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That the judgment against the corporation includes installments which became due more than two years before the action was brought against the company, is no defense to the balance of the claim in an action under this section. McMaster v. Davidson, 29 Hun, 542.
The stockholder sued may have paid in full for his stock, but this does not relieve him, if others are in default. Wheeler v. Millar, 90 N. Y., 353.
A stockholder may be absolutely discharged from all liability under this section, by payme it, on legal compulsion, to any creditor or creditors for whose debts he is liable, if such payment equals the amount of his stock. Mathez v. Neidig, 72 N. Y., 100. To entitle him to interpose such discharge as an absolute bar to a claim by other creditors, either at law or in equity, he must show that the payment was made to a creditor or creditors for whose debts he was liable under this section. Id. Probably the same effect would result from a voluntary payment. Id.
A stockholder may defeat an action brought to enforce his individval liability for its debts incurred before the capital stock is paid up, by showing that he has already paid, on account of the corporate debts, a sum equal to the amount of his stock. Garrison v. Howe, 17 N. Y., 458; Bank of Poughkeepsie v. Ibbotson, 24 Wend., 473.
A trustee can not buy up the outstanding debts of the corporation for his own benefit, knowing it to be insolvent, with an intention to get an advantage over other creditors, and hold the purchased debts for their full amount. Bulkley v. Whitcomb, 121 N. Y., 107. In such case, he has no claim to offset, in an action under this section, beyond the amount actually paid. Id.
Not only the liability imposed upon stockholders by the statute, but equitable liabilities, which may be invoked in behalf of a creditor, may be set off in an action under this section. Christensen v. Colby, 43 Hun, 362.
It is essential to the maintenance of the defense of an equitable offset by the stockholder in an action under this section that he and the suing creditors stand upon an equality. Bulkley v. Whitcomb, 49 Hun, 290. This does not appear by simply showing that he has become possessed of a judgment against the company. Id. Where he buys such a claim, and neither puts anything into the treasury nor relieves the corporation from any liability, he will not be permitted to offset his demand upon the company against a creditor's demand upon him as a stockholder. Id.
A demand, which came to the stockholder by assignment after the company had passed into the hands of a receiver, can not be so interposed against a creditor. Briggs v. Cornwell, 9 Daly, 436.
A receiver of a corporation, organized under this act, is not vested with the right of action given by this section to corporate creditors against the stockholders. Farnsworth v. Wood, 91 N. Y., 308.
A recovery by a receiver appointed by the supreme court as the successor of the statutory receivers or trustees, in an action to enforce the liability of the stockholders, is a bar to an action by a creditor. Cuykendall v. Douglas, 19 Hun, 577; Walker v. Crain, 17 Barb., 119; Story ». Furinan, 25 N. Y., 222. The liability of the stockholder under this section does not exist in favor of the corporation. Farnsworth v. Wood, 91 N. Y., 308. Nor for the benefit of all its creditors. Id. It was created only in favor of such creditors as are within the prescribed conditions, and is to be enforced by these in their own right and for their own special benefit. Id.; Tucker v. Gilman, 45 Hun, 193.
A receiver of a corporation is not vested with the right of action given by this section to corporate cre litors against the stockholders. Farnsworth v. Wood, 91 N. Y., 303. This liability exists only in favor of such creditors as are within the prescribed conditions, and is to be enforced by them in their own right and for their own especial benefit. Id.
Such action is barred by the statute of limitations after the expiration of six years from the time the liability was incurred. Knox v. Baldwin, 80 N. Y., 610. The period of six years is the only limitation provided for suits of this description. Corning . McCullough, 1 N. Y., 47.
An action under this section must be brought before the expiration of six years from the termination of the two years allowed for the paying up of the capital stock, or it will be barred by the statute of limitations. Phillips v. Therasson, 11 Han, 141; Conklin v. Furman, 48 N. Y., 527.
An action under this section can be brought before the expiration of two years within which the stock must be fully paid in or the charter forfeited. King
Duncan, 38 Hun, 461. The requirements of the following section must be first met. Id. The case of Phillips v. Therasson, 11 Hun, 141, has not given a contrary construction to the statute. Id.
An action under this section is barred by the statute of limitations after the expiration of six years from the time the liability was incurred. Knox v. Baldwin, 80 N. Y.. 610. It was not determined in this case whether the cause of action against the stockholder accrued at the expiration of the two years within which the whole capital stock was to be paid in under this section, or upon the recovery of judgment, or after judgment and execution, under section 58 of this chapter. The statute of limitations does not begin to run in favor of a stockholder until after the return of execution against the corporation. Handy v. Draper, 89 N. Y., 334; Rocky M. Nat. Bk. v. Bliss, id., 338.
