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prior to December 1, 1902, they had disposed of all other partnership holdings and had severed all business relations with one another, except in connection with the Brooks estate.

"(3) This estate they continued to hold and manage as partners until November 1, 1906, the date of the expiration of said lease. "(4) The plaintiff had the management of said estate from December 1, 1895, to December 1, 1902, after which date the defendant took charge.

"(5) The plaintiff is not indebted to the defendant in any sum on account of his management of the estate during the seven years prior to December 1, 1902.

"(6) During 1904 constant efforts were made to settle the Cohen suit, and the lessor through his attorney and personally urged the three lessees to pay the $300 required, for which they were liable under their lease, and promised if they would do this that he would grant them an extension of their lease or a new one on the same terms.

"(7) This offer was accepted by each of the three lessees, and the plaintiff and Silverman instructed the defendant to pay the lessor $300 and deduct their shares thereof from the net rents of the Brooks estate.

that price, and received as his share of the commission on said sale $310, of which he never offered any part to the defendant.

"(15) The defendant then asserted his rights under said option, and to procure the surrender of the option the owner of the Brooks estate paid him $2,000 in August, 1907.

"(16) Shortly afterwards the defendant gave Silverman $600, of which $500 was on account of the sum received for the surrender of the option, and $100 was on account of the back rents which had not been divided.

"(17) I rule that said option was for the benefit of the three lessees and that the plaintiff is entitled to recover from the defendant one-third of the $2,000 paid for its surrender, and one-third of the net rents of the Brooks estate which accrued between November 1, 1906, and August, 1907.

"(18) The net rents of said estate from October 1, 1905, to August, 1907, averaged $50 a month.

"(19) During the period between October 15, 1905, and November 1, 1906, the net rents of said estate amounted to much more than the $300 retained by the defendant to reimburse himself for his payment in the Cohen matter, and the plaintiff is entitled to onethird of the surplus, which I find to be $300. "(8) While negotiations for a settlement of "(20) September 1, 1907, the dethe Cohen suit were in progress, the plaintiff, fendant owed the plaintiff on acwithout the knowledge or consent of the de-count of the $2,000 paid for the surfendant or Silverman, asked the lessor for render of said option....

a new lease of the Brooks estate in his own

"On account of his share of the

between November 1, 1906, and Au-
gust, 1907, nine months.....

name at an increased rent; and the defend-net rents of the Brooks estate be-
ant and Silverman, without the knowledge
of the plaintiff, planned to procure a new
lease of said premises for themselves, pro-
vided Silverman could secure the defendant
by a bond or mortgage.

“(9) January 30, 1905, the defendant paid the lessor $300 from his own funds to settle the Cohen suit, and obtained from him either the same day directly, or the next day by mail, an option for a new five years' lease of the same premises in his own name to begin November 1, 1906.

"(10) In accordance with instructions of the plaintiff and Silverman and before the termination of the lease, he retained from the net rents of the Brooks estate the full sum of $300 to reimburse himself for his payment to the lessor on account of the joint liability of the three lessees in the Cohen matter.

"(11) Said option for a new lease. of the premises was obtained by the defendant for his own use while he was managing the property for the benefit of the partnership, of which the plaintiff and Silverman were the

other two members.

"(12) The consideration for said option was the $300 paid to said lessor to settle the Cohen suit, and of this sum the plaintiff and Silverman paid each one-third.

$666 66

150 00

between October 15, 1905, and No-
"On account of the rents accruing
vember 1, 1906, in excess of the $300
which the defendant was to retain.. 100 00

"Making a total of.....

$916 66.

tiff owed the defendant as his share
"(21) September 1, 1907, the plain-
of the commission received by plain-
tiff for sale of the Brooks estate.. 103 33

"(22) The balance due the plaintiff
from the defendant at that date... $813 33

"(23) The plaintiff is entitled to recover from the defendant in these proceedings $813.33, with interest from September 1, 1907, amounting at the date of this finding, May 4, 1912, to $1,041.60."

Elisha Greenhood, of Boston, for appellant. Young, Hill, Ludden & Marks, of Boston, for appellee.

