Halstead agt. Dodge.

behalf of the defendants. They relate to entire and indivisible transactions, and hold the rule to be that the party deceived cannot disaffirm such transactions or sales in part and maintain an action for the residue as goods sold and delivered. There was no such partial rescission in this case, but it was entire as to the goods known to have been fraudulently obtained, and they consisted of a distinct and separate quantity purchased at a different time from those for the price of which the present action has been brought, and the plaintiffs could well rescind as to this parcel of goods and affirm the other sales and maintain an action for the recovery of the price. This right results from the well established legal rules affecting transactions of this description, and is supported by what was held by the courts in Mattewan Co. agt. Bently (12 Barb., 645); Wheaton agt. Barber (14 Barb., 594); as well as by the principle of the cases of Wright agt. Pierce (4 Hun, 351); Morris agt. Rexford (18 N. Y., 552); and Bank of Beloit agt. Beal (34 N. Y., 473).

In this case, as well as the others, the order from which the appeal has been taken should be affirmed, together with the usual costs and disbursements.

DAVIS, P. J., and BRADY, J., concurred in the result.

N. Y. SUPERIOR COURT.

DANIEL B. HALSTEAD agt. CHARLES C. DODGE and ANSON POND.

NELSON J. BOTSFORD agt. SAME DEFENDANTS.

Corporations Actions against trustees to recover corporate debts as penalty for failure to file annual reports - Liability of -Laws of 1875, chapter 510 Practice - Parties - Code of Civil Procedure, section 456.

Actions against trustees to recover corporate debts as penalty for failure to file annual reports, pursuant to chapter 510 of the Laws of 1875, are not excluded by nor included in section 456, of the Code of Civil Procedure.

Halstead agt. Dodge.

In such actions one, any number, or all of the trustees may be made parties, and it is no defense that one trustee has not been joined, affirming Strong agt. Sproul (4 Daly, 326), reversed on another point (53 N. Y., 497), explaining Quigley agt. Waller (32 N. Y. Supr. Ct., 175). The defendant who acts as trustee although he may not be legally elected or be a stockholder, is liable as to creditors for failure to file an annual report extending Easterly agt. Barber (65 N. Y., 252), which held that a trustee under such circumstances was liable to a co-trustee for contribution.

It is immaterial if the defendant so act whether he is legally elected or whether he is a stockholder at all.

Although the by-laws prohibited the officer of the corporation from contracting a debt, yet the fact that the company received and accepted the benefits of the contract, estops the defendant from raising the defense.

General Term, December, 1884.

Before SEDGWICK, C. J., FREEDMAN and VAN VORST, JJ.

THIS action was brought against the defendants as two of the three trustees of the Pyrolusite Manganese Company to recover a debt of the corporation by reason of the failure of the trustees to file an annual report. The defendant Dodge demurred on the ground that the third trustee was not joined; but the court, in special term, overruled the demurrer as it did not appear that the third trustee existed and was within the jurisdiction of the court (The case was reported 65 How. Pr., 145.)

This opinion was subsequently affirmed at the general term. The defendant Dodge then raised by answer the objection that there were three trustees and that the third trustee had not been joined. *

*

*

The case was tried before the late ex-judge Bosworth, who wrote the following opinion.

J. S. BOSWORTH, Referee.-Each of these actions is brought against the defendants as trustees of the "Pyrolusite Manganese Company," a manufacturing corporation, to recover the amount of a debt alleged to be owed by the corporation to the plaintiff.

Halstead agt. Dodge.

In each case it is sought to charge the defendants as such trustees, because the said corporation did not, within twenty days from the first of January, 1882, make and publish and file a report as required by law in such case made and provided, and also because the corporation has not since then made, published and filed such a report. These actions were commenced in March, 1883.

Some questions common to both actions will be first considered.

The defendant Dodge alleges in his answer in each action that one E. H. Woodward "at all the times alleged in the complaint was a co-trustee with this defendant of the Pyrolusite Manganese Company, and was, and is, a necessary party to this action." The defendant Pond has not set up this defense; his answer in each action consists of a general denial of the allegations of the complaint.

