Stock Corporation Law (L. 1890, ch. 564). §§ 52, 53.

ments of its by-laws in relation to the issuance of new certificates is not a sufficient demand. If it appear that the certificate of stock alleged to have been lost was assigned by the holder thereof, notice should be given either personally or by publication to the record owner of the stock. Matter of Coats, 75 App. Div. 469, 78 N. Y. Supp. 425.

§ 52. Financial statement to stockholders. (C. & G. Gen. Laws, p. 882.)

A pledgee of stock, who is not a stockholder of a corporation according to the books thereof at the time he makes his demand for a statement of the affairs of the corporation, cannot recover the penalty prescribed in this section for a failure of the treasurer to furnish such statement. This is especially so where it does not appear that the treasurer had knowledge that the stock had been pledged. Pray v. Todd, 71 App. Div. 391, 75 N. Y. Supp. 947.

§ 53. Stock books of foreign corporations. (C. & G. Gen. Laws, p. 883.)

Penalty for failure to permit inspection.- In an action brought under this section to recover a penalty for the failure to exhibit to a stockholder of the foreign corporation the stock book of such corporation, evidence that the plaintiff went to an office in the city of New York occupied by the president and secretary of the corporation, and was informed by the sercretary thereof that it was the office of the corporation and that its books were there, coupled with the admission of the secretary that the corporation had no other office anywhere and that all the business of the company was transacted at that place, justifies a finding that the corporation had an office for the transaction of business within the State, within the meaning of the above section. The section imposes the penalty not only upon the officers of the corporation, but also upon the corporation itself. Cox v. Island Mining Co., 65 App. Div. 508, 73 N. Y., Supp. 69.

Office for the transaction of business.- A foreign corporation must be deemed to have an office for the transaction of business in this State where the corporation pays rent for the office, has a person permanently in charge of it, deposits money and pays dividends therefrom. Where such foreign corporation does not keep its stock book in such office, but does keep certain books containing some or all of the information required to be shown by a stock book when kept, a stockholder of such corporation is entitled to an inspection of such books. People ex rel. Singer v. Knickerbocker Trust Co., 38 Misc. 446, 77 N. Y. Supp. 1000. Refusal to permit inspection of stock books. The refusal of the secretary of a corporation to permit a stockholder at his request to examine the stock book, followed the next day by a similar demand and refusal, and upon the day after by the refusal by the president of the same request, constitute but one demand and but one refusal on one -occasion and not three demands and three refusals, and renders each

Stock Corporation Law (L. 1890, ch. 564), § 54.

officer and the corporation liable to but one penalty under the above section. Cox v. Paul, 175 N. Y. 328, modifying 65 App. Div. 508, 73 N. Y. Supp. 69.

Under the above section a foreign corporation must deposit and exhibit its stock book in its office for the transaction of business in this state, which may include an office of the stock transfer agents of such corporation in the city of New York. The deposit and exhibit of such book may be compelled by mandamus. A refusal to permit an inspection is made out where the transfer agents have met with evasive answers only the stockholder's repeated demands for an inspection. People ex rel. Miles v. Montreal and Boston Copper Co., 40 Misc. 282, 81 N. Y. Supp. 974.

§ 54. Liabilities of stockholders. (C. & G. Gen. Laws, p. 884.) Services of attorney. The liability of stockholders under this section is not limited to the commercial debts of the corporation, but may include a debt incurred by the corporation for professional services rendered by an attorney. Hallett v. Metropolitan Messenger Co., 69 App. Div. 258, 74 N. Y. Supp. 639.