MORTON, J. This is a bill in equity for an accounting in respect of a partnership in relation to certain leasehold interests. The case was sent to a master, who made “(13) In August, 1907, the Brooks estate a report in favor of the plaintiff. A decree was offered for sale by the owner at $42,000. was entered confirming the report and order

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sum of $1,041.60, with costs of suit. The de-, for the defendant to take the option in his fendant appealed.

own name and attempt to appropriate the profits thereof to his own use constituted not only a breach of trust but a fraud upon his copartners.

Decree affirmed, with costs.

(208 N. Y. 404.) SHIPMAN v. TREADWELL et al. (Court of Appeals of New York. May 20, 1913.)

1. CORPORATIONS (§ 253*)-ACTION TO EN

FORCE STOCKHOLDER'S LIABILITY-CONCLU-
SIVENESS OF FOREIGN JUDGMENT-PERSON-
AL DEFENSES.

[1] The principal contention of the defendant is that the plaintiff is not entitled to relief because he himself at one time, according to the findings of the master, "asked the lessor" "without the knowledge or consent of the defendant or Silverman," "for a new lease of the Brooks estate in his own name at an increased rent." In other words, the defendant contends that the plaintiff does not come into court with clean hands. But, to quote from Dering v. Winchelsea, 1 Cox, 318, though a man must come into equity with clean hands, "when this is said it does not mean a general depravity; it must have an immediate and necessary relation to the A regularly entered judgment of the court equity sued for." In the present case there to proceed against nonresident defendants, not of common pleas in Ohio, having jurisdiction was no such immediate and necessary rela- personally served with process, in a suit to tion between what the plaintiff did or at-wind up the affairs of an insolvent corporation, tempted to do and what the defendant did as and to determine how much each stockholder to render the principle applicable. If the conclusive upon nonresident stockholders as to should pay to make up the deficiency, was plaintiff and the defendant had confederated the amount of assets and liabilities of the cortogether to have the defendant obtain a re- poration, and the necessity of an assessment newal of the lease in his own name without upon the stock to the extent and in the amount the knowledge of and to the exclusion of Silverman, with the agreement that any profits resulting therefrom should be divided between the plaintiff and the defendant, and the defendant for some reason had concluded to pay Silverman what would have been his share of the profits and had refused to pay the plaintiff and the plaintiff had brought a bill for an accounting, a case would have been presented for the application of the principle. But the present is not such a case. What the plaintiff did was to attempt without success to get a lease for himself without the knowledge of his copartners. And though his conduct shows a readiness on his part to cheat his copartners if he could, it does not bring the case within the principle referred to. See Lawton v. Estes, 167 Mass. 181, 45 N. E. 90, 57 Am. St. Rep. 450; Snow v. Blount, 182 Mass. 489, 65 N. E. 845.

[2-4] Amongst other things on which the defendant relies is the statute of frauds. It is manifest that that has nothing to do with the case. Besides it is not pleaded. The master having found that the plaintiff and defendant were partners the defendant stood in a fiduciary relation to the plaintiff and could not clandestinely take (as the master has in effect found that he did take) a re

newal of the lease for his own benefit. Leach v. Leach, 18 Pick. 68, 76. The option was clearly impressed with a trust in favor of the plaintiff.

[5] In addition to the trust arising out of the fiduciary relation created by the partnership, a part of the consideration for the option was furnished by the plaintiff under and pursuant to an understanding between the lessor and lessees, as the master has found that the lessees should have an extension of the lease. Under such circumstances,

ordered.

[Ed. Note.-For other cases, see Corporations, Cent. Dig. §§ 1024-1030; Dec. Dig. § 253.*]

2. CORPORATIONS (§ 685*)- ACTION TO ENFORCE STOCKHOLDER'S LIABILITY-SUIT BY RECEIVER IN FOREIGN JURISDICTION.

A foreign receiver cannot merely by virtue of his appointment and the direction to sue contained therein, maintain an auxiliary suit in this state to enforce the statutory liability of stockholders of an insolvent foreign corporation.

