App. Div.] First Department, December, 1911. guaranty by the appellant, to perform any duty under the mortgage trust agreement; nor is it even alleged that the delivery of the bonds as collateral security formed any part of the agreement by which the appellant became the indorser or guarantor of the note. The bald allegation that when the appellant indorsed or guaranteed the note he believed that respondent would perform its duty to the bondholders, is of no avail. The appellant contends in effect that the acts of negligence on the part of the respondent, by which the value of the bonds was diminished, were tantamount to a surrender of the security. We do not agree with this contention and are of opinion that, as pledgee, on the facts alleged, the respondent performed its duty, which was merely to hold the bonds so that when the note became due they could be resorted to, unchanged in their terms and unaffected by any act of the respondent, for the payment thereof either by the respondent or by the appellant, on his paying the note and becoming subrogated to the rights of the respondent. As mere pledgee of the bonds, the respondent was under no obligation to institute an action for a default in the payment of interest thereunder, or to otherwise move, until the note became due, at least in the absence of any demand on the part of the surety therefor, which is not shown. The only demand on the part of appellant for action by the respondent was before he became surety and with respect to the respondent's rights and duties under the mortgage trust agreement. Moreover, on the facts alleged, if the respondent had surrendered the bonds, that would not discharge the appellant, but would merely constitute a defense to the extent of the value of the securities surrendered. As already stated, the appellant does not show that the bonds were delivered to the respondent pursuant to the contract by which the appellant became the indorser or guarantor of the note, or that the respondent obligated itself under that contract to hold the bonds. If such were the case, doubtless a surrender of the bonds would be a breach of the appellant's contract of suretyship, which would be a complete defense to the action. It is not even alleged that, as between the maker and payee of the note, it was any part of the contract that the bonds were to be delivered as security and held by the respondent until the maturity of the note. First Department, December, 1911. [Vol. 147. The case of Antisdel v. Williamson (165 N. Y. 372), upon which the appellant relies, does not support his contention. There the surety guaranteed the payment of a bond and mortgage, and he was held to be released by an extension of the term of the mortgage, upon the ground that such extension constituted a material alteration of his contract of suretyship, by which he guaranteed, not merely the bond, but the mortgage as well. It was decided in Vose v. Florida Railroad Co. (50 N. Y. 369) that an indorser of notes for which bonds were delivered as collateral was not released by the surrender of the collateral, but was merely discharged to the extent of the value of the security surrendered; and that decision is cited with approval in Antisdel v. Williamson (supra). The case at bar, in its most favorable aspect to the appellant, falls within the principle of the Vose Case · (supra). Considering the respondent's obligation, therefore, merely in the capacity of pledgee of the bonds, neither the acts of negligence alleged nor the damages alleged to have been sustained thereby would constitute a defense, in whole or in part, to the action. The facts alleged with respect to the failure of the respondent to perform its duty under the mortgage trust agreement might constitute a counterclaim if, as is not the case, appellant were the only bondholder; but as they arise out of a separate and independent contract, they would not constitute a defense to the action. The appellant, however, in each of the defenses alleges damages caused by the failure of the respondent to perform its duty to the bondholders under the mortgage trust agreement, and seeks to offset those damages against any recovery to which the respondent would otherwise be enti tled. The appellant does not in form plead these facts as a counterclaim, even for the purpose of being used merely as a setoff, which doubtless would be good pleading (See Rando v. Nat. Park Bank, 137 App. Div. 190, 192), but it appears to be unnecessary to label a pleading as a counterclaim if the essential facts are set forth. (McCrea v. Hopper, 35 App. Div. 572; affd. on opinion of Appellate Division, 165 N. Y. 633.) The appellant does not demand an affirmative recovery against the respondent, but merely pleads these facts, which, if the App. Div.] First Department, December, 1911. cause of action arising therefrom were vested in him individually, would doubtless constitute a counterclaim as an offset to any recovery by the respondent herein. The duty, however, which the respondent, as trustee under the mortgage trust agreement, owed to the appellant was one which it owed to all of the bondholders of the West Virginia corporation in common. In so far as the appellant seeks to show damages by reason of the respondent's negligence to perform its duty under the mortgage trust agreement in defense of the action, or as an offset or counterclaim herein, it would seem that the acts of omission and commission with which the appellant seeks to charge it were the acts of the receiver in the foreclosure action, who was an officer of the court and accountable to the court for his conduct. The answer contains allegations in the nature of conclusions of law, without setting forth the facts, to the effect that respondent