Van Wickle v. Barron — 39 N.Y.S. 85

Majority

p. 85

(5 App. Div. 130.)

VAN WICKLE et al. v. BARRON.

(Supreme Court, Appellate Division, First Department.

May 8, 1896.)

Headnote

Pleading—Amendment—Improper Exercise oe Discretion.

Where it was sought to charge a stockholder with a debt of the corporation on the ground that all the stock had not been paid in and a certificate of such fact recorded as required by statute, a motion, made four years afjter the beginning of the action, but before it was reached on the calendar, for leave to amend the complaint by alleging that defendant’s stock was not issued in payment of property necessary for the business of the company, that the only stock issued for anything except cash was that issued to the promoter of the company for services which were ' fraudulently overvalued, and that the stock so issued was issued for the purpose of evading the statute, was improperly denied.

Appeal from special term, New York county.

Action by Augustus S. Van Wickle and another against John C. Barron to charge defendant, as a stockholder of a corporation, with a debt of the corporation to the amount of his stock. From an order

p. 86

denying a motion for leave to amend their complaint, plaintiffs appeal-.

Reversed.

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, c. 40, Laws 1848. The amendments sought to be made were, in effect, that 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 $100,000 worth at par, issued to the promoter of the company for services and expenses in organizing the company; that such services were fraudulently overvalued, and the stock issued therefor was issued in bad faith, and for the purpose of evading the statute. Plaintiffs sought to recover judgment for $500 and interest. The action was commenced in January, 1892. The motion was made in April, 1896. 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.

Argued before BARRÉTT, RÜMSEY, WILLIAMS, PATTERSON, and INGRAHAM, JJ.

W. P. Knapp, for appellants.

Ernest F. Eyrault, for 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 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 $10 costs of motion and all costs and disbursements of the action'after notice of trial.