App. Div.]

FOURTH DEPARTMENT, JULY TERM, 1896.

This action is brought on behalf of the plaintiff and all other creditors of the Globe Paper and Fiber Company similarly situated, and who will come in and share the expenses of this action against fortyfour defendants, being the said stockholders and the plaintiffs who had brought actions against them at the commencement of this action; and the relief demanded in the complaint is to the effect that an accounting be had as to the liability of each individual stockholder in the dissolved corporation for the debts thereof in the actions already instituted, and such stockholders as might thereafter be brought in; and that said stockholders shall pay and contribute the amounts respectively which it shall be ascertained they are justly liable for, sufficient to pay the debts of the plaintiff, and all such persons as should join as plaintiffs in this action for an injunction and for further relief.

The learned justice at Special Term directed that the injunction obtained from the county judge of Jefferson county be vacated, with ten dollars ($10) costs of motion, without prejudice to any defendant stockholder to move for an injunction in any proper action or proceeding brought by such stockholder or stockholders.

It will be seen that this is an action in equity to adjudge in one action the rights of the creditors and the liabilities of the stockholders in this dissolved corporation, in order to avoid a multiciplicity of actions and the wasting of the property of the stockholders in a large number of litigations involving a large amount of costs. Owing to the peculiar circumstances indicated by the moving papers, and the complications arising from conflicting interests, it would seem very desirable that the rights, interests and responsibilities of the stockholders and creditors should, if possible, be adjusted in one action.

The power of the court in this action to restrain the actions at law against the stockholders cannot be doubted. Courts of equity have exercised that jurisdiction from time immemorial. The cases in this State sanction it. (The Erie Railway Company v. Ramsey, 45 N. Y. 637; Pfohl v. Simpson, 74 id. 137; Cochran v. American Opera Co., 20 Abb. N. C. 114; National Park Bank v. Goddard, 131 N. Y. 494.)

Pfohl v. Simpson (just cited) was an action brought by a creditor of the People's Safe Deposit and Savings Institution, organized

FOURTH DEPARTMENT, JULY TERM, 1896.

[Vol. 8. under the act chapter 816, Laws of 1868, in his own behalf and that of other creditors against the stockholders of said company, the assignee in bankruptcy, and such creditors as had brought actions at law to collect of said stockholders the sums for which they were liable under the provisions of sections 13 and 14 of that act, to distribute the same among the creditors and to restrain the prosecution of said actions at law. The action was held to be well brought.

It was further held that the fact that by said provisions the stockholders were made severally liable did not preclude the attaching and exercise of this equitable jurisdiction. This case, in principle, is analagous to the one at bar and affords complete justification for its maintenance, as is also the case of The National Park Bank v. Goddard (supra). The liability of the stockholder for the debts of the corporation under the Stock Corporation Law (Chap. 688 of the Laws of 1892, § 54) is a legal liability, and no reason can be urged why the equitable power of the court, such as is sought in the action at bar, should not be exercised in this, as well as in other legal actions, such as were restrained in the case cited.

The learned justice at Special Term seems to have reached the conclusion that the injunction should have been sustained in the case before us had it been obtained by a stockholder. It is difficult to conceive, if a stockholder is entitled to an injunction, why a creditor is not. In this case none of the stockholders had answered at the time of the dissolution of the injunction. Seven of them had appeared and moved for its dissolution, and the affidavits presented by them, which were embraced in their motion papers, did not materially contradict or vary the case made by the plaintiff's papers upon which the injunction was obtained, and in the replying affidavit of the plaintiff's attorney, read upon the motion, it appears that since the commencement of this action other creditors than the plaintiff holding undisputed claims against the defendants for upwards of $2,500 have arranged with the plaintiff's attorney to come in as plaintiffs in this action and to share the expenses thereof. That at the time of the making of said affidavit (April 4, 1896) twenty-five actions had already been brought by the creditors of the Globe Paper and Fiber Company against single stockholders of the said company, and among such actions five thereof were brought by the

App. Div.]

FOURTH DEPARTMENT, JULY TERM, 1896.

Watertown Press Brick Company against five several stockholders of the said company on a claim of ninety dollars and forty cents, and that many other claims sued upon were moderate in amount.

So it appears that between the granting of the injunction, March 24, 1896, at the time of the commencement of this action, when fifteen stockholders were made defendants, and the dissolution of the injunction on the fourth of April following, ten new actions had been instituted against the unfortunate stockholders. The fact that the law permits the creditor of the corporation holding a small claim to bring action against any number of its stockholders individually and separately, and to pursue them until he obtains the satisfaction of his debt out of some one of them, is liable to great abuse, and affords, in a proper case, a strong reason for the exercise of the equitable jurisdiction invoked in this action.

We have reached the conclusion that the order dissolving the injunction herein should be reversed, with ten dollars costs and disbursements of this appeal.

All concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.

