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and 106 New York State Reporter

In commenting upon this discussion in the case of Hurd v. Laundry Co., 167 N. Y. 89, 96, 60 N. E. 327, 329, which case presents many parallels to the one at bar, the court say:

"The only difference between the transferee in that case and in this is that there it gave up nothing except its promise to pay the indebtedness of the transferror, and here it gave up stock, not to the transferror, but to an individual stockholder, who did not undertake to pay the corporate debts. Neither became a purchaser for value under such circumstances."

In the case at bar the Aeolian Company gave nothing to the transferror. It gave its stock to the individual stockholders of the Orguinette Company, who did not undertake to pay the debts of the corporation, and the transfer, if sanctioned, operates to deprive the creditors of the Orguinette Company of their equitable lien upon the property of the corporation. It results in a fraud upon the creditors of the Orguinette Company; and the Aeolian Company, made up for the most part of the officers of the Orguinette Company, cannot be said to have been purchasers for value, or in good faith, under the circumstances here disclosed. In the Hurd Case, supra, the court, in commenting on the case of Holmes & Griggs Mfg. Co. v. Holmes & Wessell Metal Co., 127 N. Y. 252, 27 N. E. 831, 24 Am. St. Rep. 448, say:.

"The statement in the opinion in that case to the effect that a corporation has power, with the consent of all of its stockholders, to sell its plant to another corporation, and to retire from business, taking payment in the stock of the other corporation, was entirely correct, as qualified by the facts before the court. No rights of creditors intervened. The stockholders had all consented, and the question arose between the parties to a promissory note given for some of the stock. Here we have an entirely different condition of things. The stockholders consent, but the creditor objects. When he demands payment of his claim, he is referred to the empty shell, which is all that is left of the live corporation whose tangible assets constituted a trust fund for the payment of his debt at the time of its creation."

This is the situation in which the plaintiff in this action was placed, and the judgment of the court below seems to be in entire harmony with that in the Hurd Case, except that it does not appear from the opinion that the defendant was called upon to account for more than enough to meet the demands of the creditor, no evidence of other debts being shown to be outstanding against the company whose property was taken. In the case at bar the evidence is reasonably conclusive that there are no other creditors than the plaintiff, and all of the requirements of justice would be met by a modification of the judgment in such form as to secure to the plaintiff the amount of her claim, with interest and the costs, leaving the transfer, in so far as it concerns only the stockholders, in the position in which they had a legal right to make it. The stockholders, saving the rights of creditors, had a perfect right to make the transfer in the manner in which it was made; and, when the rights of this plaintiff have been secured, there would appear to be no good reason why the defendant corporation should be put to any further trouble or expense, particularly as there appear to be persons interested in the welfare of the corporation who were not in any manner involved in the fraud upon the plaintiff's testator.

The appellant urges, however, that, even if there is an equitable right to follow the assets of the Orguinette Company into the hands of the defendants, there is still a complete bar to the recovery in this case on general equitable principles, and that this bar rests upon the grounds of laches, acquiescence, and equitable estoppel. We have examined these propositions with care, and we are unable to discover that they have any application to the case at bar. Henry Wilson, it will be remembered, entered into a written agreement, by which he was to have an income of 3 per cent. upon the gross wholesale price of all of the goods put upon the market by the Mechanical Orguinette Company, in consideration of his grant of a license to the corporation to make use of his patent rights in the manufacture of such instruments. The defendants claim that no payments under this contract were made to Henry Wilson subsequent to 1884, and that there was no liability existing to Henry Wilson upon the transfer of the assets of the Orguinette Company to the Aeolian Company in 1887, or that, if any such liability existed, it was wholly undisclosed and unknown to the stockholders of the Automatic Music Paper Company, who surrendered their stock in that company in exchange for stock in the Aeolian Company, etc.; and that Henry Wilson, by his laches and by the acquiescence of himself and his representatives in the transfer to the new company, waived and lost any rights which he may have had as against the Mechanical Orguinette. Company, so far as concerns the assets transferred to the Aeolian Company; and that the latter company stands in the position, on behalf of its stockholders, of a bona fide purchaser for value, without notice; and that plaintiff is estopped from asserting any claim. as against such stockholders and as against such corporation at this late day. The answer to these suggestions is that the plaintiff, in an action against the Mechanical Orguinette Company, has been given a judgment for $25,389.99, and this judgment, so long as it stands unreversed and in full force, must be deemed to have disposed of all of the questions which were litigated in that action. Pray v. Hegeman, 98 N. Y. 351, 359. The judgment conclusively establishes the legal right of the plaintiff, and this judgment was entered in 1899. It shows that the Orguinette Company was, at the time of the transfer of the property to the Aeolian Company, indebted to Henry Wilson in the sum of $25,389.99, and the fact that some of the individual stockholders of the latter company did not know of this fact cannot afford a defense to the distinct legal entity, whose executive officers are for the most part the same individuals who were, and who still are, the executive officers of the Mechanical Orguinette Company. The Aeolian Company must be charged with the knowledge of its executive officers; and the very men who made the contract with Henry Wilson, as the executive officers of the Mechanical Orguinette Company, are the men who are to-day urging that the plaintiff is equitably estopped from asserting rights under her judgment, because some individuals may not have had full knowledge of all the facts, and because it is not disclosed by the evidence that her testator gave notice of his rights to a corporation which was in just as good a position to know the facts as he was at the time of the trans

