order of the plaintiff, who paid the corporation $900 for it. It appears undisputed that both the plaintiff and the defendant were actively interested in the Empire State Motor Transport Lines, Inc., and were stockholders or subscribers to its capital stock. About April 15th the defendant agreed to take 40 shares of this stock, and gave the corporation a note payable six months thereafter for the sum of $2,000, the agreed price of the shares of stock. At the request of the corporation and for its convenience the defendant, a little later, substituted for the note for $2,000 two notes bearing the same date, (Court of Appeals of New York. Nov. 25, for the sum of $1,000 each, of which the note in suit is one. 1924.) 1. Corporations 92-Note given in payment of stock subscription held enforceable in hands of one who took with knowledge of purpose for which given. Note given in payment of stock subscription which violated Stock Corporation Law, 67, requiring payment in cash of 10 per cent. of amount subscribed, was enforceable in hands of one who took note with knowledge of purpose for which it was given, where corporation by negotiation of note obtained the required 10 per cent. in cash, and defendant never denied liability until corporation had gone into bankruptcy. 2. Corporations 88-Statute satisfied where corporation obtains by negotiation of note 10 per cent. of subscription in cash. Stock Corporation Law, § 67, providing that every subscriber shall pay in cash 10 per cent. on amount subscribed by him, is satisfied when subscriber has given corporation a negotiable instrument for 10 per cent. or more of amount, and corporation obtains by negotiation required 10 per cent. in cash. The record is not clear as to whether at the time the original note was given the defendant agreed to purchase stock which had been previously issued and returned to the corporate treasury, or whether he was subscribing for new stock. If the note was given in connection with a purchase of corporate stock previously issued, then the note, from the time it was signed, was free from any infirmity, and was enforceable even in the hands of the original payee; if it was given in connection with a subscription for new stock, then the defendant and the corporation have failed to comply with the provisions of sections 67 and 69 of the Stock Corporation Law (Cons. Laws, c. 59), formerly sections 53 and 55, governing subscriptions to stock, and the consideration for its issue, and the note at its inception had infirmities which would at least in some circumstances render it unenforceable. Upon the trial it was assumed that the note was given in connection with a subscription for new stock, and the trial judge charged the jury that the note was unenforceable if the plaintiff had notice Appeal from Supreme Court, Appellate Di- that it was given in payment of a subscripvision, Fourth Department. Action by William M. Furlong against James Johnston. From a judgment entered on an order of the Appellate Division (209 App. Div. 198, 204 N. Y. S. 710), reversing a judgment in favor of defendant entered on a verdict, and directing judgment in favor of plaintiff, defendant appeals. Affirmed. tion for shares of stock to be issued thereafter. Upon suthcient evidence the jury found that the plaintiff had such notice, and a verdict for the defendant followed. Upon appeal the judgment was reversed and judg ment directed in favor of the plaintiff, though the court again assumed that the note was given in connection with a sub See, also, 204 App. Div. 857, 197 N. Y. S. scription for new stock. In reviewing that 913. George P. Decker, of Rochester, for appellant. Edwin C. Redfern, of Rochester, for respondent. LEHMAN, J. The defendant signed a promissory note bearing date April 15, 1918, for the sum of $1,000, payable to the order of the Empire State Motor Transport Lines, Inc., six months after date, with interest. The note was indorsed before maturity to the judgment, we shall proceed upon the same assumption. [1] Upon this assumption, the original transaction between the corporation and the defendant contravened the explicit command of the statute that: "Every subscriber shall pay in cash ten per centum upon the amount subscribed by him, and no subscription shall be received without such payment." Stock Corporation Law, § 67. In so far as it contemplated the issuance of the stock before the note was paid, it may (145 N.E.) "No corporation shall issue either shares of stock or bonds, except for money, labor done or property actually received for the use and lawful purposes of such corporation." Section 69. also have contravened the prohibition of the enforceable by the corporation, his assignor. statute that: In the case of Jeffery v. Selwyn, 220 N. Y. 77, 115 N. E. 275, 6 A. L. R. 1111, this court held that a subscription agreement might under some circumstances be enforced, although it was not accompanied by a 10 per cent. payment in cash. The circumstances in that case are widely different from those present in the case under consideration, but the decision is significant, because the court there recognized that subscriptions not accompanied by immediate cash payments have not been held actually void, and that though ordinarily not enforceable they