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See DEED.
CORPORATION Foreign corporation — stockholders' action for the restora-
tion of its property fraudulent appropriation of its stock- the statutes of
New York are not applicable to its mortgaging its property or issuing its stock.]
1. The complaint in an action alleged that the plaintiffs were stockholders
in a foreign corporation; that subsequent to their becoming stockholders, Fen-
nessey, one of the individual defendants, became the owner, through himself
and his associates, of a majority of the stock of the corporation, and caused
himself and his friends to be elected directors; that said directors passed a
resolution to increase the capital stock of the company from $50,000 to
$100,000, and that Fennessey issued to himself and his friends all such increase
of stock without consideration and without authority of law, and that the
corporation received no value whatever for such issue; that thereafter Fen-
nessey and his associates caused the company to execute a mortgage to the
defendant, the Knickerbocker Trust Company, for the sum of $100,000, and
threatened to issue bonds secured by that mortgage to said amount; that the
real capital stock of the company was $50,000, and that it had no power to
mortgage its property to a greater amount. The complaint demanded judg
ment that the capital stock of the corporation be declared to be $50,000;
that the individual defendants be directed to return for cancellation the
increased stock so issued to them or account to the corporation for the same,
and that the mortgage to the Knickerbocker Trust Company and the bonds
issued thereunder be decreed to be invalid and void.
Upon the hearing of demurrers interposed to the complaint it was
Held, that the action was strictly for a restoration of property wrongfully
taken or withheld from the foreign corporation, and for an accounting, and
that the courts of the State of New York had jurisdiction of the subject-
That the allegation that the stock was issued and delivered to the defend-
ant Fennessey and his associates gratuitously, and without consideration,
in effect charged an illegal and fraudulent appropriation of the stock, and
that the complaint set forth a cause of action against the defendant, the
foreign corporation, and the individual defendants:
That as the statutes of the State of New York did not apply to foreign
corporations, there was nothing to show that the mortgage set forth in the
complaint was in any respect invalid or illegal, and that the demurrer should,
therefore, be sustained as to the trust company;
That, for the same reason, allegations of the complaint to the effect that
the increase of stock was made in violation of the statutes of the State of
New York were not sufficient to show that the increase of stock by the for-
eign corporation was illegal. ERNST v. RUTHERFORD & B. S. GAS Co...... 388
2. Liability of a director of a corporation which filed a defective annual
report — what is insufficient documentary proof that the defendant was a director
-a certified copy of the certificate of incorporation and annual reports as evi-
dence thereof- -an answer not denying an allegation of the complaint that the
defendant was a director.] In an action brought to charge an alleged director
of a corporation with liability for its debts because of its failure to file its
annual reports in the years 1892 and 1893 in the form required by the statute
the reports actually filed being verified by only one of its officers - the
fact that the defendant was a director of the corporation at the time the
indebtedness accrued is not sufficiently established by evidence consisting
of a certified copy of the certificate of incorporation of the company, filed
in 1887 in the office of the Secretary of State, on which, in addition to other
names, is that of the defendant as a trustee to manage the affairs of the com-
pany for the first year, together with certified copies of the so-called annual
reports filed in 1892 and 1893, in which the defendant's name appears as a
stockholder and trustee, each verified by the president of the corporation.
who swore that each report was signed by a majority of the trustees, and
the complaint in an action brought against the same defendant and others,
alleging that he was a director or trustee of the corporation, and an answer
thereto, purporting to be signed and sworn to by the defendant, in which
there is no denial of the allegation that he was a director.
Assuming that the certified copy of the certificate of incorporation, acknowl-
edged by the defendant, might, under section 933 of the Code of Civil Pro-
cedure, giving to it the same effect as the original, have been sufficient to dis-
pense with proof of the actual signing of the original certificate by the
defendant, and to establish the defendant's directorship for the first year, the
further inference that the defendant continued after the expiration of that
year to serve as a director of the corporation, which was organized under the
Manufacturing Act (Chap. 40 of the Laws of 1848), cannot be drawn there-
from, under the authority of section 23 of the General Corporation Law (Chap.
687, Laws of 1892), which provides that “every director shall continue to
held his office and discharge his duties until his successor has been elected,"
as the provisions of that act are confined to corporations organized under it
or controlled by its provisions.
In the case of the signing of the annual reports, the affidavit of the presi-
dent, while sufficient to entitle the reports to be filed, does not show that
they were in fact signed by the defendant.
BANK OF THE METROPOLIS v. FABER
3. Preference given by a corporation in contemplation of insolvency
accounts assigned to replace other assigned accounts collected by the debtor.]
Creditors of an insolvent stock corporation to whom its officers, after they
have been advised that its affairs are in a desperate 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 pre-
viously 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 section 48 of the Stock
Corporation Law (Laws of 1890, chap. 564, as amd. by Laws of 1892, chap.
