Ryder v. Bushwick Railroad — 45 N.Y. St. Rep. 388

Majority

p. 388

Smith Ryder, App’lt, v. The Bushwick Railroad Co., Resp't.^[1]

(Court of Appeals, Second Division,

Filed May 31, 1892.)

Headnote

Corporations—Action to compel issue of stock—Specific performance.

Defendant’s directors appointed five of their number to act as an executive committee to have general direction of the affairs of the company, hut no power was §iven to them to issue stock. The president, however, upon their authority issued certificates of stock. The board of directors did not authorize or ratify this action and plaintiff was not purchaser in good faith for full value. Held, that- plaintiff could not compel defendant to issue the stock to him upon said certificates, account for dividends, etc.

Appeal from a judgment of the general term, second department, affirming a judgment entered upon a decision dismissing the plaintiff’s complaint upon the merits.

Charles S. Simpkins, for app’lt;. Thomas S. Moore, for resp’t..

This action was brought to compel the defendant to issue to the plaintiff certificates for thirty shares of its capital stock and to place his name on its books as the owner thereof,, and to account of and concerning the dividends declared by the defendant thereon and the interest on such dividends from time-to time, and to pay the same over to the plaintiff; and that in default thereof the plaintiff have judgment in the sum of $5,190,. with interest thereon, etc., together with the value of the dividends, declared, etc.

The defendant is a corporation organized under the laws of this state and is engaged in operating a railroad in connection with its main line known as the Tompkins Avenue Branch in the city of Brooklyn. By its articles of incorporation it was authorized to-issue stock to the amount of $500,000, all of which has been issued.

In the months of March ' and May, 1868, its president, F. W. Kalbfleisch, issued the five certificates in question. They are in. form ás follows:

p. 389

“ Bush wick Railroad Company,

“ Tompkins Avenue Branch,

“ Brooklyn, March 25, 1868.,

“ This certifies that- -is entitled to five (5) shares

of the capital stock of the Bush wick Railroad Company upon surrender of this certificate at the company’s office.

“F. W. Kalbfleisch, President

“$500.

“ Shares $100 each.”

The plaintiff claims to have purchased these certificates in the open market, and on the 3d day of February, 1886, presented them at the defendant’s office, and demanded that new stock should be issued to him and that his name should be entered upon the books of the company as the owner. The defendant, through its secretary, refused, and this action was brought.

It appears that the directors of the defendant consisted of thirteen stockholders ; that they had appointed of their number five to act as an executive committee who were to have the general direction and superintendence of the affairs of the company and were vested with full authority for constructing, repairing, equipping and operating the road, etc. But no power was given to them to issue stock.

The certificates in question, however, were issued by the president upon the authority of the executive committee.

The trial court has found, as facts, that such certificates were not issued by the authority of the board of directors; that they had not ratified such issue, and had not authorized the executive committee or the president to issue the same, and that the plaintiff was not a purchaser in good faith for full value.

Our examination of the case leads us to conclude that the findings are supported by the evidence.

We regard these findings as disposing of the case, for if the certificates were not legally issued and the plaintiff is not a bona fide holder, he is pot entitled to the relief demanded. Barnes v. Brown, 80 N. Y., 527 , 534; Burrall v. Bushwick R. R. Co., 75 id., 211; N. Y. & N. Y. R. R. Co. v. Schuyler, 34 id., 30.

"The judgment should be affirmed, with costs.

All concur.