Gerdau v. Faber — 26 A.D. 606

Majority

p. 606

Otto Gerdau, Respondent, v. Eberhard Faber, Appellant.

Headnote

Action against a director for a failure to file an annual report - amended answer — merits of the proposed answer not considered ing the application. - leave to serve an — laches in mah-

Upon an application made by a director of a. corporation for leave to serve an amended answer, setting up the' Statute of Limitations as a defense to an action brought against him because of the failure of the corporation to file an annual report, the court will not pass upon the merits of the proposed defense.

Where it appears that the board of directors has attempted to comply with the' statute, the action being p'enal in its nature, the court will not be strenuous to deny the application upon the ground of laches.

Appeal by the defendant, Eberhard Faber, from an order of the 'Supreme Court, macje at the New York Special Term and entered' in the office of the clerk of the county of New York on the 26th day of January, 1898, denying his motion for leave to serve an amended answer.

Francis Forbes, for the appellant.

Marshall B. Clarke, for the respondent.

This action was brought, to enforce a.liability for the indebtedness of a corporation against the defendant as director, because of the failure of the corpioration to file an annual report. The case was at issue for some time, and a motion was made for leave to serve an

p. 607

amended answer, setting up the Statute of Limitations. This motion was resisted .upon the ground of laches, and also because such statute would be no defense.

Upon this appeal we do not think that we should pass upon the question of the merits of the defense. Whatever question- there may be in that respect should be raised upon the trial, so that ■ either party may take an exception and be able to review the action of the court upon appeal.

As to the question of laches, it does not seem to us that the motion should have been denied upon that ground. There had been an attempt upon the part of the board of directors to comply with the statute. The defendant’s liability, if any, arises because of a want of compliance with the formal requirements of the statute, and although the defendant may not have made his motion at the earliest opportunity, still, the action being penal in its nature, if he has any defense he ought to be allowed to introduce it.

The order appealed from should be reversed, with costs, and the motion granted upon payment by the defendant of the costs of the action up to the time of' the making of the motion, and upon his stipulating to allow the plaintiff to discontinue the action without costs, in case he should be so advised.

Barrett, Rumsey, Ingraham and McLaughlin, JJ., concurred.

Order reversed, with costs, and motion granted upon payment by defendant of the costs of the action up to the time of the making of the motion, and upon his stipulating to allow the plaintiff to discontinue the action without costs, in case he should be so advised.