., , 363 de facto corporation. 3n delivery (Pers. Prop. Law, § 183) 189 directors (G. 0. L., § 3) 310 dividends 9 198 domestic corporation (0. P. A., § 7; tj. O. L., § 3) 10 employees 290 equipment (Trans. 0. L., '§ 153) 813 fair and honest creditors 637 foreign corporation (C. P. A., §' 7; G. O. L., § 3) ... . . 10, 730 general manager. 504 ia good faith (Pers. Prop. Law, § 'l83) ....:..... 189 insolvency Plfj laborers. . '..'.'......... 390 QJBlJSrEBAL INDEX. 1185 Qefinition — Continued: Page lawful purposes as used in giving corporation, right to purchase prop-. erty with stock 135 laws (G. C. L., § 3).....i, ,: . 6 local authority (Trans. C. L., § 153) 812 managing agent of foreign corporation. . , ,,., .- 798 moneyed corporation (6. 0. L., § 3) 10 municipal corporation (G. C L., § 3) ....:. 10 non-stock corporation (G. C. L., §. 3) 10 office of corporation , . . 71 option ; , .i. ..fi. .,...,:.■. ..,.,., 171 pa,rticular corporations. . ...v...' .- 10 person (Pers. Prop. Law, § 183) . , 189 pergonal property, as used in statute regulating franchise tax on busi- ness corporations (Tax Law, § : 219-1) 942 promoter .■..,, 33 public corporation. . , ,; .:. ..,. ... 8 purchase (Pers. Prop. Law, § 18'3) . . .'. ; 189 purchaser (Pers. Prop. Law, § 183) 189 scrip dividend 203 servants ,....., : 290 shares (Pers. Prop. Law, § 183) 189 state (Pers. Prop. Law, § 183) 199 stock corporation (G. C. L., § 3) 10 stock dividend 203 sta-eet (Trans. C. L., §. 153).... .,.....; :■,:.•••• ^13 subscribe 148 terminal basins (Trans. C. L., § 153) 812 docks (Trans. C. L., § 158) 812 facilities (Trans. 0. L., § 153) 812 factories (Trans. C. L., § 153) 812 stations (Trans. 0. L., § 153) 812 stores (Trans. C. L., §■ 153) 812 warehousing (Trans. C. L., § 153) 812 ways (Trans. 0. L., § 153) 812 title (Pers. Prop. Law, § 183) :■ 189 transfer (Pers. Prop. Law, §, 183) 189 I . transportation (Trans. C. L., § 153) . . . ..^.^:. ■■■■■■ 813 ultra vires contracts 528 value (Pers. Prop. Law, § 183) 1'89 Delivery, defined (Pers. Prop.. Law, § 183) 189 Dentistry, corporations prohibited from practicing (Public Health Law, § :203) *3"' *2t Depositary, certified copy of resolution designating, see Form No. 104. Depositions. (See also. Actions By and Against; Corporations.) examination of foreign corporation before trial. . . ,:■■•: "^^^ examination of corporation before trial (C- P- A., f . 289) ,...., 546 75 j.186 GENEKAL INDEX. Page Depositories, designation of depository for funds held by receiver (G. C. L., § 313) 664 Designation, appointment of new designee by foreign corporation, see Form No. 13. by foreign corporation of person on whom process may be served, see Form No. 12. Devise, power of foreign corporation to take property by devise (G. C. L., § 21) 723 Directors: agreement that deprives directors of powers invalid 336 certificate of incorporation, legality of provision concerning 31 change in number: in general (S. C. L., § 26) 313 affidavits of custodian of stock book, aflBxing to consent (S. C. L., § 26) 313 agreement as to inci'ease or decrease, validity 314 authority to increase or decrease lies with stockholders 314 banking corporation, consent of superintendent of banks (S. C. L., § ae) 313 by-law requiring consent of more than majority invalid 315 certificate of incorporation providing for unanimous consent to change is valid 315 division into classes (S. C. L., § 26) 313 filing transcript of proceedings 315 insurance corporation, consent of superintendent of insurance (S. 0. L., § 26) 313 legality cannot be raised collaterally : 314 stockholders' meeting' (S. G. L., § 26) : 313 unanimous consent without meeting (S. 0. L., § 26) 313 when change takes effect. 815 court will not try disputed title to office 279 definition (6. C. L., § 3) 310 definition in reference to criminal liability for oflBoial misconduct (Penal Law, § 667) 393 de facto directors, right, duties and liabilities 312 rights as against people 313 rights cannot be Questioned collaterally 313 who are. 312 directors for first year not elected by stockholders 18 dissolution, final judgment to adjudge liability of directors and officers (6. C. L., § 114) 638 election : acceptance of office necessary 316 action to declare election void is representative 317 adjourned meeting, election at. ..... 319 agreement among stockholders to elect certain persons as. directors, validity 317 GENERAL INDKX. 1187 Directors — Continued: Page agreement by proposed director, when void 317 by-laws for election, neglect of directors to adopt (S. 0. L., § 37) . . 319 publication. 318 regulating election (G. 0. L., § 11) 318 that majority of stock present at meeting shall constitute quorum does not apply to election of electors 318 failure to elect on day designated does not give cause for dissolving corporation (G. C. L., § 28) 330 failure to elect directors on day designated, old directors hold over (G. 0. L., § 28) 320 injunction restraining acts of waste or mismanagement until elec- tion of directors 323 illegal votes, when will not affect election 317 legality of election ; 316 legality of provision in certificate concerning 22 liability of directors for failure to adopt by-laws regulating (S. C. L., § 27) 319 majority of stockholders attending constitute quorum 316 mandamus to compel • • ■•. 317 . notice of election (S. 0. L., § 25) 319 of special meeting for election (G. C. L., § 29) 321 waiver of publication, effect on validity of election 320 number to be elected annually (S. 0. L., § 25) 316 petition to set aside election of directors, see Form No. 252. place and time (S. C. L., § 25) 31« plurality of votes required (S. C. L., § 25) 316 publication, election under by-laws not published invalid 318 of notice of time and. place of holding (S. C. L., § 25) 319 qualification of voters and canvass of votes at special election (6. C. L., § 31) ....!...., 323 quorum at special meeting (G. 0. L., § 30) 3i22 special meeting for election of directors (G. C. L., § 29) 32] mode of conducting (G. C. L., § 30) 322 notice in addition to statutory notice 321 place of holding (G. C. L., § 30) 332 powers of stockliolders (G. C. L., § 30) 322 qualification of voters and canvass of votes (G. C. L., § 31) . . . 32:' sufi6ciency of notice of election 319 testing validity ■ • 31~ time and place (S. G. L., § 25) 316 vacating for failure to give proper notice of election 322 examination before trial (C. P. A., § 289) 546 executive committee of board of directors, powers 328 false statement inducing purchase of stock, essential element of cause of action , 372 fiduciary relation to corporation 335 infants not eligible 312 1188 GENERAL INDEX. Directors — Continued: Page liability : apportionment i in sequestration action or independent action (G. C. L., § IH) &68 dissolution, apportionment of liability in action for dissolution or independent action (G. C. L., § 111) 624 action for dissolution, enforcement in (6. C. L., §, 109) . . 633 dissolution, independent action to enforce (6. C. L., § 110) 624 making directors parties in action to sequfestrate corporate prop- erty (6. C. L., § 109) 567 to creditors wliere all of property transferred. 107 mandamus to compel, surrend^ of books to rightful officers 279 married women eligible 312 minutes of first meeting of directors, see Form No. 103. notice of meeting. to change number (S. C. L.,' § 2-6) 313 officers of corporation, appointment by directors (S. G. L., § 30) 337 official misconduct, suspending officer (G. C. L., § 90) 375 place of meeting,, restricting in certificate 18 powers: action as body required ; ; 33T appointment of officers and agents (S. C. L., , § 30i) 337 by-laws, power to make (G. C L., § 34) . 330 delegation, powers that may be delegated 328 delegation to executive comimittee or agent 338 executive committee of board of directors 328 exercise of powers not controlable by stockholders 386 general powers of directors 335 nature of director's position 335 nature of powers 325 official action required '. 337 separate and individual authority of directors 337 proceedings of meeting to change number (S. C. L., § 36) 313 procedure of board: by-law requiring unanimous vote for sale of business 333 formal proceedings at board meeting not required 339 minutes of meeting, signed by secretary. 330 notice of meeting (G. C. L., § 43) 3B9, 333 seivice 333 validity of act where notice not given (G. 0. L., § 43) 333 place of meeting. . . . !•. 3.39 jTOwers of majority (6. C. L., § 34) !..,.... 330 quorum of directors (G. C. L., § 34) 330 resolution, oral testimony to contradict not admissible 330 shareholders not chargeaible with notice. 330 special meeting 330 how called (G. 0. L., § 43) 332 voting by proxy prohibited 330 qualifications (S. C. L., § 35) 310 311 removal from office 3gg GENEBAl, INDEX. 1189 Directors — Continued: ,:^ Page action iby attorney general (G. 0. L., §§ 304, 307) .....333, 379 mandamus not proper remedy by illegally removed director 333 receiver of corporate assets in action for removal 323 statutory provision not exclusive of charter provision 323 request for statement as to financial condition, see Form No. 61. residence in state required 313 resignation : necessity for acceptance 333 resigning in body proliibited. ._ 324 sale by stockholder of all his stock 324 rights, duties and liabilities of directors, see also, "Eights, Duties and Liabilities of Directors and Officers" 334 et seq. rights of directors holding over 320 stockholders' consent to increase or reduce number of directors, see Form No. 51. necessity that director be (S. C. L., § 35) 311 temporary transfer of stock to enable person to qualify as director makes election invalid 311 substitution in pending action on dissolution 568 suspension from office 323 action by attorney general (G. C. L., § 304) 379 action by attorney general (G. C. L., § 307) 333 official misconduct (6. C. L., § 90) , 37.5 transcript of minutes of stockholders' meeting held for purpose of in- creasing or reducing number of directors, see Form No. 52. vacancies, filling (S. C. L., § 25) 324 filling by one remaining director 335 sale of stock as effecting 311 what constitutes 335 waiver of notice of first meeting of directors, see Form No. 100. Dissolution. (See Actions By and Against Corporations; Voluntary Disso- lution.) application to commence action, where made (G. C. L., § 304) 621 appointment and powers of temporary receiver (G. C. L., § 104) : S29 appraisal of property of corporation in hands of receiver (G. C. L., § 310) 634 attorney general, action by (G. C. L., § 102) 619 submission by creditor or stockholder of demand to commence ac- tion (G. C. L., § -103) 619 when must bring action (G. C. L., § 304) 631 banking corporation, grounds for (G. C. L., § 101) 617 bills and notes, refusal' to pay for one year as ground for (G. C. L., § 101). . . : • ■ • • 617 bringing in creditors to prove claim (G. C. L., § 303) 628 compelling officers and agents to testify in action for (G. C; L., § 301). 626 complaint in action for, see Form Nos. 366, 267. • necessary allegations. 633 creditor, application to attorney general to bring action- (G. C. L., § 304) 631 at large cannot apply : ' 620 1190 GENERAL INDEX. Dissolution — Continued: Page rights of 636 whien may maintain action for dissolution (G. C. L., § 103) 619 creditors and stoelcholders subject to summary jurisdiction of court in distribution of estate 636 curing omission to serve papers on attorney general e^S directors, as parties to action to enforce liability (G. C. L., § 109) .... 623 directors as trustees in case of dissolution (G. 0. L., § SS) 363, 559 not to act where receiver appointed 362 improper distribution of assets 363 distribution of property, claims by attorneys defending action for dis- solution 637 fair and honest creditors defined 63T priority of taxes 636 provisions in final judgment (G. 0. L., § 112) 636 effect of judgment dissolving corporation and appointing receiver 634 effect on corporate obligations 635 on pending actions 558 on powers of corporation 635 on remedies against corporation (B. 0. L., § 5) 633 failure of creditors to present claim after notice published {G. 0. L., § 303) 628 failure to pay in one-half of capital stock within one year as ground (B. C. L., § 5) 619 final judgment, provisions in (G. C. L., § 113) 636 general statutory provisions do not affect special provisions (6. O. L., § 115) 617 grounds for dissolution (G. C. L., § 101) 617 injunction, can be .granted by court only (G. C. L.,. § 305) 636 granting temporary injunction (O. G. L., § 103) 626 notice to attorney general of application for modification 627 restraining corporation and officers from exercising corporate rights (G. C. L., § 301) 626 restraining corporation from collecting assets and paying out money (G. 0. L., § 301) '. 62« insolvency defined 618 Insolvency for one year as ground for dissolution (G. C. L., § 101) .... 617 insurance corporation, fi-ounds for (G. C L., § 101) 617 involuntary dissolution, corporations to which statute does not apply (G. 0. L., § 300) : 617 judgment in action for dissolution, see Form No. 368. directors and officers, final judgment to adjudge liability (G. C. L., § lit) 638 of dissolution, effect 634 entry and filing certified copy (G. C L., § 116) 638 final judgment to adjudge liability of stockholders who were parties to action (G. C. L., , § 113) 63S provisions in final (G. C. L., § 112) 630 GENERAL INDEX. 1191 Dissolution — Continued : Pago ser\iee of copy of proposed judgment on attorney general (6. 0. L., § 313) : 634 liability of stockholders and officers, effect on (B. C. L., § 5) 635 moneyed corporation; accounting 'by receiver, requisites of account, filing with court and attorney general and notice on creditors (G. C. L., § 158) 643 accounting, proceedings upon (G. C. L., § 159) 644 allowance, rejection and adjustment of claims by receiver (G. C. L., § 156) 643 application for final settlement and distribution (G. C. L., § 157) . . 64r2 banking corporation, accounting by receiver (G. 0. L., § 158) .... 643 bond of permanent receiver (G. C. L,, § 151) 639 claims, allowance, rejection and adjustment by receiver (G. C. L., § 156) 642 claims barred after distribution of assets (G. C. L., § 160) 644 conversion of assets into cash (G. C. L., § 153) 640 corporation to which statute applies (G. C. L., § 161) 639 creditors, serving notice of account and accounting by receiver (G. C. L., § 158) 643 employment of counsel (G. C. L., § 154) 641 final settlement and distribution (G. C. L., § 157) 643 inventory and appraisal of assets of property (G. 0. L., § 152) . . . . ■ 640 limitation of actions against director or stockholder (0. P. A., § 49) 645 notice to creditors to present claims, publication and service (G. C. L., § 155) 641 permanent injunction and receiver, order to show cause why in- junction should not be made permanent (6. C. L., § 151) 639 receiver, bond for appointment (G. C. L., § 150) 639 not to sacrifice property in converting it into cash 640 notice of application for appointment 639 order to show cause why receiver should not be made permanent (G. C. L., § 151) 639 payment of fees before final accounting ; . . 643 is presumed to be appointed as permanent receiver 840 referee, notice of application to be served on attorney general 642 reference, determination of referee as to validity of claim not final. 642 to determine validity of disputed claim (G. C. L., § 156) . . 642 temporary injunction and receiver (G. C. L., § 150) 639 title guaranty company, notice to holders or owners of policies of insiiranoe, when publication sufiBcient (G. C. L., § 155) 641 non-user, grounds for dissolution '-. 617 notices that must be served on attorney general 625 notice to attorney general of suit brougJit by receiver not necessary . . . 636 oflScers and stockholders as parties to action (G. C. L., § 109) .... 623 officers and stockholders, attorney general cannot be compelled to make party to action ; . 633 officers and stockholders, independent action to enforce liability (G. C. L., § 110) ■'-■■ •■•■• 624 1192 GBNEBAL INDEX. OisBOlution — Continued: Page one-half of capital Btock not paid in within one year 114 parties in action for disBOlution 630, 683 pending actions, effect on judgment of dissolution and appointment of receiver • 635 permanent receiver: accounts, filing (G. C. L., § 107) 633 additional duties and liabilities (G. C. h., § 107) 633 application by attorney general for appointment, where made (G. C. L., § 108) 633 definition (G. C. L., § 106) 633 duties and liabilities (G. C. L., § 106) ._ 633 inspection of statement, books and papers (G. O. L., §, 107) 633 nature of title to property . , 632 powers and authority (G. C L., § 106) 633 removal, effect (G. 0. L., § 107) 033 removal for failure to comply with statute (G. C. L., § 107) .... 633 title to property, when becomes effective 632 place of trial in action by attorney general (G. 0. L., § 315) 621 pleading in action for dissolution 633 powers of temporary receiver (G. C. L., § 104) 639 priority between action for dissolution and involuntary dissolution. . . . 619 process, service (G. C. L., § 103) 619 reference, action for (C. P. A., § 465) 631 right of corporation to defend action ., 630 service of papers on attorney general (G. C. L., § 313) 634 separate action against officers and stockholders (6. 0. L., § 110) .... 634 staying action by creditors after action for dissolution commenced (G. C. L., § 303) 627 staying action by creditors, purpose of statute 637 stockholder, when may maintain action for dissolution (G. C. L., § 103) 619 stockholders parties to action, final judgment to adjudge liability (G. C. L., § 113) 638 stockholder's liability, stockholder party to action (G. C. L., § 109) . . . 63."! stockholders and directors, apportioning liability in action for dissolu- tion or independent action (G. C. L., § 111) ; T. 634 suspension of business as grounds for dissolution (iis of ordinary and lawful business for one year as ground (G. C. L., § 101) y' 617 temporary receiver, additional powers that may be conferred by court (G. G. L., § 105) 631 appointment and powers generally (G, C. L., § 104) 629 continuing business, power to 631 effect of appointment on rights to sue or toe sued 63] facts that must be shown to secure appointment 639 nature of office 631 nature of possession of property 630 purpose of appointing 639 qualifying (G. C. L., § 104) .639, 630 GBNEBAL INDEX. 1193 Dissolution — Continued: Pago venue in action by attorney-general (G. C L., § 315) 631 who may maintain action (G. C L., §. 102) 619 Distinction: between capital stock and capital 105 corporation and its members 7 joint stock company and corporation ;..... 3 merger and consolidation 8S District steam corporation: cutting off supply for failure to pay rental to be exercised only in certain cases 905 deposit guaranteeing payment for steam (B. C. L., § 13) 904 duties as to service and rates 905 duty to furnish steam on application (B. C. L., § 13) 904 entry by agent of corporation to cut off steam (B. C. L., § 14) . . 005 examination of meters (B. C. L., § 13).. i 904 laying service pipe, where ground frozen not required (B. C. L., § 12) . . 904 rates (Pub. Serv. Com. h., § 79) , 905 rates, right to change 906 what constitutes (B. C. L., § 13) , 904 Dividends. (See also Foreign Corporations.) "capital stock" defined , 208 capital stock not to be impaired 201 court will not interfere with direfetors' discretion in declaring. .. ._ 198 cumulative preferred dividends 310 declaration of dividends, suit by stockholder to compel 304 definition 198 discretion of directors as to declaring 198 discrimination between stockholders. 