The moment a cause of action accrues against the company, it accrues, under this section, against each stockholder liable. Conklin v. Furman, 57 Barb., 484; aff'd 48 N. Y., 527. At this time the statute of limitations begins to run against the stockholders. Id. The action, reported in 48 N. Y., 527, arose under section 44, chap. 210 of 1847, whereby provision is made that a joint action may be prosecuted against the company and any one or more stockholders liable to contribute to the payment of its debts. A similar provision is found in section 7, chap. 567 of 1890, applicable to full liability corporations. In such case, it may be that an action under this section must be brought before the expiration of six years from the accruing of the debt against the company. In the case of a limited liability corporation, the rule of limitation enunciated in Phillips v. Therasson, 11 Hun, 141, may govern.
Action against stockholders for non-filing of certificates of payment of stock may be revived against the personal representatives. Cochran v. Weichers, 25 N. Y. St. Rep., 571.
more than an addition to his Pfohl v. Simpwhich was not benefit of the
No stockholder, in such action, can be cast in judgment for amount equal to the sum of the stock owned by him individually, in liability to pay in full the stock subscribed for or bought by him. son, 74 N. Y., 137. He will not be held for the debt of a creditor created while he was a stockholder, nor will any creditor lose the liability of a stockholder, who was such when his debt was created. Id. Stockholder's liability is limited to the amount of his stock with interest from the time of the commencement of the action. Handy v. Draper, 89 N. Y., 334. The allowance of interest in such action from the date of the recovery of judg ment against the corporation is error. Handy v. Draper, 89 N. Y., 334.
Interest upon the amount of debt, when the recovery is limited to the amount of the stock, can be allowed from the date of the commencement of the action. Burr v. Wilcox, 22 N. Y., 557; Handy v. Draper, 89 id., 334; Shellington v. Howland, 53 id., 372. But these cases do not determine the rule as to interest, where the debt is less than the stockholder's liability, and the allowance of interest does not swell the recovery beyond that limit.
Where the entire principle and interest of the debt do not exceed the limit of liability, the allowance of interest from the maturity of the debt is proper. Wheeler v. Millar, 90 N. Y., 353.
The stockholder is liable for interest upon an amount equal to his stock, from the commencement of a suit against him, to enforce his individual responsibility. Burr v. Wilcox, 22 N. Y., 551.
In an action under this section, an allegation "that as plaintiff is informed and verily believes, only a small portion of said stock has been paid off," is a sufficient averment that the capital stock of the corporation had not been paid in in full. Woodard v. Holland M. Co., 39 N. Y. St. Rep., 411.
The claimant, to hold a stockholder liable for his services, must come strictly within the denomination of a "laborer, servant or employee. other than contractor," of the corporation. Harris v. Norvell, 1 Abb. N. Č., 127.
In the enactment of such provisions as are embodied in the second clause of this section, it has been the policy of the legislature to protect those only who are the least able to protect themselves, and who earn their living by manual labor for a small compensation. Gurney v. A. & G. W. Ry. Co., 58 N. Y., 358; Stryker v. Cassidy, 76 id., 53.
Under chap. 611 of 1875, stockholders were not under any special liability to laborers, servants or employees for services performed for the corporation. Richards v. Beach, 19 Abb. N. C., 84.
Laborers or servants, within the meaning of this section, are persons who, in common parlance, and according to the general understanding of men, fall under that appellation, in enumerating the different classes of persons employed by a corporation. Dean v. De Wolf, 16 Hun, 186; aff'd 82 N. Y., 626.
An assistant, who performs all the duties of the superintendent in his absence, and receives a stated salary, is not a laborer or servant within the meaning of this section. Dean v. De Wolf, 16 Hun, 186; aff'd 82 N. Y., 626.
The performance of some manual labor, merely incident to his position of general superintendent of the company, does not bring a person within the provisions of of this section. Krauser v. Ruckel, 17 Hun, 463; Ericsson v. Brown, 38 Barb., 390.
Under the act of 1848, the term "servant," was understood to relate and apply only to a person rendering services of a subordinate, but not necessarily of a menial character to an employer, varying in its nature according to the business or occupation in which it was rendered, and not to extend to and include every employee and party who does work for another. Hill v. Spencer, 61 N. Y., 274. It was associated with "laborers" and "apprentices," thus indicating that it was intended to apply to a person employed to devote his time and render his service in the performance of work, similar in its general character to that done by those employees. Id. The corresponding section of the new act (57) employs the word in a different context, and connects it with "laborers or employees, other than contractors."
A bookkeeper was held, in Sherman v. Herbert, 2 City Ct., 314, not to be a "laborer" within the section of the former act making stockholders personally liable for the wages of laborers.
Bookkeeper and general clerk is employee. Brown v. A. B. C. Fence Co., 52 Hun, 151.
Bookkeeper is servant within this section. Chapman v. Chumar, 26 N. Y. St. Rep., 473.
