« ForrigeFortsett »
Trial Term affirmed, with costs in this court order of the plaintiff, who paid the corporą. and in the Appellate Division to appellant. tion $900 for it. It appears undisputed that
both the plaintiff and the defendant were acHISCOCK, C. J., and CARDOZO, POUND, tively interested in the Empire State Motor MCLAUGHLIN, CRANE, and ANDREWS, Transport Lines, Inc., and were stockholders JJ., concur.'
or subscribers to its capital stock. About
April 15th the defendant agreed to take 40 Judgment reversed, etc.
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 cor
poration and for its convenience the defend(239 N. Y. 141)
ant, a little later, substituted for the note FURLONG V. JOHNSTON.
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 1924.)
in suit is one.
The record is not clear as to whether at 1. Corporations Om 92—Note given in payment the time the original note was given the deof stock subscription held enforceable in fendant agreed to purchase stock which had hands of one who took with knowledge of been previously issued and returned to the purpose for which given. Note given in payment of stock subscrip: scribing for new stock. If the note was give
corporate treasury, or whether he was subtion which violated Stock Corporation Law, S 67, requiring payment in cash of 10 per cent.
en in connection with a purchase of corporate of amount subscribed, was enforceable in hands stock previously issued, then the note, from of one who took note with knowledge of pur- the time it was signed, was free from any pose for which it was given, where corporation infirmity, and was enforceable even in the by negotiation of note obtained the required 10 hands of the original payee; if it was given per cent. in cash, and defendant never denied in connection with a subscription for new liability until corporation had gone into bank- stock, then the defendant and the corporation ruptcy.
have failed to comply with the provisions of 2. Corporations 88_Statute satisfied where sections 67 and 69 of the Stock Corporation
corporation obtains by negotiation of note 10 Law (Cons. Laws, c. 59), formerly sections per cent. of subscription in cash.
53 and 55, governing subscriptions to stock, Stock Corporation Law, $ 67, providing that and the consideration for its issue, and the every subscriber shall pay in cash 10 per cent. note at its inception had infirmities which on amount subscribed by him, is satisfied whep would at least in some circumstances render subscriber has given corporation a negotiable
it unenforceable. Upon the trial it was asinstrument for 10 per cent. or more of amount, sumed that the note was given in connection and corporation obtains by negotiation required 10 per cent. in cash.
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.
tion for shares of stock to be issued thereAction by William M. Furlong against after. Upon suthcient evidence the jury James Johnston. From a judgment entered found that the plaintiff had such notice, and on an order of the Appellate Division (209 a verdict for the defendant followed. Upon App. Div. 198, 204 N. Y. S. 710), reversing a appeal the judgment was reversed and judg. judgment in favor of defendant entered on ment directed in favor of the plaintiff, a verdict, and directing judgment in favor of though the court again assumed that the plaintiff, defendant appeals. Affirmed. 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.
judgment, we shall proceed upon the same
assumption. George P. Decker, of Rochester, for appel
 Upon this assumption, the original lant.
transaction between the corporation and the Edwin C. Redfern, of Rochester, for re
defendant contravened the explicit command spondent.
