Caesar v. Bernard — 156 A.D. 737

Majority

p. 737

Henry A. Caesar and Edwin A. Richard, Copartners, Doing Business under the Firm Name of H. A. Caesar & Co., Appellants, v. Robert W. Bernard and Others, Defendants, Impleaded with William M. Bernard, Respondent.

First Department,

May 9, 1913.

Headnote

Corporations — action under section 66 of Stock Corporation Law— party — officer “concerned” with illegal disposition of corporate property.

An officer of a corporation may, without acting officially, violate section 66 of the Stock Corporation Law by inducing other officers to transfer assets of the corporation in violation of law either to themselves or to another, especially where he derived a benefit therefrom.

It is sufficient to charge such officer with being “ concerned ” in the illegal disposition of corporate property where it is alleged that he advised, ratified, approved and assented to the illegal transfer, and through its execution received payment of a note of the corporation held by him.

Ingraham, P. J., and Dowling, J., dissented.

Appeal by the plaintiffs, Henry A. Caesar and another, from a determination of the Appellate Term of the Supreme Court, entered in the office of the' clerk of the county of New York on the 7th day of-February, 1913, afffrming an order of the City Court of the city of New York granting the respondent’s motion for judgment on the pleadings.

Henry L. Scheuerman, for the appellants.

W. Cleveland Runyon [Richard H. McIntyre, Jr., with him on the brief], for the respondent.

The facts and points presented by this appeal are the same as those presented on the other appeal in this case, in- which the defendant Runyon is the respondent ( 156 App. Div. 724 ), with the exception of those relating to this respondent’s connection with the company, and his participation in the conveyance and assignment of. its property, and, therefore, the opinion on that appeal disposes of them in favor of the appellants. He was not a director, but was the treasurer of the company at the time a mortgage, alleged to have been given in violation of the statute, was executed. As a stockholder,- he signed a consent to its execution, and it is alleged that he advised, ratified,' approved and assented to the execution of the mortgage, and that through its execution he received payment of a note of the corporation which he .held for $2,500.- It is quite plain, I think, that, although he did not in his official capacity represent the corporation in the execution and delivery of the mortgage, and, therefore, did not as an officer of the corporation violate the statute, yet he was concerned in the disposition of the corporate property made thereby, for the words “be concerned in violating,” as used in section 66 of the. Stock Corporation Law (Consol. Laws, chap. 59; Laws of' 1909, chap. 61), are equivalent to “participate” or “take part” in violating. (See United States v. Scott, 74 Fed. Rep. 213 .) I am of opinion that an officer may, without acting officially, violate the statute by inducing other officers to transfer assets of the corporation in violation of law to himself or to another, at least, when, as here alleged, he is to and did derive a benefit' therefrom.

The determination of the Appellate Term and order of the Special Term of the City Court should, therefore, be reversed, with costs, and motion denied, with costs.

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

Determination and order reversed, with costs, and motion denied, with .costs.

Cases cited

Cæsar v. Bernard 156 App. Div. 724 N.Y. App. Div. 1913-05-09 p. 737