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fer. Plaintiff's testator had entered into an agreement under seal, in which his rights were fully defined. He was not bound to go around inquiring into the affairs of the corporation, nor was he called upon to take any action to prevent a consolidation of the corporation with which he had contracted. He had a right to rely upon his contract, and to assume that the defendants would not act unlawfully to deprive him of his rights; and the corporation having taken the responsibility of stripping the Mechanical Orguinette Company of its property, which, under the laws of this state is held in trust for the payment of the corporate debts (Hurd v. Laundry Co., 167 N. Y. 89, 95, 60 N. E. 327, and authorities there cited), it cannot be heard to say that the plaintiff has lost the right to follow this property into the hands of the corporation, which has had the benefit of the transfer, and to demand the payment of the amount which has been judicially determined to have been due to her testator at the time of the consolidation of the companies, at which time the contract came to an end. The Aeolian Company, as a distinct legal entity, having knowledge of all the facts, cannot gain a standing in a court of equity because of the fact that it may not have disclosed the truth to all of the parties who have been brought into the corporation; and if individuals suffer by reason of the judgment in this action it is due, not to the plaintiff or her testator, but to the failure on the part of the executive officers of the company to disclose the facts, which were peculiarly within their knowledge, and which they were in duty bound to make known to those whose money and property they were bringing into the new corporation. These officers were occupying a fiduciary relation, not alone to the stockholders of the Mechanical Orguinette Company, but to the proposed stockholders of the corporation to which they were elected as the executive officers, and the plaintiff is not to be deprived of her property because of the manner in which the defendant's officers discharged or failed to discharge their duty to the innocent stockholders, whose rights the company now attempts to assert as a shield to itself.

The judgment appealed from should be modified as suggested above, and, as so modified, should be affirmed, with costs. The order amending the pleadings does not seem to be very material, and the modification of the judgment, in effect conforming it to the original pleadings, sufficiently disposes of that question. All concur.

DUFF v. GALLO et al.

(Supreme Court, Appellate Division, Second Department. October 4, 1901.) PARTIES-NONJOINDER-JUDgment.

Where, in a suit to recover for work done on certain premises, it is established that the property was owned and leased by parties not joined in the action, and a nonjoinder of defendants is pleaded, it is proper to enter judgment for defendant without prejudice to plaintiff in bringing a new action.

Hirschberg, J., dissenting.

Appeal from municipal court, borough of Brooklyn.

Action by William A. F. Duff against Severio Gallo, impleaded with another. From a judgment in favor of defendant Severio Gallo, plaintiff appeals. Affirmed.

Argued before GOODRICH, P. J., and WOODWARD, HIRSCHBERG, JENKS, and SEWELL, JJ.

Corn & Lazansky, for appellant.
O'Hare & Dinnean, for respondent.