199 equity, when suit in equity lies to recover declared dividends 217 extraordinary dividends, rights of life tenant and remainderman 213 what constitutes .212, 213 guaranty of dividends of another corporation 202 interest on dividend withheld , 215 liability of directors for unauthorized dividends (S. C. L., § 28) 398 life tenant and remainderman, rights in dividends generally 213 rights in ordinary and extraordinary dividends 212, 213 nature of action to recover declared dividend 317 net income, how determined ....:..... 800 no par value, dividends on stock of (S. C. L., § 20) 204 partly paid stock, dividends on (S. C. L., § 60) 112, 304 payment to wrong party, right to recover 216 pledgor and pledgee, rights between 195 power of directors to declare dividends 198 preferred stockholders, right to dividends 20i7 recovery of declared dividend 215 remainderman and life tenant; rights in dividends generally 813 restraining payment of unlawful dividends 201 right or title where declared, but payable in future 207 1194 GENERAL INDEX. Dividends — ^Continued: Page right to dividend, when accrues 307 scrip dividends . . , 803 stock book as evidence of ownership of stock 199 stock dividends 803 suit hy stockholder to compel declarations 204 surplus profits, what amounts to for purpose of dividends. 200 surplus profits, to be declared from (S. 0. L., § 88) 199 title, when accrues , , 207 transfer of stock, effect on right to dividend 210 prior to declaration, effect on right to dividend 211 unauthorized dividends on stock without nominal or par value, liability of directors (S. C. L., § 30) 400 What amounts to dividends 199 when money may be borrowed to pay dividends ■ 300 without par value, dividends on stock (S. C. L., § 80) 204 Doing business within state, what constitutes for jurisdictional purposes in actions against foreign corporation 800 Domestic corporation: consolidation of foreign and domestic 11 corporation organized under Federal Law 11 defined (G. C. L., § 3; C. P. A., § 7) 10 Domicile. (See Place of Business.) Due process of law, corporation as person within meaning 5 Duration of corporation, statement in certificate (B. C. L., § 2) 18 Ejectment, telegraph and telephone poles may be removed by 867 Elections, (See Stockholders' Meeting.) Election of directors, (See Directors,) Electric light corporation. (See Gas and Electric Light Corporations.) Embezzled property, recovery by receiver from officer, agent or employee (G, C, L., § 240) - 691 Employees: claims by preferred (S. C. L,, § 66) 448 compensation 35j^ contract of employ ment %iy president admissible in action against cor- poration g0g examinations before trial in action by or against corporation (C P A § 389) .'546 general authority of officers and agents to engage. 505 issuance of stock to (S. C L,, § 62a) 113 liability of stockholders for -njages (S, C. L., § 57) ....... , gg© who are within meaning of statute fixing liability of stockholders .... 890 Equal protection of law, corporation as person within meaning 5 Equity: court of equity has no inherent power to dissolve corporation 586 GENERAL INDEX. 1195 Equity — Continued : Page jurisdiction to compel accounting by directors and oflBeers for oflSeial misconduct (G. C. L., § 91a) 385 liability of directors to account in equity for ofScial misoondvict 383 Estoppel: of stockholder to bring representative action . 246 of stockholder to question incorporation in action to recover subscrip- tion 167 of stockholder to plead failure to pay ten per cent on subscription ...... 168 to deny corporate existence 45 Evidence: account books as evidence 80 action to enforce liability of directors and oflficei's for corporate acts and debts 403 admissions and declarations by members of corporation (0. P. A., §340) 520 books of foreign corporations to prove membership therein (C. P. A., § 373) 731 copies of books of foreign corporation in actions against (C. P. A., § 374) 732 exemplified copy of certificate of incorporation. 44 minute books as evidence 79 proof of authority of officers and agents 523 consolidation (G. C. L., § 9) . . 88 existence of corporation (G. C. L.. § 9, C. P. A., § 332) 43 merger (G. C. L., § 9) 83 stock book as evidence (S. 0. L., § 32) 78 as evidence of ownership for ipuiposes of dividends 199 Execution: foreign corporation, where property attached in action against (0. P. A., § 645) 788 levy on stock certificate (0. P. A., § 915) 124 Executors and administrators: non-Uaibility as stockholder of person holding stock as (S. C. L., § 58) . 291 power to transfer shares (Pers. Prop. Larsv, § 163) 189 Existence of corporation: duration 40-43 duration not extended by reorganization 102 estoppel to deny corporate existence 45 exemplified copy of certificate of incorporation as evidence 44 extension of existence: approval of certificate (G. C. L., § 39) 43 certificate of consent to (6. 0. L., § 37 ) 41 certificate of extension of existence by vote, see Form No. 19. by written consent of stockholders without meeting, see Foi-m No. 18. certificate of incorporation requiring consent of more than two- thirds of stockholders (G. C. L., § 37) 41 consent of stockholders to ....,.! 42 GENEEAL INDEX. 1197 Page Filing fees (Executive L., §§ 26, 43; County L., § 174; Pub. Off. h., § 66-a) aS Financial condition: liability for false statement inducing purchase of stock 371 request for statement, see Form No. 61. Financial statement by treasurer or chief fiscal oflScer to stockholders (S. C. L., § 69) , , 338 Fine in action for usiu'pation of corporate office, franchise or right (C. P. A., § 1216) 711 Foreign corporation: acquisition and transfer of real property < G. C. L., § 20 ) , 722 acquisition of real property ■within foreign state 722 actions against: action by resident, when maintainable generally (G. C. L., § 46) . . 775 answer, when must be verified (0. P. A., § 252) 785 constitutionality of statute regulating action by uon- resident 777 continuation of action after dissolution of defendant 781 doing business in this state, by non-resident 779 necessity that foreign corporation be (G. C. L., § 47) 776 provision that action may be maintained by non-resident is not mandatory on courts ■ 780 enforcement of judgment where defendant does not appear (C. P. A., § 520) 787 examination before trial 786 examination of defendant foreign corporation before trial, order. . 549 foreign corporation, action against by another (G. C. L., § 47) .... 776 foreign corporation defined within meaning of statute allowing action by nOn-resident or another foreign corporation '(G. C. L., § 47) ;.................. 776 injunction, requisites of (G. C. L., § 305) ......' 788 judgment by default (C. P. A., § 493) 787 ,' execution where property attached (C. P. A., § 645) 788 ^- jurisdictional question, manner of raising - ^ . .' . . . 786 i 1 limitation of action 785 ) . non-resident, actions that may be maintained against foreign corporations by (G. C. L., § 47) ; . : ..... 776 / non-resident or another foreign corporation to recover damages for / breach of contract made within State (G. C.L., § 47) 776 for breach of contract made within state, principles governing. 778 for breach of contract made without sttate 778 for breach of contract relating to property within state (G. C. L., § 47) 776 on cause arising within state ; 779 constitutionality of statute regulating action by non-resident . . 777 to replevy chattel within state (G. C. L., § 47) ; 776 to recover real property within state (G. C. L., § 47) 776 on cause of action arising within state (G. C. L., § 47) 776 when foreign corporation doing business in state 779 place of trial ■ ■" ' 785 1198 GENERAL INDEX. Foreign corporation — Continued. Page pleading 784 raising jurisdictional questions at any time during trial 786 supplementary proceedings in actions against. 788 actions by: allegation of possession of certificate of authority to do business, when must be made 769 contract not made in state, failure to secure certificate not defense in action on 772 certificate of authority, failure to secure as matter of defense. . . . 770 necessity for proof of compliance with statute 770 when must be alleged 769 name, may maintain suit to restrain use of name though license fee not paid 58 place of trial 769 right to maintain action generally (G. 0. L., § 45) 765 sufficiency of allegation of authority to do business 771 verification of pleadings 768 ;ilien enemies constituting owners of corporation, corporation not ex- cluded from courts 767 annual report: see Form No. 54. failure to fil^, liability of officers and directors (8. C. L., § 70) . . . 732 as person within meaning of equal protection clause 5 assignment for benefit of creditors ; 724 attachment, action against, proof 783 issuandte of attachment in action against (C. P. A., § 903) 782 authority to do business in state : actions that are not affected by failure to secure certificate 755 apppintnii-'nt of iii'vv designoo liy foreign corporation, see FOrm No. 13. Corporation may maintain tort action tliough it has not secured certificate 755 certificate of authority, effect of failure to procure on right to maintain action 752 failure to secure not defense in action on contract not made within state 772 designation of peifton on whom process may be served, see Form No. 12. Federal courts, failure to secure certificate not defense 774 necessity for securing from Secretary of State (Q. C. L., § 15) . 747 not to be granted where corporation has same name as ex- isting domestic corporation (G. 0. L., § 15) 747 not to be granted to corporation other than moneyed or in- surance corporation with the word "trust," etc. as part of name (G. 0. L., § 15) 747 payment of license fee does not obviate necessity for procuring . 754 proof required to secure (G. C. L., § 16) 749 GENEEAL INDEX. 1199 Foreign corporation-r-Continued. Page refused where name does not indicate character as a corpora- tion 749 revocation of certificate of authority to do business, grounds for (G. C. L., § 16) 751 surrender of authority to do business in New York, see Form No. 14. what constitutes maintaining action 753, 754 contracts made by corporation doing business in this state without certificate of authority not invalid 752 death or removal of person designated upon whom process may be served as ground for revoking certificate on failure to make new designation (G. C. L., § 16) 751 designation of person upon whoni process may be served before certificate of authority will be granted (G. 0. L., § 16) 749 designation of person upon whom process may be served, consent of designee (G. 0. L., § 16) 749 effect of death or removal of person designated on whom process may be served (G. C. L., § 16) 749 foreign corporation having certificate entitled to equal protection of laws 748 interstate commerce, restrictions must not interfere with 746 interstate commerce, § 15 of General Corporation Law and § 181 of Tax Law do not apply to corporations engaged in interstate or foreign commerce. . . 746 maintenance of action on contract made in this state prohibited where foreign corporation doing business herein does not have certificate of authority. 752 power of state to impose restrictions 745 purpose of statute requiring certificate of authority 748 right to interpose counterclaim though certificate of authority not procured 753 revocation of certificate of authority by court •: 751 service of process on secretary of state where person not designated on whom service may be served ( G. 0. L., § 16 ) ;......... 749 surrender of authority to 154 recovery of amount paid where subscription induced by fraud 154 rescission of subscription to stock induced by fraud 155 representative action to correct 236 Fraud and concealment, complaint in action against directors, see Form No. 351. Fraudulently issued stock certificate, liability of corporation 138 Fraudulent issue of stocks or bonds, criminal liability (Penal Law, § 663) . 143 Fraudulent over- issue of certificates of stock 137 Fraudulent practices: in respect to corporate stocks and bonds in general (G. B. L., §§ 352-359) 142-146 action by attorney-general (G. B. L., § 362) 143 criminal prosecution (G. B. L., § 358) 145 examination of witnesses on preliminary investigation by attorney- general (G. B. L., § 352) 143 injunction, preliminary injunction in proceeding by attorney-general (G. B. L., § 352) 143 . immunity of witnesses in proceedings by. attorney-general (G. B. L., § 359) 145 1206 geneeaij index. Fraudulent practices — Continued: Page penalties (G. B. L., | 357) 144 powers of referee in action by attorney-general (G. B. L., § 356) 144 procedure on prelimiary hearing by attorney-general (G. B. L., § 355) . 144 Fraudulent representations by promoters ■^fi Freight terminal corporatio'n: certificate of incorporation, see Form No. 88. classification of business (Trans. 0. L., § 155) 813 consolidation (Trans. C. L., § 157 ) 814 definition of terms used in act (Trans. C. L., § 153) 812 inconsistent statute not to affect oonporation (Trans. 0. L., § 15&) .... 815 incorporation (Trans. C. L., § 154) 811 limitation on powers (Trans. C. L., § 154) 811 "Local authority," "tei-minal docks," "tenninal basins," "terminal ways," "terminal stations," "terminal stores," "terminal warehous- ing," "terminal factories," "terminal facilities," "equipment," "street," "transportation," defined (Trans. C. L, § 153) . 812 merger (Trans. C. L., § 157 814 mortgages (Trans. C. L., § 157) 814 powers and duties (Trans. C. L., § 157 ) 814 public service commission, subject to jurisdiction of (Trans. 0. L., § 156) 813 railroad and express companies not to be interested in (Trans. 0. L., § 154) 811 rates (Trans. C. L., § 155) 813 real property, power to acquire by condemnation (Trans. C. L., § 157) . 814 stocks, ibonds, notes or other evidence of indebtedness, power to issue (Trans. C. L., § 157) 814 street, acquiring right to cross or otherwise use (Trans. C. iL., § 157) . . 815 subject to local law and ordinances (Trans. C. L., § 158) 815 Full liability corporations, incorporation (B. C L., § 6) 17 liability of stockholder (B. 0. L., § 6) 282 6 Gas and electric light corporations: abutting owners of highway, right to compensation for ooiistruetion of lines 820 annulment of charter of gas company , 843 business corporations not entitled to perform functions of gas and elec- tric light companies 820 certificate of incorporation, see Form No. 83. consent of municipal authorities 821 consolidation (Trans. C. L., § 61 ) 817 construction of contracts and franchises with municipalities 821 ooi-poration may be organized for supplying both gas and electricity. . . . 816 corporation may be organized for supplying natural gas (Trans. 0. L., § 60) .'. 815 corporation need not supply electric current from high voltage line where building is move than 100 feet from low voltage line 832 GENERAL INDEX. 1207 Gas and electric light corporations — Continued: Page deposit of money to secure rental (Trans. O. L., § 63) 840 interest on 840 unreasonableness of 840 destruction of shade trees and plants, liability of gas company for .... 826 discontinuance of service on refusal to pHy rental 842 discrimination in supplying gas and electricity prohibited (Trans. C. L., § 62) . 827 discrimination, public service oomimission cannot authorize 820 duty of electric light company to furnish current for power purposes rests upon common law obligation and not statute 834 duty to supply gas and electric light on application (Trans. C. L., § 62) 827 entering building for examination of meters, pipes, fittings, wires and works, right of corporation (Trans. 0. L., § 66) 841 escaping gas, liability of corporation 824 exemption to taxation on personal property (Trans. O. L., | 61) 817 fire underwriters certificate, when need not be secured under .contract with electric light company 833 franchises with municipalities, construction of 821 gas company, annulment of charter 843 gas main, right of cities and villages in reference to laying 819 grant to gas oomipany to lay mains includes streets thereafter opened . . 822 incorporation (Trans. 0. Ii., § 60) 815 interest on deposit made to secure rental 840 liabilities generally (Trans. 0. L., § 61) 817 of gas company for injuries from escaping gas 824 meters, rental not to be charged for (Trans. C. L., § 66) 841 penalty for refusal to supply gas and electricity (Trans. C. L., § 62) . . 828 830 only one action can be maintained to recover for continuing refusal 832 for refusal to supply gas or electricity, sufficiently of application for gas and electricity 83 1 permit to use street is license merely, revocable at will unless executed. 821 powers generally ( Tj-ans. 0. L., § 61 ) 817 property, acquisition by condemnation (Trans. 0. L., § 61) 817 public service commission cannot discrimdnate in supplying 829 rates, corporation cannot increase rate aibove maximum provided by franchise by filing schedule without consent of Public Service Com- mission 839 courts may declare rates fixed by statute confiscatory 835 elements to be considered in fixing rates 838 enforcement of order of Public iService Commission 840 franchise rate, power of Public Service Oommission to regrulate. . . . 837 franchise rate suibjeot to change by legislature ; 823 power of Public Seivice Commission to fix rates as to foreign cor- poration transporting natural gas from another state. . . . ; 836 proceedings by municipality to have rates reduced 837 public service commission cannot fix rates higher than maximum in statute ; 835 regulation by Public Service Commission . .■ 836 1208 GBNEEAL INDEX. Gas and electric light corporations — ^Continued: Page right of ooiforation to file schedule increasing rates 838 schedules iby corporation increasing rates 838 suit in equity by corporation to have statutory rates declared con- fiscatory. . . . 837 Supreme Court does not Jave power to fix ... ; 836 regula;tions that corporation may impose as condition^ of furnishing service 833 rental, deposit of money may he required (Trans. 0. L., § 63) 840 refusal or neglect to pay, discontinuance of service (Trans. 0. L. § 65) 842 refusal to pay, right of employees to enter building and remove equipment (Trans. 0. L., § 65) 842 for meters, what constitutes 841 not to be charged for meters (Trans. G. L., § 66) 841 service by, duty of company to supply 880 service must be given to buildings within one hundred feet of main. . . . 828 steam, acquiring right to supply to customers (Trans. C. L., § 61) ... . 818 supply cannot be refused because former occupant owes bill (Trans. C. L., § 62) 827 trespass, ia entering building to attend to equipment 841 wires of electric company, liability for damages from 826 Good faith defined (Pers. Prop. Law, § 183) 189 Good will of corporation, how established 137 Guaranty of dividends 302 Guardian, non-liahility as stockholder of guardian on stock (S. C. L., § 58) 291 H Highways: agreement between turnpike, plank-road and bridge corporation with supervisor and commissioner of highways for use of highway (Trans. C. L., § 122) 879 pipe line crossing (Trans. C. L., | 43, 45) , 851, 852 I Incorpoiation: acts of legislature 12 amendment of certificate *B. 0. L., § 29) 909 authorized purposes imder Business Corporations Law 14 certificate : acknowledgment 24 alteration and extension of business, amendment 48 alteration as relieving subscribers 19 amended certificate to remedy defective acknowledgment, see Form No. 11. amendment (G. C. L., § 7) 48 of certificate of co-operative corporation (B. 0. L., § 29) .... 909 of supplementail certificate (Q. C. L., § 7) 46 GENERAL INDEX. 