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3. The permit being invalid, the next question which arises is what relief, if any, the plaintiff is entitled to receive in this action. In her complaint she asks that the projection be removed, or for damages. But in the brief submitted upon the trial her attorney states that what the plaintiff desires is a judgment directing the removal of the obstruction. I am of the opinion that she is not entitled to that relief. The plaintiff and her husband reside in the house situated on the north side of Eighty-Second street, on land adjoining the vacant lot which it is claimed has been injured by the projection of defendant's house into the street. It is shown that her husband is in no business, and that he acted for his wife in all business matters, and that he was a frequent visitor to the building which the defendant erected on the land adjoining his wife's lot, and saw the work upon the building going on from the time the foundations were laid until the building was completed. He claims, as I understand his testimony, that he did not know that the defendant was extending the front of his building into the park, but, upon all the evidence, I must hold that he did have such knowledge. It also appears that he never made any objection whatever to the erection nor to such extension of the building, and that it was not until some difficulty had arisen between him and the defendant that this action was brought. Under these circumstances, she is not entitled to a judgment compelling the defendant to remove his building so far as it projects into the street. So far as the question of damages is concerned, it is extremely difficult to determine what damages the plaintiff has suffered. The lot which she claims has been injured is a very small one, of irregular shape; and it appears by the testimony that it was not bought by the plaintiff with the intention of building upon it, but in order to prevent the erection of any building thereon which might be detrimental to the house upon the adjoining lot, on the side street, which the plaintiff owns and occupies. It is therefore extremely problematical whether the plaintiff, or any one taking title from her, will ever put a building upon this lot. If such building should be erected upon the lot, the amount of damage done by the projection of the defendant's building into the park would largely depend upon whether the person erecting the building could obtain from the park board permission to project such building as far into the park as the projection of the defendant's building now extends. If such permission could not be obtained, the injury to such building would be quite serious. If it could be obtained, I cannot see that the projection of the defendant's building would cause any material injury. The testimony as to the damage to the lot in question, considered as a vacant lot, is very conflicting; some witnesses testifying that the damage is very great, and others testifying that it is not damaged at all. After the best consideration that I have been able to give to the matter, I have decided to award judgment in plaintiff's favor for the sum of $2,500, with costs.

Judgment for plaintiff, with costs.

(53 App. Div. 65.)

UNION NAT. BANK OF TROY v. SCOTT.

(Supreme Court, Appellate Division, Third Department. June 28, 1900.) 1. CORPORATIONS-CORPORATE NOTE.

A promissory note made to the order of "ourselves," signed, "H. V. K. Co., A. B., Treasurer," and indorsed by "H. V. K. Co., A. B., Treasurer, Troy, N. Y.," and "C. D., Troy, New York," is on its face a corporate liability, and not that of A. B. and C. D.

2. SAME-ANNUAL REPORT-FAILURE TO FILE-STOCKHOLDERS-STOCK BOOK. Stock Corp. Law (Laws 1892, c. 688) § 29, requires the keeping a book containing a list of the stockholders, the amount of stock held by each, and the time when they became owners, which book shall be presumptive evidence of the facts in any action against the corporation, its officers, directors, or stockholders. Defendant in an action for failure to file an annual report was a director of a corporation which did not keep such book. Held, that defendant might be proved to be a stockholder by other evidence.

3. SAME-PLACE OF STOCKHOLDERS' MEETING.

Stock Corp. Law (Laws 1892, c. 688) § 20, provides that the directors of every stock corporation shall be chosen at the place fixed by the corporate by-laws. Defendant was chosen director of a corporation at a stockholders' meeting held at Troy; the principal office of the company being established at Waterford, under the certificate of incorporation. The by-laws were not in evidence, nor did it appear that any place for the meeting was fixed by them. The company had an office in Troy, and stockholders' meetings were all held there for 12 years. Held, that defendant's election as director was not invalid.

4. SAME-INSPECTOR'S OATH-FAILURE TO FILE.

Under Stock Corp. Law (Laws 1892, c. 688) § 28, requiring the oath of inspectors of election at a stockholders' meeting to be filed in the office of the clerk of the county where the meeting is held, a failure to file such oath will not invalidate the election.