WOODWARD, J. After reading the evidence in the light of the plaintiff's brief, we are of opinion that it does not support the cause of action alleged, and that the judgment in favor of the defendant, without prejudice to the plaintiff in bringing a new action, should be affirmed. The defendant Gallo was not shown to have had any interest in the premises where the work was done by the plaintiff's assignor, and the evidence in support of the alleged agency or partnership of Figundio is by no means so convincing as to warrant this court in holding that the decision of the court below that the plaintiff had failed to prove his cause of action was not justified at the close of the case. The documentary evidence establishes that the property was owned and leased by parties who were not brought into the action, and the amendment of the pleadings in accordance with the proved facts, pleading a nonjoinder of parties defendant, made the disposition of the case in the manner of the court below entirely proper.

The judgment appealed from should be affirmed, with costs. All concur, except HIRSCHBERG, J., who dissents.

(35 Misc. Rep. 601.)

In re MEAGHER, Commissioner of Public Works.

(Supreme Court, Special Term, Onondaga County. July, 1901.) CONDEMNATION-PUBLIC USE-NECESSITY.

Under Code Civ. Proc. § 3360, subd. 3, and section 3369, requiring a petition in condemnation to allege the public use for which the property is required, and to contain a concise statement of the facts showing the necessity of the condemnation, allegations in the complaint to condemn land for a city park, that the property is required for park purposes, and that the people in that section of the city are desirous that the property should be so condemned, are insufficient, even where no answer has been interposed, for failing to state the situation in the neighborhood, the extent of the population, and such other acts as bear on the necessity of its use for such purpose.

In the matter of the application of James H. Meagher, commissioner of public works of the city of Syracuse, for the condemnation of certain real estate for the purposes of a public park. Order for amendment of petition.

M. Z. Haven, Corp. Counsel, for petitioner.

William F. Rafferty, for Matilda D. Wells and others, owners.

HISCOCK, J. This is an application in behalf of the petitioner, acting for the city of Syracuse, for a judgment providing for the con

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demnation of certain real estate in the city of Syracuse for the purpose of a public park, and for the appointment of commissioners, etc. No defense or answer has been interposed by the owners of the property, Matilda D. and J. Emmet Wells, or other opposition made to the granting of the application. The statute (Code Civ. Proc. § 3369) provides that, under such circumstances, if "it appears from the petition" that the petitioner is entitled to the relief demanded, judgment shall be entered adjudging that the condemnation of the real property described is necessary for the public use, etc. The statute further provides (Id. § 3360, subd. 3) that the petition to be presented upon such an application shall set out the "public use for which the property is required, and a concise statement of the facts showing the necessity of its acquisition for such use." The petition presented in this case does not, in my opinion, set out sufficient facts to authorize the court to give the judgment asked for. The only allegation upon this subject is: "The public use for which the property is required is for public park purposes. That the people in that section of the city are desirous of a place to beautify their section and a place for recreation." In my judgment, further facts than this should be set forth in the petition, showing the situation of the neighborhood in which the land sought to be condemned is situated, the extent of the population there, the fact, if it so be, that there is no other sufficient or proper place for the necessary and proper recreation and enjoyment of the people living in that section, and such other facts as may bear upon the necessity of the use of this land for public purposes; for that is the test which the statute applies.

In accordance with these views, an amended petition may be filed, setting out further and additional facts, as required by the statute, or, if preferred by the parties, this court will appoint a referee to take evidence and report upon the subject.

Ordered accordingly.

(64 App. Div. 382.)

MacEVITT v. MAASS.

(Supreme Court, Appellate Division, Second Department. October 4, 1901.) 1. PHYSICIANS AND SURGEONS-ACTION FOR COMPENSATION-QUESTION FOR JURY. A surgeon agreed with defendant to perform an operation, which was not dangerous, for the wife of the latter, for $75, but on a future examination he found that an entirely different and more difficult and dangerous operation was required. He disclosed such facts to defendant, but nothing was said about a change in the agreed compensation. Held, that the question whether the plaintiff superseded the original agreement as to compensation, based on the first examination, was properly submitted to the jury.

2. OPINION EVIDENCE.

Two physicians, who attended on an operation on defendant's wife, and one of whom was present at the plaintiff's subsequent visits, may give their opinions as experts as to the value of the services rendered in an action for compensation.

8. PHYSICIANS AND SURGEONS-ACTION FOR COMPENSATION-EVIDEnce—Suffi

CIENCY.

A surgeon agreed with defendant to perform an operation, which was not dangerous, for the wife of the latter, for $75, but on a future exam

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