1209 Incorporation — Continued : Page to alter and extend business (S. C. L., § 18) 48 to change to shares vpithout nominal or par value (S. C. L., § 24) , 49 to correct legal informalities and omissions ; 47 to express true object and purpose (G. 0> L., § 7) 46 to express true object not to effect pending action (Q-. C. L., 5 7) 46 to express true purpose, construction of statute , 46 when amended certificate may be filed without application to court , 47 annual meeting, fixing definite date for holding improper 21 certificate of amendment pursuant to § 24 of Stock Corporation Law, see Form No. 48. of certificate of incorporation, see Form No. 41. to correct informality and eliminate unauthorized matter, see Form No. 10. to increase number of authorized shares and stated capital, see Form No. 45; of incorporation of business corporation authorized to issue shares without designated par value and shares with par value and preferred as to principal, see Form No. 43. of incorporation of company all of whose shares are to have designated par value, see Form No. 1. of proceedings of stockholders' meeting to amend certificate of incorporation pursuant to J 22, Stock Corporation Law to increase number of authorized shares and amount of stated capital, see Form No. 46. classification of capital stock, see Form No. 56. clause for certificate of incorporation which provides for issuance of shares without nominal or par value and shares with nominal or par value, preferred as to dividends, but without preference as to principal, see Form No. 44. contents (B. C. L., § 2) 18 co-operative corporation (B. C. L., § 26) , 908 copy of minutes of stockholders ' meeting to amend certificate of incorporation, see Form No. 42. cumulative voting, provision for (G. C. L., § 24) , 268 definition (G. C. L., § 3) ,. • • 18 directors, provisions concerning 21 disclosing business of proposed corporation... 14 duration, fixing. 22 English language, certificate to be (G. C. L., § 5) 19 evidence of incorporation (G. C. L., | 9, C. P. A., § 332) 43 execution of certificate - .■ • 24 by attorney 24 county clerk's authentication of notary's signature 25 extension of existence, requiring; consent of more than two-thii-ds (G. C. L., § 337) :•••• 21 1210 GENERAL INDEX. Incorporation — Continued : Page filing and recording (G. C. L., § 5) 25 filing, county clerk's office, authentication of notary's signature 27 filing, recording and otljpr fees (Executive L., § 26; County L., § 174; Pub. Ofe. L., § 66-a) iJ8 law, certificate not to be construed to allow corporation to practice (B. C. L., § 2-a) :*. 16 limitation on powers of corporation (G. C. L., § 10) 408 on powers of corporation or directors 19 lost or destroyed certificate (G. C. L., § 8) 27 nature and contents generally 17 no par yalue, certificate of incorporation (S. C. L., § 19) 23 organization tax where stock has no par value 28 preferences, right to state 21 provision for issuance of preferred and common stock (S. C. L., § 61) 108 limiting powers of corporation or directors and stockholders (G. C. L., § 10) 19 limiting right to vote 20 ' requiring unanimous consent to change in number of directors is valid 315 restricting transfer of stock 20 of incorporation to be stated 19 reorganization, on (S. C. L., § 9) 97 sale of property and franchises, provision authorizing sale on con- sent of less than two-thirds invalid 472 secretary of state, power to pass on form 26 specific objects of business corporation, forms for, see Forms Nos. 120-219. unauthorized provisions. 20 defect that may be cured by amendment of certificate (G. 0. L., § 7) . . 46 evidence of incorporation (G. 0. L., § 9; C. P. A., § 332) 43 fraud in organization of corporation (Penal L., § 660) 16 full llaibility corporations (B. C. L., § 6) 17 law, corporation t-arinot be organized to practice (B. O. L., § 2a) 16 learned professions, organization prohibited 15 l^alizing organization 13 number of incorporators (B. C. L., § 2) 14 organization tax, amendmfnt to change to shares without nominal or par value (S. 0. L., 24b) 51 powers stated in certificate must all be legal 15 power to create corporation 12 practicing law, corporation cannot be organized for 15 purposes for which corporation may be organized 14 qualifioaetions of incorporators (G. 0. L., § 4) 14 stock corporation cannot act as incorporator 14 tax, organization tax (Tax L., § 180) 27 unauthorized purposes under Business Oorporations Law 15 words in special act necessary to create 13 GENERAL INDEX. 1211 Increase oi reduction of capital stock. (See Capital Stock.) certificate of increase of capital shu k ly resolution of board of direc- tors, see Form N^o. 36. Page Indian reservation, construction of pipe lines over (Trans. 0. L., § 47) ... . 853 Indictment. (See Crimes.) Infant, power to transfer shares (Pers. Prop. Law, § 1&3) 189 Injunction : action for official misconduct, injunction staying action by creditors (G. 0. h., § 302) " 389 of directors or oflieers, injunction to suspend (business or restrain- ing oflicers from acting (Gt. C. L., § 305) 389 against fraudulent practices in respect to corporate stocks and bonds ( General Business Law, § 352 ) 143 construction of statute as to injunction suspending business of corpora- tion and restraining officers from performance of duties 561, dissolution, can be granted by court only (G. C. L., § 305) 626 injunction restraining corporation from collecting money and pay- ing out ( G. L., § 301 ) 626 restraining corporation and officers frorti exercising corporate rights (6. G. L., § 301) 626 staying action by creditors after action for dissolution commenced (G. C. L., § 302) 627 foreign corporations, requisites of injunction suspending general or or- dinai-y business, or suspending from office or restraining from per- foi-mance of duties, trustee, or director or other officer (G. C. L., § 305) '..... 788 forfeiture of franchise, restraining corporation and ofiicers from exer- cising corporate rights, etc. (G. C. L., § 135) 659 granting injunction suspending business of corporation and restraining officers from performance of duties (G. 0. L., § 305) 561 manner of service of injunction order (C. P. A., § 883) 546 order appointing receiver with injunction, see Form No. 281. restraining discharged agent from entering premises 508 staying action by creditors after sequestration commenced (G. 0. L., § 302) 569 suspending 'business of corporation and restraining officers from per- formance of duties (6. C. L., § 305) 561 temporary injunction, see Form No. 317. in sequestration action against corporation and officers (G. C. L., § 103) 569 unlawful exercise of corporate rights, injunction in action for (0. P. A., § 1319) 712 voluntary dissolution, restraining creditors after iippointmpnt of tem- porary receiver (G. 0. L., § 184) 610 Insolvency: actions based on illegal transfers while insolvent 465 all transfers while insolvent pr(Jhrbited ; 4,50 assignment by officer or stockholder of claim against corporation 452 assignment for benefit of creditors without preference 463 bankruptcy, transfers within four months of ; 464 1212 GBNEEAL INDEX. Insolvency — Continued : Page collateral security *56 construction and object of statute prohibiting transfer while insolvent or in contemplation thereof. 449, 450 contemplation of insolvency, what amounts to transfers in .. 453 definition as used in statute authorizing dissolution. 618 intent to create preference in transfer wfhile corporation insolvent .... 455 judgment, effect of failure of corporation to defend against valid claim 460 judgment, validity of judgment against insolvent corporation 458 knowledge by creditor of insolvency of corporation at time of transfer 456 mortgage executed in contemplation of in/solveney 457 particular transactions not fraudulent or in violation of statute. . . . 461 parties defendant to action for illegal transfer .;..■.....;.... 468 Ijrohibited transfers, liability of directors for participating in (S. C. L., § 66) 396 receiver, action against vendee acquiring property while corporation insolvent 46? representative action by creditors where transfers made illegally.... 465 transfer by corporation of property while insolvent or in contempla- tion of insolvency prohibited (S. C. L., §66) 448 transfers while insolvent, particular transactions not fraudulent or in violation of statute 463 transfers within four months of bankruptcy 464 trustee in bankruptcy, action based on illegal transfer 468 what amounts to transfers in contemplation of insolvency. . 453 Inspection of books. (See also Books; Foreign Corporations.) Insurance: designation of state superintendent of insurance by foreign insurance corporation on Whom to serve process (Ins.- L., § 30) 802 foreign corporation, manner of service of process on superintendent of insurance 803 policyholder of insurance corporation eligible to election or appoint- ment as ofl&cer (S. C. L., § 30) .: 48';' Interest, dividends, action where dividend withheld 315 Interest coupons. (See Bonds.) Interstate commerce, restrictions on right of foreign corporation to do business within state must not interfere with 746 Issuance of certificate of stock, proceedings to compel 126 J Joint stock company: distinguished from corporation 3 foreign corporation as including 2 Judgment: action for official misconduct against directors and oflScers 391 default judgment in action against foreign corporation (C. P. A., § 493) 787 dissolution, final judgment (G. 0. L., § 112) 636 extent of preference in distribution of assets of insolvent corporation (G. C. L., § aei) fi97 GENEKAL INDEX. 1213 Judgment — Continued: Page forfeiture of frandhise, filing and publishing judgment (G. C. L., § 136) , 661 forfeiture of franchise, in, action for (G. 0. L., | 134) 660 insolvency, effect of failure to defend against valid claim resulting in judgment , 460 insolvent corporation, validity of judgment against 458 recovering judgment while insolvent or in contemplation of insolvency (S. C. L., § 66) 448 Judicial proceeding to sell, mortgage or lease real property: application to court (G. C. L., § 70) 446 hearing on petition (G. .C. L., § 73) 447 notice to creditors of insolvent corporation (G. C. L., § 74) 448 order to sell, mortgage or lease (G. 0. L., § 73) , 447 petition (G .0. L., § 71) ..,, 447 to mortgage, see Form No. 259. practice in eases not specially provided for (G. C. L., § 76) 448 service of notices (G. C. L., § 75) ,..., 448 Jurisdiction: place of business of corporation for determining 71, 73 federal courts, corporation as citizen 4 Jury, jury trial of action to enforce liability for official misconduct (G. C. L., § 90) 375 E Knowledge of officer or agent as knowledge of corporation 519 L Labor as consideration for stock 135 Laborers: liability of stockholders for wages (S. C. L., §. 57) 389 who are within meaning of statute iixing liability of stockholders.... 290 Law: corporation cannot be organize to practice (B. C. L., § 2-a) 15, 16 corporation prohibited from practicing law 414 criminal liability where corporation practices law (Penal Ijaw, g 280) 415 Lease, ratification of lease made Ijy promoters.. 38 Levy or attachment on shares (Pers. Prop. Law, § Iti) 192 Liability of officers and directors for corporate acts. (See also Directors.) assets, wrongful distribution 395 burden of proof in action to enforce. , 403 capital not paid in, liability for debts by corporation issuing stock without nominal or par value incurred before (S. 0. L., § 20) 400 criminal responsibility 404 damages in action to enforce 403 defense to action for unauthorized dividends 400 dividends, declaration of unauthorized (S. C. L., § 38) 398 enforcement of liability, form of action . . 403 evidence in action to enforce , 403 false certificate, reports or puljlic notices (S. C. L., § 35) 401 1214 GENEBAL INDEX. Liability of officers and directors for corporate acts — ^Continued: Page false report, action to enforce liability 403 illegal disposition of corporate property, liability of directors 397 loans made to stockholders, liability of directors (S. C. L., § 39) .... 394 nature of liability for unauthorized dividends 399 prohibited transfers by corporation, liability for participating in (S. C. L., § 66) .••; 396 transfers, while insolvent in contemplation thereof, liability of directors (S. 0. L., § 66) 396 unauthorized dividends on stock without nominal or par value (S. C. L., § 30) 400 Libel: liability of corporation 714 right of corporation to maintaiin action for 555 License. (See Foreign Corporation.) Liens : created while insolvent or in contemplation of insolvency, validity (S. C. L., § 66) 448 shares of capital stock, lien of corporation (Pers. Prop. L., § 176) . . 113 Life tenant: extraordinary dividends, what constitutes 313 rights in extraordinary dividends 313 rights in dividends as between remainderman and life tenant 312 Limitation of action: action against director or stockholder of moneyed corporation to recover penalty or forfeiture or to enforce liability (C. P. A., § 49) . . 645 representative action 355 stockholders' liability, full liability corporation 382 limitation of action against corporation and stockholder SO.? Lis pendens, doctrine not applicable to transfer of shares 170 Loans: hj directors and officers to corporation 353 of corporate moneys to stockholders, liability of directors (S. C. L., § 29) ': 394 power of corporation to loan money or credit 473 Lost or destroyed certificate of incorporation (G. C. L., § 8) 37 Lost or destroyed certificates of stock, profceedings to compel issuance of new certificate (S. C. L., § 67) 138 M Malicious prosecution, liability of corporation 714 Managing agent, who constitutes for purposes of service of process .545 Mandamus: books of foreign corporation, to compel inspection 728 not proper remedy to compel transfer of shares on books 185 where director illegally removed l, 323 to compel secretary of state to file certificate of incorporation. ...;,.. 27 election of directors , 317 production of books for examination by stockholder (S. C. L., § 32) . 77 GBNEKAL INDEX. 1215 Page Medicine, corporations prohibited from practicing medicine 430 Merger: certificate of merger, see Form No. 40. corporations which may be merged (S. C. L., § 15) 82 distinction between consolidation and merger 82 effect of merger (S. C. L., § 15) 82 on rights and liabilities 84 filing certificate of ownership of stock and of resolution to merge (S. C. L., § 15) 82 freight terminal corporation (Trans. C. L., § 157) 814 manner of merging corporations (S. 0. L., § 15) 82 moneyed corporations may be merged 83 name of merged corporation (G. C. L., § 6) ...;.. .53, 84 proof of merger (G. C. L., § 9) , 44, 83 right of creditors • 84 Minute books as evidence 79 Minutes of meeting to form corporation, see Form No. 96. Misconduct at corporate election (Penal Law, § 6-68) 2&9 Misnomer not available in action against stockholder (G. C. L., § 309) .... 303 Moneyed corporations. (See also Dissolution; Foreign Corporations.) corporations included within terms , i. ... 10 defined (G. C. L., § 3) 10 may be merged 83 Monopoly, combinations effecting (S. C. L., § 14) 94 Mortgages. (See also Judicial Proceedings to Sell, Mortgage or Lease Peal Property; Powers of Corporation.) after-acquired property, mortgage covering 442 consent of stockholders (S. C. L., § 6), see Form No. 35 433 action to adjudge invalidity for lack of (S. C. L., § 7) 442 as essential to validity of corporate mortgage. 436 of corporation issuing shares vpithout nominal or par value (S. C. L., § 6) 433 presumption as to giving (S. C. L., § 7) ; 441 filing consent of stockholders ^ ; . 440 filing mortgage covering both real and personal property (Lien L., § 231) 445 insolvency, executed in contemplation of 457 liability of new corporation organized on sale of property (S. C. L., § 11) ■• 103 order granting leave to mortgage real estate, see Form No. 260. petition for leave to mortgage real estate, see Form No. 259. power to borrow money and mortgage property (S. C. L., § 6) 433 receiver of property of corporation in action to foreclose (G. C. L., §306) 665 refunding mortgage 444 requisites of stockholders' consent 437 sale of property on foreclosure (S. 0. L., § 11) 103 stockholders, who may consent as , 439 1216 GENERAL INDEX. Mortgages — Continued: Pagi^ trustee under trust mortgage to secure bonds ; "485 trust mortgage to secure bonds 485 validity, wlio may object to 4#0 when consent of stockholders not required , 438 Motor vehicle corporation. (See Stage Coach Corpora tipns.) Municipality, assent to reorganization where it holds stock (S.. C. L., § 13i) 99 Municipal corporation defined (G. C. L., § 3) 10 Music, corporation for distribution of music electrically (Trans. C. L., § 106) S63 N Name: affix or prefix to indicate corporate character (G. C. L., § 6) 53 basis of equitable relief against improper use of corporate name. ..... 58 change of name : abatement, change of name not to abate action or special proceedjrig (G. C. L., § 65) ..,i... 540 action not to abate by reason of change (G. 0. L., § 66) 64 affidavit of publication of notice of stockholders' meeting to change name, see Form No. 23. publication of order, recording and filing (G. C. L., § 64) .... 68 certificate of change, see Form No. 22. to be filed (G. C. L., § 66) 63 change to be made as authorized by law ; 64 contents and requisite of petition 65 corporations that may change name (G. 0. L., § 66) 63 court to which application to be made (G. C. L., § 61) 65 dissimilarity with name of existing corporation required (G. C. L., § 66) 63 entry and filing of order (G. C. L., § 63) ' 67 generally (G. 0. L., § 66) 63 granting order is discretionary and not reviewable 67 notice of presentation of petition, publication (G. C. L., § 62) .... 66 of presentation of petition by publication cannot be waived. . 6R of special meeting to change name (G. C. L., § 66) .......... 63 order authorizing change (G. C. L., § 63) 66 changing name, seo Form No. 254. petition to change name (G. C. Li., § 61), see Form No. 253. ...... 64 procedure on presentation of petition (G. C. L., § 63) .........;.. 66 publication of order changing, name (G. C. L., § 63) 07 reservation of proposed name by secretary of state (G, C. Ij., §§ 62, 66). . . i 63, 66 revocation of order changing name. ...;.. 67 similarity to name of existiBg corporation prohibitecl (G. C. L., S 62) 66 substitution of new na,me in pending actions or proceedings (.G. C- L., § 65) 68, 540 vote of holders of two- thirds of stock required (G. Ci L.. S 66) . . . . 6.? waiver of notion of meeting ■ 2R6 GBNEItAL INDEX. 1217 Name — Continued: Page when change becomes effective (G. 0. L., § 63) 66 to take eflfect (G. C. L., § 64) 68 conflict between names of domestic and foreign corporations 56 consolidated corporation (G. C. L., § 6) 53, 87 corporate character to be indicated by name (G. C. L., 6§ ) 53, 54 corporations not organized under Banking Law 55 not organized under Insurance Law 55 not to ha-pe name similar to existing corporation (G. C. L., § 6) . . 53 duty to use corporate name 62 equitable relief against improper use of corporate name, basis 58 foreign corporation, certificate of authority not to be granted where foreign corporation has same name as domestic corporation 747 injunctive relief against improper use of corporate name 57 improper name, remedy upon acceptance of improper name by secretary of state 57 improper use of corporate name, when relief may be had in equity .... 58-62 merged corporation ( G. C. L., § 6 ) 53, 84 misnomer not avilable in action against stockholder (G. C. L., § 309) . . 303 national guard or naval militia, name indicating connection with pro- hibited (Military L., § 241) ; 56 not to conflict with existing corporation 18 penalty under Civil Eights Law for unlawful use of name 62 prohibited names of corporation not organized unde^ Banking or In- surance Law (G. 0. L., § 6) 53 reincorporation, reorganization or. consolidation 55 reorganization, on (G. 0. L., § 6) 53 similarity in name, particular instances 60 purpose of statute in forbidding 54 "university" or "college," corporation restricted in use (Education L., § 66) 56 unlawful use of certain titles in connection with corporate name ( Penal L., § 666) 56 National bank, as citizen of state 11 Natural gas company, incorporation (Trans. C. L., § 60) 815 Naval militia, name indicating connection with prohibited (Military L., § 241) 56 Navigation corporation: action on undertaking given in Mttaohment proceedings against vessel (C. P. A., §§ 932, 933) 847 additional water, further certificate to pennit navigation on (Trans. C. L., § 11) 844 annulment of attachmhent on foreign vessel (C. P. A... § 937) 848 appraisal of attached domestic vessel (Trans. C. L., §. 