may become enforceable, not only by a subsequent cash payment, but "by a course of dealing between the parties." In the present case the defendant gave a note embodying his obligation. He must be presumed to have known that thereby he put it in the corporation's power to negotiate his promise to pay; indeed there is evidence scarcely, if at all, qualified that he gave the corporation express authority to negotiate this particular note. When the note became due the defendant paid interest thereon, thereby recognizing his obligation, even though perhaps he did not know at that time that the note was no longer held by the corporation. The corporation was unsuccessful, and the defendant gained no financial benefit from his subscription agreement for these shares, but he never denied liability on subscription agreement or note until the corporation had gone into bankruptcy. In the meantime the corporation has been enabled to receive $900 from the plaintiff through negotiation of the defendant's note. If the stock has ben issued to the defendant before the defendant paid the note which represents his obligation under his subscription agreement, then it may well be that the directors of the corporation have committed a legal wrong, but it does not follow that such wrong would invalidate or render unenforceable the original subscription agreement. While there are some decisions in this state, and in other states having statutes similar to our own, that a note is neither "money" nor "property" within the meaning of the statute, in most of the cases where the courts have refused judgment upon a note given in payment of a subscription, for stock, the refusal was based upon the ground that the subscription was not accompanied by a 10 per cent. payment in cash. In no case that has been cited have the courts held that the corporation may not enforce a subscription agreement, otherwise valid, merely because it was followed by a premature and possibly prohibited issue of stock. The purpose of the statute would be defeated, and its provisions, intended for the protection of innocent creditors or stockholders, perverted, if a stockholder under a contractual obligation to pay for stock were permitted to free himself from this obligation upon the plea that he had received or expected to receive the stock before the agreed price was due or paid. A subscription agreement may provide for the payment at some future date of 90 per cent. of the amount subscribed for; the statute requires a payment of only 10 per cent. in cash, and the promise to pay the remainder may lawfully be embodied in a negotiable instrument or in any other form of contract. That promise may be enforced according to its terms by the corporation, or by any assignee of the corporation, and it does not become unenforceable because the parties may contemplate or complete a delivery of stock before full payment is made. Otherwise a corporation could not maintain an action upon a subscription agreement after the stock was issued. In the present case the subscription agreement was undoubtedly not enforceable at its inception by the original parties, because the defendant failed to pay to the corporation 10 per cent. of the amount he subscribed. The right of the plaintiff to recover, then, depends upon the question of whether the subsequent circumstances have rendered enforceable in his hands an obligation which originally was not [2] These circumstances in our opinion render the note enforceable even in the hands the purpose for which it was given. In of one who took the note with knowledge of Beach v. Smith, 30 N. Y. 116, this court held that a subsequent agreement to credit upon a ring the note escape its obligation to issue the stock upon the plea that no moneys were paid by the defendant at the time the subscription was made, and the defendant should likewise in good conscience not be permitted to escape his obligation upon that plea when he gave the corporation a negotiable instrument upon which it could and did raise moneys. We do not now pass upon any question of whether the corporation might hold the directors for any loss sustained through the receipt and negotiation of the note. We decide only that the note is enforceable in the hands even of one who purchased with notice. the present case the defendant has paid no | subscription agreement enforceable. Certainmoneys, but the corporation has received ly the corporation could not after transfermore than 10 per cent. of the defendant's subscription through the negotiation of the defendant's note. When the defendant gave that note he placed the corporation in a position where it could obtain money upon the defendant's promise to pay. The plaintiff could properly rely on the corporation's apparent right to negotiate the note, and, even though the plaintiff knew that the note was given in consideration of the corporation's promise to issue stock, the defendant should not be permitted to escape liability upon the note upon the plea that he did not pay 10 per cent. in cash. The spirit, if not the letter, of the statute is satisfied when the subscriber has given the corporation a negotiable instrument for 10 per cent. or more of the amount subscribed for, and the corporation obtains by negotiation of that instrument the said 10 per cent. in cash. Especially when the subscriber fails to demand back his note and continues to recognize his obligations thereunder until the corporation goes into bankruptcy, such circumstances constitute a "course of dealing" between corporation and stockholder which renders the The other grounds which are urged against the validity of the note hardly require detailed consideration. The judgment should be affirmed, with costs. HIS CARDOZO, POUND, MCLAUGHLIN, Judgment affirmed. (239 N. Y. 148) (145 N.E.) VITTORIO v. ST. REGIS PAPER CO. (Court of Appeals of New York. Nov. 25, 1924.) 