The term "salary," is not ordinarily employed to services performed by a "servant" in the general and usual understanding and meaning of the relation of an employee to an exployer. Hill v. Spencer, 61 N. Y., 274.
One employed to take charge of and control its property and manage its financial affairs in another country, in all respects as the company itself could do, is not a Servant within the meaning of the provisions of this section. Hill v. Spencer, 61 N. Y., 274; Aikin v. Wasson, 24 id., 482; Coffin v. Reynolds, 37 id., 640.
The stockholder must pay, not deb's due to all employees of the company, but those due to " laborers, servants or employees, other than contractors," and not all debts due to them, but only such as are due for "services performed by them for such corporation." Wakefield v. Fargo, 90 N. Y., 213.
One employed at a yearly salary as a bookkeeper and general manager was held not to be a laborer, servant or apprentice within the meaning of the former act of 1848 or 1863. Individuals who occupied positions and were usually of such capacity as enabled them to look out for themselves, were not deemed to be within the privilege of the statute. Id.
A reporter employed by a newspaper company was held, in Harris v. Norvell, 1 Abb. N. C., 127, to be a laborer or servant of the company within the statute of 1848. This case also decided that a “city or assistant editor,” if not an officer of the company, came within the same term.
In Conant v. Van Schaick, 24 Barb., 87, it was held that a civil engineer and a rodman were included within the terms "laborers or servants," in section 10 of the general railroad act. This case made no restriction short of officers or agents of the company.
A consulting engineer was held, in Ericsson v. Brown, 38 Barb., 390, not to be within the language or policy of an act which provided for the personal liability of the stockholders for debts due and owing to its "laborers and operatives" for services performed for the corporation. The word "servant" was not used in
The case of Aiken v. Wasson, 24 New York, 482, holds that a contractor for the construction of a railroad is not a laborer" or 66 servant within the provisions of the general railroad act. To the same effect are the cases of Boutwell v. Townsend, 37 Barb., 205, and Balch v. N. Y. & O. M. R. R. Co., 46 N. Y., 521. The latter case states that the term "laborer" in this act did not include one who contracts for and furnishes the labor and services of others, or who contracts for
and furnishes a team or teams for work, whether with or without his services. See Atcherson v. Troy & B. R. R. Co., 6 Abb., N. S., 329.
In Williamson v. Wadsworth, 49 Barb, 294, a civil engineer and traveling agent at a fixed salary was held to be a servant of the corporation within the meaning of section 18 of the act of 1848.
It was held in Coffin v. Reynolds, 37 N. Y., 640, that the secretary of a coporation was not a laborer or servant of the corporation under section 18, chap. 40 of 1848. The decision was placed on the ground that the "secretary" was an officer of the company.
The superintendent and attorney are not employees, operatives or laborers," or their earnings, "wages," within the meaning of chap. 376 of 1885. People v. Remington, 45 Hun, 329.
A laborer working with his team and his nired man, at an agreed price per day, can not recover under section 12 of the general railroad act. Åtcherson v. T. & B. R. R. Co., 1 Abb. Ap. Dec., 13; s. c., 6 Abb., N. S., 329; Cummings v. N. Y. & O. M. R. R. Co., 1 Lans., 68; Balch v. Same, 46 N. Y., 521.
Under chap. 755 of 1873, surgeons were held not to be clerks or employees. People ex rel. Satterlee v. Board, etc., 74 N. Y., 44.
The term "employees," is usually considered as embracing laborers and servants and those occupying inferior positions. People ex rel. Satterlee v. Board, etc., 74 N. Y., 44.
The case of Richardson v. Abendroth, 43 Barb., 162, was overruled in Coffin v. Reynolds, 37 N. Y., 640, as to the point that the secretary, in performing the ser vices incident to the duties of his office, is a servant of the company, within the meaning and intent of the act of 1848.
A foreman, who renders manual service of the same kind as that performed by the other laborers in the employ of the company as one of his principal duties and not a mere incident to his position, was held to be a laborer or servant within the meaning of section 18, of the act of 1848. Short v. Medberry, 29 Hun. 39.
A secretary of a corporation is not a servant in the ordinary and usual sense in which the term is used. Smith v. Long I. R. R. Co., 32 Hun, 38; Gurney v. A. & G. W. Ry. Co., 5S N. Y., 367; Coffin v. Reynolds, 37 id., 640.
The term "employee," in its ordinary and usual sense, includes all whose services are rendered for another. Gurney v. A. & G. W. Ry. Co., 58 N. Y., 358. It is not restricted to any kind of employment or service, but includes the professional man as well as the common laborer. Id. This case arose on the construction of an order of court appointing a receiver, and it may be that a different rule of construction would be applied in such case than in the case of a statute. In Ericsson v. Brown, 38 Barb., 390; Aikin v. Wasson, 24 N. Y., 482, and Coffin v. Reynolds, 37 id., 640, there was a statute liability created against stockholders, and such statutes are always strictly construed, and in view of the supposed policy and general legislative intent indicated by the particular terms employed. In an action brought under the second clause of this section, the employee may, under chap. 257 of 1838, compromise with and release one or more, without affecting his right to recover the balance of his claim from the other stockholders. Herries v. Platt, 21 Hun, 132.
