Bauer v. Parker

O’Brien, !, (dissenting) :

I agree in the. view that this action is maintainable in equity, but do not assent to the grounds upon which it is proposed to reverse the judgment. '

The first of these is that the receiver should have been made a party. In Bauer v. Platt (72 Hun, 332), wherein a demurrer to a complaint was interposed by a director, it was said: “How, applying these rules, we find first, that the corporation has no rights to be ascertained and settled before the rights of the parties to the suit can be determined. The liability of the directors is not created for the benefit of the corporation, but rather for that of its creditors. It is not an asset of the corporation and cannot be enforced by it, nor by a receiver of its assets, appointed in an action for a dissolution of the corporation. The liability is to the creditors and they alone can compel its payment.”

The demurrer in that case also brought' up the. question as t.o whether a director had an interest in having the corporation made a party for the purpose of showing how much its assets could pay on the claim of the plaintiff and others similarly'situated, and it was *305therein held that the point was not well taken because it did not appear upon the face of the complaint that the corporation had assets which could be applied in payment of its creditors. Here the proof is that on the 17th day of January, 1896, after five years of administration of the assets by the receiver, there was due general depositors and in payment of other claims $500,000, to meet which there was then in the hands of the said receiver the sum of $74,217.27. Whether, therefore, it rested with the plaintiff or with the defendants to prove that there was a sufficiency or an insufficiency of assets, I think the facts justified the inference that they were insufficient and hence that this ground for reversing the judgment is untenable.

It is further suggested that the record does not show that the three directors who were, omitted as parties defendant could not be served. As I read it, however, it does appear that they were non-residents, and that although some of them had an office in this State for the transaction of business, the effort to serve them with process therein was unsuccessful. I do not understand that, having made an honest effort to serve these directors, the plaintiff was prevented from ever bringing his action if he could never serve them. There being proof, therefore, that an earnest effort was made to serve them, which was ineffectual, the plaintiff, I think, had the right to proceed with the action without those directors as parties defendant.

The most serious ground, in my opinion, relied upon for reversing the judgment, is the release of one of the directors, Mr. Merrill, who was originally joined and who, upon the payment of $1,500, obtained a release and was subsequently, on motion, stricken out of the action as a party defendant. I think, however, that to the suggestion that this release freed all the other defendants, there is an answer. If we regard the liability as several, then clearly the release of one of the defendants would not discharge the others. If, on the other hand, we regard it as joint, then section 1942 of the Code of Civil Procedure applies, which provides that a joint debtor may make a separate composition with his creditor * * *. Such a composition discharges the debtor making it, and him only.” And that section, with respect to the construction to be placed upon a *306release or composition,, further provides: An instrument specified" in this section does not impair the creditor’s right of action against any other joint debtor, or his right to take any proceeding against the latter, unless an intent to release or exonerate him .appears affirmatively upon the face thereof.” -

These are the grounds, as I read the opinion of Mr. Justice Ingraham, upon which it is proposed to reverse the judgment, and-as I cannot concur in his reasoning, 1 dissent from such reversal. It is proper, however, to say that I have examined the other "points presented by the appellant, but it appears to me that the strongest grounds are those which are discussed by Mr. Justice Ingraham in his opinion, and that I regard neither them nor the others as tenable, and think that the judgment should be affirmed, with costs. "

Judgment reversed, new trial ordered, costs to appellants to abide event.