The defendants insist that as the statute makes the trustees jointly and severally liable, they must be sued separately or jointly; that by bringing an action against more than one trustee the plaintiff has elected to treat these as jointly liable, and that his complaint is fatally defective because he has not made all the trustees parties defendant.

The common-law rule that persons jointly and severally liable must all be made defendants, if more than those thus liable were sued, applied only to actions arising ex contractu (Graham Pr., [2d ed.,] 91).

As to actions ex delicto the rule was different.

In such a

case the injured party could sue one, all, or any number of them (Id. 93, and cases there cited). Under the statute which subjects trustees to the liability here sought to be enforced, the liability is imposed for a neglect or omission to perform a duty which the statute enjoins. No right of recovery is based upon any contract, made or alleged to have been made by the trustees; it is based on their misconduct, for which, when established, they are subjected to a liability which the statute affixes as the penalty for such misconduct.

Halstead agt. Dodge.

I think, therefore, that this defense is unavailing (Strong agt. Sproul, 4 Daly, 326; Quigley agt. Walter, 2 Sweeny, 195).

It is objected on behalf of the defendant Pond that he was not at any time a trustee of the company. He was as matter of fact elected a trustee on the 12th of July, 1881. All the stockholders were represented at that meeting, and all the votes cast were in favor of such election. He was elected in the place of Pauline Woodward, whose resignation was presented at that meeting and accepted. Her resignation was in terms conditioned "to take effect after the legal election of the fourth trustee " named in contract, bearing date June 29, 1881, the word "legal" is interlined and is in a different ink from the residue of the written resignation, but when or by what authority it was inserted was not shown. By the articles of incorporation the business of the corporation was to be managed by three trustees. It does not appear that any appropriate action has been taken to make four the number of the trustees. It would seem from the evidence that A. T. Woodward was elected a trustee at the same time. The acting trustees at that time were Edward H. Woodward, the president, and the defendant Charles E. Dodge. After the election of Pond and of A. T. Woodward, there was in form four trustees. As Pond was elected trustee in place of Mrs. Woodward, there is some force, as I think, in the position. that he was legally elected a trustee, unless the condition of Mrs. Woodward's resignation, as it was not literally and legally complied with, rendered such election a nullity. If she had resigned unconditionally, and Pond had thereafter been duly elected a trustee in her place, I do not see that the validity of his election could be questioned, merely because then or thereafter there was a fourth trustee elected, without such prior action having been taken as would be necessary to make the election of a fourth trustee legal.

Mrs. Woodward's resignation was in fact accepted, and Pond was elected as her successor.

had been duly elected a trustee.

He then believed that he About the 26th of June,

Halstead agt. Dodge.

1883, he formally resigned as trustee, and the five shares of the stock of the company which had stood in his name, from the time of his election as trustee, on the books of the company, was transferred to Charles C. Dodge, and on the evidence given, presumably at the request of Pond.

In the meantime Pond, though evidently paying but very little attention to the details of the company's business, did various acts as secretary of the company. As such secretary, he signed notices of proceedings had, and also certificates of the ownership of stock in the company. On or about the 3d day of June, 1882, Pond and Dodge "as trustees of the Pyrolusite Manganese Company," presented a petition to the supreme court, in which they prayed "for a final order, dissolving said corporation and appointing one or more receivers of its property, and for such other relief as may be just." That petition alleges "that the said petitioners are one-half in number of the trustees of the Pyrolusite Manganese Company." It was signed by Dodge and Pond, and verified by them on the 3d of June, 1882. In the verification they, each for himself, swore, "that the matters of fact stated in the foregoing petition and schedule thereto annexed are just and true, so far as he knows, or has the means of knowing."

On that petition the supreme court made an order, on the 5th of June, 1882, by which, among other things, it was "ordered that all persons interested in the said corporation show cause" (at a time and place named, before Horace C. Chittenden, appointed a referee for that purpose) "why the prayer of the petitioners should not be granted." On the 29th day of December, 1882, the defendant Pond was examined as a witness under this order of reference, and testified thus, viz.:

"Q. You are, or suppose yourself to be, one of the trustees? A. I suppose myself to be; yes sir.

"Q. How many shares of stock do you own? A. Five shares."

The evidence justifies the conclusion that litigation on the