Rutter v. . Kilpatrick

Allen, J. It may be conceded that the appellant and his assignors, by subscribing to the building stock authorized to be created by the act incorporating “ The East Side Association of the city of New York” (Laws of 1868, chap. 762), and paying into the corporation the amount subscribed, became stockholders in the corporation and entitled to all the rights of stockholders, to vote at all elections and to share in the income derived from the building for which the stock was created. The relation was established by the subscription and payment, and did not depend upon the issue of a certificate or other evidence of such right by the corporation. (Thorp v. Woodhull, 1 Sandf. Ch., 411; Spear v. Crawford, 14 Wend., 20, per Johnson, J.; B and N. Y. City R. R. Co. v. Dudley, 14 N. Y., 347.) Those rights — that is, those that grow out of the relation of a holder of the building stock and can be claimed as such — are declared and regulated by section 4 of the act quoted supra. But the lien now asserted and sought to be enforced as prior and paramount to that of plaintiff’s mortgagees, does not necessarily flow from the relation of a stockholder, but is a statutory lien, special in its character, and whatever may be the rights of individuals as against the corporation, can only exist and be enforced against bona fide lienors and incumbrancers of the corporate property, when it has been perfected in the method and evidenced by the instrument prescribed by the act. *607 The act (section 5) declares that the shares for which certificates shall be issued, signed by the president and secretary and countersigned by the treasurer, shall, from the date thereof, be a lien and charge upon the real and personal property of the corporation. The property of the corporation may be incumbered, for the benefit of the stockholders, by the method prescribed, but in no other way, and the direction as to the form of the certificates and the declaration as to the time at which they shall operate as a lien upon property, necessarily excludes the presumption of an intention to confer the rights of alienor by any acts short of those mentioned. It is not improbable that the corporation omitted to issue certificates for the “ building stock,” and the subscribers fore-bore to ask for them, that the corporation might be enabled to borrow money upon a mortgage, as they did, upon the credit of the mortgage to the plaintiffs as trustees. It is enough, however, that the statute declares that the lien shall only take effect from the date of the certificates, and the mortgage of the plaintiffs’ was prior to the issue of any certificates to the defendant and his assignors. It does not appear that certificates have been issued at all. The judgment must be affirmed. All concur. Judgment affirmed.