of the statute that: LEHMAN, J. The defendant signed a
"Every subscriber shall pay in cash ten per promissory note bearing date April 15, 1918, centum upon the amount subscribed by him, for the sum of $1,000, payable to the order and no subscription shall be received without of the Empire State Motor Transport Lines, such payment.” Stock Corporation Law, $ 67. Inc., six months after date, with interest. In so far as it contemplated the issuance The note was indorsed before maturity to the of the stock before the note was paid, it may
(145 N. E.) 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. “No corporation shall issue either shares of 77, 115 N. E. 275, 6 A. L. R. 1111, this court stock or bonds, except for money, labor done or
held that a subscription agreement might property actually received for the use and law- under some circumstances be enforced, alful purposes of such corporation.” Section 69. though it was not accompanied by a 10 per
cent. payment in cash. The circumstances in If the stock has ben issued to the defend- that case are widely different from those ant before the defendant paid the note which present in the case under consideration, but represents bis obligation under his subscrip- the decision is significant, because the court tion agreement, then it may well be that the there recognized that subscriptions not acdirectors of the corporation have committed companied by immediate cash payments have a legal wrong, but it does not follow that not been held actually void, and that though such wrong would invalidate or render un
ordinarily not enforceable they may become enforceable the original subscription agree
enforceable, not only by a subsequent cash ment. While there are some decisions in this payment, but "by a course of dealing bestate, and in other states having statutes tween the parties." In the present case the similar to our own, that a note is neither defendant gave a note embodying his obliga“money" nor "property” within the meaning tion. He must be presumed to have known of the statute, in most of the cases where that thereby he put it in the corporation's the courts have refused judgment upon a
power to negotiate bis promise to pay; innote given in payment of a subscription,
deed' there is evidence scarcely, if at all, for stock, the refusal was based upon the qualified that he gave the corporation exground that the subscription was not ac- press authority to negotiate this particular companied by a 10 per cent. payment in cash. note. When the note became due the defendIn no case that has been cited have the courts ant paid interest thereon, thereby recognizheld that the corporation may not enforce ing his obligation, even though perhaps he a subscription agreement, otherwise valid, did not know at that time that the note was merely because it was followed by a prema- no longer held by the corporation. The corture and possibly prohibited issue of stock. poration was unsuccessful, and the defendThe purpose of the statute would be defeated, ant gained no financial benefit from his suband its provisions, intended for the protection seription agreement for these shares, but he of innocent creditors or stockholders, pervert
never denied liability on subscription agreeed, if a stockholder under a contractual ob- ment or note until the corporation had gone ligation to pay for stock were permitted to into bankruptcy. In the meantime the corfree himself from this obligation upon the poration has been enabled to receive $900 plea that he had received or expected to re
from the plaintiff. through negotiation of the
defendant's note. ceive the stock before the agreed price was due or paid. A subscription agreement may render the note enforceable even in the hands
 These circumstances in our opinion provide for the payment at some future date of 90 per cent of the amount subscribed for; of one who took the note with knowledge of the statute requires a payment of only 10 per Beach v. Smith, 30 N. Y. 116, this court held
the purpose for which it was given. In cent. in cash, and the promise to pay the remainder may lawfully be embodied in a ne
that a subsequent agreement to credit upon a gotiable instrument or in any other form of subscription agreement moneys due for servcontract. That promise may be enforced ac
ices amounting to more than 10 per cent. of cording to its terms by the corporation, or
the subscription rendered the original subby any assignee of the corporation, and it scription agreement valid. In the present does not become unenforceable because the the corporation has received more parties may contemplate or complete a de- than 10 per cent., but it has not received livery of stock before full payment is made. that money directly from the defendant. Otherwise a corporation could not maintain Does this circumstance differentiate the an action upon a subscription agreement aft- cases? In Ogdensburgh, C. & R. R. R. Co. v. er the stock was issued. In the present case Wooley, 3 Abb. Dec. 398; this court held that the subscription agreement was undoubtedly a corporation may enforce a subscription not enforceable at its inception by the origi- agreement where the subscriber made no paynal parties, because the defendant failed to ment at the time of the subscription, but sub pay to the corporation 10 per cent. of the sequently gave promissory notes for more amount he subscribed. The right of the than 10 per cent., and paid the amount of plaintiff to recover, then, depends upon the these notes to a bona fide holder for value question of whether the subsequent circum- to whom these notes were negotiated. There stances have rendered enforceable in his the subscriber had paid the 10 per cent., but hands an obligation which originally was not had not paid it direct to the corporation. In
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 ring the note escape its obligation to issue subscription through the negotiation of the the stock upon the plea that no moneys were defendant's note. When the defendant gave paid by the defendant at the time the subthat note he placed the corporation in a po- scription was made, and the defendant should sition where it could obtain money upon the likewise in good conscience not be permitted defendant's promise to pay. The plaintiff to escape his obligation upon that plea when could properly rely on the corporation's ap- he gave the corporation a negotiable instruparent right to negotiate the note, and, even ment upon which it could and did raise monthough the plaintiff knew that the note was eys. We do not now pass upon any question given in consideration of the corporation's of whether the corporation might hold the promise to issue stock, the defendant should directors for any loss sustained through the not be permitted to escape liability upon the receipt and negotiation of the note. We denote upon the plea that he did not pay 10 cide only that the note is enforceable in the per cent. in cash. The spirit, if not the let- hands even of one who purchased with noter, of the statute is satisfied when the sub-tice. scriber has given the corporation a negoti The other grounds which are urged against able instrument for 10 per cent. or more of the validity of the note bardly require detailthe amount subscribed for, and the corpora-ed consideration. tion obtains by negotiation of that instru The judgment should be affirmed, with ment the said 10 per cent, in cash. Especial- costs. ly when the subscriber fails to demand back his note and continues to recognize his obli. CARDOZO, POUND, MCLAUGHLIN, gations thereunder until the corporation CRANE, and ANDREWS, JJ., concur. HISgoes into bankruptcy, such circumstances COCK, C. J., absent. constitute a "course of dealing" between corporation and stockholder which renders the Judgment affirmed.