[Ed. Note. For other cases, see Corporations, Cent. Dig. § 2667; Dec. Dig. § 685.*1 3. CORPORATIONS (§ 685*) - STOCKHOLDER's LIABILITY - ENFORCEMENT AGAINST NONRESIDENT-ACTION BY RECEIVER.

In such case the receiver sues in the courts of this state as a quasi assignee and representative of the creditors, vested with rights of action against the stockholders, and charged with the enforcement of those rights in this state, and having a transitory right of action based on a contract of the defendants to pay the creditors of the corporation on account of their claims a sum equal to the amount of the stock which defendants owned.

[Ed. Note.-For other cases, see Corporations, Cent. Dig. § 2667; Dec. Dig. § 685.*] 4. LIMITATION OF ACTIONS (8 65*)-LIABILITY OF STOCKHOLDERS RECEIVER'S ACTION TO ENFORCE-ACCRUAL.

The cause of action in favor of a foreign receiver to enforce the liability of resident stockholders does not accrue until a judgment is rendered, fixing and determining the amount of the assessment upon the stock.

Actions, Cent. Dig. §§ 261, 345-350; Dec. Dig. [Ed. Note.-For other cases, see Limitation of § 65.*]

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state in which it accrued, a receiver's cause of action to enforce the liability of nonresident stockholders, accruing May 6, 1907, the date of the rendition of the judgment in the creditor's suit against the stockholder, or on June 1, 1907, the date fixed by such judgment for paying the assessment, not brought in this state until December 10, 1908, was barred by limitations; the fact that a demand was necessary not postponing the operation of the statute by reason of the express provision of Code Civ. Proc. § 410.

[Ed. Note.-For other cases, see Limitation of Actions, Cent. Dig. §§ 353-375, 655; Dec. Dig. §§ 66, 169.*]

6. CORPORATIONS (§ 264*) STOCKHOLDER's LIABILITY-RECEIVER'S ACTION TO ENFORCE AGAINST NONRESIDENTS-LIMITATIONS.

The Ohio Constitution (Const. art. 13, § 3), in force at the time defendant's stock subscription was made, provided that each stockholder should be liable over and above the stock owned, and any amount unpaid thereon, to a further sum at least equal to the amount of such stock, and Rev. St. Ohio 1908, § 3258, was to the same effect, and thereunder courts of that state had held' that an action to enforce the liability of stockholders was subject to the six years' statute of limitations. By Act April 29, 1902 (95 Ohio Laws, p. 312) the section which is now section 3258 of Rev. St. 1908 was amended to limit the liability of stockholders who had in good faith assigned their stock before the debts of the corporation became enforceable against them, and section 3258a was added, providing that an action upon the liability of stockholders should be brought within 18 months after the debt should become enforceable against them. The amendment to section 3258 was declared unconstitutional, and in 1903 the Constitution was amended by striking out the provisions imposing double liability, and making the liability only for the amount unpaid on subscriptions, which amendment was held to repeal by implication section 3258, and thereafter the Legislature re-enacted section 3258 in the same form, and amended section 3258a to provide that an action upon the liability of the stockholders "under the last preceding section" should be brought within 18 months after the debt should be enforceable against stockholdHeld, that Rev. St. 1908, §§ 3258, 3258a, were intended to preserve the double liability of the stockholders existing prior to the constitutional amendment, and hence that a rereceiver's action to enforce such liability not brought within the 18 months was barred.

[Ed. Note. For other cases, see Corporations, Cent. Dig. 88 1084-1098, 2274; Dec. Dig. 264.*]

an Ohio corporation with the amount of an assessment upon their stock to pay the debts of the corporation.

The Constitution of the state of Ohio, in force at the time the defendants' stock subscriptions were made, provided that each stockholder in a private corporation should be liable over and above the stock owned by him, and any amount unpaid thereon, to a further sum at least equal to the amount of such stock. Section 3258 of the Ohio Revised Statutes was to the same effect. Under the law of Ohio the subscriber for stock in a private corporation assumed the liability imposed by the Constitution and Revised Statutes as part of his subscription agreement. But the liability was secondary and contingent upon an insufficiency in the assets of the corporation to pay its debts.

