Snyder v. Lindsey , 99 N.Y. Sup. Ct. 432 ( 1895 )

BRADLEY, J.

It is urged on the part of the appellant that the joint-stock association created by the parties plaintiff and de-, fendant has the nature of a corporation, and is a corporation, in such sense that the remedy available to members of a partnership for its dissolution has no application to it, and, therefore, that an action for the dissolution of the association can be maintained only by the attorney general, in the name of the people, as provided by the statute relating to corporations (Code, § 1786). The question was raised at the trial, and, as we think, properly overruled. It is true that in this state a joint-stock association has certain attributes of a corporation, for the purposes of the conduct of its business, and of suing and being sued. Laws 1849, c. 258;. Laws 1853, c. 153; Laws 1854, c. 245; Laws 1867, c. 289. But, unlike a corporation, the common-law liability of its members remains upon the obligations legitimately created or assumed through the acts of the officers or agents of the association. People v. Coleman, 133 N. Y. 279, 31 N. E. 96. The nature of a joint-stock association was the subject of some consideration in People v. Wemple, 117 N. Y. 136, 22 N. E. 1046, where it was held that the United' States Express Company, a joint-stock company, was subject to-taxation as such upon its business, pursuant to Laws 1880, c. 542, as amended by Laws 1881, c. 361, § 3, which provides that every corporation, joint-stock company, or association incorporated.or organized under any law of this state, or any other state or country, and doing business in this state, with certain exceptions, should be subject to and pay a tax upon its corporate franchise or business, into the treasury of the state, annually. The association formed by the parties rests on their contract, into which they entered, and adopted for its creation; and their individuality, in point of personal liability to creditors, remains as effectually as if they had created a partnership. No substantial reason therefore-exists, in the nature of the association, for denial of the right to one or more of its members to institute an action for its dissolution whenever a suitable occasion arises, rendering it legitimately desirable to wind up its affairs.

