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McIntyre agt. Strong.

poration certain premises in the city of New York, for the term of five years and four months from date, and the corporation entered into possession thereof. The defendant pleaded 1st, surrender; 2d, that he was not a stockholder when the liability was assumed; and 3d, that under section 7 of the statute he is not liable.

First. It must be admitted that upon the printed case submitted to the court, defendant made a strong case of surrender. The impecunious condition of the corporation, the conversation as stated by the president and corroborated by the secretary of said corporation, the delivery of the key, the letter of the 18th of August, 1877, in which the alleged agreement to surrender made in said conversation is stated, and to which plaintiff never replied, tended to prove this. On the other hand, the corporation remained in possession after the delivery of the key, and plaintiff denied making the agreement to cancel the lease. This presented a sharp conflict of evidence, which was submitted to the jury by the learned judge who tried the cause, and whose charge was lucid and comprehensive, and not excepted to. The jury having the advantage of seeing the witnesses, decided for plaintiff, and we do not deem that there was such a weight of evidence in favor of defendant as would warrant a reversal on that ground (Westerlo agt. De Witt, 36 N. Y., 340; Crane agt. Randonine, 55 N. Y., 256; East River Nat. Bank agt. Grove, 57 N. Y., 598; Roosa agt. Smith, 24 Sup. Ct. [17 Hun], 138).

Second. It appears from the evidence that, in or about October, 1875, defendant subscribed for stock in said corporation, and on the 21st day of January, 1876, he received a certificate for one hundred shares, for which he then or previously paid the par value thereof. If we were governed by the date of the lease, it might become important to determine the status of defendant in relation to said corporation on the 1st day of January, 1876, but the date is only a formal part of the instrument, and the presumption which

McIntyre agt. Strong.

it affords of delivery is overthrown by the fact that the copy thereof produced by the plaintiff was acknowledged before the subscribing witness on the twenty-sixth day of January, five days after the defendant confessedly became a stockholder in said corporation.

Third. A more important and difficult question arises on the third defense, that is, as to the liability of a stockholder on the lease in question under the twenty-fifth section of said act, which provides: "No stockholder shall be personally liable for the payment of any debt contracted by any corporation formed under this act, which is not to be paid within two years from the time the debt is contracted." The great and constantly increasing number of companies incorporated under the general laws of the state of New York, relating to corporations, including almost the entire community, either as stockholders or creditors, and give to questions of this character a general interest, and consequently such questions demand the most careful consideration. The law has imposed. burdens upon individual stockholders until the capital is duly furnished (which has not been done in this case), to protect creditors who trust the corporation on the faith of a paid-up capital; on the other hand it protects such stockholders against the unqualified, unlimited and prolonged liability of a general partnership. Counsel for plaintiff claims that defendant is liable under section 37 of said act. "In limited liability companies, all the stockholders shall be severally individually liable to the creditors of the company in which they are stockholders, to an amount equal to the amount of stock held by them respectively for all debts and contracts made by such company, until the whole amount of capital stock fixed and limited by such company has been paid in," &c.

These two provisions as they stand, are inconsistent, and one or the other must yield. Following the rule of construction laid down in respect to wills, we are of the opinion that section 37 must be read subject to section 25. If it were otherwise, so much of section 25, as quoted above, would

McIntyre agt. Strong.

be meaningless, for when the whole capital stock of a limited liability company is paid in, and the conditions of the law complied with, then there is no liability whatever upon the individual stockholders, however brief the credit given to the corporation may be; so that section 25 must govern this case. We then recur to the question, was the debt in quession to be paid within two years from the time it was contracted?

The defendant's counsel declared that as the lease is for five years, no liability is imposed whatever upon the stockholder. Plaintiff's counsel contends that each quarter is a new contract, and that no part of the lease is beyond the statutory limitation. To support this view he cites Garrison agt. Howe (17 N. Y., 465).