66) 846 attachment, discharge of attachment on foreign vessel (O. P. A., § 936) 848 of goods in vessels (C. P. A., § 920) 346 bicycles to be taken as baggage on steamboats (Trans, C. L., J 14) 845 capital stock, payment of one-half within one year from incorporation Trans. 0. L., § 12) . .,,:. ■• ■■ 845 certificate of incoi-poration (Trans. C. L., § 10; see Form No. 77) ...;.. . 843 77 1218 GBNEKAX, INDEX. Ifavigatian corporation. — Continued: Page certificate of payment of one-half cajpital stock, see Form No. 78. claim of third person to attached domestic vessel (G. P. 0., § 928) .... 846 discharge of attachment on domestic vessel (C. P. A., § 931) 847 extension of time for undertaking to prevent release of foreign vessel (C. P. A., § 966) 849 ferries unauthorized (Trans. C. L., § 13 ) i 845 incorporation (Trans. C. L., § 10) 843 liability to passenger for loss of personal property 844 passenger, liability to for loss of personal property 844 payment of one-half of capital stock within one year (Trans. O. L., § 12) 845 penalty for refusal to take bicycles as baggage (Trans. C. L., § 14) .... 845 proceedings to discharge attachment (C. P. A., § 957) 848 purposes for incorporation (Trans. C. L., § 10) 843 sale of domestic or foreign attached vessel where claim not made (0. P. A., § 939) 848 foreign attached vessel (C. P. A., § 938) 848 subsequent attachment against domestic vessel (C. P. A., § 961) 846 of foreign vessel after release for failure to give undertaking (C. P. A., § 963) 849 undertaking on claim to attached domestic vessel (C. P. A., § 930) 846 on claim to foreign attaclied vessel (C. P. A , § 935) 847 under junior attachment for release of foreign vessel (C. P. A., § 962) 848 valuation of foreign attached vessel on claim by third person (0. P. A., § 924) 847 Negligence : liability of electric company for damages from wires 826 of gas company for escaping gas 824-826 Negotiability of corporate ibonds 482 stock certificate 124 voting certificate. . . 125 Newspapers, transmission of dispatches for (Trans. C. L., § 103) 870 Non-stock corporation: classification ( G. 0. L., § 2) 8 defined (G. C. L., § 3) 10 enlargement of limitations upon amount of property which they may hold (Q. C. L., § 12) 433 No par value: amendment of certificate to change to shares without nominal or par value (S. 0. L., § 24) 49 amount of capital and of shares without nominal or par value (S. C. L., § 23) Ill certificate of incorporation (S. C. L., § 19) 23 of shares, requisite (S. C. L., § 19) 126 consent of stockholders to mortgage (S. C. L., § 6) 433 dividends on stock (S. C. L., § 20) 204 increase or reduction of shares of capital of corporation issuing shares without nominal or par value (S. C. L., § 22) 122 liability of directors for debts incurred before capital paid (S. G. L., GENBBAL . INDEX. 1219 No par value— Continued : Page § 20) 400 for unauthorized dividends (g. C. L., § 20) 400 organization tax 28 requisites of certificates for preferred shares (S. C. L., § 19) 1&6 restrictions on commencement of business by corporation issuing stock without nominal or par value (S. C. L., § 20) 411 right to sell shares at market value (S. C. L., § 65) Ill shares to 'be deemed fully paid and non-assessable (S. C. L., § 65) .... Ill value of shares issued without nominal or par value (S. C. L., § 65) . . Ill Notices: liability of officers and directors for false certificate (S. C. L., § 35) . . 401 of election of directors (S. C. L., § 25) 319 stockholders' waiver of notice, see Form No. 36. Nuisance, forfeiture of corporate franchise for commission of nuisance outside state affecting persons within (G. C. L., § 302) 653 Oath, receivers (G. C. L., § 238) 670 Office of corporation. (See Incorporation; Place of Business.) Officers. (See also Rights, Duties and Liabilities of Directors and Officers.) acts outside scope of employment, liability of corporation for 517 acts within apparent scope of authority binding 491 burden of proof on corporation 492 admissions and declarations iby members of corporation, effect (0. P. A., § 340) : 530 apparent authority not binding where third person has knowledge of limitation 493 appointment (S. C L., § 30) 487 attorney, general authority to engage - 506 authority limited by dharter and iby-laws 490 must be shown to bind corporation 490 proof of. 533 by-laws, effect on third persons dealing with officer 494 limitations therein unknown to third person does not limit apparent authority 494 checks, liability of third person where endorsement forged 514 lialbility of person taking on unauthorized endorsement by agent. . . 513 person taking check payable to corporation on endorsement of agent chargeable therewith 513 wrongful use by 513 commercial paper, execution in interest of officer 511 contracts of employment, general authority to make 505 examination before trial (C. P. A., § 389) 546 execution of authority 535 execution of contract in individual name improper 536 extraordinary or unusual acts or contract, express authority required. 493 forfeiture of franchise, compelling officers and agents to testify (G. C. L., § 301) : 658 1220 GENEJElAr. INDEX. Officers— Continued : Page general, authority of officers to engage agent 506 general manager, authority generally 504 contracts which general manager may make 505 definition 504 general executive officer, as 504 implied authority .4 504 general officer has prima facie powers to do any act which hoard of directors could ratify 490 knowledge of officer or agent aa knowledge of corporation 519 liability of corporation for wrongful issue of corporate stock 518 liability on implied warranty where he makes promissory note without authority 511 managing agent, who constitutes for purpose of service of process 645 negotiable paper, authority to execute and transfer generally , . . 509 manager, promissory note, does not have authority to execute 510 notice of extent of authority of officers and agents 493 official misconduct, see Rights, Duties and Liabilities of Officers and Directors, policyholder of insurance corporation eligible to election or appoint- ment as officer (S. C. L., § 30) 487 power and authority generally (S. C. L., § 30) 327, 489 may be fixed by by-laws (S. C. L., § 30) 487 may be prescribed by directors (S. C. L., § 30) 487 president, appointment (S. G. L., § 30) 487 authority generally 495 bankruptcy, does not have general authority to execute petition. . . . 499 burden of proof on corporation to show lack of authority 499 contract bj' binding on corporation generally 498 of employment by president admissible in evidence in action against corporation 508 general conveyance of assets of corporation, president has not gen- eral authority to make ; . . . 499 implied authority to transact business of corporation generally.. 496, 498 impliedly has power to transact any business that directors could authorize or ratify 497 liability personally for his own tortious acts 500 particular instances of president's authority 499 personal indebtedne^ of president cannot be paid with corporate property 499 promissory note, ratification of act in signing 510 qualifications (S. C. L., § 30) 487 what does not constitute authority to endorse checks 514 principles of agency applicable 49O promissory note, authority to execute and transfer generally 509 executed in favor of officer, rights. of third person 511 executed in individual name of . officers 536 proof of authority 523 prospectus, liability of corporation for false statement contained in.. 517 GBNEEAL IHDBI. 1221 ©fficera— Continued: Page ratification of acts of officers and agents 520 accepting benefits of contract as 531 basis of ratification is knowledge of circumstances 533 what amounts to 531 removal (S. C. L., § 30) ; 48:7, 488 repudiation by corporation of agent's wrongful act 518 rescission by corpoiration of unauthorized contract by officer or agent. . 618 resignation 489 restraining discharged agent from entering premises 508 seal of corporation, necessity for 535 secret limitations on authority contained in by-laws 494 secretary authority generally 503 forfeiture of stock, secretary cannot forfeit , 503 general officer, secretary as < 502 knowledge of ty-laws 503 minutes of meeting, secretary may delegate duty to take and transcribe 503 promissory note, endorsement by , . 503 represents corporation in general capacity 503 sale of corporate assets not within implied authority 503 security, right of directors to require (S. C L., § 30) 487 special and not general agents 490 third persons not bound to know extent of authority 494 treasurer, authority generally : 501 bond, see Form No. 106. borrowing money, does not have authority to borrow money 509 cannot make contract for work, labor and services 307 promissory note, does not have authority to execute .501, 309 sale of accounts of corporation not within implied authority ...... 502 trespass, liability of corporation for willful 517 when contract binding on corporation though executed in individual name ,. 536 witnesses, compelling officers gnd agents to testify in action for dis- solution (G. a L., § 301) ,. . ; .'. . 63B wrongful acts of officers and agents, liability of corporation 517 Opening books to receive further subscriptions after incorporation (S. C. L., § 53) .: • ■ 147 Option defined 171 . Orders. (iSee also Actions By and Against Corporations.) authorizing change of name (G. C. L., § 63) 66 service on corporation (C. P. A., § 798) ....'..... 546 Organization: corporation to be formed under general laws (N. Y. Const., art. 8, § 1). 7 power of state to create fi special act creating corporation (N. Y. Const., art. 8, § 1) .......... . 7 , Organization tax. (See also Taxation.) amendment of certificate to change to shares without nominal or par ; value (8. 0. L., § 24b) .' 51 1222 GENERAL, INDEX. Organization tax — Continued: Page amount (Tax Law, § 180) 27 how payment made. . 37 P Parties: action based on illegal transfer while corporation insolvent 46S action by director or officer against co-director or officer for official misconduct 382 action to enforce liability of old corporation on consolidation 93 action to rescind subscription for stock because of fraud 155 representative action , 253 substitution of new name in pending actions and proceedings (G. C. L., § 65) ^.. ; 68 of receivers or directors on dissolution 558 Partly paid stock, issuance (S. C. L., § 60) 112 Partnership: notice that partnership ihas been dissolved and succeeded by corpora- tion, see Form No. 105. power of corporation to enter into 410 Par value of shares of capital stock, change in (S. C. L., § 65) Ill Patent as consideration for stock 133 Penalties. (See also Books.) amount of recovery in action to recover for refusal to allow inspection of stock books 233 assets, penalties recovered by receiver to be considered as (6. C. L., § 260) , 689 books, failure to keep books required by statute (S. C. L., § 3iS) 231 failure to permit inspection as required by statute (S. C. L., § 38). 231 concealing property from receiver (G. C. L., § 253) 689 failure to keep and ejshibit books (S. C. L., § 32) 77, 78 foreign corporations, refusal to allow inspection of books 7 JO pleadings in action to recover penalty for refusal of inspection of stock books 233 refusal of gas and electric light corporation to supply gas and elec- tricity •. 830-832 tax on transfer of stock, penalties for failure to pay (Tax Law, § 373). 949 Permanent receiver. (See Dilsolution.) Person defined (Pers. Prop. Law, § 183) 189 as including corporation , 4 Personal Property Law as affecting transfer of ?hares of stofck (Pers. Prop. L., §§ 162-175, 181-183) 188-192 Petition and proceedings to compel issuance of new certificates of stock (S. C. L., § «7) 128 to change name (G. C. L., § 61) 64 proceedings to sell, mortgage or lease real property (6. C. L., § 71) . . 447 Physicians and surgeons, corporations prohibited from practicing dentistry (Pub. Health Law, § 303) 430, 431 GENERAL INDEX. 1223 Pipe line corporation: Page altei-ation of line on objection of landlord (Trans. C. L., § 41) 850' canals, construction across and along (Trans. C. L., § 44) 852 cancellation of vouchers (Trans. C. L., § 51) 854 certificate of change of location of principal office, see Form No. 39. of incorporation (Trans. C. L., § 40), see Form No. 62 849 cities, construction through (Trans. <0. L., § 46) 852 common carrier, liability as (Trans. C. L., § 50) 854 consent of local authorities to construction across, along or upon high- way (Trans. C. L., § 45) 852 consent of municipality (Trans. C. L., § 42) 851 condemnation of real property (Trans. C. L., § 42) 851 construction across and along canals, rivers and creeks (Trans. C. L., § 44) 852 construction through villages and cities (Trans. C. L., § 46) 852 crime, misconduct of officers and agents (Penal Law, § 66«) 855 delivery of property (Trans. C L., § 51) 854 examination and survey of proposed line (Trans. C. L., § 49) 853 farm crossings and use of line not inclosed (Transi. C. L., § 53) 855 fences along route (Trans. C. L., § 53) 855 highway crossing (Trans. C. L., § 43) 851 consent of local authorities to construction across, along or upon (Trans. C. L., § 45) 853 incorporation (Trans. C. L., § 40) 849 Indian reservations, construction over (Trans. C. L., § 47) 853 location of line (Trans. C. L., § 41) 850 "misconduct of officers and agents (Penal Law, § 669) 355 monthly statements (Trans. C. L., § 53) 855 plank road crossing (Trans. C L., § 43) 851 powers additional to those conferred by General and Stock Corporation Laws (Trans. C. L., § 49) 853 to hold real estate and other property (Trans. C. L., § 49) 853 purposes for which corporation may be organized (Trans. C. L., § 40). 849 railroad crossing (Trans. C. L., § 43) 851 rates and charges (Trans. C. L., § 50) 854 receipts for property, rules regulating (Trans. C. L., § 51) 854 regulation of time and manner in which property Shall be transported (Trans. C. L., § 49) 854 state lands, construction over (Trans. C. L., § 48) 853 storage facilities (Trans. C. L., § 50) 854 taxation of property (Trans. C. L., § 54) . . 855 turnpike crossing (Trans. C. L., § 43) 851 use of line to be public (Trans. C. L., § 50) 854' villages, construction tibrough (Trans. C. L., § 46) 853 width of route (Trans. C. L., § 49) 853 Place of business: change of place of business 72 filing certificate (S. C. L., § 13) 72 manner (S. C. L., § 13) 72 1224 6BNBRAL IBTDBX. Place of business — Continued: Page location within state 71 "office of corporation" defined 71 "principal office" and "principal place of business" synonymous 71 statement in certificate of incorporation conclusive 71 Btockholders' consent to change location of principal office of business, see Form No. 38. street railways corporation 73 Pleadings. (See also Actions By and Against Corporation; Foreign Cor- porations.) action for dissolution 623 action to enforce stockholders' liability, see Stockholders' Liability. Pledge: attachment of pledgor's interest 194 certificates of stock by agent wrongfully 125 criminal liability of Officers or agents for fraudulent pledge of stocks or bonds (Penal Law, § 662) . i 142 dividend, rights between pledgor and pledgee. 195 effect of pledge on title 192 on lien of return of pledged stock 193 improper use of pledged stock 194 manner of pledging 192 necessity for returning identical certificate 193 pledgee, rights as against corporation 197 pledge or sale by pledgee 193 pledgor, non-liability as stockholder of person holding stock as (S. C. L., § 58) .• 291 right to vote on stock at stockholders' meeting (G. C. L., § 23) . . 2'60 redemption of pledged stock : 19B relations between pledgor and pledgee 193 rights of pledgee 194 pledgor 195 sale or pledge by pledgee 193 tender of amount due to redeem pledged stock 196 Political contributions by corporations prohibited (G. C. L., § 44) 536 criminal liability of officer and agent (G. C. L., § 44) 53fi Powers of corporation: annual report of corporation to secretary of state (S. C. L., § 34) . . . . 422 requisites of report. 423 acquisition and disposal of property right of corporation to acquire and dispose of property 429 and holding corporate stock, power to purchase its own stock. . . . 425 of property without state (G. C. L., § 14) ' . . 432 of additional real property after sale (G. C. L., § 1.S) 432 bonds, consideration for bonds (S. C. L., § 55) 479 conversion into stock (S. C. L., 9 6) 434 definition 478 stock as distinguished from bonds 478 borrowing money (S. C. L., § 6) 433 GENERAL INDEX. 1225 Power of corporation — Continued: Page by-laws, power to make (G. C. L., § 11) 407 condemnation of lands by development or improvement corporation (B. C. L., § 16) 431 consolidated corporation (B. C. L., § 9) 89 construction of provisions of charter and statutes 408 contractual powers: accommodation paper, execution of 473 bills and notes, execution of 473 bonds of other corporations, power to guarantee when corporation owns entire stock (S. C. L., § 8) 477 bonds of other corporations, unanimous consent to guarantee (S. C. L., § 8) , 47? contract of predecessor, liability of corporation 475 debts of predecessor, liability of corporation 475 guaranteeing bonds and other obligations of other corporations (S. C. L., § 8) 477 loaning money or credit 473 control by courts of internal management of corporation..., 411 court will not interfere with internal management of corporation. .411, 413 criminal liability for practicing law (Penal Law, § 380) 415 debts, power to contract (S. C. L., § 6) ' 433 employees, claims by preferred (S. C. L., § 66) 448 ferry corporation, powers additional to those conferred by general and stock corporations laws (Trans. C. L., § 4) 809 general powers 406 grant of general powers by statute (G. C. L., § 11) 407 incidental powers 409 implied powers 409 internal management, control by courts 411 liability of corporation on forged or fraudulently issued certificate of stock : 138 limiting powers in certificate of incorporation (G. C. L., § 10) 408 mortgages: consent, action to adjudge invalidity for lack of (S. O. L., § 7) . . 443 as essential to validity 436 presumption as to giving (S. C. L., § 7) 441 consideration • 435 covering after-acquired property. 442 filing consent of stockholders 440 of mortgage covering both real and personal property (Lien Law, § 231) 445 "power to mortgage property (S. C. L., § 6) 433 refunding mortgage. . . ' 444 requisites of stockholders' consent 437 who may consent as stockholders 439 who may object to validity ••••'•• • • • • ■ 440 when consent of stockholders not required ; . . . .:'. 438 notice of powers, third person chargeable with 408 1226 GENERAL, INDEX. Power of corporation — Continued: Page oflcers, power to appoint (G. C. L., § 11) 407 partnership, power to enter into 410 payment in of capital stock before incurring debts (G. C. L., § 3) . . . . 411 practicing law, application of statute against 418 construction and purpose of statute prohibiting 416 purpose and construction of statute against 416 test for determining whether acta constitute practicing law. ..... 