Glenn v. Lancaster

• Decision Date: 30 April 1888
• Citation: 109 N.Y. 641,16 N.E. 484
• Parties: GLENN v. LANCASTER.
• Court: New York Supreme Court

109 N.Y. 641

16 N.E. 484

GLENN

v.LANCASTER.

Supreme Court, New York County, New York.

April, 1888.

Appeal from an order of the General Term of the first department, which affirmed an order of the Special Term denying a motion to strike the cause from the Special Term calendar.

John Glenn, as trustee of, and for the benefit of the creditors of the National Express and Transportation Company, brought this action against Robert A. Lancaster, David J. Garth and other defendants.

The complaint alleged, as a first cause of action: (1) that the defendants were co-partners, and as such became assignees of holders of four hundred and ninety shares of the express company named; (2) that the company was and continued to be a Virginia corporation, and defendants became owners of their four hundred and ninety shares by assignment from the original subscriber therefor and others accepted by the company as stockholders; (3) that by virtue of the contract between the corporation and the original subscribers the latter agreed for themselves and their assigns for value to pay $100 for each share subscribed for, in such instalments and as and when called upon according to the law under which the company was incorporated; (4) that by reason of these facts the defendants became liable to pay such subscriptions; (5) that at the time the defendants took their assignment $80 per share remained unpaid; (6) that the company had made an assignment for benefit of creditors and the trustees had accepted the trust with the assent of the defendants as stockholders; (7) that at the time of making the assignment only $20 per share had been called and the residue had been suffered to remain in the hands of the persons liable to pay it, subject to be called for according to the terms of the subscription and the Virginia statute; (8) that the trustees named in the assignment not having performed the trust, one William H. Glenn, a creditor, on behalf of himself and all the other creditors, brought an action against the company, its officers and the trustees named in the assignment, to obtain an adjudication as to its validity, and to require a call to pay whatever might be found on an accounting sufficient to satisfy the creditors, and by a supplemental bill the removal of the original trustees, the appointment of new ones and a decree in equity making a call or assessment after an accounting, was sought. That the Virginia court in this suit adjudged the trusteeship to be valid and that the trustees were thereby vested with the right to recover the unpaid subscriptions, provided a proper call therefor should have been made, and thereupon proceeded to establish the claims of creditors and adjudged that a call or assessment of thirty per cent. was necessary for their payment; to remove the original trustees and appoint the present plaintiff [John Glenn] trustee in their stead; assess the stockholders thirty per cent., direct the present plaintiff to proceed to collect that amount, and, lastly, to retain the cause so that a further call might be made if it should prove necessary; (10) that the present plaintiff as new trustee duly qualified and as substituted trustee was entitled to collect the thirty per cent., and had made demand upon the defendants; (11) that by reason of the premises defendants became liable to the plaintiff in the sum of $14,700, being thirty per cent. on the stock held by them which they had refused to pay.

For a second cause of action, the plaintiff reiterated all the allegations of the first cause of action, and added that upon further proceedings in the suit mentioned a further call for the residue of fifty per cent. on the stock had been adjudged, by reason whereof and the demand and non-payment the defendants were indebted to the plaintiff in the further sum of $24,500; and demanded judgment for $39,200.

The defendants Lancaster and Garth interposed separate answers.

Lancaster admitted the co-partnership and put in issue substantially all the allegations of the first cause of action, except the non-payment of money demanded.

For a separate defense he alleged (1) that the firm mentioned were brokers and bankers engaged in buying corporate stock for their customers, and as such caused to be purchased for customers, four hundred and ninety shares of the stock, but did not cause nor authorize it to be transferred into their own name, and they were never owners of it; (2) set up the statute of limitations; (3) that he had been discharged in bankruptcy.

The answer further alleged that the association called the express company, pretended to be a corporation, remained in existence but a short time, when it ceased to exist, its officers all resigned, etc., that the pretended company opened books of subscription, and that over ten thousand persons, scattered all over the country, a small number only residing within this State, subscribed, and that only a part had paid the twenty per cent., and no measures had ever been taken to enforce the liability for the residue, and that meanwhile the statute of limitations had barred claims against them; that at the time of the assignment for benefit of creditors the debts exceeded the assets, that the trustees never filed any inventory nor rendered any account, but wasted the assets, and the plaintiff had never rendered any account nor taken measures to recover the assets: that the abandonment of its business by the company, and its neglect to enforce the liability of stockholders, was a breach of the contract of subscription which discharged the others, or at least limited their obligation to an obligation to contribute after an accounting in equity, and the application of the assets which had already been wasted; and that any subscriber who should pay more than his due proportion should have the right to recover over against the others, but that the paintiff had released a large proportion of the subscribers at a nominal percentage of their subscriptions; that there had never been any accounting in respect to the indebtedness or the liability of the subscribers and that the court in which the present action was brought was without jurisdiction to enforce the Virginia decree, and the call founded thereon or made therein by reason of defects in the proceedings in the Virginia courts, which were stated in detail. The answer further alleged that plaintiff had no other right than as the representative of creditors of the company; that the laches of such creditors precluded them from enforcing the subscriptions, and the proceedings of the Virginia courts were without jurisdiction.

The separate answer of the defendent Garth raised the same questions.

Defendants Garth and Lancaster served notice of trial for the October Term of the Court, 1887, at Special Term, without a jury, and filed notes of issue at the Special Term.

When the October calendar was called by LAWRENCE, J., plaintiff objected to trial of the issues without a jury, and moved that the case be struck from the Special Term calendar. The motion was opposed by the defendants. The...