5. SAME LIABILITY OF DE FACTO DIRECTOR.

Where defendant was present at a stockholders' meeting at which he was elected director, and subsequently acted as such, he cannot escape liability to corporate creditors for failure to file an annual report on the ground of the invalidity of his election.

6. SAME-RESIGNATION-WHAT AMOUNTS TO.

Defendant was a director of a corporation whose goods his firm had been selling. Defendant stated to the treasurer and the secretary of the corporation that, if dissatisfied with the way defendant's firm handled the account, they might take it away, in which case defendant "would not have anything more to do with the management, when he wasn't selling the goods." Subsequently defendant signed an annual report, and later made an individual report, stating that he was president and director of the company. Held, that his language did not amount to a resignation of his office as director.

Appeal from trial term, Saratoga county.

Action by the Union National Bank of Troy against Edward W. Scott. From a judgment for plaintiff after trial by the court, defendant appeals. Affirmed on opinion of court below.

The following is the opinion of the court below (EDWARDS, J.): This action is brought against the defendant, as a director of the Hudson Valley Knitting Company, upon the statutory liability for failure to make and file an annual report. The Hudson Valley Knitting Company was incorporated in November, 1877, under chapter 40, Laws 1848, and the acts amendatory thereof. The defendant was one of the signers of the certificate of incorporation, and one of the trustees named therein for the first year. The place 66 N.Y.S.-10

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designated in the certificate in which the operations of the company were to be carried on is Waterford, in the county of Saratoga; and the annual meetings of stockholders for the election of trustees were held at that place until and including the meeting held in February, 1883, and thereafter were held in the city of Troy, in pursuance of a resolution adopted at each previous meeting, except that the minutes do not show any such resolution passed at the meeting held in February, 1892. From 1883 to 1894, except the year 1889, meetings of the trustees were annually held for the election of officers; and such meetings, after 1883, except the one in the year 1888 held in Waterford, were held in the city of Troy. The last meeting of the stockholders was held on February 6, 1894, and the last meeting of the trustees was held on the same day. The defendant attended each of said stockholders' meetings, and at each was elected a trustee, and also attended each of said meetings of trustees for election of officers, and at each was elected president. The particular place of business of the company was in Waterford, where it had an office; and it also had an office in the city of Troy. The company did not file an annual report in 1895 or in 1896. On May 1, 1896, an action was commenced by the people of the state against the company for a dissolution of the corporation on the ground that it had been insolvent for more than a year. On May 4th an order was granted in said action enjoining creditors of the corporation from bringing or prosecuting any action against the company. On October 6, 1896, a judgment was granted dissolving the corporation, and restraining it from exercising any of its corporate powers and franchises, and enjoining all persons from commencing any action or proceeding against the corporation, which judgment was entered in the Saratoga county clerk's office on the 13th day of October, 1896. In December, 1894, the defendant, who was a member of the firm of Scott Bros., commission merchants, in New York, had a conversation with Mr. Dowsley, the secretary, and with Mr. Fales, the treasurer, of the corporation, and the trustees who had principally the management of the business, in respect to the sale by the defendant's firm of the goods of the company on commission, in which conversation the defendant told Messrs. Dowsley and Fales that if they were not satisfied with the manner in which defendant's firm was selling the goods, and the commission charged, they could remove the account to a broker, and in that case the defendant would not have anything more to do with the management of the mill, when he was not selling the goods. Messrs. Dowsley and Fales came to the conclusion that it was better to sell the goods of the mill in some other way than through the defendant's firm, and the arrangement theretofore existing between the mill and defendant's firm then terminated. Thereafter the defendant did not confer with his associates in the business as to the management of the company, nor as to the purchase of goods for the mill, or of machinery, and did not attend any meeting of the board; and no members of the board, except Dowsley and Fales, thereafter had anything to do with the management of the company. In the early part of the year 1895 the defendant signed an annual report of the company, and sent it to Troy or to Waterford, to some of the officers of the company, to be filed, but the same was not filed. On May 18, 1896, the defendant made a certificate and individual report as a director of the corporation, which was verified on that day, and filed on the 19th of May, 1896, in the office of the secretary of state. This certificate of the defendant stated that he was president of and a director of the Hudson Valley Knitting Company; that he had endeavored to have the annual report of the company made and filed as required by law; that such report was prepared and signed and acknowledged by him pursuant to law, and sent by him to the secretary to be filed, but that the secretary had neglected and refused to file such report. The verification made by the defendant stated that he was the president and director of the Hudson Valley Knitting Company. No certificate and individual report was filed by the defendant in the year 1895. On October 10, 1895, the company made its promissory note, of which the following is a copy:

"$5,000. Troy, N. Y., October 10th, 1895. "Four months after date, we promise to pay to the order of ourselves five thousand dollars, at the National Bank of Troy, for value received.

"Hudson Valley Knitting Co.,

"F. A. Fales, Treas."

This note was indorsed as follows: "Hudson Valley Knitting Co., F. A. Fales, Treas., Troy, N. Y. K. B. Dowsley, Troy, N. Y. F. A. Fales, Troy, N. Y.,"-and, so indorsed, was delivered to the plaintiff, who on the day of its date discounted the same for the Hudson Valley Knitting Company, and the proceeds thereof were paid over to the said company, and by it deposited to its credit in the National Bank of Troy, where the said company kept its account. At the time of the making of this note, F. A. Fales was, and during the existence of the corporation continued to be, the treasurer of the Hudson Valley Knitting Company, and had charge of its financial and banking matters. This note was renewed from time to time by notes of the said company similarly made and indorsed, the last of which, dated April 3, 1896, for $4,900 ($100 having been paid on the principal), reads as follows:

"$4,900. Troy, N. Y., April 3rd, 1896. "One month after date, we promise to pay to the order of ourselves forty-nine hundred dollars, at the National Bank of Troy, for value received. "Hudson Valley Knitting Co.,

"F. A. Fales, Treas."

This note was indorsed: "Hudson Valley Knitting Co., F. A. Fales, Treas. F. A. Fales, K. B. Dowsley,"-and was on its date delivered to the plaintiff, who is now the owner of the same; and no part thereof has been paid, except $572.71 paid by the receiver of the Hudson Valley Knitting Company on July 29, 1898. To recover the amount due on this last note given in renewal of the indebtedness of the Hudson Valley Knitting Company to the plaintiff, contracted on October 10, 1895, during which year no report was filed, this action has been brought. The alleged liability of the defendant arises by virtue of the provisions of section 30 of the stock corporation law (Laws 1892, c. 688), which require a stock corporation to make and file in the office of the secretary of state, and in the office of the county clerk of the county where its principal business office may be located, an annual report, and provides that, "if such report is not so made and filed, all the directors of the corporation shall jointly and severally be personally liable for all the debts of the corporation then existing, and for all contracted before such report shall be made." It is well settled that this statute is a highly penal one, and that, to establish a liability created by it, every fact upon which the right to recover against a director depends must be affirmatively proven. Whitney v. Cammann, 137 N. Y. 344, 33 N. E. 305. It is in the light of this principle that the questions presented in this case should be considered and determined. The right to maintain the action depends upon the existence of three facts: The failure to make and file a report, a debt against the corporation, and the directorship of the defendant at the time of the default. Shaler v. Bliss, 27 N. Y. 297; Duckworth v. Roach, 81 N. Y. 49; Gold v. Clyne, 134 N. Y. 262, 31 N. E. 980. The failure to file reports in 1895 and 1896 is conceded. The indebtedness and directorship are controverted. This brings us to the consideration of the question whether a valid indebtedness then existed against the corporation in favor of the plaintiff. If a debt exists against the corporation, to which it has no good defense at law or in equity, the statutory liability of the defendant attaches. Arms Co. v. Barlow, 63 N. Y. 62. The alleged indebtedness arose out of the discounting by the plaintiff for the corporation of the note dated October 10, 1895, for $5,000, which was renewed from time to time, and in renewal of which, except $100 paid on the principal, the note of April 3, 1896, for $4,900, was given. It is maintained by the defendant that these notes were, upon their face, not the notes of the Hudson Valley Knitting Company, but the individual notes of Fales and of Dowsley; but I think it is well settled by the authorities that they are the notes of the corporation. They are signed in the name of the corporation, by F. A. Fales, the treasurer, who had authority to make them. Furthermore, the original note was given to the plaintiff in consideration of the proceeds of the same received by the defendant, which were placed to its credit in its account with the National Bank of Troy. It is too clear for discussion that this transaction of the 10th of October, 1895, constituted an indebtedness of the Hudson Valley Knitting Company to the plaintiff, and in an action brought by the plaintiff against that company on the renewal note of April 3, 1896, the company would have no defense whatever. The indebt