418 prohibited powers, banking powers of corporation not organized sub- ject to banking laws (G. C. L., § 22) 413 criminal liability for practicing law (Penal Law, § 280) 415 practicing dentistry (Public Health Law, § 203) 421 practicing law 414 practicing medicine or dentistry 420 property : acquisition of property without state (G. 0. L., § 14) 432 enlargement of limitations upon amount whicfh non-stock corpora- tion may hold (G. 0. L., § 12) 433 power to acquire and dispose of (G. O. L., § 11) 407 rights extending beyond period of existence (G. 0. L., § 13) 432 that corporation may acquire 430 purchase of stock of other corporation, when power exists (S. C. L., § 52) 426 application of statute 428 report to secretary of state, construction of statute and reports there- under 422 when corporation relieved from filing report 424 restriction on commencement of business (G. C L., § 3) 411 by corporation issuing stock without nominal or par value (S. C. L., § 20) 411 where capital stock not paid in 114 ultra vires acts 538-535 unexpressed powers 409 Preference clause with sinking fund and redemption provision, see Form No. 57. Preferences, intent to create in transfer by corporation while insolvent or in contemplation of insolvency 455 Preferred stock. (See Oapdt* Stock.) Preferred stockholders, right to dividends SOT Presumption: of knowledge of corporate condition in criminal prosecution for official misconduct (Penal Law, § 667) 393 that person is -stockholder from entry of name in stock book 219 Principal business office, statement in certificate (B. C. L., § 2) 18 Private corporations defined 8 Privileges and immunities, corporation as citizen within constitutional pro- visions 4 GENERAL INDEX. 1227 Page Process, service of. (See Actions By and Against Corporations; Foreign C!orporations.) service in action for dissolution (G. C. L., § 102) 619 service of summons by publication, action to enforce stockholders' lia- bility (C. P. A., § 232) 307 Promissory note, rights of third person on paper executed in favor of officer 511 Promoters: accounting for profits made on sale to corporation 35 adoption of contract by corporation 38 agency of promoters 33 agreement affecting board of directors 33 as to future management 34 to form corporation 33 to form corporation and take stock, see Form No. 95. to form corporation as constituting parties partners 35 contract by promoters, liability 35 liability of corporation 3 ( definition 33 fraudulent representation 3f> lease, ratification by corporation 3S liability of corporation on contract by promoters 37 on contract made for benefit of corporation 35 letter offering to sell business to corporation, see Form No. 101. minutes of meeting to form corporation, see Form No. 96. profit on sale of property to corporation 34 subscription induced by fraudulent representation 36 ratification by corporation of sale of property to corporation 34 of contract by promoters 37 relation to proposed company 33 rescission of subscription to stock induced by fraud 154 sale of property to corporation 34 validity of contract for sale of property to corporation 34 waiver of notice of incorporator's meeting, see Form No. 99. Proof of existence of corporation (G. C. L., § 9; C. P. A., § 332) 43 Proof of merger (G. C. L., § 9) 83 Property. (See also Powers of Corporation.) action to set aside alienation made contrary to law (G. C. L., § 90) . . 375 acquisition of additional real property after conveyance (G. C. L., § 13). 43i2 acquisition of property without state (G. C L., § 14) .... 432 consideration for stock (S. C. L., § 55) 133 consolidation, transfer of property of old corporation (B. C. L., § 10) . . 89 non-stock corporation, enlargement of limitations upon amount which they may hold (G. C. L., § 12) 422 power of corporation to acquire and dispose of (G. C. L., § 11) . . .407, 429 purchased by director 370 restraining improper alienation (G. C. L., § 90) 375 rights in property extending beyond period of existence (G. C. L., § 13). 432 1228 GBNKBAL INDEX. Property— Continued : Page right of corporation to acquire and dispose of property . 429 validity of acts acquiring corporation property 368 Prospectus: construction. . 36 fraudulent representations in 36 liability of directors or oflBcers for false statement inducing purchase of stock 371 Proxy for first subscribers' meeting after filing of certificate of incorpora- tion, see Form No. 97. Publication: of by-laws regulating election of directors 318 notice of election of directors (S. C. L., § 25) . ...... 319 notice of presentation of petition to change name (G. C. L., § 62) .... 66 order to show cause why corporation should not be dissolved in volun- tary proceedings (G. 0. L., § 179) 596 service of summons by in action to enforce stockholders' liability (C. P. A., § 233) 307 Public corporation defined 8 Public service commission: freight terminal corporation, subject to jurisdiction of (Trans. O. L., § 156) .^ 813 regulation of rates of gas and electric corporation 836 Purchase defined (Pers. Prop. Law, § 183) 189 Purchaser defined (Pers. Prop. Law, § 183) 189 Q Quo warranto by director claiming illegal removal 323 Qualification of Incorporators (G. C. L., § 4) 14 R Railroads: pipe line crossing (Trans. C. L., § 43) 851 not to be interested in freight terminal corporations (Trans. C. L., § 154) 811 Rates. (See also Gas and Electric Light Corporation.) ferry corporation must post schedule of (Trans. C. L., § 6) 810 public service corporati|in, discrimination between customers as to credit prohibited 871 Ratification of acts of ofScers and agents 520 accepting benefits of contract as 521 what amounts to 521 promoter's contract 38 ultra vires acts 534 Real property: action to compel determination of claim to 555 power of foreign corporation to acquire and transfer ,(G. ,C. L., §§ 20, 21) ' 732 GBSTEEAL INDEX. 1229 Real property— Continued: Page Teceivers to hold (G. C. L., § a43) 685 sale by receiver free of liens 687 Receivers. (See also Foreign Corporations.) account, duty to keep (G. C. L., § 247) 694 accounting: application by attorney general for order (G. C. L., § 311) 664 or creditor to compel accounting (G. C. L., § 268) 704 de facto receiver 70o further (G. C. L., § 272) 707 hearing on final account (G. C L., § 270) 706 notice of final accounting (G. C. L., § 369) 705 not to be passed unless sureties notified of accounting (G. C. L., § 227) : . . 705 permanent receiver (G. C. L., § 311) 671 right to account limited ly statute (G. C. L., § 268) 704 temporary receiver to himself as permanent receiver not required. 705 renunciation of receivership (G. C. L., § 275) 671 reference on final account (G. C. L., § 271) 706 when to apply for fina.1 settlement of account and order for dis- tribution (G .0. L., § 368) 704 account of receiver, including copy of notice to present claims and copy of notice of presentation of account, see Form No. 311. accounts, settling between corporation and debtors or creditors (G. C L., § 239) 676 actions: against receiver, leave to commence 673 by, authority to bring action (G. C. L.,' § 239) 675 on bond not maintainable before accounting. , 706 unless sureties given notice of accounting 706 preference in trial of actions by or against (G. C. L., § 316) 674 that receiver may maintain , . . . 678 to preserve assets of corporation having no officer to hold same, appointment in. 6'67 under §§ 90-91a of General Corporation Law, right to restrain officers from interfering with property 665 additional allowance except in voluntary dissolution (G. C. L., § 278) . . 708 agreement by receiver with counsel, see Form No. 298. allowance of set-offs (G. C. L., § 359) 697 appeal by receiver 678 from order removing receiver or compelling accounting, etc. {G. C. h., § 311) 671 application for order permitting renunciation of receivership (6. 0- L-, § 275) •••-■■■ :■: 671 appointment in representative action : 357 appointment, motion for, where made (Rules of Civil Practice, Rule 178) - 66^ . appraisal of property (G. C. L., § 310) , 686 1230 GENERAL INDEX. Receivers — Continued : Page assets of corporation, transfer to receiver (G. C. L., § 233) 685 distribution and disposition of 695 attorney general, application for removal of receivers and accounting (G. C. L., § 311) 664 authority of single receiver (G. C. L., § 235) 679 surviving receivers (G. C. h., § 237) 679 vifhere several appointed (G. 0. L., § 336) 679 bona fide purchaser, receiver not 684 bond (G. 0. L., § 335) 675 by creditor, failure to file claim before first dividend (G. C. L., §362) 701 claims against fund, status must be fixed as of date of commencement of action for dissolution 698 commissions allowable to second receiver 709 except in voluntary dissolution (6. C. L., § 278) 708 how to be computed 708 in voluntary dissolution (G. C. L., § 277) 707 metlhod of computation 707 receiver appointed to foreclose mortgage not entitled to fees 708 compounding claim in favor of corporation (G. C. L., § 239) 676 compromise of disputed and doubtful claims 693 concealed property, recovery (G. C. L., § 340) 691 concealing property from receiver, penalty for (G. C. L., § 252) 689 conditional contract of corporation 678 pledges of personal property, redeeming (G. C. L., § 239) 676 control of receivers by court (6. C. L., § ,276) 679 conveyances and bills of sale, executing on sale of property (G. 0. L., § 239) ■ : . . 676 counsel, change. 688 compensation 682 contract with (G. C. L., § 342) 681 number that may be employed (Rules of Civil Practice, Rule 180). 681 power to employ (G. C. L., § 242) 681 services rendered to corporation before receiver appointed 683 who may be employed as 682 credit on sale of property, allowing (G. C L., § 239) 676 creditor, court will not appoint on application by 664 date of appointment of receivers fixes status 695 notice to present claims (G. C, L., § 250) 688 creditor's meetings, account and demands for and against corporation to be ascertained and adjusted (G. C. L., § 254) 695 duty to call (6. C. L., § 253) «95 notice of time and place of holding, publication (G. C, L., § 253) . , 695 damages for injuries to persons or property during receivership en- titled to priority 70i debts due United States entitled to preference (G. C. L., § 261) 697 owing by corporation as guardian, executor, etc., entitled to prefer- ence (G. C. L., § 261) 697 GENERAL INDEX. 1231 Receivers — Continued : Page deduction of disbursements and commissions by receiver (G. C. L., § a55) 701 delivery of property to receiver (G. C. L., § 351) 689 depository of funds, designation (G. C. L., § 313) 664 disbursements and commissions, deduction (G. C. L., § 355) 701 discharge, on reorganization of corporation (S. 0. L., § 11) 103 right to sue restricted (S. C. L., § 11) 103 disposition of moneys retained by receiver for suits (G. 0. L., § 365). 703 disputed claims, ascertaining validity by summary reference not ex- clusive , 693 dissolution, appointment and powers of temporary receiver in action for dissolution (G. C. L., § 104) 629 distribution .of assets, preference of government 699 of surplus after second dividend (G. C. L., § 264) 702 duty of receiver to convert property into money (G. C. L., § 345) .... 686 effect of reorganization on authority or possession of property sold on foreclosure (S. G. L., § 11) 103 embezzled or withheld property, recovery from officer, agent or em- ployee (G. C. L., § 340) 691 equity action to compel accounting by directors and officers. for official misconduct (G. 'C. L., § 91a) 385 expenses in cases except in voluntary dissolution (G. C. L., § 378) . . . 708 in voluntary dissolution, what allowed as 708 of administration should be paid first 701 of receiver in voluntary dissolution (G. C. L., § 377) 707 extension of receivership, where application made (Rules of Civil Prac- tice, Rule 179) 664 failure to file claim before second dividend, effect (G. C. L., § 367) 703 before first dividend, effect (G. C. L., § 363) 701 final accounting of receiver (G. C. L., § 371) 706 foreclosure action, appointment in 666 inherent power of court to appoint receiver of property •. . . . 665 insolvency, action by receiver against vendee acquiring property while corporation insolvent 467 instruction from court 680 interest on claims against corporation 700 issuance of notes or certificate of indebtedness 678 judgments entitled to preference to amount of lien (G. C. L., § 361) . . 697 satisfying (G. C. L., § 239) 676 leave of court to sue receiver 673 liability wihere business continued by 678 liens on property 685 mortgages, redeeming (G. C. L., § 239) 676 nature of receiver's office (G. C. L., § 231) 669 title : 684 notice by receiver of meeting of creditors, see Form No. 305. of accounting, see Form No. 315. 1232 GENERAL INDEX. Receivers — Continued: Page of application to offlcera of corporation when not appointed by a final judgment (G. C. L., § 306) 665 of appointment to debtors and creditors (G. C. L., § 350) 688 of final accounting, publication (G. C. L., § 269) 705 of motion for order to prove claim, see Form. No. 300. of motion on application for final settlement, see Form No. 310. of motion to discharge receiver, see Form No. 316. to creditors to present claims (G. C. L., § 250) 688 to creditors to prove claims, see Form No. 303. to debtors to pay debts to corporation (G. G. L., § 250) 688 to pay debts and present claims, see Form No. 304. to person having possession of property to deliver to receiver (6. C. L., § 250) 688 to sureties of final accounting (G. C. L., § 227) 705 oath (G. C. L., § 238) 'eTO oflScer of court, as 683 order appointing receiver with injunction, see Form No. 281. appointing referee to examine and report receiver's account, see Form No. 312. approving agreement by receiver with counsel, see Form No. 299. authorizing continuance of business, see Form No. 291. authorizing receiver to sell real property, see Form No. 297. confirming report of referee on interlocutory accounting, see Form No. 309. granting leave to receiver to issue certificates, see Form No. 292. of reference as to interlocutory account, see Form No. 307. permitting receiver to bring suit, see Form No. 289. requiring creditors to prove claims, see Form No. 302. settling receiver's account, see Form No. 313. payment of debts not due (G. C. L., § 258) 696 receiver represents all parties 698 to receiver (G. C. L., § 251) 689 penalties recovered by receiver to be considered as assets (G. C. L., § 260) 689 pending litigation, direction to appear in 680 permanent receivers, statute applicable to permanent receivers gen- erally (G. C. L., § 230) 668 petition for instructions as to bringing suit, see Form No. 288. for instructions as to sale of real estate, see Form No. 296. for leave to continue business, see Form No. 290. for order requiring creditors to prove claims, see Form No. 301. possession of property (G. C. L., § 239) 676 possession, title, custody and control of property 683 power and authority in general (G. C. L., § 239) 675 power of court to remove receiver or direct new bond be given (G. C. L., § 226) 675 to hold real property (G. C. h., § 243) 685 preference in actions by or against receiver (G. C. L., § 316) 674 GENERAL INDEX. 1233 Receivers— Continued: Page in payment of claims (G. C. L., § 261) 697 private sale of property of corporation (G. C. L., § 346) 687 property of corporation, action for removal of officers or directors. . . . 333 lawfully held by trustee, right of receiver to. 6&6 power of court to forbid interference with by act or otherwise. . . . 686 receiver of (6. C. L., § 306) 665 subject to attachment chargeable with certain expenses 699 real property, power to hold (G. C. L., § 243) 685 sale free of liens 687 receiver's final report, see Form No. 314. referees, reference to settle controversies (G. C'L., § 241) 692 selection by court on reference to settle controversies (G. C. L., § 241) «92 reference on final accounting, account to be filed first 706 to determine validity of disputed claims not exclusive method. . . . 693 refunding consideration of subsisting contracts (G. C. L., § 256) 695 removal of receiver on failure to give new bond (6. C. L., § 226) 675 application ty attorney general (S. C. L., § 311) 664 permanent receiver 670 on application by attorney general (G. C. L., § 311) 670 wliere application made (Rules of Civil Practice, Rule 179) 664 renunciation of receivership (G. C. L., § 275) 671 proceedings on (G. C. L., § 275) 671 report and account of receivers, see Form No. 306. duty to make (G. C. L., § 249) 694 notice to attorney general and sureties of intention to make (G. C. L., § 249) 694 of referee On interlocutory accounting, see Form No. 308. service of copy upon attorney general and superintendent of banks (G. C. L., § 248) 694 when to be made and filed (G. C. L., § 249) 694 resignation (G. C. L., § 275) 671 restitution where claim improperly paid 701 retention of funds for subsisting contracts and pending suits (6. C. L., § 257) ■ ■.• . 696 ri^ht of corporation to acquire and dispose of real property 429 sale of property (G. C. L., § 239) 676 private sale (G. C. L., § 246) .'..' 687 real property free of liens 687 second dividend by receiver, when to be made and notice thereof (G. C. L., § 263) 702 security for costs in actions by 673 to be furnished by receiver (G. C. L., § 234) 674 sequestration, who is permanent receiver (G. C. L., § 106) 572 set-offs, allowance of (G. C. L., § 259) 697 in action by (G. C. L., § 239) 675 settlement of controversies by reference (G. C. L., § 241) 692 stockholders' liability, necessary party to action to enforce by creditor. 305 78 1234 GENERAL INDEX. Receivers — Continued : Page rights to surplus after payment of debts 703 stock subscription, action to recover amount due 690 counterclaim by receiver for amount due from stockholder 690 receiver's right same as that of corporation . . . .% 690 recovery by (G. C. L., § 244) 689 substituting in pending action .- 556 of receivers on dissolution of corporation in pending action 558 sureties, notice of final accounting (6. C. L., § 327) 705 surviving receivers, authority (G. C. L., § 237) 679 temporary injunction, see Form No. 317. temporary receiver, accounting, petition for, see Form No. 285. bond, see Form No. 283. notice of motion for order extending powers and directing sale of property, see Form No. 293. order appointing, see Form No. 282. discharging, see Form No. 286. discharging temporary receiver and cancelling bond, see Form No. 287. extending powers of, see Form No. 284. extending powers and authorizing receiver to sell, see Form No. 295. petition for order extending powers and directing sale of property, see Form No. 294. temporary receiver in sequestration action, appointment (G. C. L., § 104) 570 title to property (G. C. L., § 232) 670, 683 when vests in receiver 684 transfer of assets of corporation to receiver (G. C. L,, § 233) 685 unclaimed dividends, disposition (G. C. L., § 266) . . . •. 703 unpaid stock subscriptions, collection (S. C. L., § 54) 160, 162 vacancy, filling 671 when title vests in receiver , 684 withheld or embezzled property, recovery from oflScer, agent or em- ployee (G. C. L., § 340). 691 Recording and filing certificate of incorporation (G. C. L., § 5) , . 25 Recording fees (Executive L., §§ 26, 42; County L., § 174; Pub. Off. L., § 66-a) 28 Reduction of capital stock. (Se<^Capital Stock.) Reference: action for dissolution (C. P. A., § 465) 621 action for official misconduct 391 controversies between receiver and persons holding claim against cor- poration or owing corporation (G. C. L., § 241) 692 dissolution of moneyed corporation, reference to determine disputed claim (G. C. L,. § 156) 642 Refunding mortgage ; 444 Registered holder as owner, rig'ht of corporation to treat (Pers. Prop. Law, § 164) , . , 189 GENEKAL INDEX. 1235 Page Reincorporation of existing corporation (B. C. L., § 4) 96 name (G. C. L., § 6) 53 organization tax. . -. 