App. Div.]

FOURTH DEPARTMENT, APRIL TERM, 1901.

for the sequestration of the property and it flows from offenses arising out of the management of the trusteeship. The statute prescribes the requirements for the trustees, and the liability ensues because of the omission to meet them, and the creditor injured ought not to be compelled to resort to one action in the endeavor to reach the property of the corporation, to another to obtain judgment against the trustees for failure to pay for the stock subscribed for by them, and still another to make them personally liable because they made and caused to be filed a false certificate of the payment of the capital stock. It is contended that the liability arising from the failure to file the certificate is in the nature of a statutory punishment. The obligation is that the trustee is made liable to pay the debts for this omission, and however characterized it is misconduct in the affairs of the corporation for which a personal liability is permitted.

The Code provides a scheme by action for the dissolution of 2 corporation and "to enforce the individual liability of the officers or members" thereof. (S$ 1784-1796.) Section 1784 authorizes the action for the judgment of sequestration against the property of the corporation. Section 1790 provides that where the trustees, etc., "are made liable by law, in any event or contingency, for the payment" of the debt of the creditor, "the persons so made liable may be made parties defendant," and their liability may be "declared and enforced by the judgment in the action." Section 1791 authorizes a separate action against these stockholders or officers in case they are not made parties to the action against the corporation. Section 1792 provides for an account to be taken in either of the foregoing actions, and for the ascertainment and determination "of each defendant's liability." These provisions make it clear that the stockholders and trustees can be made parties defendant in the original action of sequestration if a personal liability is claimed to exist against them.

This construction is sustained by authority. (Cummings v. American Gear & Spring Co., 87 Hun, 598; Proctor v. Sidney Sash & Furniture Co., 8 App. Div. 42; Matter of Murray Hill Bank, 153 N. Y. 199, 210; Beals v. Buffalo Construction Co., 49 App. Div. 589, 592.)

It is contended with much plausibility that no cause of action is set

FOURTH DEPARTMENT, APRIL TERM, 1901.

[Vol. 61. out in the 5th paragraph of the complaint; that the alleged false certificate was executed May 2, 1891, verified and filed in October of that year, which was subsequent to the indebtedness of the plaintiff. The plaintiff avers that the defendant corporation "incurred an indebtedness before May 1st, 1891, of upwards of $250,000, to which indebtedness each of the said trustees assented. That a part of the said indebtedness was that for which the plaintiffs' judgments herein were recovered." If this is correct then no faith could have been given to this false report by the plaintiff and no liability would arise because of its falsity. (Torbett v. Godwin, 62 Hun, 407; Young v. Godwin, 46 N. Y. St. Repr. 934.) The counsel for the plaintiff urges that he is strictly within the language of the statute. Section 15, chapter 40 of the Laws of 1848 is as follows: "If any certificate or report made, or public notice given, by the officers of any such company, in pursuance of the provisions of this act, shall be false in any material representation, all the officers who shall have signed the same knowing it to be false shall be jointly and severally liable for all the debts of the company contracted while they are stockholders or officers thereof."

This section was repealed by chapter 564 of the Laws of 1890, which took effect May 1, 1891, and which is part of the Stock Corporation Law. That contains substantially the same provisions as above cited. (§ 31.) This act was amended by chapter 688 of the Laws of 1892, and which provides (§ 31) that there shall be no liability for a false report unless the creditors sustain damages relying upon the credit thereof. While the plaintiff brings himself within the strict language of the act of 1848, as the parties making the certificate were stockholders and officers at the time this debt of the plaintiff was incurred, yet retroactive scope cannot be given to the act. The object of making and filing a certificate or report is to give notice to those dealing with or giving credit to the corporation. If such persons are deceived or may be deceived by the false report a liability attaches for the offense of the officers in making and filing it. If, however, the debt was incurred before the misconduct of the officers then no damage accrued to the creditor by reason of the vicious conduct in making the false report. No reliance, therefore, could have been placed upon it, and no liability would inure to such a creditor.

App. Div.]

FOURTH DEPARTMENT, APRIL TERM, 1901.

But the complaint further says: "That by force of the statute under which said Fonda Lake & Port Leyden Paper Company was incorporated, all of the said trustees signing such false certificate became jointly and severally liable for all the debts of the said company, contracted while they were stockholders or officers thereof, and the indebtedness for which plaintiffs' judgments were received was incurred while said defendants were trustees and stockholders." Under this general allegation proof is permissible that the indebtedness of the plaintiffs or some of them was incurred subsequent to the making of this alleged false certificate. That being so, the cause of action is not demurrable, and if plaintiff can give proof that the debt accrued subsequent to the filing of the report, then he brings himself within the provisions of the statute. If, however, the debt was incurred prior to that time, the defendant can fully protect himself by objection and exception if necessary. It is not within the province of the court on demurrer to hamper or restrict the plaintiff in his proof if within the four corners of his pleading it can be given at all.