Who are not employees, etc., within this section. People v. Remington & Sons; Matter of Ringwood (Sup. Ct., 1SS9), 25, 301; 25 N. Y. St. Rep., 301.
An employee of the corporation, who comes within section 57, can maintain an action against one or more stockholders, subject to the conditions of section 58 and first clause of section 57 of this act, and recover against them without limitation of liability save the amount of claim, interest and costs, though the capital stock has all been paid in and the certificate duly made, filed and recorded. He can also maintain an action against the trustees under section 30, in case the annual report has not been filed, or under section 31 in case a false report has been filed. The same liability exists in this case.
He may also maintain an action under the first clause of section 57, in case the capital stock has not been paid in or the certificate made, filed and recorded. The stockholder's liability in this case is limited to the amount unpaid on, and an amount equal to, his stock. This action is subject to defense on ground of pay ment or claim against corporation. No such defense is allowable in the other cases. If he fails to give the notice or bring the action within the required time, he is compelled to resort to one of the other remedies, if they exist, otherwise he is without relief. The first-mentioned remedy is subject to the conditions con
tained in section 58, the second and third clauses of section 57, and the statute of limitations of six years. The second mentioned remedy is subject to the conditions of either section 30 or 31 and the statute of limitations of three years. The last mentioned remedy is subject to the conditions of the first clause of section 57, the whole of section 58, the statute of limitations of six years, and to the defenses above named. A recovery in either proceeding, without satisfaction, is no bar to any other mode of procedure.
The right of action given by this section to laborers against stockholders, is not merely a personal privilege granted to them alone, but passes on assignment, to the assignee. Krauser v. Ruckel, 17 Hun, 463; Same v. Murdock, not reported. When the liability of the stockholders to the laborer has accrued and becomes fixed, there is no reason why it may not be assigned, and the assignee acquire all the right of action which accrued to the original party. Id.
The claim of a laborer for a corporation is assignable and, when duly assigned, the assignee takes the same with all the rights and remedies secured to the laborer by this section. Pitcher v. Drayton, 17 Hun, 429; Krauser v. Murdock, not reported; Kincaid v. Dwinelle, 59 N. Y., 548; Bonnell v. Wheeler, 1 Hun, 332. The burden is upon persons claiming preferences to bring themselves, by evidence, within the statute. People v. Remington, 45 Hun, 329.
The burden of proof is upon the employee, to show that there is a debt due and owing for services performed for the corporation, by a laborer, etc., within the meaning of this section. Johnson v. Underhill, 52 N. Y., 203. So, he must show that the person sued was, when the debt was due and owing, a stockholder of the company. Id.
An action can not be maintained by an employee of the company against two, without bringing in the other stockholders of the corporation. Strong v. Wheaton, 38 Barb., 616.
A servant of a corporation must, to enforce the personal liability under this section, sue each stockholder separately, or join them all in one action. Dean v. Whiton, 16 Hun, 203. After bringing an action against them jointly, he can not discontinue as to one stockholder, without the consent of the others. Id. He has, by suing all of them, elected to treat them as joint debtors. Id.; Herries v. Platt, 21 Hun, 132.
The stockholders, under this section, are to be considered as partners as to the debts of the laborers, etc., for the corporation. Clark v. Myers, 11 Hun, 608; Bailey v. Bancker, 3 Hill, 188; Richardson v. Abendroth, 43 Barb, 162; Wiles v. Suydam, 64 N. Y., 173.
An action against a stockholder, under this section, must be brought within two years from the maturity of the debt. Short v. Medberry, 29 Hun, 39.
A stockholder, who has paid judgments recovered against him for services performed by laborers employed by the company, can not maintain an action at law against another stockholder for contribution, but must bring a suit in equity against them all Clark v. Myers, 11 Hun, 608.
§ 55. Limitation of stockholder's liability.-No action shall be brought against a stockholder for any debt of the corporation until judgment therefor has been recovered against the corporation, and an execution thereon has been returned unsatisfied in whole or in part, and the amount due on such execution shall be the amount recoverable, with costs against the stockholder. No stockholder shall be personally liable for any debt of the corporation not payable within two years from the time it is contracted, nor unless an action for its collection shall be brought against the corporation within two years after the debt becomes due; and no action shall be brought against a stockholder after he shall have ceased to be a stockholder, for any debt of the corporation, unless brought within two years from the time he shall have ceased to be a stockholder.