That was an action brought to recover against a trustee for failure to report. Plaintiff had made a contract to deliver certain chattels from time to time, and the company, on their receipt, were to give time obligations. When the report was due the company did not owe plaintiff anything under the contract. Subsequently he made a delivery for which the company failed to pay. There is a broad distinction between that case and the case at bar. There the contract was executory on the part of the plaintiff; here it is executed. The defendant's counsel contends that as the lease was for five years, it is wholly beyond the statute. This view is equally fallacious. The true rule lies between these extremes. rent payable within two years from the time of executing the lease and delivering the premises is recoverable in this action; the rent accruing beyond that time is not a liability that can be enforced against the individual stockholders.

The

What constitutes a debt within the meaning of the various manufacturing acts, has had many and contradictory decisions (see Thompson's Liability of Stockholders, secs. 57, 58); but when a debt is contracted, has been, so far as we have ascertained, only adjudicated in Garrison agt. Howe (supra), which does not apply, and in Lewis agt. Ryder (13 Abb., 1), which throws no light upon the question.

Lampkin agt. Douglass.

The judgment and order should be reversed and a new trial granted, with costs to the appellant to abide the event, unless the plaintiff, within ten days after the entry of an order herein, stipulates to reduce the judgment to $750, with costs, interest and proper allowances, in which case the judg ment and order are affirmed, without costs to either party.

SUPREME COURT.

WILLIAM C. LAMPKIN and ALFRED S. FOSTER agt.
WILLIAM B. DOUGLASS.

Attachment-What the affidavit on which it is asked must state and showCode of Civil Procedure, section 636.

An affidavit on which an attachment is asked is defective where it does not state, as section 636 of the Code of Civil Procedure requires, that the plaintiffs are entitled to recover the sum therein alleged to be due to them "over and above all counter-claims;" and it is not sufficient to allege that such sum is due to them "over and above all discounts and set-offs."

An affidavit is defective where it fails to show that the demand is due to the plaintiffs over and above all counter-claims known to them.

As the knowledge of the plaintiff who applies for an attachment must be shown, he personally must make the affidavit, or if made by some other person, such facts, at least, should be stated as satisfy the court that the plaintiff has no knowledge upon the subject, because the entire transaction was with the affiant.

Where his sureties in an undertaking, instead of signing at the foot of the undertaking, each signed his own affidavit of justification, which was on the same page with the undertaking, both sureties appearing before a notary public, who certified that they knew them "to be the persons described in and who executed the above undertaking, and severally acknowledged that they executed the same," the execution of the undertaking will be held valid.

Ulster Special Term, February, 1882.

MOTION to vacate an attachment upon the papers on which it was allowed.

Lampkin agt. Douglass.

Howard Chipp, Jr., for motion.

William Lounsbury, opposed.

WESTBROOK, J.-The facts sufficiently appear in the statement of the points made in behalf of the defendant, which will at once be considered.

First. It is claimed that the affidavit on which the attachment was allowed is defective, because it does not state as the Code (sec. 636) requires, that the plaintiffs are entitled to recover the sum therein alleged to be due to them " over and above all counter-claims," but, on the contrary, the allegation is, that such sum is due to them "over and above all discounts and set-offs."

The language of the Code in the section referred to is mandatory. It declares that the plaintiff to obtain an attachment "must show" that he is entitled to recover the sum stated to be due to him "over and above all counter-claims." The courts also have repeatedly held, that without such an averment the affidavit is radically defective (Lyon agt. Blakesly, 19 Hun, 299; Donnell agt. Williams, 21 Hun, 216; Dickey agt. Coe, 13 Weekly Dig., 318.)

It is urged, however, by the plaintiffs' counsel, that the words "over and above all discounts and set-offs," which the affidavit contains, cover the same ground. This position is not maintainable. The word "discounts" simply conveys the thought of something to be discounted or taken from the claim itself by reason of any agreement, express or implied, between the parties (see in this connection, the word "discounts" as defined in Bouvier's Law Dictionary), and the word "set-off" has acquired a special meaning as defined by our old statutes (2d vol. R. S. [Edm. ed.], 250, 251, 365, 366).

The word "counter-claims" used in the Code is much broader and includes more than "discounts and set-offs." A comparison of section 501 of the Code, which defines a "counter-claim" with the old statute of "set-off” (see Mr.

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