Stock to be issued pursuant to agreement to purchase property.— Where a corporation purchases the stock of goods and accounts receivable, etc., of a copartnership agreeing to pay therefor a certain portion in cash and the balance by the issue of a certain number of shares of common and preferred stock, and certificates agreed to be delivered to certain members of the copartnership were never delivered under such agreement, and the corporation subsequently became insolvent; it was held that the parties mentioned in the agreements for the purchase of the property acquired by the corporation became entitled to receive the stipulated amounts of stock immediately upon the acceptance by the corporation of the transfer of the property, and that although all the stock had not been issued, it would be treated as "issued and outstanding within the meaning of the above section of the Stock Corporation Law. But where it appears that the amount of stock agreed to be paid for the property transferred to the corporation greatly exceeded the actual value of the property, the stock is not fully paid" within the meaning of the above section. Flour City National Bank v. Shire, 88 App. Div. 401.

66

Enforcement of liability. The obligation imposed upon stockholders under this section is personal to the creditors and can only be enforced in an action by them or by someone directly representing them. Such liability cannot be enforced by an assignee for the benefit of creditors of a corporation. The liability thus imposed is a contractual liability, not between the corporation and its stockholders, but between the creditors and the stockholders. It is a personal right vested in the creditor, not a right which vested in the corporation, and, therefore, not a right that either the corporation or its assignee can enforce. Thompson v. Knight, 74 App. Div. 316, 77 N. Y. Supp. 599.

Liability accrues for benefit of all creditors. A creditor of a cor

Stock Corporation Law (L. 1890, ch. 564), §§ 55, 57.

poration cannot maintain an action at law for his own exclusive benefit to enforce the liability imposed by the above section upon stockholders, but his remedy is to bring suit in equity on behalf of himself and all other creditors, to enforce such liability. As the law existed prior to the amendment of 1901 a creditor of the corporation could maintain an action to enforce the statutory liability for his individual benefit. This right is preserved to a creditor of a corporation whose claim matured four months prior to the time when the amendment of 1901 went into effect. The plaintiff in such an action need not allege that a judgment has been obtained and an execution returned unsatisfied where a complaint alleges that the corporation has been dissolved, and that the judgment of dissolution enjoined all creditors from instituting any action against the corporation to enforce their claims. Lang v. Lutz, 83 App. Div. 534, 82 N. Y. Supp. 319.

Right to enforce liability does not pass to trustee. The liability imposed by the above section on account of unpaid stock is wholly statutory, and in the nature of a penalty. The right to enforce such liability is vested in the creditors and not in the corporation, and does not pass to a trustee in bankruptcy. Rathbone v. Ayer, 84 App. Div. 186, 82 N. Y. Supp. 235.

Application of amendment to existing rights. A creditor of a corporation, whose right to maintain an action under the above section was perfect on April 16, 1901, when the amendment to the section by chapter 354 of the Laws of 1901 took effect, was entitled to institute such an action by virtue of such right subsequent to the taking effect of such amendatory act under the provisions of the section as it existed prior to such amendment. The rights of creditors to enforce the obligation of stockholders which existed at the time the amendment took effect was expressly preserved by section 5 of the amendatory act. Lancaster v. Knight, 74 App. Div. 255, 77 N. Y. Supp. 488.

§ 55. Limitation of stockholder's liability. (C. & G. Gen. Laws, p. 886.)

Application of section. The limitation prescribed by the above section is not confined to actions brought under section 54 of the Stock Corporation Law to enforce the liability of stockholders, but is generally related to the liability of stockholders in all stock corporations and applies to an action brought under section 6 of the Business Corporations Law to enforce the liability of a stockholder in a full liability business corporation. Adams v. Wallace, 82 App. Div. 117, 81 N. Y. Supp. 848.

§ 57. Voluntary dissolution. (C. & G. Gen. Laws, p. 887.) Directors as trustees upon dissolution. Upon the voluntary dissolution of a corporation under this section, section 30 of the General Corporation Law is applicable and the directors upon the dissolution become trustees of its creditors and stockholders with full power to settle its

Stock Corporation Law (L. 1890, ch. 564), §§ 58, 60, 61.

affairs, collect and pay outstanding debts and divide among the persons entitled thereto the money and other property remaining after payment of debts and necessary expenses. Janeway v. Burn, 91 App. Div. 165, 86 N. Y. Supp. 628.

