Kiendl v. Cochrane — 153 A.D. 802

Majority

p. 802

Adolph Kiendl, as Trustee of the Iron Clad Manufacturing Company, a Bankrupt, Respondent, v. Mary J. Cochrane, Appellant, Impleaded with Elizabeth C. Seaman, Defendant.

First Department,

December 6, 1912.

Headnote

Lien — payment of charges against land, by president of insolvent corporation — action by trustee in bankruptcy under section .66 of Stock Corporation Law to establish lien — complaint — demurrer.

A lien cannot be impressed upon the premises of one person by the mere voluntary payment of taxes or other charges thereon by another person with the funds of an insolvent corporation.

Hence, a complaint in an action by a trustee in bankruptcy of a corporation against the president of the corporation and her mother, which alleges that during the ten years prior to the adjudication, when the corporation was insolvent, its president used the corporation funds to pay interest on mortgages which were a lien upon certain premises, and to pay taxes thereon, insurance premiums and other charges and expenses for its benefit; that, the year before the adjudication, a deed, dated prior to the ten-year period, purporting to convey the premises from the'president of the corporation to her mother, was recorded; and which asks that the plaintiff have a lien for the amount of said payments, does not disclose a prohibited transfer under section 66 of the Stock Corporation Law, and is demurrable for failure to state a cause of action.

Those who received the money of the corporation are the ones, if any, from whom it may be recovered under the statute.

Láughlut and Dowling, JJ., dissented.

Appeal by the defendant, Mary J. Oochrane, from an interlocutory judgment of the Supreme Court in favor of the plaintiff,' entered in the office of the clerk of the county of New York on the 15th day of June, 1912, upon the decision of the court, rendered after a trial at the New York Special Term, overruling the said defendant’s demurrer to the complaint on the ground that it does not state facts sufficient to constitute a cause of action.

Albert M. Levy, for the appellant.

Edwin T. Rice, for the respondent.

The plaintiff is a trustee in bankruptcy of a corporation, which it is alleged was controlled by defendant Seaman, who was its president and treasurer. The adjudication in bankruptcy was made on December 2, 1911. It is alleged that during the ten years prior thereto, when the corporation was insolvent, the defendant Seaman used the corporation funds to pay interest on mortgages which were a lien upon certain premises, and to pay taxes upon said premises, insurance .premiums and other charges and expenses for its benefit; that in November, 1910, a deed, bearing date April 22, 1899, and purporting to be executed by the defendant Seaman and to convey said premises to the appellant, was recorded; that the appellant is the mother of the said defendant Seaman and for a number of years has resided with her in said premises; and that said defendants are in j oint possession thereof. The prayer for relief is that the plaintiff be adjudged to have a lien upon the said premises to the amount of said payments and for the foreclosure thereof.

There is no averment that the payments were made at the request, upon the consent or even with the knowledge of the appellant, and the bald question is presented whether a lien can be impressed upon the premises of one person upon the bare fact of the voluntary payment of taxes or other charges thereon by another person with the funds of an insolvent corporation. The rule is well settled that a person who voluntarily discharges another’s debt cannot recover the money paid. (First Nat. Bank of Ballston Spa v. Board of Supervisors,. 106 N. Y. 488 ; Flynn v. Hurd, 118 id. 19, 26.) A fortiori he cannot have a lien impressed upon real property for money voluntarily paid to discharge liens thereon.

Plaintiff relies upon section 66 of the Stock Corporation Law, which prohibits certain transfers to officers, directors or stockholders, or to creditors with the intent of giving a preference, and particularly upon this sentence, viz.: “Every person receiving by means of any such prohibited act or deed any property of the corporation shall be bound to account therefor to its creditors or stockholders or other trustees.” But the complaint does not disclose a case of one of the prohibited

p. 804

transfers to the appellant. She was neither a creditor, a stockholder, a director nor an officer of the corporation and she has received no property of the corporation. The complaint does not disclose to whom the payments' were made. Those who received the money of the corporation are the ones, if any, from whom to recover it under the statute. No fact is stated to impeach the conveyance to the appellant; indeed, it is to be inferred from the averments of the complaint that the conveyance was made in April, 1899, which was before any of the payments complained of were made.

The interlocutory judgment should be reversed, with costs, and the demurrer sustained, with costs, with leave to plaintiff to serve an amended complaint upon payment of costs in this court and in the court below.

Ingraham, P. J., and McLaughlin, J., concurred; Laughlin and Dowling, JJ., dissented.

Judgment reversed, with costs, and demurrer sustained, with costs, with leave to plaintiff to serve amended complaint on payment of said costs.

Cases cited

First National Bank of Ballston Spa v. Board of Supervisors 106 N. Y. 488 N.Y. 1887-10-04 p. 802