Gardner v. C. B. Keogh Manufacturing Co. — 45 N.Y. St. Rep. 144

Majority

p. 144

Charles E. Gardner, Resp’t, v. The C. B. Keogh Manufacturing Co., Impl’d, App’lt.

(Supreme Court, General Term, First Department,

Filed March 31, 1892.)

Headnote

Fraudulent conveyance—Parties—Stockholders.

The complaint in an action to set aside transfers of property by a firm composed of the individual defendants to a corporation as fraudulent and void as to the creditors of said firm, also alleged that the individual defendants, in pursuance of their fraudulent scheme, had transfeired stock of such corporation to persons vrho were not bonajide creditors of the-firm, and whose claims were much less than the stock. Held, that as the-only relief demanded was in respect to the property fraudulently transferred to the corporation, and not in respect to the stock, the stockholders-were not necessary parties to the action.

Appeal from interlocutory judgment overruling demurrer to-the complaint.

Ü7. J. Meyers, for app’lt; M Kent, (A. H. Joline, of counsel), for resp’t. ' ■

This action was brought by a judgment, creditor of the individual defendants -composing the firm of 0. B. Keogh & Co., against such individual defendants and the C. B. Keogh Mfg. Co. to set aside as fraudulent a transfer or conveyance of certain property belonging to said firm, made by said firm to the ■ defendant, the C. B. Keogh Mfg. Co. The defendant corporation interposed a.demurrer upon the ground that it appeared upon the face of the complaint that there was a defect of parties defendant.

The complaint alleges among other things that the property in question was transferred to the corporation, and was accepted by the corporation, with intent to hinder, delay and defraud the just-creditors of the firm of C. B. Keogh & Co.

It then further alleges that the individual defendants in pursuance of the scheme or plan aforesaid transferred and delivered a large amount-of the capital stock in said corporation to divers-persons who were not and are not hona fide creditors of said firm,, and whose claims and demands against said firm were much less, in amount than the value of said stock, so delivered, and that, said transfer or delivery was made in pursuance of said scheme-- and with'intent to hinder, delay and defraud said creditors, and. particularly the plaintiff.

It is urged that because of this allegation the persons to whom this stock was delivered are necessary parties to this action because it is claimed their holdings are assailed as being fraudulent.

If this were true, and if the plaintiff was desirous of reaching the stock in question, the claim would be well-founded. But it. appears upon an inspection of the complaint that the plaintiff is not at all interested in or desirous of securing any part of the stock of the defendant company; and that all that this allegation was intended to aver was fraudulent practices upon the part of the individual defendants' in connection with their dealing with the corporation. The allegation in question was probably entirely unnecessary. All that the plaintiff seeks to recover is property the ostensible? title to which is in the defendant corporation, and they allege a

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fraudulent scheme between the individual defendants and. the-corporation, and then for the further purpose of characterizing: the fraudulent character of the action of .the individual defendants they alleged that they transferred the stock they received, from the corporation to persons without an adequate consideration.

All the relief demanded is in respect to the property transferred by the individual defendants to the corporation. Stockholders as such do not own the property of a corporation and are-not necessary parties in an action brought to affect the title to-property held by the corporation. Hence the stockholders were-not necessary parties to the action, nor was the allegation contained in the complaint necessary in order that proof of fraudulent acts upon the part of the defendants might be offered.

■ We are. of opinion, therefore, that the demurrer was rightly overruled and the judgment should be affirmed, with costs, with, leave, however, to the defendant to answer on paying the costs of the demurrer upon this appeal and the costs of the court below within twenty days after entry of order hereon.

O’Brien and Patterson, JJ., concur.