Sections 3260 et seq. of the Revised Statutes of Ohio provide that a creditor of a corporation, seeking to charge the stockholders thereof with the liability aforesaid, may file his complaint for that purpose in any court of common pleas having jurisdiction. The court is authorized to take an account, and appoint a receiver of the corporation.. All the stockholders may be made parties to the action, and nonresident stockholders may be brought in by publishing notice of the action. If the assets of the corporation are not sufficient to pay its debts, the court is directed to ascertain the liability of the stockholders, adjudge the amount payable by each, and enforce the judgment as in other cases. The receiver appointed in such proceeding is a quasi assignee, invested with the creditors' right of action to enforce the liability of the stockholders, and the court may direct the receiver to prosecute suits in his own name, as may be necessary, in other jurisdictions to collect from any stockholders.

By sections 5651 et seq. of the Revised Statutes it is provided that a corporation may be dissolved if insolvent, or, if the objects of the corporation have failed, upon the application of a majority of the stockholders, and a distribution made of its assets

Appeal from Supreme Court, Appellate among those entitled thereto. Division, Third Department.

Action by Leonard H. Shipman, as receiver of the F. Gray Company, against George Curtis Treadwell and another. From a judgment of the Supreme Court, Appellate Division, Third Department (150 App. Div. 57, 133 N. Y. Supp. 970), reversing a judgment of the Special Term (73 Misc. Rep. 587, 131 N. Y. Supp. 67) in favor of the plaintiff, and ordering a new trial, plaintiff appeals. Affirmed.

The corporation concerned in the case now before the court was declared insolvent in proceedings instituted by a majority of its stockholders under section 5651 of the Revised Statutes on April 16, 1901, and an or der was then made dissolving the corporation.

Thereafter and on June 22, 1901, an action was brought in the court of common pleas of Miami county by a creditor of the corporation against all the stockholders including

See, also, 150 App. Div. 895, 897, 134 N. Y. these defendants, under section 3260 of the Supp. 1146; 102 N. E. 1113.

Andrew J. Nellis, of Albany, for appellant. James F. Tracey, of Albany, for respondents.

Revised Statutes, and a receiver of the cor-
Notice of
porate property was appointed.
such action was given to these defendants
by publication thereof, pursuant to an order
of the court. The defendants are residents
They were not personally

CUDDEBACK, J. This action was brought to charge the defendants as stockholders of of this state.

It is the claim of the plaintiff that the creditor's cause of action against the stockholders accrued at the time the corporation was declared insolvent and dissolved on April 16, 1901, and that it was subject to the limitation of the general six-year statute of the state of Ohio. Inasmuch as the creditor's suit against the stockholders was instituted on June 22, 1901, it was brought in time. To sustain this position, the plaintiff cites Barrick v. Gifford, 47 Ohio St. 180, 24 N. E. 259, 21 Am. St. Rep. 798, and Younglove v. Lime Co., 49 Ohio St. 663, 33 N. E. 234. The plaintiff also claims that this action is merely ancillary to the creditor's suit in Ohio.

served with process in the action brought | and after the time of payment fixed by the in the court of common pleas, and did not judgment. appear in such action. The defendant George C. Treadwell had subscribed for and held 72 shares of stock in the company, and the defendant Wilhelmina W. Collins 50 shares. On May 6, 1907, a final judgment was rendered by the court of common pleas in the creditor's action against the stockholders, determining the amount of the indebtedness of the corporation after exhausting its assets, and the amount that would be required as an assessment upon each of the solvent stockholders to pay the deficiency in such indebtedness. In and by such judgment the sum of $4,458.24 was assessed against the defendant Treadwell, and $3,096 against the defendant Collins, and they were ordered to pay those amounts to the receiver of the company, the plaintiff in this action, on or before the first day of June, 1907.

The judgment also authorized and empowered the receiver to prosecute, in his own name as receiver, actions against nonresident stockholders in the jurisdictions where they might be found, to collect the amount due from them. Subsequently and on October 5, 1908, the plaintiff, as receiver, was specially directed by the court of common pleas to sue these defendants in this state; they having failed to pay their assessments on demand.

