Marstaller v. Mills — 62 N.Y. St. Rep. 443

Majority

p. 443

Frederick Marstaller, Resp’t, v. Ogden Mills et al., as Trustees, etc., App’lts.

(Court of Appeals,

Filed October 30, 1894.)

Headnote

1. Corporation—Dissolution—Liability.

An action for injuries, caused by tbe negligence of a domestic business corporation, is maintainable against the trustees holding the corporate property for the purposes of distribution.

2. Same.

The word “creditors,” in § 30, chap. 687, of 1892, includes all those to whom the corporation was under any enforceable obligation at the time of its dissolution, as well as those to whom it was indebted1.

Appeal from judgment of the general term of the supreme court in the second judicial department, entered upon an order, which affirmed an interlocutory judgment in favor of plaintiff entered upon an order of special term overruling a demurrer to the complaint.

William John Warburton, for app’lts; James G. Oropsey and Charles J. Patterson, for resp’t.

Plaintiff brings this action against the defendant, as the trustees of the creditors and stockholders of the Mergenthaler Printing Company, a domestic business corporation, to recover for the loss of services of his son; who was injured while in the em

p. 444

ployment of the company. Subsequently to the time when he received these injuries, that corporation was dissolved, in.the course of proceedings for its voluntary dissolution, and the sole question, which is presented by the demurrer to the complaint, is whether the cause of action survived the dissolution and is maintainable against the defendants. If provision has not been made in the statute law of this state, whereby such a cause of action is preserved from abatement, the common law rule would undoubtedly be in force and the plaintiff’s remedy would be gone. We think that such is not the case and that, upon a fair reading and by a reasonably liberal construction of certain statutory provisions, the plaintiff retained his remedy in the form he has adopted.

In the “Business Corporations Law” (Laws 1892, chap. 691, § 5) is contained the following section :

“Payment oe Capital Stock.—One-half of the capital stock of every such corporation shall be paid in within one year from its incorporation, or the corporation shall be dissolved. * * * The dissolution of any such corporation for any cause shall not take away-or impair any remedy against it, its stockholders or officers, for any liabilities incurred previous to its dissolution.”

The last sentence of this section was taken, with a slight change of verbiage, from the statute as it was enacted in 1875 (Laws 1875, chap. 611, § 38); where it stood as a distinct section. Although it was inserted in connection with a provision made for the event of (a failure to pay in the capital stock, its language is too comprehensive to warrant us in attributing any other legislative intent, than what the plain reading conveys. Inartificial as may be the insertion of this clause in the section, it cannot be qualified by what precedes and it reaches beyond the contingency of the particular dissolution previously referred to and applies to any, that is to every, case of corporate dissolution.

The plaintiff’s cause of action arose upon a wrong having been’ done to his rights or interests, for which tbe corporation could be held liable, and if it has survived, by force of the statutory provisions mentioned, we think he is entitled to be classed with the “creditors;” for whom, in another provision, the directors of the corporation become trustees. It was enacted in the “ General Corporation Law” (Chap. 687 of the Laws of 1892) as § 30 and reads:

“Upon the dissolution of any corporation created, or to be created, and unless other persons shall be appointed by the legislature, or by some court of competent authority, the directors or managers of the affairs of such corporation at the time of its dissolution, by whatever name they may be known in law, shall be the trustees of the creditors and stockholders of the corporation dissolved, and shall have full power to settle the affairs of the corporation, collect and pay the outstanding debts and divide among the stockholders the moneys and other property that shall remain after the payment of debts and necessary expenses.”

We think that the legislature intended by this provision that the corporate property should be held and administered upon by

p. 445

tbe directors, where other persons were not appointed, for the purpose of its distribution in the settlement of all existing claims upon it; whether the claimant was a creditor in the legal sense, or not. The term “creditor” is broad enough, in view of the evident purpose of this act and of the other provision we have mentioned, to include those persons, to whom the corporation was under any enforceable obligation, as well as those to whom it was indebted. If the general investment of the directors with the power “to settle the affairs of the corporation” were to be regarded as qualified and as limited, with respect to the payment of claims against it, to those which constituted debts, in the strict legal sense of the word, the-legislature would be chargeable with a very grave inconsistency. It would have expressly retained all the remedies against a corporation for any liabilities incurred previous to its dissolution; while limiting the power of its trustees, upon a voluntary dissolution, to the consideration and payment of those liabilities only which arose upon contract. This would be a harsh construction and one which does not seem in harmony with the general scheme of legislation. If this had been the case of an individual wrongdoer, his death would’ not have caused the abatement of the cause of action for the wrong done . by him to the property rights or interests of the plaintiffs. That case has been expressly provided for and. the action would be maintainable against his executors or administrators. 2 R. S. 447, §§ 1, 2, and see Cregin v. Brooklyn Crosstown R. R. Co., 75 N. Y. 192 . We do not think a discrimination has been intended in favor of corporations. The language of the section admits of the criticism that it fails to express clearly the intention that a liability upon tort is to be considered and met by the trustees; but, reading together § 5 of the Business Corporations Law and § 80 of the General Corporation Law, the construction is permitted that all persons, who have claims against the corporation, upon which it might be liable, should be. regarded as actual or possible creditors.

The interlocutory judgment should be affirmed, with costs; with leave, however, to, the appellants to answer the complaint within twenty days after service of the notice of the entry of the order upon our remittitur and on payment of costs.

All concur. Judgment accordingly.

Cases cited

Cregin v. Brooklyn Crosstown Railroad 75 N. Y. 192 N.Y. 1878-11-12 p. 445