Cæsar v. Bernard — 141 N.Y.S. 668

Majority

p. 668

(156 App. Div. 736.)

CÆSAR et al. v. BERNARD et al.

(Supreme Court, Appellate Division, First Department.

May 9, 1913.)

Headnote

Corporations (§ 545*)—Insolvency—Transfers—Preferences — Liability of Directors.

The secretary of an insolvent corporation, who as director voted to authorize a mortgage of the assets of the corporation, and who as secretary executed the necessary papers, and who in his individual capacity benefited by the transaction by receiving a preferential payment, violated Stock Corporation Law (Consol. Laws 1909, c. 59) § 66, declaring that the directors of an insolvent corporation shall be liable for a preferential transfer of corporate assets.

[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 2170-2175; Dec. Dig. § 545.^[1] ]

Ingraham, P. J., and Dowling, J., dissenting.

Appeal from Appellate Term, First Department.

Action by Henry A. Csesar and another, copartners doing business . • under the firm name of H. A. Csesar & Co., against Robert W. Bernard and others. From a determination of the Appellate Term (79 Mise. Rep. 224, 139 N. Y. Supp. 974 ), affirming an order granting the motion of defendant named for judgment on the pleadings, plaintiffs appeal. Reversed.

Argued before INGRAHAM, P. J., and McLAUGHLIN, LAUGHLIN, DOWLING, and HOTCHKISS, JJ.

p. 669

Henry L. Scheuerman, of New York City, for appellants.

John Elton Way land, of New York City, for respondent.

The opinion on another appeal herein, wherein the defendant Runyon is respondent ( 141 N. Y. Supp. 659 ), which is to be decided herewith, is decisive in favor of the appellants on all points save one. The learned counsel for this respondent pointedly contends that the statement of a cause of action against an officer' or director to enforce this personal liability requires an allegation that he violated the statute, or was concerned in its violation, in his capacity as an officer or director of the corporation. That point is sufficiently discussed in the opinion on the appeal in which William M. Bernard is the respondent ( 141 N. Y. Supp. 669 ), and is there decided adversely to this respondent. He was a director, and as such voted to authorize a mortgage, alleged to have been executed in violation of the statute, and as secretary of the corporation he executed the necessary papers, and in his individual capacity he benefited by the transaction by receiving a preferential payment.

It follows that the determination of the Appellate Term, and order of the Special Term of the City Court, should be reversed, with costs, and motion denied, with costs.

McEAUGHLIN and HOTCHKISS, JJ., concur. INGRAHAM, P. J., and DOWLING, J., dissent.