1. False imprisonment 15 (3) Employer liable for wrong by employee acting within scope of duties. Where in writing out information before justice, on which plaintiff was arrested, defeudant's employee was acting within scope of his duties and in behalf of defendant, defendant was liable for any wrong which employee inflicted on plaintiff. 2. False imprisonment 7(4)-Defendant not liable for acts of magistrate and sheriff, though they were its employees. Defendant was not liable for any error or wrongful act of a justice of the peace or a deputy sheriff in connection with exercise of their functions as public officers, though they were its employees, since they derived their authority solely from state through election or appointment, and when performing their public functions were not acting as its agents or employees. 7. False imprisonment ~7(4)—Information not expressly charging plaintiff knew goods were stolen not jurisdictionally defective. Information showing that stolen goods were delivered to plaintiff by a thief for concealment, and were found in plaintiff's possession, held not jurisdictionally defective because not expressly charging that plaintiff knew goods were stolen. Failure of 8. False imprisonment 7(4) magistrate to sign jurat not wrong for which informant responsible. Where informant before justice of peace, charging plaintiff with receiving stolen property, was sworn, his deposition made in writing and subscribed by him, as required by Code Cr. Proc. § 148, failure of magistrate to sign jurat was not wrong for which informant could be held responsible, nor did it affect jurisdiction of magistrate. 9. False imprisonment 7(4)-No cause of action where warrants on which plaintiff was arrested were not jurisdictionally defective. Where warrants on which plaintiff was arrested were not jurisdictionally defective, plaintiff had no cause of action against defendant for false imprisonment, even if defendant causWarrant noted plaintiff's arrest under such warrants. 3. False imprisonment 13 If information on which justice of the peace acted in issuing warrant of arrest was sufficient to give him jurisdiction, a warrant issued thereon would not be void, and arrest not unlawful, even though magistrate may have erred grossly, and though complainant was unable at trial to sustain his charges, or accused was able to meet them fully. 4. False imprisonment 7(4)-Information liberally construed on collateral attack. Sufficiency of an information even when attacked directly may not be tested by same rules and standards of technical correctness as were applied to a common-law pleading, and especially when attack on sufficiency is made collaterally great latitude of construction should be indulged in. 5. False imprisonment 7(4)-Neither justice nor complainant before him committed legal wrong because displaying lack of learning. Neither a justice of the peace nor a complainant before him committed a legal wrong for which he should respond in damages because he failed to display a learning which he could not reasonably be presumed to possess. 6. False imprisonment 13- Plaintiff's arrest on information placed before justice held not unlawful. Information placed before a justice of the peace, charging plaintiff with receiving and concealing stolen property, held sufficient to require justice to decide whether a warrant should issue, and hence plaintiff's arrest was not unlawful, though his innocence might thereafter appear. 145 N.E.-58 Appeal from Supreme Court, Appellate Division, Fourth Department. Action by Anthony Vittorio against the St. Regis Paper Company. From a judgment of the Appellate Division (209 App. Div. 846, 204 N. Y. S. 956), affirming a judg ment in favor of plaintiff entered on a verdict, defendant appeals. Reversed, and complaint dismissed. See, also, 202 App. Div. 775, 194 N. Y. S. 519. John Conboy and T. Arthur Hendricks, both of Watertown, for appellant. Clarence L. Crabb, of Watertown, for respondent. LEHMAN, J. In October, 1919, the plaintiff was arrested upon a warrant issued upon a complaint, lodged with a justice of the peace by Carl F. McGran, an employee of the defendant. The complaint charged the plaintiff with receiving property stolen from the defendant. The plaintiff was discharged by the justice of the peace when it appeared that the jurat on the written information upon which the warrant was issued was not subscribed by the officer before whom it was taken. The plaintiff was then arrested again under a warrant issued upon a new complaint made by McGran. He was tried and found guilty of the charge contained in that complaint. Upon appeal the conviction was reversed and the