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edness existed when the corporation was in default for not filing its report for 1895.

The defendant further maintains that the proof fails to show that he was a director of the Hudson Valley Knitting Company at the time of the failure to file the annual report. One of the grounds for this contention is that it was essential to his election as a director in February, 1894, that he was then a stockholder, and that the only evidence of who are stockholders of a corporation is the stock book provided for by section 29 of the stock-corporation law, which book was not produced in evidence. That section requires that every stock corporation shall keep a book, to be known as the "Stock Book," "containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof and the amount paid thereon." It further provides that such book "shall be presumptive evidence of the facts therein so stated in favor of the plaintiff in any action or proceeding against such corporation, or any of its officers, directors or stockholders." While this statute makes the stock book "presumptive evidence" of who are stockholders in an action against any of its directors, it does not make it the only evidence. The Hudson Valley Knitting Company did not keep the stock book required by this statute, and the neglect to keep such a book cannot exclude common-law evidence of who are stockholders. In this case it was clearly proved by competent commonlaw evidence that the defendant was a stockholder.

It is also contended by the defendant that his election as a director in February, 1894, was void, for the reason that the meeting of the stockholders for the election of trustees was held in Troy, and not at Waterford, and for the further reason that the inspectors of election did not file their oath of office in Rensselaer county. Section 20 of the stock corporation law provides that "the directors of every stock corporation shall be chosen from the stockholders at the time and place fixed by the by-laws of the corporation." There is no other statute prescribing the place of meeting of stockholders. The bylaws are not in evidence, and it does not appear that Troy is not the place fixed by the by-laws. It does appear that the company had an office in Troy, and that all of the meetings of the stockholders for the election of directors after 1883 were held there. The statute requiring the oath of inspectors to be filed in the office of the clerk of the county in which the election is held (section 28, Stock Corp. Law) is directory only, and the failure to file it does not invalidate the election. In re Directors of Mohawk & H. R. R. Co., 19 Wend. 135. Furthermore, the defendant cannot avail himself of irregularities in his election as a director at the stockholders' meeting in February, 1894, for the reason that he was at least a de facto director. He was present at the stockholders' meeting in February, 1894, and also at the meeting of the trustees held thereafter on the same day for election of officers, accepted the office, and thereafter exercised the duties of a director. Having accepted the office and exercised its duties, he cannot escape its responsibilities. He was a director to whom the liability created by the statute attaches. Donnelly v. Pancoast, 15 App. Div. 323, 44 N. Y. Supp. 104. "The rule of law is well established that he who enters upon an office and exercises all its functions is responsible for his acts therein, to the same extent as though he of right occupied the position." Id.

It is strenuously urged by the defendant that if he were legally elected a director in February, 1894, his declaration made to Messrs. Dowsley and Fales in the following December, and his nonparticipation with them thereafter in the active management of the business of the company, amounted to a resignation, so that on October 10, 1895, when the indebtedness of the corporation to the plaintiff was contracted, the defendant had ceased to be a director of the company. I do not think his language susceptible of such a construction. He testifies that he said to them, "I should not have anything more to do with the management of the mill, when I wasn't selling the goods." Whether this language has reference to his directorship, or to his assisting the manager as he had theretofore done, is not certain; but, if it refers to the former, it cannot be construed, especially in the light of his subsequent acts and conduct, as anything more than a threat to resign in case the goods of the concern should