Spellman v. Looschen

desire on the part of the corporation favorable to giving preferences to Campbell on the indebtedness held by him against the corporation.” In Varnum v. Hart, 119 N. Y. 101 , 23 N. E. 183 , it appeared that the director of the corporation upon whom the summons and complaint were served, acting in concert with the creditor, knowing the company to be insolvent, and meaning to permit the creditor to obtain a preference in payment of his claim over other creditors, kept the fact of the service of the papers upon himself concealed from the other officers of the company, and a judgment by default was granted. The court of appeals held that the statute was not violated; that neither the creditor nor the director was under any statutory restraint, and that there was no violation of the statute by the failure of the director to disclose the fact of the service of the papers on him, whereby a debt really existing and honestly due obtained a preference; that neither the director who was served, nor the other officers, if they had known of the service of papers, were bound to interpose a defense; and that, whatever was done or authorized to be done or omitted, the fact remained that there was no assignment or transfer of property, and hence no violation of the statute. And in the case of French v. Andrews, supra, it was held that the conduct of the treasurer in giving notes which split up the creditor’s demand so that it might be sued by the creditor in the municipal court did not so far alter the facts as to call for a different decision from that made in the Varnum Case. In that case the officers of the corporation gave to the creditor notes which might be sued in a municipal court, which would enable him to obtain judgment in very much less time than if the notes had not been given, and that was held not to be void. Applying this principle to the case at bar, it would seem that there was no evidence here to show that the officers of this corporation suffered this judgment to be obtained, within the prohibition of the statute. The evidence is clear that the whole amount sued for was due. The defendant, who sold the goods, and the president of the corporation, who purchased them, testified that the goods, for the sale and delivery of which the plaintiff sought to recover as one of his causes of action, were sold for cash, or for customers’ approved notes, to be delivered within a week. The sale was made on May 13th, and more than a week had passed before the action was commenced. There was not even a suspicion that that testimony was not true, as the mere fact that the defendant had sold goods to the corporation prior to this time upon a two or four months’ credit would not affect this particular sale, which, by agreement between the parties, was for cash. The testimony is explicit that the defendant, being applied to by the president of the corporation for these goods, refused to sell them, and finally was induced to make the sale upon the express agreement for pajunent in cash. It being, therefore, an honest debt, for which the defendant had a right to sue, he was informed that another person had obtained a judgment against the company, and that the company was in trouble, and he commenced his action at once. Assuming that he also understood that proceedings were about to be instituted for a dissolution of the corporation, he was not bound to wait until such proceedings eventuated, in the appointment of a receiver, and thus

lose his right to enforce his claim against the corporation. Nor does the fact that he employed as an attorney a gentleman who had hired a part of the offices of the attorney for this corporation tend in any way to show that the officers of this corporation were doing anything to facilitate his obtaining the judgment. He had a right to employ this attorney to bring his suit. He had a right to sue and obtain judgment. Neither of these officers could have verified an answer to this claim without committing perjury, and all that the officers of this company could have done to prevent a judgment from being obtained would be to interpose an answer which, upon the evidence, would have been false. Certainly it was never contemplated that this statute would impose a duty upon the officers of the corporation of interposing a false answer in an action brought against the corporation, which would" subject the person verifying it to the penalty for perjury. The mere failure of an officer of a corporation to interpose such an answer would not be suffering a creditor to obtain a judgment, with intent to give such creditor a preference.

We think, therefore, that there was no evidence to justify the court in finding that the amount of $411, which constitutes one of the causes of action, was not due at the time the action was commenced, or that this corporation, of which the plaintiff was receiver, suffered a judgment to be taken against it, within the meaning of section 48 of the stock corporation law of 1892. For this reason the judgment should be reversed, and a new trial ordered, with costs to the appellant to abide the event. All concur, except RUMSEY, J., dissenting.