97 Release of subscriber from subscription to stock 155 Remainderman, extraordinary dividends, what constitutes 312 rights in dividends as betvpeen life tenant and remainderman 212 rights in extraordinary dividends 213 Removal of director or officer from office (G. C. L., § 90) 375 Reorganization: agreement for reorganization, construction and validity 100 contents (S. C. L., § 10) 99 of bondholders 98 annulment of agreement for fraud 101 bond to reorganize corporation (S. C. L., § 10) r 99 canceled stock, amount of (S. C. L., § 10) 99 certificate of reorganization (S. C. L.. § 9), see Form Nos. 3 and 37, 97 character of business not changed by 102 compromise settlement of claim (S. C. L., § 10) 99 construction of agreement for reorganization 100 effect 103 on possession and authority of receiver in foreclosure (S. C. L., § 11) 103 extension of duration not effected by 103 liability of new corporation for acts or omissions of receiver appointed on sale and foreclosure (S. C. L., § 11) 103 on contractual obligations of predecessor 98 municipality holding stock, assent of (S. C. L., § 12) 99 name (G. C. L., § 6) 53 on sale of corporate property and franchise, right where property and franchise sold under mortgage or deed of trust (S. C. L., § 9) 97 qualification of reorganizers (S. C. L., § 9; G. O. L., § 4) 1,4, 97 rights, duties and liabilities of reorganized corporation (S. ;C. L., § 9). 97 stock, right of stockholder to compel delivery 102 validity of agreement for reorganization 100 Repeal of charter by legislature 52 by-laws ''^ Reports : action to enforce liability for false report , 403 annual report of corporation to secretary of state (S. C. L., § 34) ... . 422 construction of statute and reports thereunder 422 when corporation relieved from filing annual report with secretary of state 424 Representative action: abatement of action 256 action on part of plaintiff and all other stockholders 235 allegation in 'complaint that plaintiff is ."ihareholder 350 authority of stockholder to sue not statutory 236 ease in favor of corporation must be made out. , 237 1236 GEKEBAL INDEX. Representative action — Continued: Page cause of action in favor of corporation, necessity for stating in com- plaint 248 complaint, essential allegations 348 corporation party defendant 253 defaulting ofBcers necessary parties 354 delay by corporation to bring after demand 244 demand on corporation to bring and refusal as condition precedent .... 243 demand and refusal, necessity for alleging in complaint 249 demand not necessary where it would prove useless 344 when not necessary 244 demand that stockholders bring action not necessary 344 directors acting in bad faith, right of minority to maintain represen- tative action 234 directors as Such not necessary parties 354 equity, ordinarily in 235 essential allegation of complaint '. . . , 248 estoppel of stockholder to bring action 346 examination before trial 355 extent of fraud or oppression that must bo shown to maintain action. . 236 fraud, right to maintain where fraud exists 334 general basis of action 233 judgment 257 limitation of action 255 notice to stockholders, not necessary to allege in complaint 250 not maintainable where based on want of judgment on part of directors, etc ■ 333 particular instances when action may o^ may not be maintained 238 parties 353 questions of fact, stating for trial by jury 256 receiver, appointment of 357 recovery runs to corporation 336 refusal of corporation to maintain action as condition precedent 243 what amounts to 244 relief that may be granted 357 right of action belongs to corporation 23,5 statement of cause of action 351 stockholders as necessary parties 354 transactions consummated b§fore stockholder acquired stock right to commence action 241 when action maintainable generally 236 Repudiation by corporation of wrongful acts of officers and agents 518 Requisite of injunction against corporation (G. C. L., § 30i5) 569 Removal of ofScers and agents. (See Officers and Agents.) Rescission: by corporation of contract with director 366 contract of subscription for corporate bonds ' . 481 subscription to stock 154 transfer of shares, grounds (Pers. Prop. I*w, § 168) 190 GENEEAL INDEX. 1237 . -■ Page Residence, railroad corporation 78 Resignation of officers and agents. (See Officers and Agents.) Revival of corporate existence (G. C. L., § 38) 42 Rights, duties and liabilities of directors and. officers: acquiring corporate property, validity of acts 368 agreement that depriyes directors of powers invalid 336 assets not to be wasted or dissipated 107 compensation : right to compensation generally. , 343 accounting for salaries illegally paid 349 agents and general employees 351 authority to award must be found in statute, by-law or charter . . 346 extra services may be compensated 345 general employees and agents 351 not entitled to compensation for ordinary services 343 salaries, power of directors to fix 346 presence of director at meeting which votes him compensation. . . . 348 recovery back of salaries illegally voted to officers and directors .... 348 representative action to recover salaries illegally paid 349 services outside of regular duties 345 validity where director votes at meeting awarding compensation to himself , , 347 contract between corporations haying common directors 337 contracts between directors and corporation, validity 364 validity where openly made 367 remedy of corporation 366 rescission by corporation 366 creditors, liability for failure to protect 108 dealing with corporation, right of directors generally 364 duties in reference to stockholders 337 exercise of rights and duties not controllable by court or stockholders generally 335 fiduciary relation of directors and officers to corporation 335 financial condition, liability for false statement inducing purchase of stock r t • • r • • ; 371 financial statement: by chief fiscal officer to stockholders (S. C. L., § 69) 338 demand for statement 341 form of statement ,. ■■■ 341, 343 motive of stockholder in demanding statement 340 pleading in action to recover penalty 340 proof in action to recover penalty. 340 requisite of demand 340 stockholder within statute has absolute right to statement 340 sufficiency of statement , 341 who entitled to 339 inspection of general books 230 issuance of stock without consideration , 137 1238 GEN-EEAL INDEX. Rights, duties and liabilities of directors and officers — Continued: Page liability for wasting or dissipating assets , 107 loans and advances by directors to corporation 353 management of corporate affairs: discretion of directors and management not controllable by court or stockholders 356 dissolution, directors as trustees in case of (G. C. L., § 35) 363 directors not to act as trustees where receiver appointed 362 improper distribution of assets, liability of directors 363 duties and liabilities generally ; . ; 356 errors of judgment, directors not responsible for 359 extent of liability for acts or omissions in management 358 knowledge of corporate conditions, presumption on part of directors. 361 liability for acts of co-directors 358 misconduct of officers, liability of directors 357 negligence, liability 357 presumption of knowledge of corporate conditions on part of direc- tor 361 sale of corporate property without provision for creditors, liability. 358 ultra vires acts, liability of directors 360 misrepresentation of financial condition 371-37+ official misconduct: abatement of action on death of one of defendants 389 action by director not 'bar to representative action by stockholder. 382 action to set aside alienation of property made contrary to law (G. C. L., § 90) 375 attorney general, when must bring action 379 compelling officer and agents to testify (G. O. L., § 301) 390 officers and directors to account (G. 0. L., § 90) 375 payment of money or property appropriated or unlawfully wasted (G. C. L., § 90) 375 contempt, enforcement of judgment by proceeding for contempt. . . 391 creditor, action against directors 380 action by as representative 381 as used in sections 90, 91 of G. C. L., defined 380 bringing in to prove claim in action for official misconduct (G. C. L., § 303) 388 criminal liability (Penal Law, §§ 664, 665) 391, 393 ' ' director ' ' define* (Penal Law, § 667) 393 presumption of knowledge of corporate condition (Penal Law, § 667) 393 what constitutes official misconduct (Penal Law, § 664) 391 defense, acquiescence of stockholders not defense 382 determination that misconduct exists must precede order for ac- counting 391 directors of foreign corporation 377 director or officer, action against co-director or officer 381 effect of statute as creating new cause of action 378 enforcement of liability generally (G. C. L., § 90) 375 GENERAL INDEX. 1239 Rights, duties and liabilities of directors and ofScers— Continued : Page equity action, effect of section 91a of General Corporation Law. . . . 386 to compel accounting by officers or directors for property mis- appropriated and for negligence of neglect of duty 386 trial by jury of issue of negligence (G. 0. L., § 91a) 385 equity jurisdiction to compel an accounting (G. 0. L., § 91a) 385 equity, liability of directors to account in 383 general creditor cannot maintain action 380 injunction in action against directors and officers staying action by creditors (G. C. L., § 308) 389 injunction suspending business or restraining officers from acting (G. C. L., § 305) 389 joinder of causes of action against directors and predecessors thereof 387 judgment 391 enforcement 391 jury trial, issue of negligence in equity action (G. C. L., § 91a) . . . 385 of action to enforce liability for (G. C. L., § 90) 375 nature of directors and officers liability 381 obligation of corporation, purchase and enforcement by directors . . 355 pleadings and parties in action for 383 proof of misconduct 390 purchase of stock other than out of surplus, criminal liability. . . . 393 reference in action 391 removing director or officer from office (G. C. L., § 90) 375 action by attorney general (G. 0. L., § 307) 379 restraining improper alienation of property (6. C. L., § 90) 375 stockholder who is not director cannot maintain action under (G. C. L., §§ 90, 91) 378 what constitutes misconduct 390 who may bring action generally (G. C. L., § 91) 377 penalty for failure of treasurer or chief fiscal officer to furnish finan- cial statement to stockholders (S. C. L., § 69) 339 property, purchase by director 370 relation of directors to corporation when dealing with third person . . . 335 security to director or officer for loans made 354 validity of contract between corporation having common directors .... 337 s Sale: of property and franchise: application of statute. authorizing sale! 471 appraisal of value of stock of non-consenting stockholder (S. 0. L., § 17) 469 report of appraisers. 470 certificate of incorporation, provision authorizing sale on consent of less than two-thirds, invalid. 472 consent of two-thirds of stock to sale (S. C. L., § 16) 468 con,9ent not obtained at stockholders' meeting, effect on sale 471 1240 GENEKAL INDEX. Sale— Continued: Page construction of statute authorizing sale. . 4T1, 472 corporation to which franchise and property may be sold (S. C. L., § 16) 468 history of statute authorizing sale 471 non-consenting stockholder, purchase of stock 470 notice of application for appraisal of stock of non-consenting stock- holder 470 of ohjection to sale, see Form No. 263. objection to sale by stockholders not consenting (S. O. L., § 17) . . 469 order granting application and appraiser to appraise stock on sale, see Form No. 263. petition by non-consenting stockholder for appraisal of stock, see Form No. 261. property situate without state (S. C. L., § 16) 468 purchasing corporation must be engaged in similar business 472 purchase of stock of non-consenting stockholders (S. C. L., § 17) . . 469 railroad corporation excepted (S. C. L., § 16) 468 report of appraisers of stock of non-consenting stockholders, effect and control of court over 470. rights of non-consenting stockholders (S. C. L., § 17) 469 right to sell franchise and property (S. C. L., § 16) 468 stockholders, rights of non-consenting (S. G. L., § 17) 469 of property to corporation by promotors 34 of real estate: order authorizing sale, see Form No. 257. petition for leave to sell, see Form No. 255. resolution of board of trustees, see Form No. 356. of stock, contract for 186 Seal: affixing seal makes instrument specialty 70 corporation may have seal (G. C. L., § 11) 68 effect of affixing seal (C. P. A., § 343) 69 kind of seal 68 necessity for use on corporate contract 525 negotiable instrument not affected by 70 presumption that it was properly affixed 70 presumptive evidence of consideration 70 simple contracts do not require seal 69 use of private seal of offices 69 Secretary of state: acceptance of improper name not reviewable on certiorari 57 construction of statute requiring reports and reports thereunder 422 mandamus to compel filing of certificate of incorporation 27 power to pass on form of certificate 26 rejection of certificate of incorporation containing improper provision . . 27 report of corporation (S. C. L., § 34) 422 requisites of annual report t6 secretary of state 423 review of action refusing to file certificate 27 when corporation relieved from filing annual report. 424 GENERAL INDEX. 1241 Sequestration: Page accounting as to stockliolderB and directors lialiility in sequestration or independent action (G. C. L., § 111) 568 action does not bar right of attorney general to bring action to dissolve. 565 for and action for voluntary dissolution of equal dignity 566 maintainable to apply property not leviable 565 application to court, district in which made (6. C. L., § 314) 56fi apportionment of stockholder's or director's liability in sequestration action or independent action (G. C. L., § 111) 568 books as evidence in action 566 bringing in creditors to prove claims (G. C L., § 303) 566 collection of amount due on stock subscription, judgment against stock- holders (G. C. L.^ § 113) 570 complaint in action for, see Form No. 264. conditions precedent to maintainance of action (G. C. L., § 100) 564 corporation to which statute authorizing action for sequestration does not'apply 564 creditors, bringing in to prove claim^ (G. C. L., § 303) 566 distribution of property by judgment (G. 0. L., § 112) 575 effect of judgment of sequestration and appointment of receiver 574 enforcement in sequestration action of liability of shareholders on stock subscription 567 trustees for false certificate 567 independent action against stockholders and directors personally liable (G. C. L., § 110) 568 joinder of sequestration action with cause of action fo set aside fraudu- lent judgment 568 judgment in action for, see Form No. 265. and return of execution unsatisfied as condition precedent 565 against stockholders for amount due on stock subscription (G. C. L., § 113) 570 stockholders or directors, enforcing their linlnlit^- (G. C. T.. 5 114) . . 570 distribution of property by (G. 0. L., § 112) 575 effect of judgment of sequestration and appointment of receiver. 574 nature of action 565 oflScers may be compelled to testify in action (G. C. L., § 301) 562 order appointing temporary receiver, see Form No. 280. requiring creditors to exhibit and prove claims, effect of failure to comply with (G. C. L., § 303) 566 right of creditors not having notice (G. C. L., § 303) 566 papers to be served on attorney-general (G. O. L., § 312) 5R8 permanent receiver: account, papers and books to be open for inspection (G. C. L., § 107) 573 filing verified (G. C. L., § 107) 573 additional duties and liabilities (G. C. L., § 107) 573 removal for disobedience of statutory duties (G. C. L., § 107) 573 who is (G. C. L., § 106) .' 572 pleadings, complaint, necessary allegAtions 567 1242 GENERAL INDEX. Sequestration — Continued : Page joinder of parties receiving property fraudulently 567 joinder of stockliolders and trustees wliere personal liability exists (G, C. L., § 109) 567 proposed judgment to be served on attorney general (Q. C. L., § 313). 568 receiver, effect of appointment 574 purpose of appointing receiver ; 573 title to property 573 right to maintain action to secure judgment sequestrating property (G. C. L., § 100) r 564 sequestration action and voluntary dissolution of equal dignity 573 temporary injunction against corporation and officers (G. C. L., § 103). 569 temporary receiver: additional powers and duties (G. C. L., § 105) 572 application for appointment, where made 570 appointment (G. C. L., § 104) 570 bond 573 collection of corporate property and maintenance of action 571 may be given powers and duties of permanent receiver (G. C. L., § 105) 572 notice of motion to attorney general for appointment 571 powers and duties (G. C. L., § 104) 570 proof necessary to secure appointment, . 571 rights of temporary receiver and assignee for benefit of creditors. 571 w^here corporation has property subject to execution, action is not maintainable 565 Servants : general authority of officers and agents to engage 505 liability of stockholders for wages (S. C. L., § 57) 289 who are within meaning of statute fixing liability of stockholders .... 390 Services as consideration for stock 135 Service of process. (See Actions By and Against Corporations; Foreign Corporations.) Set-off and counterclaim: action to enforce stockholders' liability 302 allowance of set-offs by receivers (G. C. L., § 359) 697 Shade trees and plants, liability of gas company for destruction by escaping gas 826 Shareholders. (See Stockholder*.) Shares: defined (Pers. Prop. Law, § 183) . 189 iiature of property in 105 Si>ecial act: creating corporations by special act restricted 13 not afl'ected by General Corporation Law (G. C. L., § 331) 6 power of legislature to alter or repeal (N. Y. Const., art. 8, § 1) 7 right of legislature to pass (N. Y. Const., art. 8, § 1) 7 title of act incorporating company (N. Y. Const., art.. 3, § 16) 13 words necessary to create corporation 13 GKNEKAL INDEX. 1243 Specific objects, objects of business corporation, forms for, see Form Nos. 130-219. Specific performance: Page agreement between stockholders regulating transfer of shares 176 agreement to form corporation 39 contract for sale of shares 187 contract to issue stock certificates 126 Stage coach corporation: advertisement, power to maintain on outside of vehicles 856 alteration of route (Trans. G. L., § 31) 856 bond to be given to municipality (Trans. 0. L., § 36) 859 bus lines as common carriers 858 certificate of convenience and necessity (Trans. C. L., § 36) 859, 860 certificate of incorporation (Trans. C. L., § 30), see Form No. 80 856 of auto-bus line, see Form No. 79. common carriers, when within Public Service Commission Law (Trans. C. L., §§ 24, 25) 858 existing routes and extensions (Trans. C. L., § 33) 857 extension of route (Trans. C. L., § 31) 856 incorporation (Trans. C. L., § 20) 856 injunction against person operating without certificate of convenience and necessity 8'6{) license, ability to operate does not create vested right in licensee 858 local authorities, when consent required (Trans. C. L., § 36) 859 mandamus to compel enforcement of law at suit of private citizen .... 861 money received from leasing advertising space is part of receipts of operation subject to license fee 857 phrase "public convenience and necessity" to be taken as an entirety . . 860 powers in addition to those conferred by general and stock corporation laws (Trans. C. L., § 23) ; 856 generally (Trans. C. L., § 23) 856 to erect and maintain buildings (Trans. C. L., § 22) 856 to hold property (Trans. C. L., § 32) 856 public convenience and necessity, when exists 860 public service commission, approval of extension of existing route (Trans. C. L., § 33) 857 route, alteration or extension (Trans. C. L., § 31) 856 extending through public park 857 violation of Transportation Corporation Law punishable under Penal Law and also under Public Service Commission Law 860 State: construction of pipe lines over state lands (Trans. C. L., § 48) 853 defined (Pers. Prop. Law, § 183) '..: 189 Statutes, private and public acts defined 8 Stay of proceedings, action collusively ibrought by directors against cor- poration (G. C. L., § 33) 561 Steam right of gas and electric corporation to supply to customers (Trans. C. L., § 61) 818 1244 GENERAL INDEX. Stock. (See Capital Stock.) Page and scrip dividends 203 book as evidence (S. C. L., § 32) 78 corporation, defined (G. 0. L., § 3) 10 classification (G. C. U, § 2) S not to act as incorporator 14: Stockholders. (See also Representative Actions; Stockholders' Liability; Stockholders' Meeting.) agreement between stocktolders and corporation as to preferences. . . . 