Lamphere v. Lang
| Decision Date | 19 January 1915 |
| Citation | 108 N.E. 82,213 N.Y. 585 |
| Parties | LAMPHERE v. LANG. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from Supreme Court, Appellate Division, Fourth Department.
Action by Loren J. Lamphere, as receiver of the Canadaway Fertilizer Company, against Louis J. Lang. From a judgment of the Supreme Court, Appellate Division, Fourth Department (157 App. Div. 306,141 N. Y. Supp. 967), affirming a judgment for plaintiff on a directed verdict, defendant appeals. Reversed.
Joseph C. White, of Dunkirk, for appellant.
Nelson J. Palmer and Thomas H. Larkins, both of Dunkirk, for respondent.
[1][2] This action is brought by the plaintiff, as the receiver of the Canadaway Fertilizer Company, an insolvent corporation, against the defendant, who is a director of the company, to recover upon a stock subscription. The complaint alleges that the defendant became a subscriber to the capital stock of the corporation and ‘thereby agreed to take the number of 10 shares, each share being of the par value of $100, and agreed to pay * * * therefore the sum of $1,000 as required by law and the orders of the directors,’ and that a stock certificate was issued by the corporation to the defendant which represented the stock as fully paid for, but that the defendant did not in fact pay for the same either in money, property, or services. The complaint also contains an allegation that the officers and directors of the company ‘well knew that said stock was not fully paid and that such issue was in fraud of creditors and contrary to law.’
The complaint plainly states a cause of action on contract, and that is the nature of the obligation which a subscriber to stock in a corporation assumes to the company. Southworth v. Morgan, 205 N. Y. 293, 98 N. E. 490,51 L. R. A. (N. S.) 56;Christensen v. Eno, 136 N. Y. 97,12 N. E. 648,60 Am. Rep. 429. The allegations of fraud are not necessary to the pleading and may be rejected as surplusage. Sparman v. Keim, 83 N. Y. 245.
On the trial of the action the defendant proved that the 10 shares were issued to him by the corporation pursuant to a resolution of the board of directors, which recited in substance that each of the seven directors of the company had contributed liberally of his time and energy in the formation of the corporation and had since contributed liberally in services and otherwise for its benefit, and that they were all willing to accept stock of the corporation in payment, and therefore it was resolved that the secretary be authorized to issue to each of the directors 10 shares of the capital stock in payment for the services and contributions mentioned and for no other consideration whatsoever.
After the resolution was received in evidence, the plaintiff undertook to prove that the defendant had rendered no services to the company except as a promoter in its organization, and that the stock was issued unlawfully. Herbert v. Duryea, 34 App. Div. 478,54 N. Y. Supp. 311, affirmed 164 N. Y. 596, 58 N. E. 1088;Stevens v. Episcopal Church History Co., 140 App. Div. 570,125 N. Y. Supp. 573. The avowed object of the plaintiff was to show that the defendant had wrongfully converted the stock and that he could be held on an implied agreement to pay therefor. No application was made for leave to amend the complaint. The defendant strenuously objected to the introduction of this proof on the ground that it was not authorized by the allegations of the complaint. His objections were overruled and the evidence taken. The exceptions to that ruling are relied on...
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