638). The effect of such a view would be to give special favor to a claim
growing out of the wrongful appropriation of the accounts by the corpora-
tion, and to permit such creditors to surrender an additional remedy in tort
against the officers of the corporation in exchange for property of the cor-
poration transferred to them to the exclusion of the other creditors.
Nor can such assignments be supported on the ground that, although
their actual execution was deferred until after insolvency, they were made
to secure money advanced upon the strength of them, where there was no
agreement between the parties to substitute other accounts for accounts col-
lected by the corporation, but, on the contrary, the agreement signed by
the corporation contained a special agreement to turn over the proceeds of
any assigned accounts collected by it to the assignees. HILTON . ERNST... 94
4. Liability of directors who do not file a report in January, 1896 -a
bond executed by the corporation in 1895 and payable in 1900 is an existing
obligation in 1896.] A bond executed in 1895 and payable in 1900, given by
a corporation and secured by a mortgage on its real estate, is, in January,
1896, an existing debt of the corporation for which the directors of the cor-
poration become liable by a failure to file their annual report in January,
1896. LEE v. JACOB..
Effect of the abandonment of the business after a failure to file the
report.] The abandonment of the business of the corporation, after the
default in filing occurs, does not operate to relieve the directors from lia-
bility. Id.
Assignment by a corporation for the benefit of creditors — not invalid
because of a defective certificate of acknowledgment where the instrument was in
fact acknowledged ·
- an assignment to a director is not repugnant to section 48
of the Stock Corporation Law - - assignments without preferences favored.
See LINDERMAN . HASTINGS CARD & PAPER CO...
Trust fund its use in the business of a corporation by its secretary with
knowledge -credits of payments on the earlier items — personal liability of the
secretary when the beneficiaries may sue to enforce such liability — proof that
the corpus of the fund was thus used.
Plea in abatement action brought against a corporation by its presi-
dent for an accounting and for the amount found to be due him. when not a
bar to a subsequent action by the corporation for an accounting by the president
for his acts.
See CONSOLIDATED FRUIT JAR Co. v. WISNER...
Guaranty of an indebtedness for goods to be sold — when given to a firm
it does not survice its dissolution officers of the corporation which gave the
guaranty cannot extend it by parol — estoppel.
See FRIEDLANDER . N. Y. PLATE GLASS INS. Co..
General assignment, with preferences, by a foreign corporation — its
validity in the State of New York sustained evidence of public policy — proof
of execution of an assignment by a foreign corporation.
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COSTS Taxation, in each of four actions, of mileage for the same witnesses.]
1. Where, in four actions upon similar bonds, given by a club as princi
pal, and signed by a surety company, under the Liquor Tax Law, all of
which appeared upon the day calendar for trial at the same time, four bills
of costs are presented for taxation at the same time under four judgments
in favor of the State Commissioner of Excise, in each of which mileage fees
are taxed for the same witnesses, the clerk is not justified in refusing to tax
the mileage of such witnesses in each case because the surety company
objects that it was not proper to tax more than one mileage for each wit-
ness, and inasmuch as the four bills of costs were before the court for taxa-
tion at the same hour, the clerk should look at the bills of costs and strike
therefrom the names of any witnesses whose mileage had been already taxed
in any one of the four causes,” in the absence of proof in contradiction of the
statement in the affidavits attached to the several bills of costs that "each
of the persons above named as witnesses attended as such witness on the
trial of said action the number of days set opposite their names; that each
of said persons resided the number of miles set opposite their names from
the place of said trial, and that each of said persons as such witness, as
aforesaid, necessarily traveled the number of miles so set opposite their names
in traveling to, and the same distance in returning from, the said place of
trial." LYMAN . YOUNG MEN'S COSMOPOLITAN CLUB...
220
2. Papers which may be used on a motion for a retaxation of costs.]
Upon a motion for a retaxation of costs it is improper to use any other
papers than those used before the clerk, except such as may be necessary to
show his action; and it is irregular for the court to receive and consider, after
the motion has been heard, an affidavit of the attorney of the moving
party, presented without the knowledge of his opponent, which in some
respects involves the merits of the clerk's ruling. Id.
3. Extra allowance granted under an agreement to waive it if no appeal
be taken.] Where, after the rendition of a verdict in favor of the plaintiff,
the plaintiff's counsel moves for an extra allowance, stating that he will
waive any allowance granted if the defendants do not appeal, and the clerk's
minutes recite that, "upon this statement and stipulation, the court granted
an extra allowance of five per cent," the allowance so granted will not be
allowed to stand, its effect being to impose a fine of that amount upon the
defendants for appealing from the judgment.
THAMES LOAN & TRUST Co. v. HAGEMEYER.