plaintiff discharged, "upon the ground that no sufficient information McGran testified that he did not see the warrants after they were issued, and took no part in serving them either personally or through directions to any peace officer, and there is no evidence which contradicts this testimony. was laid before the justice of the peace, and | arrest, and secured counsel to assist in the that said court was without jurisdiction in prosecution after the second arrest; but the premises, and that said conviction was also contrary to the weight of evidence." After his discharge the plaintiff brought this action against the defendant, alleging in his complaint both unlawful arrest and imprisonment under void process and malicious prosecution. A judgment recovered by the plaintiff at the first trial was reversed by the Appellate Division on the ground that the trial court applied a wrong rule of damages, but a majority of the judges sitting in the Appellate Division held that neither information signed by Mr. McGran "was sufficient to give the justice jurisdiction to issue the warrant, and that the plaintiff made out a cause of action against the defendant upon the theory that it instigated and carried forward the proceedings." At the second trial the plaintiff's counsel stated that he would offer no evidence to establish the claim of malicious prosecution, but would rest "our case here upon the claim of false imprisonment." In passing upon that claim the trial judge was constrained to follow the previous ruling of the Appellate Division, and he held as a matter of law that the plaintiff's arrest and imprisonment was unlawful because neither information was sufficient to confer any jurisdiction on the justice of the peace before whom it was laid. He left to the jury only the question of whether the defendant instigated the arrest, and the jury decided this question in the plaintiff's favor, and awarded him damages of $150. The evidence sufficiently establishes that McGran made an investigation in regard to the alleged disappearance of some felt from the defendant's mill, with a view of establishing that the felt was stolen, and of finding the guilty persons. He learned that some felt was discovered in the plaintiff's house when the house was searched under a search warrant. Plaintiff's wife at that time said that she had received the felt from her brother-in-law. The brother-in-law was arrested, and pleaded guilty to a charge of larceny. McGran then told the justice of the peace of these circumstances, together with some other circumstances which might tend in some degree to establish knowledge on the plaintiff's part that the goods were stolen. At the suggestion of the justice of the peace McGran wrote out the "information" upon which the justice of the peace issued a warrant, and when the plaintiff was discharged after that arrest McGran wrote out another "information" upon which the second warrant was issued. McGran opposed the plaintiff's discharge after his first [1-3] Unquestionably the evidence is sufficient to establish that McGran was at all times acting within the scope of his duties and in behalf of the defendant, his employer. The defendant may therefore properly be held liable for any wrong which McGran inflicted upon the plaintiff; but the defendant is not liable for any error or even wrongful act on the part of the justice of the peace or of a deputy sheriff in connection with the exercise of their functions as public officers even though, like all the other residents of the village where the defendant's mills are situated, they were employees of the defendant. They derived their authority solely from the state through election or appointment, and they were agents of the state when they performed their public functions, and were not at that time acting as agents or employees of the defendant. MeGran did not seek to arrest the plaintiff without a warrant. He went to the justice of the peace, and he asked the justice of the peace to determine upon the facts laid before him whether a warrant should be issued for the plaintiff's arrest. He was sworn, and he wrote out the information upon which the justice of the peace acted in issuing a warrant. If the information so laid before the justice of the peace was sufficient to give the magistrate jurisdiction, and to call upon him for a decision as to whether the warrant should issue, a warrant issued upon that information is not void, and the arrest is not unlawful, even though the justice of the peace in issuing the warrant may have erred grossly, and even though the complainant be unable at the trial to sustain his charges or the accused be able to meet them fully. Marks v. Townsend, 97 N. Y. 590; Swart v. Rickard, 148 N. Y. 264, 42 N. E. 665. [4-6] In our opinion the courts which have heretofore passed upon the validity of the second warrant upon which the plaintiff was arrested and then tried have erred in holding it jurisdictionally defective and void. We may not test the sufficiency of an information, even when attacked directly, by the same rules and standards of technical correctness as were formerly applied to a common-law pleading, and, especially when the attack on the sufficiency of the information is made collaterally, "great latitude of con |