(146 N.E.) (239 N. Y. 148)
7. False imprisonment 7(4)-Information VITTORIO V. ST. REGIS PAPER CO. not expressly charging plaintiff knew goods
were stolen not jurisdictionally defective. (Court of Appeals of New York. Nov. 25, Information showing that stolen goods were 1924.)
delivered to plaintiff by a thief for concealment,
and were found in plaintiff's possession, held 1. False imprisonment On 15(3) Employer not jurisdictionally defective because not ex
liable for wrong by employee acting within pressly charging that plaintiff knew goods were scope of duties.
stolen. Where in writing out information before
Failure of justice, on which plaintiff was arrested, defeud- 8. False imprisonment Cm7(4) ant's employee was acting within scope of his
magistrate to sign jurat not wrong for which duties and in behalf of defendant, defendant was
informant responsible. liable for any wrong which employee inflicted on
Where informant before justice of peace, plaintiff.
charging plaintiff with receiving stolen property,
was sworn, his deposition made in writing and 2. False imprisonment Om7(4)-Defendant not subscribed by him, as required by Code Cr.
liable for acts of magistrate and sheriff, Proc. & 148, failure of magistrate to sign jurat though they were its employees.
was not wrong for which informant could be Defendant was not liable for any error or held responsible, nor did it affect jurisdiction wrongful act of a justice of the peace or a dep- of magistrate. uty sheriff in connection with exercise of their 9. False imprisonment w7 (4)—No cause of functions as public officers, though they were its employees, since they derived their author
action where warrants on which plaintiff was ity solely from state through election or ap
arrested were not jurisdictionally defective. pointment, and when performing their public
Where warrants on which plaintiff was arfunctions were not acting as its agents or em
rested were not jurisdictionally defective, plainployees.
tiff had no cause of action against defendant
for false imprisonment, even if defendant caus3. False imprisonment em 13 Warrant noted plaintiff's arrest under such warrants.
void where information sufficient to give ju-
Appeal from Supreme Court, Appellate Diacted in issuing warrant of arrest was sufficient vision, Fourth Department. to give him jurisdiction, a warrant issued there Action by Anthony Vittorio against the on would not be void, and arrest not unlawful, St. Regis Paper Company. From a judgeven though magistrate may have erred grosso ment of the Appellate Division (209 App. ly, and though complainant was unable at trial Div. 846, 204 N. Y. S. 956), affirming a judgto sustain his charges, or accused was able to meet them fully.
ment in favor of plaintiff entered on a ver
dict, defendant appeals. Reversed, and com4. False imprisonment Om7(4) -Information
plaint dismissed. liberally construed on collateral attack.
See, also, 202 App. Div. 775, 194 N. Y. S. Sufficiency of an information even when at
519. tacked directly may not be tested by same rules and standards of technical correctness as were John Conboy and T. Arthur Hendricks, applied to a common-law pleading, and espe- both of Watertown, for appellant. cially when attack on sufficiency is made col Clarence L. Crabb, of Watertown, for relaterally great latitude of construction should
spondent. be indulged in. 5. False imprisonment Ow7(4)-Neither jus. LEHMAN, J. In October, 1919, the plain
tice nor complainant before him committed tiff was arrested upon a warrant issued uplegal wrong because displaying lack of learn.
on a complaint, lodged with a justice of the ing.
peace by Carl F. McGran, an employee of Neither a justice of the peace nor a com
the defendant. plainant before him committed a legal wrong
The complaint charged the for which he should respond in damages be plaintiff with receiving property stolen from cause he failed to display a learning which he the defendant. The plaintiff was discharged could not reasonably be presumed to possess.
by the justice of the peace when it appeared
that the jurat on the written information 6. False imprisonment Eww13 – Plaintiff's ar. upon which the warrant was issued was not
rest on information placed before justice held subscribed by the officer before whom it was not unlawful.
