Boyle v. Thurber — 57 N.Y. Sup. Ct. 259

Majority

p. 259

AMELIA F. BOYLE, Administratrix, etc., of JAMES J. BOYLE, Deceased, Respondent, v. JEANNETTE M. THURBER, Appellant.

Headnote

Laws 1875, chap. 611 — liability under, for a false report, does not sumiré to the legal representative of the oi'iginal creditor.

The liability created by chapter 611 of the Laws of 1875, against the directors of a corporation created under that act, by reason of their making a false report, abates on the death of the original creditor of the corporation and cannot be revived in favor of or prosecuted by his personal representatives.

Brackett v. Griswold ( 103 N. Y., 425 ) followed.

p. 260

Appeal from an order of tbe New York Special Term, of June 28,1888, reviving and continuing tbe action in tbe name of the personal representative of tbe deceased plaintiff, James J. Boyle.

L. O. Waehner, for tbe appellant.

William W. Badger, for tbe respondent.

Tbe action was commenced against tbe defendant as a director of tbe corporation known as tbe American Opera Company (Limited.) This company was organized and incorporated under tbe authority of chapter 611 of tbe Laws of 1875, and it became indebted to tbe intestate for damages for tbe breach of a contract made with him for services to be rendered to tbe corporation as a singer. To maintain the action against the defendant it was alleged in tbe complaint that she signed tbe annual report of the corporation required to be made and filed by the statute, and that this report was false in its material statements. And if these facts were truly stated in the complaint, then a liability did exist against tbe defendant for the payment of this indebtedness, for by section 21 of tbe act it has been declared, that if any certificate or report, made by the officers of tbe corporation shall be false in any material representation, “ all tbe officers who shall have signed the same shall be jointly and severally liable for all the debts of tbe corporation contracted while they are officers thereof.”

Tbe application to revive tbe action in favor of the personal representative of tbe deceased creditor was, however, resisted. on the ground that tbe action had abated by bis decease, and could not be revived in favor of or prosecuted by his personal representative. It is true that neither this act, nor the act providing for the incorporation of manufacturing companies, declared the liability for tbe payment of tbe debts of tbe company to be subject to any such event; but tbe act for the incorporation of manufacturing companies has been construed as entitled to that effect by tbe courts. That act is more restricted as to the liability of tbe officers for making a false report or certificate than tbe act of 1875; for the officers signing it have been declared to be liable for all tbe debts of the corporation contracted while they where stockholders or officers thereof only

p. 261

when tbe report, or certificate snail be false in any material representation to tbe knowledge of tbe person subscribing it; but tbe language declaring tbe extent of tbe babibty when it shall arise for making and filing tbe report containing materially false representations, is expressly tbe same in eacb of tbe acts. JBy section 15 of chapter 40 of tbe Laws of 1848, tbe officers signing such a report, knowing it to be false, are declared to be “ jointly and severally liable for all tbe debts of tbe company contracted while they were stockholders, or officers, thereof; ” and by section 21 of tbe act of 1875, it has in bke manner been declared that tbe officers who have .signed tbe false report, “ shall be jointly and severally liable for all tbe debts of the corporation contracted while they are officers thereof.” This identity of language in framing these parts of these sections of tbe different acts indicates tbe existence of an identity in tbe intention, so far as tbe extent of liability was described and ■declared; and that is, in eacb class of cases, that for violating either ■one of these sections tbe officers signing tbe false report shall be liable for all tbe debts of tbe company contracted while they were officers thereof; and tbe decisions declaratory of tbe effect of this language employed in tbe earlier act, therefore, require tbe same construction to be placed upon so much of tbe other act as contains the same language, and is drawn in controversy in this action.

In tbe case of Brackett v. Griswold ( 103 N. Y., 425 ) the precise question arising out of this language, and upon which tins appeal depends, was presented and decided by tbe Court of Appeals. Tbe action there was brought to charge tbe defendants, as trustees of tbe Iron Mountain Company of Lake Champlain, with liability for tbe indebtedness of tbe company, upon tbe ground that they bad signed tbe annual report for tbe year 1879, knowing tbe statements contained in it as to tbe assets of tbe company to be false, and that tbe ■company was organized in pursuance of a fraudulent conspiracy to deceive tbe plaintiff. Tbe appeal was decided upon tbe first .of these grounds, and tbe court held tbe liability created by tbe statute to be of such a description as to abate with tbe death of tbe creditor, and that tbe action could not be revived in favor of tbe personal representative, and successfully prosecuted by him to ■enforce tbe liability. This was, in some degree, afterwards reconsidered in Blake v, Griswold ( 104 N. Y., 613 ); but no different

p. 262

construction was permitted by the decision then made, than that which was approved and sanctioned in the preceding authority.

These decisions are controlling over the present action; for if the trustees are exonerated from liability under the act of 1848, by the decease of the creditor, it follows that the same result must attend the decease of the creditor when the claim or indebtedness arises under the act of 1875. The language of both acts in this respect is the same. By that language the trustees are made liable for all the debts of the corporation contracted while they are officers thereof, and as the trustees of a corporation formed under the manufacturing act are discharged from liability by 'the the decease of the creditor, it necessarily follows that the same discharge will arise out of that fact, where the corporation has been formed, as this was under the act of 1875. The action, consequently, could not be revived as it was directed to be by the order of the court from which the appeal has been brought, and the order should be reversed and the motion denied, but without costs.

YaN BruNT, P. J., and Bartlett, J. concurred.

Order reversed and motion denied without costs.