The interlocutory judgment should be affirmed, with costs and disbursements to the respondents, with leave to withdraw demurrer and answer on payment of costs.

All concurred.

Interlocutory judgment affirmed, with costs to respondents, with leave to defendant to withdraw the demurrer and answer upon payment of the costs.

MARY C. DONLON, Appellant, v. LAURA M. KIMBALL and Others.

Respondents.

Complaint form of, in an action to establish a lost codicil.

The complaint in an action brought under sections 1861-1867 of the Code of Civil Procedure to establish a lost codicil aileged to contain the following provisions: "I give and bequeath to my friend and former servant, Mary C. Donlon (the plaintiff), unless I shall have settled such sum on her in my lifetime, one hundred thousand dollars," need not show affirmatively that the sum bequeathed was not settled upon the plaintiff during the life of the testator; the fact that

FOURTH DEPARTMENT, APRIL TERM, 1901.

[Vol. 61.

upon the face of the codicil the plaintiff has a probable interest in its establishment, is sufficient to entitle her to maintain the action.

Such a complaint need not negative subdivision 1 of section 1861 of the Code of Civil Procedure which provides that the codicil in question must have been lost or destroyed before it was duly proved and recorded within the State."

APPEAL by the plaintiff, Mary C. Donlon, from an interlocutory judgment of the Supreme Court in favor of the defendants, entered. in the office of the clerk of the county of Monroe on the 2d day of January, 1901, upon the decision of the court, rendered after a trial at the Monroe Special Term, sustaining a demurrer to the complaint upon the ground that it does not state facts sufficient to constitute a cause of action.

John D. Teller, for the appellant.

William F. Cogswell and Walter S. Hubbell, for the respondents. SPRING, J.:

This action was commenced May 17, 1899, to establish a lost codicil to the will of William J. Kimball, deceased. The complaint, after setting forth the death of Kimball in 1895 while a resident of Monroe county, N. Y., and the admission to probate of his last will and testament dated October 19, 1889, alleges that he published a codicil to said will about November 1, 1892, which relates to personal estate "by which he gave and bequeathed to plaintiff a legacy of one hundred thousand dollars, as by said codicil, a substantial copy of which is hereto annexed and marked Schedule 'A' will more fully appear."

The said codicil contains the following provisions: "I give and bequeath to my friend and former servant, Mary C. Donlon, unless I shall have settled such sum on her in my lifetime, one hundred thousand dollars, to her and for her assigns forever, as follows: In six months from and after my death I authorize and direct my executors to pay unto the said Mary C. Donlon fifty thousand dollars in preferred stock of the American Tobacco Company at its par value, and I direct my executors to pay the said Mary C. Donion the remaining fifty thousand dollars as soon as they conveniently can after my death." There are further provisions which it is unnecessary to consider here.

App. Div.]

FOURTH DEPARTMENT, APRIL TERM, 1901.

The complaint also avers the due execution and publication of the said codicil, the competency and freedom from restraint of the testator, that the codicil was in existence at the time of his death, "but has been lost since that time either by accident or design," and further “that until said codicil is admitted to probate plaintiff will be unable to recover the legacy therein provided for.”

The authority for an action to establish a lost will is found in the Code of Civil Procedure, sections 1861-1867. Section 1861 provides that such an action "may be maintained by any person interested in the establishment thereof " where such will "has been lost or destroyed by accident or design."

The contention of the demurrants is that the complaint must show affirmatively that the sum bequeathed was not settled upon the plaintiff during the lifetime of the testator. We cannot agree to this proposition. If upon the face of the codicil propounded the plaintiff has a probable interest in its establishment, that should be sufficient to enable her to maintain the action. The primary purpose of the action is to secure a judgment establishing the will and the construction of its provisions, and the effect to be given to them ought not to be the subject of litigation in that preliminary action. If there have been advances made which amount to a payment of the legacy, or if by extrinsic proof its validity or amount can be attacked for any reason, it may well be held that the questions thus involved should await the determination of the original action and there will then be parties authorized to act if the will is established. In any event the plaintiff in the first instance should not be called on to anticipate an attack upon her legacy.

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The necessity of an interest is essential in every action or proceeding to authorize the party instituting it to maintain it. In proceedings for the probate of a will a petition must be presented by a person interested in the estate." (Code Civ. Proc. § 2614.) Redfield, in his Law and Practice of Surrogates' Courts (5th ed.) at page 125, in considering the effect of this term, says: "Doubtless, under the language of the present, as under that of the former statute, the rule obtains that any interest or the bare possibility of interest is sufficient to entitle one to be a party to the proceeding." (Matter of Greeley's Will, 15 Abb. Pr. [N. S.] 393.)

APP. DIV.-VOL. LXI. 3