taken. The plaintiff was then arrested again Information placed before a justice of the under a warrant issued upon a new complaint peace, charging plaintiff with receiving and made by McGran. He was tried and found concealing stolen property, held suflicient to re.quire justice to decide whether a
guilty of the charge contained in that comshould issue, and hence plaintiff's arrest was plaint. Upon appeal the conviction was renot unlawful, though his innocence might there- versed and the plaintiff discharged, “upefter appear.
on the ground that no sufficient information 145 N.E. -58
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 McGran testified that he did not see the also contrary to the weight of evidence." warrants after they were issued, and took
After his discharge the plaintiff brought no part in serving them either personally or this action against the defendant, alleging through directions to any peace officer, and in his complaint both unlawful arrest and there is no evidence which contradicts this imprisonment under void process and mali- testimony. cious prosecution. A judgment recovered by [1-3] Unquestionably the evidence is suffi. the plaintiff at the first trial was reversed cient to establish that McGran was at all by the Appellate Division on the ground that times acting within the scope of his duties the trial court applied a wrong rule of dam- and in behalf of the defendant, his employer. ages, but a majority of the judges sitting in the defendant may therefore properly be the Appellate Division held that neither in- held liable for any wrong which McGran formation signed by Mr. McGran "was suffi- inflicted upon the plaintiff; but the defendcient to give the justice jurisdiction to issue ant is not liable for any error or even wrongthe warrant, and that the plaintiff made out ful act on the part of the justice of the a cause of action aga the defendant up- peace or of a deputy sheriff in connection on the theory that it instigated and carried with the exercise of their functions as pubforward the proceedings."
lic officers even though, like all the other resAt the second trial the plaintiff's counsel idents of the village where the defendant's stated that he would offer no evidence to mills are situated, they were employees of establish the claim of malicious prosecution, the defendant. They derived their authority but would rest “our case here upon the claim solely from the state through election or of false imprisonment." In passing upon appointment, and they were agents of the that claim the trial judge was constrained state when they performed their public functo follow the previous ruling of the Appel- tions, and were not at that time acting as late Division, and he held as a matter of law agents or employees of the defendant. Mcthat the plaintiff's arrest and imprisonment Gran did not seek to arrest the plaintiff was unlawful because neither information without a warrant. He went to the justice of was sufficient to confer any jurisdiction on the peace, and he asked the justice of the the justice of the peace before whom it was peace to determine upon the facts laid belaid. He left to the jury only the question of fore him whether a warrant should be iswhether the defendant instigated the ar- sued for the plaintiff's arrest. He was rest, and the jury decided this question in sworn, and he wrote out the information upthe plaintiff's favor, and awarded him dam- on which the justice of the peace acted in ages of $150.
issuing a warrant. If the information so The evidence sufficiently establishes that laid before the justice of the peace was suffiMcGran made an investigation in regard to cient to give the magistrate jurisdiction, and the alleged disappearance of some felt from to call upon him for a decision as to wheththe defendant's mill, with a view of estab-er the warrant should issue, a warrant islishing that the felt was stolen, and of find-sued upon that information is not void, and ing the guilty persons. He learned that some the arrest is not unlawful, even though the felt was discovered in the plaintiff's house justice of the peace in issuing the warrant when the house was searched under a search may have erred grossly, and even though the warrant. Plaintiff's' wife at that time saia complainant be unable at the trial to susthat she had received the felt from her tain his charges or the accused be able to brother-in-law. The brother-in-law was ar
meet them fully. Marks v. Townsend, 97 rested, and pleaded guilty to a charge of N. Y. 590; Swart v. Rickard, 148 N. Y. 264, larceny. McGran then told the justice of 42 N. E. 665. the peace of these circumstances, together [4-6] In our opinion the courts which have with some other circumstances which might heretofore passed upon the validity of the tend in some degree to establish knowledge second warrant upon which the plaintiff was on the plaintiff's part that the goods were arrested and then tried have erred in holdstolen. At the suggestion of the justice of ing it jurisdictionally defective and void. We the peace McGran wrote out the “informa- may not test the sufficiency of an information" upon which the justice of the peace tion, even when attacked directly, by the issued a warrant, and when the plaintiff was same rules and standards of technical cordischarged after that arrest McGran wrote rectness as were formerly applied to a comout another "information” upon which the mon-law pleading, and, especially when the second warrant was issued. McGran op-attack on the sufficiency of the information posed the plaintiff's discharge after his first is made collaterally, “great latitude of con