Cochran v. Weichers — 25 N.Y. St. Rep. 571

Majority

p. 571

S. Skiddy Cochran et al., App'lts, v. William A. Weichers, Impleaded, etc., Resp’t.

(Supreme Court, General Term, First Department,

Filed July 9, 1889.)

Headnote

Abatement and Revival—Corporations—Action against stockholder.

An action to enforce the liability against a stockholder of a corporation organized under an act providing that all the stockholders shall be individually liable to the creditors of the company to an amount equal to the stock held by them respectively for all debts and contracts made by the company until the whole amount of capital stock fixed by the company has been paid in, and a certificate thereof made and recorded, the certificate not having been recorded as provided, is not an action to recover a penalty, but arises upon contract, and may be revived against a deceased stockholder’s personal representatives.

Appeal from order of special term denying plaintiffs’ motion to revive an action as against the executors of the defendant Weichers, deceased.

H. D. Hotchkiss, for app’lts; Hy. Schmitt, for resp’t.

This motion to revive was denied, upon the ground that the cause of action set out in the complaint was to recover a penalty, and, therefore, did not survive. In this we think the learned judge fell into an error, as the action was not brought to recover a penalty, but to recover a sum which the deceased (under the act under which the corporation was formed of which he was a member), became liable to pay under certain contingencies.

The provisions of the act in question are that in limited liability companies all the stockholders shall be individually liable to the creditors of the company in which they are stockholders to an amount equal to the stock held by them, respectively for all debts and contracts made by such company until the whole amount of capital stock fixed by such company has been paid in and a certificate thereof has been made and recorded as therein provided.

Although the deceased has paid in full for his stock, yet still the subsequent conditions in regard to the filing of the certificate as to the payment of the stock' have not been complied with; and the defendant became liable under the provisions of this section to the creditors of the corpora

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tian for all debts and contracts made by such corporation to the amount of the stock held by him.

The discussion df this question seems to be entirely unnecessary in view-:of the decision, of the supreme court of the United States in the case of Flash v. Conn. ( 109 U. S., 371 ). That action- was brought to enforce a liability under-section 10 of the act of the legislature of the state of New York, passed February 17, 1848, commonly known as the manufacturing act'. The language of section 10 is identical with but two insignificant exceptions, with the language which has been quoted from section 37 of the act under which the depeased’s corporation was organized, and that action was brought to enforce identically the same liability which is sought to be enforced by this action; and it was there held that the action was not brought to enforce a liability in the nature of a- penalty^ following the decisions-upon this point which had previously been made in the state of New York, but a liability arising upon contract.

The order must be reversed, with ten dollars costs and disbursements; and an order entered reviving the action as against the personal representatives of the deceased defendant.

Brady and Barrett, JJ., concur.