The trial court found, as matter of fact, the laws of Ohio and the proceedings in its courts as hereinbefore set forth. They are substantially the facts alleged in the complaint, and it has been held by this court that the complaint states a cause of action. Shipman v. Treadwell, 200 N. Y. 472, 93 N. E.

1104.

The defendants, however, now plead the statute of limitations contained in section 3258a of the Ohio Revised Statutes, viz.:

"Sec. 3258a. An action upon the liability of stockholders under the last preceding section (§ 3258) can only be brought within eighteen months after the debt or obligation shall become enforceable against stockholders."

Upon this section (3258a), taken in connection with section 390a of our Code of Civil Procedure, the defendants mainly rely to defeat the plaintiff's claim. Section 390a| of the Code of Civil Procedure provides in substance that, where a cause of action arising outside the state is barred by lapse of time in the state or country where the cause of action arose, it is also barred in this state. It is the claim of the defendants that the plaintiff's cause of action arose in the state of Ohio on May 7, 1907, the date of the rendition of the judgment in the creditor's action against the stockholders, or, at the latest, on June 1, 1907, the date when the defendants were required to pay their assessments to the receiver. The action in this state was begun December 10, 1908, more than 18

I think the cases cited by the plaintiff show that the action begun in Ohio by the creditors against the stockholders was timely brought, but I am also of the opinion that the receiver's action in this state is barred by the 18 months' statute of limitation.

[1] The suit in Ohio has a double aspect. It was a suit to wind up the affairs of the insolvent corporation and apply its assets in payment of its debts, and, if a deficiency existed, to determine how much each stockholder should pay to make up the deficiency. To that extent, the court had jurisdiction to proceed against the defendants not personally served with process. But as to the defendant stockholders who were personally served, the court could and did go further and render a judgment against them in personam for the amount of their liability.

Under the decisions both of this court and the United States Supreme Court, and upon the facts found by the trial judge as to the laws of the state of Ohio and the proceedings in its courts, it must be held that the judgment rendered in the court of common pleas is binding and conclusive upon the defendants in this action so far as it determined the amount of assets and liabilities of the insolvent corporation and the necessity of making an assessment upon the stock to the extent and in the amount ordered. Matter of Empire City Bank, 18 N. Y. 199; Shipman v. Treadwell, 200 N. Y. 472, 477, 93 N. E. 1104; Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489, 47 L. R. A. 725; Bernheimer v. Converse, 206 U. S. 516, 27 Sup. Ct. 755, 51 L. Ed. 1163; Converse v. Hamilton, 224 U. S. 243, 32 Sup. Ct. 415, 56 L. Ed. 749.

These defendants, of course, remained free to show any defense personal to themselves against the creditor's claim. Lazier v. Westcott, 26 N. Y. 146, 82 Am. Dec. 404; Durant v. Abendroth, 97 N. Y. 132; Bernheimer v. Converse, 206 U. S. 516, 518, 27 Sup. Ct. 755, 51 L. Ed. 1163.

The fact, however, that such personal defenses remained to the defendants is not very important at this time because the defense of the 18 months' statute of limitation does not controvert anything decided by

giving full faith and credit to the judicial | the Ohio Revised Statutes, and section 390a proceedings of another state as required by of the Code of Civil Procedure.

the federal Constitution. The defense now urged is a defense which has arisen since the judgment of the Ohio court was made.

[2] The question is, when did the receiver's cause of action against these defendants accrue? In determining that question, it is necessary to understand clearly the position which the receiver occupies in our courts. The receiver, the plaintiff, is not here as an officer of the Ohio court, seeking by an auxfiary suit to enforce the judgment of that court. If such were his standing, the action could not be maintained. Hale v. Allinson, 188 U. S. 56, 23 Sup. Ct. 244, 47 L. Ed. 380; Great Western M. & M. Co. v. Harris, 198 U. S. 561, 25 Sup. Ct. 770, 49 L. Ed. 1163.

[3] The plaintiff is here as a quasi assignee and representative of the creditors, invested with their rights of action against the stockholders, and charged with the enforcement of those rights in the courts of this state. Converse v. Hamilton, supra. He has a transitory right of action, based on a contract of the defendants to pay the creditors of the corporation on account of their claims a sum equal to the amount of the stock which the defendants own. Ibid.

