Van Wickle v. Baron — 5 A.D. 130

Majority

p. 130

Augustus S. Van Wickle and James W. Morrell, Appellants, v. John C. Baron, Respondent.

Headnote

Complaint — a delay from 1892 to 1896, not hurtful to the defendant, is not a ground, for denying leave to amend it — Laws 1848, chap. 40, §§ 10, 11.

In an action brought by judgment creditors of a domestic corporation in January, 1892, based upon an allegation that the whole amount of the capital stock of such corporation had not been paid in, and a certificate of the fact recorded as required by law, the plaintiffs, in April, 1896, applied for leave to amend their complaint by inserting allegations that the stock of the defendant was not issued in payment for property necessary for the business of the company; that no such property was purchased; that the only stock issued for anything except cash was stock of the par value of §100,000 issued to the promoter of the company for his services and expenses in organizing the company; that these services were fraudulently overvalued, and that the stock issued to pay for them was issued in had faith, and for the purpose of evading the statute.

The case, although at issue and upon the calendar, had not been reached for trial.

Held, that the court had power to allow the amendment;

That although the motion had not been promptly made, as it did not appear that the defendant had suffered any injury by reason of the delay, it was a mis taken exercise of discretion to deny it.

Appeal by the plaintiffs, Augustus S. Van Wickle and another, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 10th day of April, 1890, denying the plaintiffs’ motion for leave to amend their complaint.

The action was one of several brought by judgment creditors of a domestic corporation on the ground that the whole amount of the capital stock of the company had not been paid in, and a certificate thereof recorded, as required by sections 10 and 11 of chapter 40 of the Laws of 1848.

The amendments sought to he made were in effect that the defendant’s stock was not issued in payment for property necessary for the business of the company, and at its fair value; that there was no such property purchased, and that the only stock issued for anything except cash was stock worth at par $100,000, issued to the promoter of the company for services and expenses in organizing

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the company; that such services were fraudulently overvalued, and that the stock issued therefor was issued in bad faith and for the purpose of evading the statute.

The plaintiffs sought to recover judgment for $500 and interest. The action was commenced in January, 1892. The motion was made in April, 3896. Nothing has been done in the action beyond the service of the pleadings and placing the case upon the calendar for trial. The case has not yet been reached.

W. P. Knapp, for the appellants.

Ernest F. Ayrault, for the respondent.

There can be no doubt but the court had power to allow the amendments asked for. The motion must, therefore, have been denied as a matter of discretion, because not made promptly enough. No other valid reason could have been alleged for the exercise, of such discretion. No injury had been suffered by the defendant by reason of the delay. The action had been at issue for the last four years, and had not been tried because not yet reached upon the calendar. There seems to have been some disagreement by the different courts as to the necessity of alleging the facts sought to be inserted in the complaint in order to maintain the action. We think under the circumstances the amendments should have been allowed.

The order appealed from should, therefore, be reversed, with costs to the appellants, and the motion for leave to amend be granted, upon payment of ten dollars costs of motion and all costs and disbursements of the action after notice of trial.

Present — Barrett, Rumsey, Williams, Patterson and Ingraham, JJ.

Order reversed, with costs to appellants, and motion for leave to amend granted, upon payment of ten dollars costs of motion and all costs and disbursements of the action after notice of trial.