RICHARDS v. BEACH

RICHARDS v. BEACH. N. Y. City Court, Special Term ; May, 1887. 1. Business corporations; liability of stockholder to servants, <6c.J Stockholders in a business corporation created under L. 1875, c. 611, are not under any special liability to laborers, servants or •apprentices for services performed to the corporation. Such special liability is peculiar to the general manufacturing act of 1848 (c. 40). 2. The same; return of execution before suit against stockholder.] No action can be maintained by a judgment creditor to enforce the individual liability of a stockholder in a business corporation, until execution has been issued and returned unsatisfied. Demurrer to complaint. G. W. Cotterill, for the defendant, demurring. W. W. Badger, for the plaintiff, opposed. These acts are compared and considered, together with the act of 1865 (c. 368), in a note on organization of social and other clubs, 17 Abb. N. C. 112. [MAJORITY — McAdam, Ch. J.] McAdam, Ch. J. The facts of this case are almost similar to those in Richards v. Coe (ante, p. 79), except that the plaintiff in the present action, declares upon a judgment against the corporation. But the complaint fails to allege that an execution has been duly issued thereon and returned unsatisfied. This omission is fatal to the plaintiff’s right of action for the reasons assigned in the Coe case. There is no provision in the act of 1875 (chap. 611) making a stockholder liable for debts due to laborers, servants or apprentices, for services performed to the corporation, and the allegations of the cpmplaint attempting to bring the plaintiff’s claim within this category merit no comment, and may be regarded as surplusage. The provisions of the manufacturing act of 1848 (chap. 40, § 18), which the pleader evidently had in mind (because they refer to these subjects), do not in any manner affect corporations created under the act of 1875 (chap. 611). But even under these provisions of the manufacturing act of 1848, the stockholder cannot be sued until the legal remedies of the creditor have been exhausted. The demurrer to the plaintiff’s complaint must therefore be sustained with costs.