Camp Manufacturing Co. v. Reamer

Patterson, J.: This action was brought to recover from, the defendants, directors of a domestic corporation, the amount of an indebtedness of that corporation to the plaintiff, the alleged ground of liability of the defendants being that the directors of the corporation had failed to make and file a report as required by section 30 of the Stock Corporation Law (Chap. 688, Laws of 1892). There is no allegation in the complaint of the recovery of a judgment against the principal debtor and the return of an execution unsatisfied, and a demurrer was interposed to the complaint on the ground that it did not contain facts sufficient to constitute a cause of action for the want of such an allegation. The learned judge below sustained the demurrer and held that the obligation of the directors as imposed by section 30 of the act referred to was a secondary liability and was in analogy • with that imposed upon directors by the 24th section of the same law, and that within the decision of the Court of Appeals in the case of The National Bank of Auburn v. Dillingham (147 N. Y. 603), it was necessary for the plaintiff to exhaust its remedy at. law against the principal debtor before resort could be had to the directors individually. The precise question involved, in this appeal, which is from the judgment sustaining the demurrer, was disposed of by the Appellate Division of the Supreme Court in the case of Rose v. Chadwick (9 App. Div. 311). It was there held that it was not necessary in an action under the 30th section of the Stock Corporation Law for the plaintiff to proceed against the principal debtor before resorting to his remedy against the directors. It was also declared that [410] the case of The National Bank of Auburn v. Dillingham (supra) was not in point in the consideration of this question. The casé of Rose v. Chadwick (supra) is conclusive of the qiiestion, and the authorities cited in the opinion of the court in that case abundantly establish the correctness of the decision. The interlocutory judgment sustaining the demurrer must be reversed and judgment directed overruling the demurrer, with costs, with liberty to the defendant to withdraw the demurrer and answer over within twenty days upon the payment of the costs below and in this court. Yak Brunt, P. J., Barrett, Rumset and Williams, JJ., concurred. ' Judgment reversed, and judgment directed overruling the demurrer, with costs, with leave to defendant to withdraw demurrer and answer over within twenty days on. payment of costs in the court below and in this court.