219 admissions and declarations by, effect (C. P. A., § 340) 1 ............ . 520 assignment by stockholder of claim against corporation while insolvent or in contemplation of insolvency 453 consent to voluntary sale of property and franchise (S. C. L., § 16) , . 468 consolidation, appraisal of stock of stockholders not consenting, (B. C. L., § 8) 89 of telegraph and telephone corporations, stockholder not entitled to have stock appraised 875 rights to stockholders not consenting to (B. 0. L., § 8) 89 co-partners, are not 320 dissolution, compelling stockholders to testify in action for (G. 0. L., § 301) '. 626 distinguished from corporation 7 dividends, ri^t of preferred stockholders 207 suit to compel declaration 304 fraudulent increase of capital stock, right to avoid. 119 increased capital, liability of original holders where increased capital not paid in 132 inspection of stock books (S. C. L., § 32) 221 liability, increase or reduction of capital stock (S. C. L., § 62) 114 of corporation on forged or fraudulently issued certificate of stock. 138 partly paid stock (S. C. L., § 60) 113 transferor's liability not divested till transfer made on books 183 loans of corporate moneys to stockholders prohibited (S. C. L., § 29). 394 manner of creating relation (G. C L., § 3) 318 minority stockholders, when may maintain representative action .... 333 necessity for issuance of certificate to create relation 318 new stock, right of stockholder to proportionate shares 130 presumption as to continuance of relation , 319 proof of being stockholder m action to enforce liability 308 relation of common and preferred stockholders to each other and to corporation 319 representative action, election of directors, to declare void 317 recovery of salaries illegally paid 349 rights of holder of spurious certificate 140 to bind corporation by agreement 320 to purchase property on execution sale 431 stock book as presumptive evidence that person is stockholder. ..... 319 transfer of shares, agreement regulating 175 waiver of notice, see Form No. 36. GENERAL. INDBX. 1245 Stockholdeis — 'Continued : Page when may be treated as co-partners 7 when relation created (G. C. L., § 3) 318 Stockholders liability. (See also Foreign Corporations; Stockholders; Stockholders' Meeting.) apportionment in sequestration or independent action (G. C. L,., § 111). 568 contributions between stockholders 381 debts "contracted" within meaning of statute 393 included in liability 391 dissolution, apportioning liability in action for dissolution or inde- pendent action (G. 0. h., § 111) 624 final judgment to adjudge liability Where stockholders are parties to action (6. C. L., § 113) 638 independent action to enforce (G. 0. L., § 110) 624 stockholder as party to action (G. C. L., § 109) 63n employee, liability for indebtedness to (S. C. L., § 60) 38,5 who are within meaning of statute fixing liability 390 enforcement : action against corporation within two years after debt due as con- dition precedent (S. C. L., § 59) 396 amendment of pleading to cure defect of parties 305 bankruptcy proceeding as excusing judgment against corporation and return of execution 298 complaint, necessary allegations 306 conditions precedent to enforcement (S. C. L., § 59) 395 debts of corporation payable within two years, purpose of j)io- vision 300 defenses to action , 302 dissolution as excusing judgment and return of execution 299 equity as proper form of action 293 equity, representative action by creditor 305 execution against croporation limits liability merely 308 form of action 293 holder of stock, not original subscriber, liable 301 judgment against corporation and execution unsatisfied as condi- tion precedent (S. C. L., § 59) 295. 296 when excused 398 judgment against corporation as evidence in action to enforce .... 307 liability limited to debt payable within two years from time con- tracted (S. C. L., § 59) 295 limitation of action (S. C. L., § 59) 296 against corporation and stockholder 303 when statute begins to run , 304 misnomer not available in action against stockholder (6. C. L., § 309) • 303 nature of liability 305 parties 305 persons liable 301 pleadings, necessary allegations in complaint 306 1246 GENERAL INDEX. Stockholders liability — Continued: Page proof of being stockholder 308 of claim by creditor, necessity for 308 receiver of corporation not necessary party 305 set off 303 stockholder, evidence to establish relationship 308 summons, service by publication (C. P. A., § 333) .' 307 transfer of shares, right to enforce liability after (S. C. L., § 59) . . 396 of stock made in bad faith does not iplieve holder 301 who may sue 395 extent of liability to creditor 386 fraud in valuation of property or services for stock 388 full liability corporation (B. C. L., § 6) 382 judgment against corporation as prerequisite 382 limitation of action 282 nature of liability 383 increased capital stock, liability of stockholder (S. C. L., § 63) 385 independent action by plaintiff in sequestration action to enforce lia- bility (G. C. L., § 110) 568 issuance of stock not necessary to fix liability 385 laborers, servants or employees, construction of statute fixing liability. 389 liability for wages (S. C. L., § 57) 389 w'ho are within meaning of statute 390 liability of stockholders owning all or majority of stock 280 making stockholders parties dofendaut in spqucstratiou nction (G. C. L., § 109) ; 567 nature of liability of stockholder for debts 386 non-liability of person holding stock as pledgor or representative (S. C. L., § 58) 391 not limited to oiiginal incorporators ; 285 property or services ais consideration for stock, effect of excessive valuation 288 reduction of stock, liability on (S. C. L., § 63) 385 stock issued for services, effect as fully paid 387 for property, effect as fully paid _ 387 without consideration 386 stock not fully paid, liability (S. C. L., § 56) 383 Stockholders meeting. (See also Stockholders; Stockholders' Liability.) by-law fixing amount of ftock that must be represented to constitute quorum (G. C L., § 11) 407 tliat quorum shall consist of majority of stock represented in per- son or proxy invalid ^63 challenge of voter (G. C. L., §§ 33, 37) 360, 369 copy of minutes of stockholders' meeting to amend certificate of incor- poration, see Form No. 43. corporation holding stock has right to vote 3^2 cumulative voting (6. C. L., § 34) 268 construction of statute 268 dissolution before expiration of time limit, to pass on (G. 0. L., § 331). 577 GENERAL INDEX. 1247 Stockholders meeting — Continued: Page fiduciarleB, power of court to direct manner of voting stock where fidu- ciaries equally divided (G. C. L., § 33a) 365 power of majority to vote stock (G. 0. L., § 33a) 265 voting stock held by (G. C. L., § 33a) 365 increase or reduction of capital stock (S. C. L., § 63) 117 conduct of meeting (S. C. L., § 64) 118 inspectors of election, appointment (S. C. L., § 31) 367 candidates for office, may be 368 compensation (S. C. L., § 31) 367 eligibility (S. C. L., § 31) 367 filling vacancies (S. 0. L., § 31) 367 number. . . . . 367 oath (S. C. L., § 31) 367 provision as to directory only 367 opening and closing poles 368 power to administer oath to stockholders challenged (G. C. L., §27) 269 qualification 267 invalid provision in certificate of incorporation limiting right to vote . . 20 jurisdiction of Supreme Court respecting elections: application of statute 275 circumstances justifying setting aside election 376 construction of statute 373 court will not try disputed title to office 279 extent of jurisdiction to inquire into validity of election 374 notice of proceeding to test validity of election 378 order to show cause may be granted by justice out of court 378 parties to proceedings to set aside election 273, 378 power of Supreme Court to establish or order new election (G. C. L., § 33) 373 proceeding is not a contested motion 378 proceeding to test validity of election 277 what must be shown to give petitioner standing in court 277 when election will not be set aside 276 because illegal votes cast . ' 276 minutes of first meeting of subscribers to stock after filing certificate of incorporation, see Form No. 102. minutes, taking and transcribing need not be made by secretary per- sonally 503 misconduct at corporate election, criminal liability (Penal Law, § 668). 269 neglect of directors to adopt by-laws for, election, effect (S. C L., § 27) 319 notice of meeting of stockholders to extend corporate existence, see Form No. 20. to increase or reduce capital stock (S. C. L., § 63) 117 of special meeting for election of directors (G. C. L., § 29) 331 of special meeting to change name (6. C. L., § 66) 63 of time and place of holding election of directors (S. C. L., § 35) . . 319 number of votes stockholder entitled to (G. C. L., § 33) 360 1248 GENEKAL INDEX. Stockholders meeting — ^Continued: Pagu oath of challenged voter (G. C. L., § 27) 369 opening and closing polls 268 pledgor, right to demand proxy (6. C. L., § 23) 260 right to vote stock (G. C. L., § 23) 260 preferred stockholder, right to deprive of voting power 264 proxies : challenge to voters (G. 0. L., § 27) 269 duration of proxy (G. C. L., § 26) 371 execution of proxy {G. C. L., § 36) 371 for first subscribers' meeting after filing of certificate of incorpora- tion, see Form No. 97. form of proxy 371 irrevocable proxy prohibited 272 invalid where issued for consideration (G. C. L., § 23) 370 oath of proxy who has been challenged (G. C. L., § 27) 269 power of inspectors to determine genuineness 27;j proxy, see Form So. it'i. proxy, defined 270 revocation of proxy (G. C. L., § 26) 271 right of person holding proxy to call meeting to order 270 right to vote by proxy (G. C. L., §§ 23, 26) 260, 270 who may act as proxy (6. C. L., § 26) 271 publication of time and place of holding election of directors (S. C. L., § 25) 319 qualification of members as voters (G. 0. L., § 23) 360 registered stockholder, right to vote 361 restriction on voting powers, validity of 263 right to vote on proposition in which stockholder is interested 26] right to vote to be determined by books 361 special meeting for election of directors (G. C. L., § 29) 32J mode of conducting (G. C. L., § 30) 33H qualification of "voters and canvass of votes (6. C. L., § 31) 322 quorum and powers of stockholders (G. C. L., § 30) 322 stock book, production at meeting (G. C. L., § 23) 260 stockholders of record entitled to 'vote (G. C. L.. § 33) 260 sufficiency of notice of meeting to elect directors 319 transfer books, closing before meeting (G. C. L., § 23) 260 validity of proxy (G. C. ^, § 36) 371 of restrictions on voting powers 26;> voting trust agreement, see Form No. 15. duration of agreement (G. C. L., § 25) , 272 right to execute (G. C. L., § 35) 272 transfer of certificates of stock to trustee (G. C. L., § 25) 272 waiver of notice of incorporator's meeting, see Form No. 99. of notice of meeting (G. C. L., § 42) 266 of notice of meeting of stockholders, see Form No. 21. meeting to change name , 266 of publication of time and place '. .SSO GENERAL INDEX. 1249 Page Snbpoena, duces tecum to produce books on trial (C. P. A., § 411) 550 Subscription to stock. (See also Gajiital Stock.) after incorporaticm (S. <3. L., § 53) 147 agreement by corpoTation to take back stock or pay profits 152 assignment of subscription, see Form No. 98. common law subscription valid 147 contract to pay contractor in full-paid stock as subscription 148 forfeited stock, reissuance (S. C. L., § 54) 159 cancellation where not reissued (S. C. L., § 54) 159 forfeiture of certificate for non-payment (S. C. L., § 54) 159 new issue, right to subscribe to 149 oral subscription, validity 148 parties to action to rescind subscription because of fraud 155 payment : abandonment of business as defense to action for calls 167 action to recover, defense that call was for purpose not warranted. 166 installments not maintainable after stock forfeited for non- payment .' 160 assessments or calls generally 161 by receiver 161 bona fide purchaser of stock issued as fully paid, liability where not fully paid 165 check or note as cash in payment of ten percentum 157 enforcement of liability 163 estoppel of stockholders to plead failure to pay ten per cent 158 to question incorporation in action to recover 167 forfeiture for. non-payment (S. C. L., § 54).., 159 no further right to recover on stock after 160 right of stockholder 161 interest on amount due on stock 166 nature of action to enforce liability 164 notice to stockholder to pay (S. C. L., § 54) 159 receiver of assets to collect unpaid subscriptions (S. C. L., § 54) . 160 services as equivalent to cash payment of ten percentum 157 stock issued as gratuity 165 subsequent payment of ten pereentum, effect 158 ten per centum in cash at time of subscribing (S. C. I/., | 53) ... . 156 effect of failure to pay. 157, 158 required only of those subscribing after incorporation...... 159 time of payment of subscription (S. C. L., § 54) 159 transferee, liability for calls 162 unauthorized call as defense to action 166 ultra vires acts of corporation not defense to action to recover calls. 166 unpaid subsci'iption as assets IfiS validity of by-laws providing for forfeiture for non-payment 160 prior to organizatllon .' 149 conditional subscription. . . ; 151 79 1250 GENEEAL INDEX. Subscription to stock — Continued: Pago distinction between agreement to form corporation and agreement to subscribe after corporation formed 152 incorporation for different purpose ; 151 incorporation under different name 151 secret collateral agreement ■ ■ ■ ■ 151 ratification of subscription induced by fraud 154 release, acts that will not release subscriber 155 acts that will release subscriber 150 of subscriber 155 rescission, forfeiture as 160 of subscription induced by fraud 158 parties to action 155 "subscribe" defined 148 subscription for partly paid shares, see Form No. 55. subscription to articles of incorporation as suflS.cient 149 rights to stock held in trust 315 substitution of transferee 170 validity does not depend on entering m subscription books 148 failure to pay ten percentum in cash 157 of subscription prior to organization 150 Substitution of new name, in pending actions and proceedings (G. C. L., § 65) 68 Summons. (See Actions By and Against Corporations; Foreign Cor- porations.) Supplemental certificate of incorpo'ration, amendment (G. C. L., § 7) 46 Supplementary proceedings 563 Supreme Court, jiirisdiction to inquire into validity of corporate election. (See Stockholders' Meeting.) Surplus profits, dividends to be declared from (S. C. L., § 28) 199 T Taxation: corporation tax: action for recovery of taxes (Tax Law, § 203) 928 additional franchise tax on transportation and transmission cor- porations (Tax Law, § 184) ^ _, gig annual franchise tax on corporations (Tax Law, § 182) 917 application of. taxes Q^ax Law, § 306) 930 capital stock tax, certain corporations exempt (Tax Law, § 183) . . 918 credit to be given where • corporation owns state botids (Tax Law, § 190) : r 922 electric light companies, franchise tax on (Tax Law, § 186) 920 elevated railroads or surface roads not operated by steam, fran- chise tax on (Tax Law, § 185) 919 exemption from other state taxation (Tax Law, § a05) 929 foreign bankers, tax upon (Tax Law, § 191) 923 forfeiture of charter of delinquent corporation (Tax Law, § 203). 928 franchise tax on corporations (Tax Law, § 182). ..._. 917 GENERAL INDEX. 1251 Xaxation — Continued : Page gas companies, franchise tax on (Tax Law, § 186) 93(1 information of delinquents (Tax Law, § 302) OSS insurance companies, franchise tax on (Tax Law, § 187) 930 investment companies, taxation of (Tax Law, § 188a) 921 limitation of time (Tax Law, § 207) 930 notice of statement of tax (Tax Law, § 196) 925 payment of franchise tax, penalty for failure to report or pay tax (Tax Law, § 197) 926 regulations as to certiorari reviewing determination of tax com- mission (Tax Law, § 200) 927 report of corporation (Tax Law, § 192) 92?! further requirement as to (Tax Law, § 194) 925 reports to be made by secretary of state (Tax Law, § 304) 929 review of determination of tax commission by certiorari (Tax Law, § 199) 927 revision and readjustment of accounts by tax commission (Tax Law, § 198) 926 savings bank, franchise tax on (Tax Law, § 189) 922 steam heating corporations, franchise tax on (Tax Law, § 186) . . 920 tax commission, power to examine into affairs of corporation (Tax Law, § 195) 935 transportation and transmission corporations, additional franchise tax on (Tax Law, § 184) 919 trust companies, franchise tax on (Tax Law, § 188) 921 value of stock to be appraised, when (Tax Law, § 193) 924 water works companies, franchise tax on (Tax Law, § 186) 920 warrant for collection of taxes (Tax Law, § 301) 927 without nominal or par value, franchise tax on corporation issuing stock (S. C. L., § 21) :... 9is exemptions of gas and electric light corporations from taxation on personal property (Trans. C. L., § 61) 817 foreign corporation license tax (Tax Law, § 181) 916 franchise tax on business corporations: action for recovery of taxes (Tax Law,- § 219f ) 939 audit and statement of tax (Tax Law, § 319a) 937 computation of tax (Tax Law, § 214) 933 corporations exempt from franchise tax (Tax Law, § 310) 931 correction and changes (Tax Law, § 219d) . . 938 definitions (Tax Law, § 308) 930 deposit of revenues collected (Tax Law, § 219g) 939 disposition of revenues collected (Tax Law, § 319h) 940 "entire net income" defined (Tax Law, § 208) : 930 exemption from, certain other .taxation (Tax Law, § 319j) 942 forfeiture of charter by delinquent corporation (Tax Law, § 219f). 939 limitation of time (Tax Law, § 219k) 942 net income, franchise tax based on (Tax Law, § 209) 930 notice of tax (Tax Law, § 319b) 937 penalty for failure to make report (Tax Law, § 216) 9?,r, 1252 GEWEKAIi INDEX. Taxation— Continued: Page imposed on officials for disclosing information (Tax Iiaw, § 219i) 941 personal property defined (Tax Law, § 2191) 943 powers of tax commission (Tax Law, § 317) 936 rate of tax (Tax Law, § 315) , 935 reports by corporation on 'basis of fiscal year (Tax Law, § 312) . . 933 report of corporation to tax commission (Tax Law, § 211) 931 review of determination of tax commission by certiorari (Tax Law, §319) 936 revision and readjustment of accounts by tax commission (Tax Law, § 218) 936 secrecy required of officials (Tax Law, § 219-i) 941 "tangible personal property" defined (Tax Law, § 308) 930 taxation of corporations acquiring assets or franchises of other cor- porations (Tax Law, § 214a) 935 verification of form of report (Tax Law, § 213) 933 warrant for collection of taxes (Tax Law, § 219e) 939 when tax payable (Tax Law, § 219c) 937 license tax on foreign corporations (Tax Law, § 181) 916 basis of computation (Tax Law, § 181) 916 organization tax (Tax Law, § 180) 37 amendment to Change to shares without nominal or par valvie (S. C. L., § 34b) ; 51 consolidation of corporations (Tax Law, § 180) 87, 914 corpofatioii issuing stock without par value (Tax Law, § 180) .... 914 corporation issuing stock with par value (Tax Law, § 180) 914 decrease in capital stock (Tax Law, § 180) 914 increase in capital stock (Tax Law, § 180) 914 increase or reduction of capital stock 115 pipe line corporation, property of (Trans. C L., § 54) 85'5 statement in certificate of incorporation of place of business conclusive. 