4
when no proper basis therefor is shown.] An
action brought to obtain some sort of relief in respect to a paper in the form
of a general release which had been executed by the plaintiff, including an
injunction against its use," affords no proper basis for the granting of an
additional allowance. HUSTED . THOMSON..
Condition requiring the payment of costs and the giving of a bond,
imposed by an order granting a new trial- a tender of the costs and bond does
not discharge the condition—if such tender be once declined, it does not prevent
the subsequent enforcement of the condition.
An attorney receiving costs from a partner who is afterwards obliged to
pay them to his client will not be ordered to repay them on a summary application.
See TAYLOR v. LONG ISLAND R. R. Co..
Substituted trustee-what costs are allowable in an action to compel a
transfer of the trust fund.
Full costs are allowed where a motion for a new trial is made upon a case.
See REID v. GAEDEKE.
Excessive extra allowance.
COURT City of Yonkers — removal of an action from a Justice's Court to a
City Court-it is a change of forum, not of venue, and is not prohibited by sec-
tion 18 of article 3 of the Constitution.
General Rules of Practice, 49— power to appoint a guardian ad litem
-practice in a special proceeding-
- an appointment of a guardian nominated
by the adverse party will be vacated.
See MATTER OF CUTTING. (No. 1)
General Rules of Practice, 49 — the appointment of a guardian ad litem
on the nomination of the adverse party-proceedings in which such guardian
appears will be vacated.
See MATTER OF CUTTING. (No. 2).
Municipal Court of New York city — chapter 378 of 1897 creating it is
Restrictive covenants.] 1. Restrictive covenants are to be
strictly construed against the grantor. SONN v. HEILBERG..
2. A restriction to "a family residence" does not prevent the erection of
an apartment house.] A covenant contained in a deed by which the grantee
not to erect any building *
less than three stories in height,
and the same to be in every way adapted for use as a family residence," and
not to erect or permit to be erected buildings in which certain enumerated
classes of business should be carried on, is not violated by the erection by the
grantee of a six-story apartment house designed for the use of several families,
as, in view of the enumeration of the prohibited classes of business, it is evi-
dent that the object of the covenant was to restrict the use of the premises
to residence purposes in contradistinction to business uses and not to pro-
hibit the erection of houses designed to be occupied by more than one
family. Id.
CRIME Perjury when a deposition states facts from which it may be
inferred that the false testimony was willfully and knowingly given — false
imprisonment.
See KRAUSKOPF . TALLMAN...
Confession of judgment · a misstatement as to the amount due constitutes
See MATHER v. MATHER...
Landlord and tenant-breach of a landlord's covenant to keep
the roof in repair · rental damages, not damages to goods, are recoverable -
amendment of an answer, setting up injury to goods, to one making a claim for
loss of rental value.
Action against a railroad by an abutting owner who, pending the suit,
has parted with the title - issues sent from the Special Term to the Trial Term
--- entry of judgment on the verdict - period of assessment of damages.
See CAMERON . NEW YORK ELEVATED R. R. Co.....
Eminent domain
damages to an abutting owner from an elevated rail-
road when a devisee and residuary legatee of such owner is not entitled to
damages accruing before the latter's death.
See GUCKER v. METROPOLITAN ELEVATED R. Co......
Exemplary damages in an action for personal injuries — in what case
they are not recoverable.
Bill of sale of goods to be shipped — damages for a failure to deliver the
See ABE STEIN Co. v. ROBERTSON
DEATH — Abatement of action by.
DEBTOR AND CREDITOR- Trustees holding stock for creditors—what
arrangement by which they purchase the stock is a violation of the trust-by
whom an action to enforce an accounting may be brought — how such a trustee
may resign the trust — powers which should be given to a receiver — plea of laches
by dishonest trustees.
See JENKINS v. HAMMERSCHLAG..
A mortgage taken with intent to defraud creditors - the mortgagee is not
a bona fide purchaser as to a vendor of the mortgaged property from whom the mort-
gagor purchased with intent not to pay for it—burden of proof of bona fides
inadequacy of price.
See MOYER v. BLOOMINGDALE....
Corporation liability of directors who do not file a report in January,
1896- a bond executed by it in 1895 and payable in 1900 is an existing obliga-
tion in 1896-effect of the abandonment of the business after a failure to file
the report.
Compulsory accounting by executors not ordered on the application of
one whose claim to be a creditor is disputed by the executors-exercise of his
discretion by the surrogate - silence is not an admission of a claim by executors.
See MATTER OF WHITEHEAD.....
Confession of judgment — when it states "concisely the facts out of which
the debt arose -a misstatement as to the amount due constitutes perjury — the
facts are sufficiently stated if they would constitute a good complaint.
Guaranty of an indebtedness for goods to be sold — when given to a firm it
does not survive its dissolution · officers of the corporation which gave the guar-
anty cannot extend it by parol — estoppel.
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