Rowell v. Janvrin

• Decision Date: 01 December 1896
• Citation: 45 N.E. 398,151 N.Y. 60
• Parties: ROWELL et al. v. JANVRIN.
• Court: New York Court of Appeals Court of Appeals

151 N.Y. 60

45 N.E. 398

ROWELL et al.

v.JANVRIN.

Court of Appeals of New York.

Dec. 1, 1896.

Appeal from supreme court, general term, First department.

Action by George P. Rowell and others against Joseph E. Janvrin. A judgment dismissing the complaint having been affirmed by the general term (29 N. Y. Supp. 1149), the plaintiffs appeal. Reversed.

For former reports, see 23 N. Y. Supp. 481; 29 N. Y. Supp. 1149.

Philip W. Carpenter, for appellants.

Dickinson W. Richards, for respondent.

O'BRIEN, J.

This was an action against a stockholder of a corporation organized under the manufacturing act of 1848, to enforce a debt of the corporation, upon the ground that no certificate that the capital stock had been paid in was ever made or filed as required by the tenth and eleventh sections of the act. The complaint was dismissed at the trial on the ground that it did not state facts sufficient to constitute a cause of action, and this ruling, and the exception taken by the plaintiff, raise the only question that need now be considered. The complaint alleges that the certificate required by the sections of the act above referred to was not filed or recorded, but it was held that this allegation was not sufficient to charge the defendant. While the complaint alleges generally that the defendant was a stockholder, there is no statement as to the amount or number of shares that he held, and this was another defect which was stated in the motion to dismiss. No other objection appears to have been made to the sufficiency of the complaint, and no other features of the pleading are attacked, and the discussion is therefore confined to these two points.

The more substantial ground upon which the defendant succeeded in the courts below was that the complaint failed to state whether the stock was issued for cash or for property. It is said that, if the stock was issued for property, there was no duty or obligation to file any certificate whatever, while, if issued for money, then the statute applied, but the plaintiff was bound to state a case in his pleading which brought the defendant within the statute. This contention calls for a construction of the statute upon which the action is based. The tenth section of the act of 1848 provides that the stockholders of such company shall be severally liable to the creditors, to an amount equal to the stock held by them, for all debts and contracts of the company, until the whole amount of capital stock fixed and limited by the company shall have been paid in, and a certificate thereof made and recorded as provided in the following section, and the capital stock shall all be paid in, one-half within one year, and the other half within two years from the incorporation, or the company shall be dissolved. The next section prescribes the form of the certificate, and the officers who are to make and file the same. The fourteenth section declares that nothing but money shall be considered as payment of any part of the capital stock. It will be seen, from these provisions of the statute as originally enacted, that the complaint in this case states sufficient facts to create the liability then imposed upon the stockholders. But by chapter 333 of the Laws of 1853 the act of 1848 was amended generally, without naming any particular section. It is upon this amendment that the learned counsel for the defendant has constructed an argument that has met with signal success in the courts below. That statute reads as follows: ‘Sec. 2. The trustees of such company may purchase mines, manufactories, and other property necessary for their business, and issue stock to the amount of the value thereof in payment therefor; and the stock so issued shall be declared and taken to be full stock, and not liable to any further calls; neither shall the holders thereof be liable for any further payments under the provisions of the tenth section of the said act; but in all statements and reports of the company, to be published, this stock shall not be stated or reported as being issued for cash paid into the company, but shall be reported in this respect according to the fact.’ The nature and ground of the stockholders' liability under this amendment has been much discussed, and on this point, perhaps, the cases are not all in harmony. Boynton v. Andrews, 63 N. Y. 93;Boynton v. Hatch, 47 N. Y. 225;Schenck v. Andrews, 46 N. Y. 589;Id., 57 N. Y. 133;Griffeth v. Green, 129 N. Y. 517, 29 N. E. 838;Veeder v. Mudgett, 95 N. Y. 295;Tube-Works Co. v. Gilfillan, 124 N. Y. 302, 26 N. E. 538. It is perhaps true that, in some of the above cases, it was assumed that, in order to protect the stockholder from liability, it was as necessary to file the certificate when the stock was issued for property as when sold for cash. But that precise question was not involved in any of these cases, nor was the question of pleading with which we are now concerned. But, whatever conflict of opinion is to be found in some of the earlier cases with respect to the stockholder's liability from the mere fact of the failure to file the certificate, we think the question is no longer an open one in this court. It was held in Brown v. Smith, 13 Hun, 408, that failure to file the certificate where the stock was issued for property was in itself no ground of liability, and that, since the amendment of 1853, the statute did not require a certificate to be filed in such cases. This court affirmed the judgment in that case upon the opinions below. 80 N. Y. 650. The same construction has been given to the statute in a recent case. Close v. Noye, 147 N. Y. 597, 41 N. E. 570. The liability still exists, however, in cases where the stock is issued for property at an excessive, fraudulent, or fictitious valuation, to the knowledge of the trustees, and for the purpose of evading the statute. Douglass v. Ireland, 73 N. Y. 100;Iron Co. v. Drexel, 90 N. Y. 87;Jessup v. Carnegie, 80 N. Y. 441;Huntington v. Attrill, 118 N. Y. 365, 23 N. E. 544. Whether this rule of liability is confined to the trustees who caused the stock to be issued, and to such stockholders as are chargeable with knowledge of the fraud, or applies even to innocent holders for value, is a question, perhaps, not entirely free from doubt, but not involved here, and need not be decided. 1 Beach, Priv. Corp. § 131c. The liability in such cases, whatever limitations may be attached to it with respect to parties, does not arise and is not founded upon the omission to file the certificate, but rests upon a violation of the statute which prescribes the conditions upon, and the circumstances under which, the capital stock may be issued for property.

But it does not follow that because stock issued by a manufacturing corporation for property is not within the tenth section of the act of 1848, requiring the certificate to be filed, the complaint in this action is defective. The act of 1853 has modified the general provisions of the act of 1848, and has relieved stockholders, under certain circumstances, from personal liability. The question here is one of pleading, and the complaint is good unless the plaintiff was bound to negative the provisions of the amendment of 1853. In stating a cause of action arising upon a statute, it is an ancient rule that, where an exception is incorporated in the body of the clause of a statute, he who pleads the clause ought to plead the exception. But where there is a clause for the benefit of the pleader, and afterwards follows a proviso which is against him he may plead the clause, and leave it to his adversary to show the proviso. Jones v. Axen, 1 Ld. Raym. 120. This rule of pleading has been followed and applied in a great variety of cases arising upon statutes and contracts, to this day. Harris v. White, 81 N. Y. 532;U. S. v. Cooke, 17 Wall. 168;Com. v. Hart, 11 Cush. 130;Sheldon v. Clark, 1 Johns. 513;Bennet v. Hurd, 3 Johns. 438;Teel v. Fonda, 4 Johns. 303;Hart v. Cleis, 8 Johns. 41;Fleming v. People, 27 N. Y. 329;People v. Kibler, 106 N. Y. 321, 12 N. E. 795;People v. Briggs, 114 N. Y. 56, 20 N. E. 820. The whole controversy presented by the appeal really turns, therefore, upon the question whether the amendment of 1853 is to be treated as an exception or a proviso. If the latter, the plaintiff was not bound to anticipate it by negative allegations in his complaint, but might leave it to his...