71 transfers of stock: amount of tax (Tax Law, § 270) 943 application of taxes (Tax Law, § 379) 956 books and records to be kept (Tax Law, § 376) 953 cancelling stamps (Tax Law, § 273) 950 civil penalties (Tax Law, § 377) 954 construction and application of statute genferally 944 contracts for dies CSax Law, § 274) 950 for transfer not made or executed within state 947 efiFect on action based on transfer of failure tb pay tax 955 of failure to pay tax (Tax Law, '§ 278) 954 nature of tax : 944 penalty for failure to cancel stamps (Tax Law, § 273) 950 to pay tax (Tax Law, § 272) 949 to stamp transfer (Tax Law, § 277) 954 refund of tax erroneotisiy paid (Tax Law, § S80) 956 registration of firms or corporations dealing in stock (Tax Law, § 375a). . : 95] GENERAL INDEX. 1253 Taxation — Continued: ■ Page sale of stamps (Tax Law, § 271a) 949 stamps, affixing (Tax Law, § 376) 953 general principles governing (Tax Law, § 271) 948 sale of (Tax Law, § 271a) ' 949 when to be affixed (Tax Law, § 270) 942 stock without nominal or par value (S. C. L., § 21)- 948 transfer by trustee 943 do not have to he sales to he subject to tax 945 in completing merger or consolidation 946 partially executed within state 947 subject to tax (Tax Law, § 270) 942, 944-947 voting trust agreement, transfers of shares under 946 Telegraph and telephone corporations: abutting owners, ejectment to compel removal of telegraph and tele- phone poles , ". 867 rights and remedies 866 certificate of incorporation (Trans. C. L., § 100), see Form No. 86. . . . 861 condemnation of lands for purpose of constructing lines (Trans. C. L., § 102). . . 863 what constitutes public use 865 petition 866 condition upon granting of telephone service , . 86S consolidation , of corporation (Tra,ns. C. L., §, 104) 874 stockholder not entitled to have stock appraised 875 corporation for distribution of music electrically (Trans. C. L., § 106). 863 construction of contracts for right of way 86 f construction of lines (Trans. C, I/., § 103) ■ . . . 862 under ground (Trans. C. L., § 102) '. , 863 under ground in city, village qr town, consent of municipal au- thorities (Trans. C. L,, § 102) , 862 under ground through squares, pa,rk3 and othpr public places.... 864 credit, discrimination between customers prohibited 871 discount to public authorities in rates , 870 discrimination as to rates. ,........,,,. 869 dispatches, order of transmissions (Tr£|,n3. C. L., § 103) 870 extension of lines (Trans. C. L., §, 101) , 865 incorporation (Trans. C. L., § 100) , 861 leasing lines of other corporations (Tran|3, C. L., § 101) 865 liability for negligence in transmitting message extends to sender and to receiver both ,,.......,.. i , 874 limiting liability, right of corporation 872 moving building along street, right of owner . . 864 negligenQe, cannot limit liability fpr gross negligence 873 negligence, payment of liability as to , . ... ., 873 newspaper dispatches, transmission (Trans. C. L., § 1.03) 870 penalty for refusal to receive or transmit message 872 for refusal to transmit dispatches (Trans. Q. L., § 103) 870 policemen, special (Trans. C. L., § 1(>5) . - 875 1254 " GBNEKAL, INDEX. Telegraph and telephone cotporations — Continued: ' Pago possession of highway for twenty years or more does not give per- petual right 864 power to construct Hues along .highway and strpots is franchise con- ferred by state 863 rates, agreement as to rates '/. i . . . r 869 discrimination f 869 rights and remedies of abutting owners 866 right of way, construction of contracts for 867 right to use public streets and highways subject to reasonable control of local authorities 863 service, right to impose conditions upon granting 868 special policemen (Trans. C. L., § 105) 875 transmission of dispatches (Trans. C. L., § 103) 870 Temporary receiver. (See Dissolution.) • Tender of amount due on pledged stock 196 Ten percentum in cash, validity of subscription not accompanied by 157 Title defined (Pers. Prop. Law, § 183) 189 Tramway corporations: certificate of incorporation (Trans. C. h., § 30), see Form No. 81.... 875 condemnation of real property (Trans. C L., § 33) '. 876 petition and sufficiency of proof : 876 crossings (Trans. C. L., § 33) 876 examination and survey of proposed tramway, power to make (Trans. C. L., § 31) 876 incorporation (Trans. 0. L., § 30) '. . 875 laying out and constructing trainwuy, power (Trans. 0. L., § 31)..... 876 powers in addition to those conferred iby general and stock corporation law (Trans. C. L., § 31) ; 876 real property, right to acquire by condemnation (Trans. C. L/, § 32) . . 876 service stations, fixtures, etc., power to make (Trans. C. L., § 31) . . 876 Transfer of property of old corporation to consolidated corporation (B. c; L., § 10) ::.. :: .: . so Transfers of shares. (See also Pledge.) attorney, purchase as within statute prohibiting attorney from pur- chasing bonds to (bring suit, etc. ; 171 absolute prohibition of transfer illegal 172 agreement between stockholders riegulating transfers 175 as affected by Personal •Property Law (Pers. Prop. L., §§ 162-175, 181-183) .......;... 188-192 assignment by stockholder of stock in contemplation of insolvency pro- hibited (S. C. L., § 66) . . ; 449 attachment or levy on shares (Pers. Prop. Law, § 174) 193 attempt to transfer, effect of ineffectual (Pers. Prop. Law, §171)..,. 191 blank assignment and power of attorney as transferring entire legal and equitable title ^ 178 negotiability of certificate 170 rights of boiia fide purchaser 178 and jiower of attorney, validity! 177 GENEKAL INDEX. 1255 Transfers of shares — Continued: Page books of corporation, effect of failure to have transfer made on. . . . , . 182 rights of i^arties where traiisfer not made on 183 transfer on (S. C. L., § 33) 181 transfer on not necessary to pass title 182 transferor's liability not divested till made on ibooks 183 waiver of requirement of statute 183 by-laws not to impose restrictions on transfer not stated in certificate (Pers. Prop. Law, § 176) . 1 ... , 171 regulating transfer (G. C. L., § 11) 174 restricting transfer till opportunity given corporation and other stockholders to purchase, validity 174 constructive notice of contents of certificate, purchaser chargeable with. 179 contemplation of insolvency, purpose of statute 174 transfer prohibited (S. C. L., § 66) ........ 174 contract for sale of stock 186 damages for breach of contract of sale 186 .-delivery of certificate, who may deliver (Pers. Prop. Law, § 166) . , . . 190 delivery of unindorsed certificate, effect of (Pers. Prop. Law, § 170) ... 191 dividends, effect on right to 310 dividends, transfer of shares 207 .duty of corporation to transfer 170 effect of title derived from certificate on title derived from separate document (Pers. Prop. Law, § 165) 190 endorsement of certificate, effect of (Pers. Prop. Law, § 167) 190 what constitutes (Pers. Prop. Law, § 181) 188 equity suit to compel corporation to make transfer on books. 185 executor, transfer by. ...-. . , ., 170' executory contract, rights of parties 181 fraud, setting aside transfer for, 171 indebtedness to corporation, provisions of statute must be on certificate. 173 what amounts to. 173 ineffectual attempt to transfer, effect (Pers. Prop. Law, § 171) I. 191 insolvency of corporation, transfer in contemplation of, prohibited (S. C. L., § 66) ;... 174 liability of officers for refusal to make transfer on books iS's liability of transferee 170 liability of transferor where transfer not prohibited till stock fully paid. : , ■ 174 lis pendens, doctrine not applicable 179 mandamus not proper remedy to compel transfer on books 185 manner in which transfer may be effected (Pers. Prop. Law, § 162) 188 "option" defined. . . .,.....,...., ,...!... 171 pooling of stock by stockholder, right of members of pool. 171 powers of person lacking full, legal capacity and of fiduciaries "(Pers. Prop. Law, § 163) 189 prior to filing certificate : 172 provision in eertiflqate restricting 20 reasonable restrictions are legal 172 1256 GENERAL, INJJBX. Transfets of shares— Continued: Pago refusal of corporation to make transfer on books, remedy for 184 registered holder as owner, right of corporation to treat (Pers. Prop. Law, §, 1,64) 189 remedy for refusal of corporation to make transfer on books 184 rescission of transfer, grounds for (Pers. Prop. Law, § 168) 190 restrictions on transfer generally (Pers. Prop. Law, § 176) 171 right of stockholder to sell or transfer stock (S. C. L., § 50) 1-69 specific performance of agreement between stockholders regulating. . 176 specific performance of contract for sale 187 stamps, failure to affix transfer stamps as effecting enforcibility of con- tract of sale 18b stockholder indebted to corporation, transfer may be prohibited (S. C. L., § 51) 173 substitution of transferee on liability to pay subscription 170 transferee of stock, liability for calls 163 transfer defined (Pers. Prop. Law, § 183) 189 transfer to enable transferee to bring action against corporation.... 170 unindorsed certificate, effect of delivery (Pers. Prop. Law, § 170) .... 191 validity where not transferred on books of corporation (S. C. L., § 32) 181 value of stock, how established 187 warranties on 'sale of certificate (Pers. Prop. Law, §§ 172, 173) 192 what passes by transfer 180 words "in trust" as notice of rights of owner 179 Tra^sfers while insolvent or in contemplation of insolvency. (See also Insolvency.) prohibited (S. C. L., | 66) '. 448 Tiansportation corporation. (See Ferry Corporation; Freight Terminal Corporatioii; Navigation Corporation; Gas and Electric Light Corpora- tion; Pipe Line Corporations; Stage Coach Corporation; Tramway Cor- porations ; Turnpike, Plank Eoad and Bridge Corporations ; Watet Works Corporations.) Treasurer's bond, see Form Nq, 106. Trespass, employee of gas and electric company entering building to attend to equipment 841 Torts: corporate liability for torts 714 liabijity of corporation for torts of officers and agents 714 Tri4l: ' ' ■ ■ -'\l *J|l_rf! equity action to compel aroountihg by directors, jury trial of issue of negligence (G. C. L., § 91-a) 385 jury trial of actiqn to enforce liability for official misconduct (G. C. L., § 90) 375 place of trial in action against, foreign corporation 785 by ioreign corpora.tion 769' Trusts, subscription rights to stock held in trust 215 Trustee : transfer of shares by (Pers. Prop. Law, § 163) 189 ■non-liability as stockholder on stock held by trustee (S. O. L., § 58) . . 291 under trust mortgage to secure bonds 485 GENERAL INDEX. 1257 Irnstee in bankruptcy: Page equity action to compel accounting- by, directors or oflScers for official misconduct (G. C. L., | 91-a) 385 unpaid stock subscriptions, collection 163 Trust fund doctrine 106 Trust mortgage to secure bonds 486 Turnpike, plank road and bridge corporations: abating toll (Trans. C. L., § 130) 885 ^application to board of supervisors for authority to build road and take necessary real estate (Trans. C. L., § 123) 881 bridges, construction of (Trans. C. L., § 128) 883 certificate of completion of road or bridge (Trans. C. L., § 129) 884 of incorporation (Trans. C. L., § 120), see Form No. 87 876 change of location of gate (Trans. C. L., § 133) 887 office of corporation (Trans. C. L., § 137) 877 route (Trans. C. h., § 135) 882 commissioners to lay out road (Trans. C. L., § 134) 882 computation of toll 886 condemnation of use of highway (Trans. C. L., § 122) 880 consolidation of corporation (Trans. C. L., § 138) 878 construction of road, manner of (Trans. C. L., § 127) 883 directors, certain acts as prohibited (Trans. C. L., § 145) 879 directors not to be interested in contract for making or working road (Trans. C. L., § 145) 879 dissolution of corporation (Trans. C. L., § 149) 893 duration of corporation (Trans. C. L., § 130) 876 encroachment of fences by third person (Trans. C. L., § 143) 890 endorsement on certificate of affidavit that required amount of capital slock has been subscribed (Trans., C L., § 120) 877 exemptions from toll (Trans. C. L., § 130) 885 existence, extension ot (Trans. C. L., § 152) 878 extensions and branches of road, (Trans. C. L.,, § 135) 882 corporate existence (Trans. C. L., § 152) ; 878 fees for inspection (Trans. C. L., § 134) 888 gates, location and change thereof (Trans. C. L., § 133) 887 guide-posts (Trans. C. L., § 136) 887 hauling logs and timber, right restricted (TiiiiiK. C. iL., § 142) 890 highway, agreement with supervisor and commissioner of highways for use of (Trans. C. L., § 122) 879 highway labor upon line of plank road or turnpike (Trans. C. L., §. 151) 889 hoist-gates prohibited (Trans. C. L., §. 136) 88", incorporation (Trans. 0. L., § 120) 876 inspection of road (Trans. C. L., § 134) 888 inspectors, commissioners of highways as (Trans. C. L., § 134) 888 interest of corporation in highway ; . . 880 jurisdictipn of public authorities over street 891 location of gate (Trans. 0. L., § 133) 887 office of corporation (Trans. C. L., § 137) 877 road, restrictions on (Trans. C. L., S 121 ) 879 milestones (Trans. C. L., § 136) 887 1258 GENEBAL INDEX. Turnpike, plank road and bridge corporations — Continued: Page obstruction of rafts prohibited (Trans. C. L., § 12S) 883 office, location and change (Trans. C. L., § 137) : 877 penalties, actions for (Trans. C. L., § 146) 891 for fast driving over bridges (Trans. 0. L., § 144) 890 possession of and title to real estate (Trans. 0. L., § 125) 882' process, service (Trans. C. L,, § 137) v 877 proof of incorporation, when parol iproof sufficient (Trans. C. L., § 147) 877 rates of toll (Trans. 0. L., § 130) §84 restrictions on location of road (Trans. C. 1/., § 121) 870 road to be highway on dissolution of corporation (Trans. C. L., § 149) . . S92 route of road (Trans. C. L., § 12.5 ) 882 running gate, penalty for (Trans. C. L., § 132) 888 sale of franchise (Trans. C. L., § 138) 878 rights, franchises and property to county (Trans. C. L., § 139) .... 878 stockholders to be directors, Tvhen (Trans. C. L., § 148) 879 street taken for purposes of plank road does not cease to be street 891 surrender of road by corporation (Trans. 0. L., § 140) 892 taxation and exemption (Trans. C. L., § 141) S90 title to real estate (Trans. O. L., § 125) 882 toll chargeable to persons living within limited distance from gate.... 886 gate (Trans. C. L., § 130) 884 gatherers (Trans. C. L., § 131) . 888' town must pay for lands not originally highway on dissolution of cor- poration (Trans. C. L., § 150) 893 use of turnpike road by plank road (Trans. C. L., § 126) 882 width and construction of rdod (Trans. C. L., § 127) 883 u Ultra vires: acceptance of benefit, cannot interpose plea of ultra vires after 532 acquiescence by stockholder in ultra vires act . 535 basis of doctrine of ulti-a vires. .:...'. 528 contracts not mala in se or mala prohibita 531 prohibited by charter or statute. ...'.... 531 that are absolutely void 531 that are immoral or mala in se 531 that are ultra vires 529 that are not ultra vires 530 defease, necessity for pleadmg as affirmative ; 535 definition 52S effect of 530 estoppel of stockholders to restrain ultra vires acts 534 injunction restraining corporation from carrying on ultra vires business. 532 liability of directors for ultra vires acts 360 pleading defense of ultra vires 535 plea not to prevail where contract fully performed and corporation has received benefit. : 533 political contributions prohibited (G. 0. L., § 44) 536 ratification of ultra vires acts .534 GEBTERAL INDEX. 1259 Ultra vires — Continued: Page recovery back ot money paid on 532 when plea of ultra vhes -will not prevail 532 who may take advantage of ultra vires 531 United States, debts to United States entitled to preference in payment by receiver (G. C. L., § 361) 697 University, use of "university" in corporate name restricted (Education L., § 66) 66 Usurpation of corporate ofSce, franchise or right: action by attorney-general against usurper {(J. P. A., § 1208) 710 against foreign corporation exercising corporate right unlavrfuUy (C. P. A., § 1217) 711 for exercising corporate franchise or right without authority (C. P. A., § 1217) 711 action triable by jury (C. P. A., § 1221) , 712 attorney-general cannot maintain action against corporation to restrain commission of nuisance in city street 711 costs against corporation or usurpers of franchise of corporation (C. P. A., § 1220) ;...:... 712 final judgment in action for usurping oflSoe or franchise ( 0. P. A., § 1215) .; 710 fine in action for usurping ofiiee or franchise (C. P. A., § 1216) 711 injunotipn in action for unlawful exercise of corporate rights (C. P. A., § 1219) 712 -. immunity of witnesses, in action for unlawful exercise of corporate rights (C. P. A., § 1220)... 712 joinder of all persons claiming right in action by attorney-general (C. P. A., § 1209) ,. 710 leave of coui-t not necessary for attorney-general to bring action 712 nature of action. , ■ ■ • 712 trial bj' jury as matter of right , 713 Usury: application of statute prohibiting defense of usui-y 556 .corporation defined (G. B. L., | 374) , . . , 556 defense of usury prohibited to eorpoiation (G. B. L., § 374) . . , 556 V Value defined (Pers. Prop. Law. § 183) 189 Venue: .action for dissolution by attorney-general (G. C. L., § 315) 621 change of venue, statement of place of business of corporation in certificate 71 Verification. (See Actions By and Against Corporaitions;) Villages, construction of pipe line through (Trans,. C. L., § 46) 853 Voluntary dissolution. (See also Dissplution.) discontinuance of business as amounting to 586 practical dissolution without judicial proceedings. 586 surrender by corporation of its franchise 586 1260 GENERAL INDEX. Voluntary dissolution — Continued: Page through judicial proceedings (see also dissolution) : abatement, cause of action in negligence; does not abate on dissolu- tion 603 affidavit to be annexed to petition (G. C. L,, § 175) 594 amendment of schedules annexed to petition (G. C. L,, §, 189) 594 appeal : 602 appointment of temporary receiver may be made before order to show cause granted 607 attorney-general, purpose of serving notice on 597 beneiieial interests of stockholders, dissolution to be ordered for. . . 588 contents of petition (G. C. L., § 174) 591 corporations that may be dissolved voluntarily 584 corporations that may not be voluntarily dissolved (G. C. L., § 170) 584 costs 601 court of equity has no inherent priERAL ISTIiBX. Water works-^Continued : fagc power to lay water pipes in streets, etc. (Trans. C. L., § 82) 8!)9 rates, consumers may test reasonableness though fixed by franchise. . . . 898 discrimination S98 generally ^^^ right to contract with other cities, villages and towns (Trans. C. L., §85) .........^...: ...: 902 survey and map of land intended to Ije taken (Trans. 0. L., § 83) 900 unreasonaitle rates 898 water supply to distant towns (Trans. 0. L., § 81 ) 894 Without nominal or par value: certificate of incorporation authorized to issue shares without designated par value and shares with par value and preferred as to prineipa,!, see Form No. 43. dividends on stock (S. C. L., § 20) . . 204 liability of directors for debts where capital not paid in (S. 0. L., § 20) 400 for unauthorized dividends (S. C. L., § 20) : 400 restrictions on. comment of business by corporation issuing sto6k (S. c. L., § 20) :;?.:. ;. 4ii certificate of incorporation (S. C. Ii., S 19) ...;'.'! . . 23 Witnesses: compelling officer and agents to teatity in action against directors and officers for official misconduct (G. C. L., § 301) 390 in action for dissolution (G. O. L., § 301) 626 in action to forfeit franchise (G. 0. L., § 301) 658 to sequestration corporate property (G. C. L., § 301 ) 562 immvinity in action for unlawful exercise of corporate rights (0. P. A., § 1220) '^.'.'.'' '. 712 officer or agent of corporation making political contribution not excused from testifying (G. C. L., § 44) 538 [Total number of pages 1410]