United States Vinegar Co. v. Foehrenbach

• Decision Date: 19 December 1895
• Citation: 148 N.Y. 58,42 N.E. 403
• Parties: UNITED STATES VINEGAR CO. v. FOEHRENBACH et al.
• Court: New York Court of Appeals Court of Appeals

148 N.Y. 58

42 N.E. 403

UNITED STATES VINEGAR CO.

v.FOEHRENBACH et al.

Court of Appeals of New York.

Dec. 19, 1895.

Appeal from supreme court, general term, First department.

Action by the United States Vinegar Company against Francis Foehrenbach and another to recover unpaid subscriptions to the capital stock of plaintiff corporation. A judgment for plaintiff, entered on a verdict directed by the court, was affirmed by the general term (26 N. Y. Supp. 632), and defendants appeal. Affirmed.

This was an action brought by the plaintiff, a foreign corporation, organized under the laws of the state of Illinois, to recover from the defendants, residents of this state, their unpaid subscription to the capital stock of the plaintiff. The defendants, beyond a general denial, set up that the plaintiff was incorporated for the illegal purpose of controlling and limiting the production of vinegar throughout the United States. The trial court, upon a motion of plaintiff's counsel, directed a verdict in favor of the plaintiff for the amount unpaid on the subscription of the defendants, and denied the request of the defendants to go to the jury upon the question whether the company was organized for legal or illegal purposes. Upon appeal to the general term from the judgment entered upon the verdict, that court affirmed the proceedings below. The defendants now appeal to this court from the judgment of affirmance at the general term.

Benno Loewy, for appellants.

S. R. Ten Eyck, for respondent.

GRAY, J.

The defendants insist that there is additional proof in the present case, which takes it out of the operation of our decision in the case between this same plaintiff and Schlegel. 143 N. Y. 537, 38 N. E. 729. A careful consideration of the case fails to show that it is so materially changed by this further proof as to compel us to reach a different conclusion from that reached in the prior case. Judge O'Brien observed, in the Schlegel Case, with respect to certain statements and acts of the promotors of the plaintiff company, which were relied upon as evidence of an illegal purpose or object in the formation of the company, that it was unnecessary to inquire whether such statements and acts furnished evidence of an illegal purpose, because it did not appear they they were ever adopted or acted upon by the corporation itself. The defendants now argue that the additional proof in the present case establishes such an adoption and ratification. But the difficulty is that, not only the evidence is lacking of any formal adoption by the plaintiff of any illegal undertakings, but, speaking in a strict or legal sense, there was nothing for the company to adopt or ratify. The doctrine of ratification belongs to the law of agency, and seems misapplied here. The promotors had made no engagements or contracts, but had merely gotten up a prospectus, and had made various declarations, prior to the formation of the plaintiff corporation. When the corporation was formed, its object was declared in the certificate to be ‘to buy, sell, deal in, and handle vinegar.’ Those purposes, on their face, do not imply an illegal object, or one necessarily inconsistent with public policy, as declared by the public law. The strongest way in which the case might be put for the defendants is that, subsequently to the incorporation of the plaintiff, there were corporate acts which showed, or tended to show, a purpose of controlling the production and sale of vinegar, and of regulating its cost, through combinations or agreements between those who were members of the company, and which would control their dealings with the public. In a certain sense, it might be said that that was in line with the projects of the promotors of the company; but that there was such an adoption or ratification of any illegal purpose or scheme, upon the formation of the plaintiff corporation, as to necessarily affect it with a vice which would taint contracts of subscription to the capital stock, cannot be said. The design of the directors may have been immoral, and against public...