Money set apart for the payment of dividends by the directors of a corporation undergoing voluntary dissolution as provided in this section, and deposited by them with a trust company for such purpose, may be recovered in an action brought against them by stockholders. Idem.

$ 58. Merger. Any domestic stock corporation and any foreign stock corporation authorized to do business in this state lawfully owning all the stock of any other stock corporation organized for, or engaged in business similar or incidental to that of the possessor corporation may file in the office of the secretary of state, under its common seal, a certificate of such ownership, and of the resolution of its board of directors to merge such other corporation, and thereupon it shall acquire and become, and be possessed of all the estate, property, rights, privileges and franchises of such other corporation, and they shall vest in and be held and enjoyed by it as fully and entirely and without change or diminution as the same were before held and enjoyed by such other corporation, and be managed and controlled by the board of directors of such possessor corporation, and in its name, but without prejudice to any liabilities of such other corporation or the rights of any creditors thereof. Any bridge corporation may be merged under this section with any railroad corporation which shall have acquired the right by contract to run its cars over the bridge of such bridge corporation. (Added by L. 1896, ch. 932; L. 1900, ch. 476, and L. 1902, ch. 98, in effect March 6, 1902.).

§ 60. Liabilities of officers and stockholders of foreign corporations. (C. & G. Gen. Laws, p. 890.)

Unauthorized dividends.- A stockholder of a corporation organized under the laws of New Jersey may maintain in this state an action to compel a director of the corporation, who participated in declaring dividends on the stock thereof out of its capital, in violation of section 30 of the General Corporation Law of the state of New Jersey, to restore to the corporation the amount of the dividends thus unlawfully declared and paid. The action can only be brought where the dividend was paid in violation of the law af the state where the corporation was organized. Hutchinson v. Stadler, 85 App. Div. 424, 83 N. Y. Supp. 509.

§ 61. Dissolution by incorporators.-The incorporators named in any certificate of incorporation filed for the purpose of creating

County Law (L. 1892, ch. 686), §§ 3, 12.

a domestic stock corporation, other than a moneyed or transportation corporation, may, before the payment of any part of the capital, and before beginning business, surrender all corporate rights and franchises, by signing, verifying and filing in the office of the secretary of state and the clerk of the county where the certificate of incorporation is filed, a certificate setting forth that no part of the capital has been paid, that there are no liabilities, that such business has not been begun, and surrendering all rights and franchises; and proof of the facts set forth in such certificate to the satisfaction of the secretary of state; and thereupon the said corporation shall be dissolved, and its corporate existence and powers shall cease. (Inserted by L. 1904, ch. 296, in effect April 13, 1904.)

(1) The County Law. (L. 1892, ch. 686.)

§ 3. Actions and contracts in corporate name. (C. & G. Gen. Laws, p. 895.)

Action against county upon contract.

By this section and section 2

of the County Law a county is made a municipal corporation against which an action may be brought upon a contract lawfully made with it or any of its officers or agents authorized to contract in its behalf, or to enforce any liability created, or duty enjoined upon it, or any of its officers, for which it is liable. No new liability is thereby created, but an additional remedy is afforded. So where money was deposited by the decedent with a county treasurer in lieu of bail unlawfully required by a justice of the peace, an action will lie in behalf of the decedent's administrator against the county to recover sucn amount. This is so although the justice of the peace who fixed the bail was without authority to bind the county, upon the theory that the money can be traced to the county and the county has appropriated and received it for its benefit, thereby creating a liability to respond to the true owner. Sutherland v. St. Lawrence County, 42 Misc. 38, 85 N. Y. Supp. 696.

§ 12. General powers; board of supervisors. Subdivision added by L. 1903, ch. 465, in effect May 7, 1903, as follows:

18. The board of supervisors of each county may raise by tax on real and personal property, subject to taxation in such county, not more than five thousand dollars, to be expended in the repair and