released and permitted a discharge of the receiver "from any and all claims against him" by respondent as trustee for the bondholders; but in the view we take of the case, it is not necessary to decide whether or not, if the cause of action for the alleged neglect of duty on the part of the respondent were vested in the appellant alone, these allegations would be sufficient to charge the respondent with responsibility for not having required the receiver to account and for any damages to the appellant resulting from such omission. The facts alleged can only constitute a defense or offset upon the theory that they constitute a cause of action in favor of the appellant individually and alone against the respondent arising on contract, for, since this action is based on contract only, such a cause of action would be available to him herein. (Code Civ. Proc. § 501, subd. 2.) The terms of the mortgage trust agreement are not fully alleged, but it is fairly to be inferred from the allegations of the answer that the respondent became obligated thereby either to the West Virginia corporation, the mortgagor or to the bondholders jointly, or to both, but not severally to each bondholder. The cause of action, if any, for a neglect of duty on the part of the trustee and for ar accounting was in the corporation or in the bondholders, or both, and could not be enforced by a single bondholder in his First Department, December, 1911. [Vol. 147. own right, but only by an action by all the bondholders or by a representative action in their behalf or by an action by the corporation for them, or by both the bondholders and the corporation. The liability of the respondent is limited, and it runs to all of the bondholders, and the amount of its liability to them constitutes a fund in which they are all interested. The case of Merrill v. Farmers' Loan & Trust Co. (24 Hun, 297), upon which the appellant relies, is distinguishable, in that there the action was in tort by a bondholder for damages caused by collusion between the trustee and most, if not all, of the other bondholders, and the question as to whether it could be maintained by a single bondholder does not appear to have been presented for decision. Moreover, if that case is to be deemed to have decided this question, it must be regarded as having been overruled by numerous subsequent decisions holding that such a right may only be enforced in equity in a representative action. (Marsh v. Kaye, 168 N. Y. 196; Warth v. Moore Blind Stitcher & Overseamer Co., 146 App. Div. 28. See, also, Niles v. N. Y. C. & H. R. R. R. Co., 69 App. Div. 144; affd., 176 N. Y. 119.) The only argument made by the appellant based on the alleged breach of the agreement by which he claims to have indemnified the respondent to the extent of $1,500 for the costs and disbursements in the foreclosure action on the respondent's agreement that the costs and disbursements would not exceed that sum is that such agreement antedated his contract of indorsement or guaranty and, therefore, became a part thereof, and that thereby the respondent was obligated to conduct the foreclosure action and to preserve the security with due diligence and skill, and that a breach of the obligation in this regard and with respect to the charges for costs and disbursements discharged him from liability. The appellant does not specifically allege when the contract with respect to indemnifying the respondent against costs and disbursements in the foreclosure action was made with respect to the time he indorsed or guaranteed the note, but perhaps it is to be inferred that such contract had been made before such indorsement or guaranty. It is not alleged that it formed any part of the contract under which the appellant agreed to guarantee or indorse the App. Div.] First Department, December, 1911. note or that the respondent's obligations thereunder became in any manner incorporated in the contract of suretyship. We, therefore, fail to see how a violation of the contract with respect to the amount to be charged by the respondent for costs and disbursements in the foreclosure action would discharge the appellant as surety. No point is made by appellant with respect to the $125 alleged to be in respondent's possession as part of the net proceeds of the foreclosure of the trust mortgage, being the proportion to which the owners of said twelve pledged bonds would be entitled had the bonds not been pledged, and now available and applicable to the payment, in part, of appellant's liability, and, therefore, we express no opinion with respect to appellant's rights, if any, arising on that allegation. It follows, therefore, that the order and judgment should be affirmed, with costs. INGRAHAM, P. J., MCLAUGHLIN, CLARKE and MILLER, JJ., concurred. Judgment and order affirmed, with costs. LE ROY F. HOVEY, Respondent, v. THE DE LONG HOOK AND EYE COMPANY, Appellant. First Department, December 29, 1911. Corporation - foreign corporation refusal to allow inspection of stock book-penalty constitutional law interstate commerce. -- Section 33 of the Stock Corporation Law, requiring foreign stock corporations, other than moneyed and railroad corporations, having an office for the transaction of business in this State, to keep a stock book containing the names of stockholders and imposing a penalty for a refusal to allow an inspection of said book by stockholders and judgment creditors, has no relation to the provisions of the statutes requiring foreign corporations doing business in this State to obtain a certificate permitting them to do so and to pay a tax. Hence, a foreign corporation having an office for the transaction of business in this State which refuses to allow an inspection of said stock book |