JAMES HEFFERN, Respondent, v. GARRET HUNT, Appellant.

Torts — the plaintiff cannot bring in a new party defendant — appeal by the original defendant from an order authorizing it — Code of Civil Procedure, §§ 452, 723.

In an action brought to recover damages resulting from injuries to the plaintiff, caused by the alleged negligence of the defendant in leaving a hole in the sidewalk in front of premises owned by him improperly guarded, the court should not give leave to the plaintiff to issue a supplemental summons, directed to a tenant in the occupation of the premises (making him a party defendant to the action), and to serve a supplemental complaint.

The provision of section 452 of the Code of Civil Procedure, providing that, where a complete determination of a controversy cannot be had without the presence of other parties, the court must direct them to be brought in, applies only to equitable actions.

The provision of section 723 of the Code of Civil Procedure, authorizing the court, in furtherance of justice, to add or strike out the name of a party or to

FOURTH DEPARTMENT, JULY TERM, 1896.

[Vol. 8. correct a mistake in such name, applies to cases in which the party sought to be brought in is a necessary party, or interested in the event of the action, in connection with the original parties thereto, which would not be true in a case where two tort-feasors are severally liable.

The original party defendant has a right to appeal from such an order. FOLLETT, J., dissented upon the ground that the court had power, under section 723 of the Code of Civil Procedure, to authorize an additional defendant to be brought into an action of law.

APPEAL by the defendant Garret Hunt, from an order of the Supreme Court, made at the Erie Special Term and entered in the office of the clerk of the county of Niagara on the 8th day of August, 1895, granting the plaintiff leave to issue a supplemental summons, and to make John F. Little a co-defendant in the action, and to serve a supplemental complaint.

Moses Shire and Glenn S. Warner, for the appellant.

King & Morgan, for the respondent.

WARD, J.:

The plaintiff (Heffern) brings this action to recover damages against the defendant, Garret Hunt, for an injury alleged to have occurred to the plaintiff on the 11th day of March, 1894, through the wrongful act and neglect of the said defendant in leaving a hole not properly guarded in the sidewalk on a public street in the city of Lockport, opposite the defendant's premises on Lock street in said city. The defendant Hunt answered, putting in issue the claim of the plaintiff, and subsequently the plaintiff's attorney discovered that at the time of the plaintiff's injury the premises were leased to Little, and that he was in possession of the premises, and the plaintiff moved at Special Term to have Little brought in and made a party defendant, and that a supplemental summons and complaint be issued for that purpose, which were attached to the motion papers. The supplemental complaint charged that, prior to the time when Little went into possession of the premises as a tenant, the sidewalk in front of the store, being constructed of stone flagging, became fractured for about two feet square, causing the same to sink and depress into the cellar or excavation beneath, and to be unsafe, which the defendant Hunt negligently permitted, and that thereafter, when Little went into possession of the premises, he carelessly and negligently placed a piece of board of about five feet

App. Div.]

FOURTH DEPARTMENT, JULY TERM, 1896.

in length and twelve inches in width over the said hole, and negligently caused the same to be insecurely fastened, leaving the same in such a condition that it tipped, twisted and changed position when pedestrians stepped upon it; that the plaintiff afterwards, after dark, ignorant of such defect in the sidewalk, while passing along it, caught his foot in the board, and the same, tipping, tripped the plaintiff and caused him to be thrown with violence on the walk, whereby he was injured, etc.

The Special Term directed, by its order, that Little be brought into the case as a defendant, and that a supplemental summons be served upon him, and a supplemental complaint upon the defendant Hunt, from which order the defendant Hunt appealed.

The respondent seeks to sustain this order under section 452 of the Code of Civil Procedure, which is as follows: "The court may determine the controversy, as between the parties before it, where it can do so without prejudice to the rights of others, or by saving their rights; but where a complete determination of the controversy cannot be had without the presence of other parties the court must direct them to be brought in. And where a person not a party to the action has an interest in the subject thereof or in real property, the title to which may in any manner be affected by the judgment, and makes application to the court to be made a party, it must direct him to be brought in by the proper amendment."

The following section (453) directs that when a new defendant is brought in and the order is not made upon his own application, a supplemental summons must be issued, etc., for that purpose.

Section 452 provides for a relief similar to that authorized by section 122 of the Code of Procedure. Under that Code and under our present one, the courts have held that the provision permitting or requiring the court to have parties brought in, in order that a complete determination of the controversy might be had, applied only to equitable actions. The other provision of section 452 of the new Code permitting a person not a party who has an interest in the subject-matter of the action to come in upon his own application applies to all kinds of actions, whether legal or equitable. (McMahon v. Allen, 12 How. Pr. 39; affd. in 3 Abb. Pr. 89; Webster v. Bond, 9 Hun, 437; Chapman v. Forbes, 123 N. Y. 532; Rosenberg v. Salomon et al., 144 id. 92; Baylies' Trial Practice, 268, 269,