Bottlers' Seal Co. v. Rainey
| Decision Date | 21 January 1919 |
| Citation | 122 N.E. 200,225 N.Y. 369 |
| Parties | BOTTLERS' SEAL CO. v. RAINEY et al. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from Supreme Court, Appellate Division, First Department.
Action by the Bottlers' Seal Company, suing in behalf of itself and all other creditors of Tear Off Bottle Seal Company, against Roy A. Rainey and others; Albert R. Fish, impleaded. From an order of Appellate Division (180 App. Div. 935,167 N. Y. Supp. 1091) affirming an order sustaining demurrer of Albert R. Fish and dismissing complaint, plaintiff appeals. Reversed, and demurrer overruled with leave to answer.
Alfred D. Lind, of New York City, for appellant.
William Murray, of Brooklyn, for respondent.
Respondent was sued as a holder of capital stock, not fully paid, by a creditor of Tear Off Bottle Seal Company, under section 56, Stock Corporation Law (Consol. Laws, c. 59), which reads as follows:
‘Every holder of capital stock not fully paid, in any stock corporation, shall be personally liable to its creditors, to an amount equal to the amount unpaid on the stock held by him for debts of the corporation contracted while such stock was held by him.’
He demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The demurrer has been sustained and the complaint dismissed. It is alleged in the complaint that the debt of the corporation, which plaintiff is seeking to enforce, arose as follows:
In December, 1909, the plaintiff granted to one Horner the sole right and license to manufacture, use, and sell certain patented bottle caps for a term extending from the date of the agreement to and beyond July 1, 1913, and, in consideration of the granting of such license and patent rights, Horner agreed to pay to the plaintiff a license fee or royalty of one cent per gross on each gross of bottle caps and seals sold and delivered by the said Horner, or his assigns, and further agreed that the amount of the royalty to be paid to the plaintiff for the period ending July 1, 1911, should not be less than $10,000; for the period between July 1, 1911, and July 1, 1912, not less than $15,000; and for the period beginning July 1, 1912, and ending July 1, 1913, not less than $20,000; and it was further agreed that, if the aggregate royalties should be less than these sums, Horner or his assigns would pay to the plaintiff the amount of such deficiency.
After the execution and delivery of the agreement, and on or about December 28, 1909, Horner, with the plaintiff's consent, transferred all his interest therein to Tear Off Bottle Seal Company, which, in consideration of the consent to the assignment being granted, assumed and agreed to perform and carry out all the terms thereof, which would otherwise have been required to be carried out by Horner. It failed and refused to carry out the terms of its agreement, by failing to pay the amounts thus agreed upon when they became due. Respondent became a holder of stock not fully paid on January 10, 1910. His contention is that the debt was contracted on December 28, 1909, when the assignment was executed. Plaintiff contends that upon the assignment of the agreement a contingent liability was incurred which ripened into a debt only as bottle caps and seals were manufactured, sold, and delivered and the payments fell due.
[1] The proper definition of the term ‘debt contracted’ is to be sought in the legislative intent to enforce the obligation to pay for stock which is assumed by one who becomes a stockholder. It is generally held under such statutes that a sum payable upon a contingency is not presently a debt and does not become a debt until the contingency has happened. Garrison v. Howe, 17 N. Y. 458. Such decisions have had the result of relieving from liability those who were directors when the agreement creating the liability was signed, because it is said that their cases were not fairly within the language of the statute. The same rule of construction must be applied to impress liability as is applied to avoid it.
[2][3][4] The agreement between Horner and Tear Off Bottle Seal Company transferred no more than a mere license, giving the latter the right to make, use, and sell the patented article for a period less than the full term of the patent. The complaint alleges neither that the entire and unqualified monopoly, nor an undivided part thereof, nor...
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...which allowed the licensor merely a patent for a minor improvement on an earlier patent. Appellant also cites Bottlers Seal Co. v. Rainey, 1919, 225 N.Y. 369, 373, 122 N.E. 200; but the passage referred to was dictum merely, and furthermore the discussion was with reference to the position ......
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