National Bank v. M. S. Strome Co.

Headnote

Mortgage — foreclosure — corporations — action to foreclose mortgage on real property owned by corporation — defense of failure to obtain stockholder’s consent to mortgage.

National Bank of Rochester v. Strome Co., 219 App. Div. 761 , affirmed.

Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered January 11, 1927, unanimously affirming a judgment in favor of plaintiff entered upon a decision of the court on trial at an Equity Term in an action to foreclose a mortgage upon real property. All of the defendants who appeal are holders of mechanics' liens on the property in question, except the defendant Anderson, as trustee in bankruptcy of M. S. Strome Company. That company was, when the action was commenced, the owner of the mortgaged premises. The plaintiff-respondent is the assignee of the mortgage. Pending the trial, the mortgaged premises were sold by consent of the parties, free of the liens claimed by the plaintiff and the various defendants, and these liens and claims were transferred to the proceeds of sale, which are held by the trustee in bankruptcy subject to the final judgment in this action. The answers of the trustee in bankruptcy and the defendant lienors alleged that the transaction which the trial court found resulted in a mortgage by the defendant M. S. Strome Company to the plaintiff herein was invalid for the reason that there was a failure to secure the stockholders’ consent and to file and record a certificate of such consent in the Monroe county clerk’s office, where the mortgage was recorded, pursuant to the requirements of section 16 of the Stock Corporation Law.'