In November, 1893, the appellant, as president of the association, made to Grant Lindsey a chattel mortgage upon all of the goods of the association, for the purpose, as expressed in it, of securing to him the payment on January 14, 1894, of $1,500, for that amount loaned by him to it, and giving to the mortgagee power, if he deemed himself unsafe, to take before that time the possession of, and sell, the property. Afterwards, on the same day, the mortgagee took possession of the property, and, by bill of sale, sold it to the defendant James D. Evans. This bill of sale was made without consideration, other than the undertaking of Evans to proceed to sell the goods, and account to his vendor for the proceeds, and such was its purpose. Subsequently, and on or about the 16th day of November, an attachment in behalf of a creditor of the association was levied on the goods; and thereupon an arrangement was made by Evans with the appellant to pay the debt due to the attaching creditor, which, with the costs and expenses, amounted to $669, and take title to the property. Evans sold the goods to him. He .paid that debt, and also paid some other debts which the association owed, to be applied upon the purchase price-of the property. The leading question on the trial was whether or not the chattel mortgage and those sales were effectual to-transfer the title to the goods. The determination of the referee that they were not was founded upon the fact, as found by him, that the mortgage to Grant Lindsey, and the bill of sale by him to-Evans, were made without - consideration, and with the unlawful intent to enable Grant and Carmi V. Lindsey to reimburse themselves for moneys theretofore invested by them in the business, and that such transfers were made without authority. It may be-that the authority relied upon to make the mortgage was in the proceedings of the board of directors of January 28, 1893, and a power of attorney made in October following. As represented by the record of the proceedings of that meeting of the board of directors, . Grant Lindsey and W. A. Cowden were each to invest $1,000, take 100 shares of the stock of the association, and at the-end of the year to have the privilege to withdraw that amount of money so invested, by selling goods from the stock in the store-at regular rates. Afterwards, Grant Lindsey put in $1,000, and Cowden $500. The latter assigned his stock and claim to Grant Lindsey. The power of attorney was subscribed by upwards of" 50 members of the association, and, among other things, recited' and provided that Grant Lindsey had put $1,500 in the business^ of the company, and that the president was empowered, whenever Grant Lindsey might wish to resign his position as manager, to-give him a bill of sale of the goods, or to secure for such $1,500. This money evidently was furnished to assist the association in the-business, and the taking of the stock did not necessarily conclude-Lindsey and Cowden in treating the money advanced as a loan to-it, as distinguished from the shares which were represented by certificates to members, if it was put in pursuant to any arrangement duly made to so distinguish the relation arising out of such' advance. It was therefore competent for the defendant to prove under what arrangement the money was advanced by Lindsey and' Cowden. A witness, who was one of the directors, and present at the meeting of the board before mentioned, was asked: “What was done at that time? What was said at that meeting in regard to-what should be done with the money by the company?” The plaintiffs’ objections to the evidence called for by those questions-were sustained, and exceptions taken. The defendants’ counsel then offered to prove “that this money was put in by Lindsey and Cowden upon different terms than that which the other members put money into the association, and that they were to have-the privilege of selling the goods, and drawing their money out in that way.” This was also excluded, upon the plaintiffs’ objection, and exception was taken by the defendants. There is no apparent reason for the exclusion of the evidence, unless it was on-, the assumption that the facts embraced within the questions and offer were covered by the record of proceedings, before referred to, of the board. It may be that in them the terms under which the-money was advanced by Lindsey and Cowden are amply expressed. But it does not necessarily so appear by the offer as made of proof, which was to show in some legitimate manner that the money advanced by them was put into the concern upon terms differing from those upon which other members had put in money and taken certificates of stock. If the relation of Lindsey and Cowden in-respect to the $1,500 was distinguished from that of the other •members who were stockholders, in that the former loaned money to, and were creditors of, the association, although stock was issued to them, that might have been treated as an important fact by the referee, and he might not have found, as he did, that the “mortgage was in fact executed and delivered without consideration, and there existed no indebtedness whatever to said Grant Lindsey for money loaned or otherwise.” This finding may.have been founded on his view, as expressed in the opinion of the referee, that there was “no pretense furnished by the evidence in the case that as to those moneys they occupied any other or different relátion to the association than their associates. In other words, the moneys invested by them were put in as capital stock, and not otherwise.”

It is, however, suggested that, if there was any error in the exclusion of the evidence so offered, it was cured by that given later in the trial by the appellant,—that “this agreement that I executed to him [Grant Lindsey] was given to him to secure the money he paid under the resolution.” In this statement the witness evidently had reference to the record of the proceedings, before mentioned, of the board of directors; and, coming from the appellant, that statement has such force against him as to quite clearly make it appear that the evidence offered and excluded could have added nothing essential to the defense, not embraced in such record of proceedings. For that reason the exclusion of the evidence was harmless to him.

Upon the question of the value of the goods, there was a conflict in the evidence. They were, by schedule, inventoried at $1,528.88. The referee found that such was their value. The defendants gave evidence tending to prove that they were of much less value. A witness called by the plaintiffs’ counsel was asked, “What did Evans say to you in regard to the inventory?” The defendants’ objection to the competency of the evidence was overruled, and exception taken. It may be assumed that it was inadmissible as against the appellant. But, as Evans was a party defendant, appearing and defending, his declarations were admissible as against himself; and therefore the general objection of the defendants did not render the exception, as taken, available to the appellant. The same may be said of another exception in like manner taken to the reception of similar evidence of another witness. The most of the goods had been sold by the appellant when this action was commenced, and the evidence tends to prove that the proceeds of his sales, including the value of the goods unsold, amounted to very much less than the sum at which they were inventoried. The evidence apparently presents a question of very much doubt whether the property had the value so represented by the inventory, but, in view of the conflict in the evidence on the subject, it cannot, on this review, reasonably be held that the value was less than that adopted by the referee upon the facts as found by him, and which had the support of evidence.

No further question requires consideration. The judgment should be affirmed. All concur.