Wing v. Smith

Headnote

Wing v. Smith, 173 App. Div. 57 , affirmed.

Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered June 6, 1916, affirming, a judgment in favor of plaintiff entered upon a decision of the court at a Trial Term without a jury. The defendant and twenty-eight others, who severally owned in the aggregate 2,000 shares of the capital stock in the Refugio Syndicate, a New Jersey corporation, which was all the stock issued at that time, entered into an agreement by which they constituted two of their number, George W. McElhiney and Ernest A. Wiltsee, “ Syndicate Managers,” for the‘purchase of the remaining unissued stock of the-corporation aggregating 8,000 shares, and thereby authorized the managers to purchase for the several subscribers an amount of the unissued stock in proportion to their respective holdings of the stock theretofore issued, and each subscriber agreed to pay his subscription on call of the managers as therein provided. The agreement was subsequently pledged with the Guardian Trust Company, as trustee for whoever should become the holder of a note for $800,000, made by the syndicate managers payable to bearer to raise money for the purchase of said unissued stock, but which was subsequently delivered to said Refugio Syndicate itself for the stock. The trust company resigned as trustee on .September 28, 1910, and the plaintiff became trustee in its place, and brought this action to recover the balance unpaid on defendant’s subscription which was for $24,600, upon which he paid $6,150 and the recovery is for the, balance together with interest. The answer set up three defenses: First, that the Refugio Syndicate was a New Jersey corporation and that the 8,000 shares of its stock in suit were issued in consideration of a note and not for money or property as

required by the General Corporation Law. Second, that the Refugio Syndicate, a foreign corporation, conducted business in the State of New York without the certificate required by section 15 of the General Corporation Law of this state. Third, that there had been assigned and transferred in the city of New York 2,000 shares of said stock without payment of the tax required by chapter 241 of the Laws' of 1905.