[6] The plaintiff contends that section 3258a does not apply to his cause of action, for the reason that it has reference only to the liability of the stockholders "under the last preceding section," which is section 3258. The plaintiff says that this action is not brought under section 3258 as it now stands. This is a statement in another form of the plaintiff's claim that his action is ancillary to the creditor's suit in Ohio.

In order to understand the matter, it is necessary to look somewhat into the history of sections 3258 and 3258a. As has been said, the Constitution of the state of Ohio (Const. art. 13, § 3), in force when the defendants' stock subscriptions were made, provided the double liability now sought to be enforced against them. Section 3258 of the Revised Statutes was an enactment following substantially the language of the Constitution. Under the Constitution and section 3258 of the Revised Statutes the courts of Ohio held that an action to enforce the liability of the stockholders was subject to the general six-year statute of limitations. Barrick v. Gifford; Younglove v. Lime Co., supra. Thus the law stood on June 22, 1901, when the creditor's action was brought in the court of common pleas.

On April 29, 1902 (95 Ohio Laws, p. 312) section 3258 was amended so as to limit the liability of stockholders who had in good faith assigned their stock before the debts of the corporation became enforceable against them. By the same act section 3258a was added to he Revised Statutes as follows:

"Sec. 3258a. An action upon the liability of stockholders can only be brought within eighteen months after the debt or obligation shall become enforceable against stockholders."

[4] Many cases involving the power and authority of such receivers in jurisdictions foreign to the place of their appointment have been before the United States Supreme Court, and it has been held among other things that the cause of action in favor of the receiver does not accrue until the judgment is rendered, fixing and determining the amount of the assessment upon the stock. Glenn v. Marbury, 145 U. S. 499, 12 Sup. Ct. 914, 36 L. Ed. 790; Bernheimer v Converse, 206 U. S. 516, 27 Sup. Ct. 755, 51 L. Ed. 1163; Hawkins v Glenn, 131 U. S. 319, 9 Sup. Ct. 739, 33 L. Ed. 184; Glenn v. Liggett, 135 U. S. 533, 10 Sup. Ct. 867, 34 L. Ed. 262. The amendment to section 3258, whereby [5] These cases are decisive of the ques- the attempt was made to limit the liability tion. The receiver's cause of action accrued of stockholders, was declared unconstitutionon May 6, 1907, the date of the rendition of al. See cases cited in Sheets Mfg. Co. v. the judgment in the creditor's suit against Neer Mfg. Co., 4 Ohio N. P. (N. S.) 201. the stockholders, or on June 1, 1907, the date Afterwards, on November 23, 1903, the Confixed by such judgment for paying the as- stitution of the state of Ohio was amended sessment. The judgment contained the di- by striking out the provision imposing the rection that the plaintiff, as receiver, sue double liability on stockholders and making the nonresident stockholders in the jurisdic- them liable only for the amount unpaid on tions where they might be found. The sub- their stock subscriptions. sub-their It was held that sequent order of the court of common pleas, the amendment to the Constitution repealed made October 5, 1908, ordering the receiver, by implication section 3258 of the Revised specially to sue these defendants on their refusal to pay the assessments, was a mere direction to the officer of the court that would protect him in expending the trust funds in his hands, and did not confer on him additional power. Nor did the fact that a demand was necessary postpone the operation of the statute of limitations (Code of Civil Procedure, § 410).

Inasmuch as the plaintiff receiver delayed in bringing this action until December 10, 1908, he delayed too long, and his suit is

Statutes. Sheets Mfg. Co. v. Neer Mfg. Co., supra. Then there was no provision of the Ohio Revised Statutes preserving the liability of stockholders in cases where it had existed before the constitutional amendment of 1903. In order to supply this omission. the Legislature on April 25, 1904, re-enacted section 3258 in the form, however, in which it had been declared unconstitutional), with a proviso that the section should not apply to debts incurred by any corporation after November 23, 1903, the date of the constitu

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