
    Geoffrey T. Clarkson, Liquidator of the Farmers’ Bank of Canada and as Assignee for the Benefit of Creditors of W. H. Travers, Suing for Himself as Stockholder and All Other Stockholders of Valveless Inner Tube Company in Like Situation Who Choose to Make Themselves Parties to This Action, Appellant, v. Walpole Rubber Company and Others, Respondents.
    First Department,
    May 29, 1913.
    Party — pleading suit as stockholder in behalf of a corporation against persons alleged to have wrongfully disposed of its assets —* demurrer—joinder of plaintiffs — suit in dual capacity.
    A complaint of a liquidator of an insolvent bank suing a corporation and persons alleged to have wrongfully disposed of the assets of a corporation, the stock of which has been transferred to him so that he holds legal title, is not subject to demurrer upon the ground that he sues by . virtue of his office: as liquidator.
    But the plaintiff, as- liquidator, cannot join himself as coplaintiff in such suit as assignee for the benefit of the creditors of another stockholder, . where the only rights of the assignor in relation to the corporation were personal, so that they did not pass by the assignment.
    Such plaintiff cannot maintain such suit either as liquidator or as assignee of a stockholder, where the complaint does not show that he is the owner or holder of certificates of stock with a right to have them transferred to him on the books of the company. A mere allegation that he “recovered ” a certificate of stock from a certain person is not sufficient.
    
      Qucere, as to whether such plaintiff must be a stockholder of record to maintain such actions.
    Ingraham, P. J., dissented in part, with opinion.
    Appeal by the plaintiff, Geoffrey T. Clarkson, as liquidator and -assignee, etc.!, from two orders of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 25th day of February, 1913, sustaining demurrers to the complaint interposed by the defendants Wal'pole Rubber Company and Edward P. Metcalf.
    The plaintiff, a liquidator of a foreign insolvent bank, sues as a stockholder to enforce a cause of action belonging to the Valveless Inner Tube Company against the defendant and others who are charged with wrongfully converting its assets,
    
      Hugh A. Bayne, for the appellant.
    
      Francis D. Pollak, for the respondents.
   Hotchkiss, J.:

(1) In his capacity as liquidator, plaintiff does not sue by virtue of his office, but because it was in such capacity that the certificate of stock of the Valveless Company was transferred to him, and he is thus alleged to have legal title thereto.. For this reason the objection to his capacity to sue as liquidator is bad.

(2) No ground is shown for making plaintiff a party in .his capacity as assignee of Travers. It appears from the complaint that the only interest Travers had in the matter in controversy arose from his ownership of the 2,450 shares of the Valveless Company stock, which shares plaintiff has acquired as liquidator. Having transferred his shares, Travers, so far as shown, ceased to have any further property interest in the subject of the Tinkham contract, and plaintiff, as assignee, holds nothing from him. But appellant argues that plaintiff, as assignee of Travers, is a proper party to the action (and as such may with equal propriety be joined as plaintiff as a defendant) because of the provision of the Tinkham contract to the effect that Tinkham was not to be released from his obligation to advance the full amount of $100,000 without Travers’ consent. Manifestly, this provision, making Travers a sort of arbiter of the circumstances under which Tinkham could be released, was personal to Travers, and did not pass by assignment. If, therefore,. by virtue of this provision, either was a necessary, or even a proper party, it was Travers and not his assignee. Because no cause of action is stated in favor of plaintiff as assignee, the joinder of plaintiff in that capacity with plaintiff as liquidator was good ground for demurrer. (Havana City R. Co. v. Ceballos, 49 App. Div. 263.) If we treated plaintiff’s description as assignee as mere descriptio personae and surplusage, he would be in no better position, for no cause of action is alleged in his favor personally.

(3) Does the complaint state any cause of action? The allegation is “ That plaintiff as such liquidator has recovered from said Travers, and now holds by assignment" from said Travers, a certificate for 2,450 shares in the capital stock of the Valveless Inner Tube Company.”

Concededly, such an action as the present cannot be maintained by one not a stockholder. Whether he must be a stockholder of record is a mooted question. It was so held in Heath v. Erie Ry. Co. (8 Blatchf. 347) and Brown v. Duluth, M & N. R. Co. (53 Fed. Rep. 889). To the contrary is Ervin v. Oregon Railway & Nav. Co. (62 How. Pr. 490), and strongly supporting this may be cited the words of Rapallo, J., in McNeil v. Tenth Nat. Bank (46 N. Y. 325, 331), where it was said: It has also been settled, by repeated adjudications, that, as between the parties, the delivery of the certificate, with assignment and power endorsed, passes the entire title, legal and equitable, in the shares, notwithstanding that, by the terms of the charter or by-laws of the corporation, the stock is declared to be transferable only on its books; that such-provisions are intended solely for the protection of .the corporation, and can be waived or asserted at its pleasure, and that no effect is given to them except for the protection of the corporation; that they do not incapacitate the shareholder from parting with his interest, and that his assignment, not on the.books, passes the entire legal title to the slock, subject only to such liens or claims as the corporation may have upon it, and excepting the right of voting at elections, etc. ” . The same result was- reached by "Vice-Chancellor Pitney in O’Connor v. International Silver Co. (68 N. J. Eq. 67; affd. by the Court of Errors and Appeals, 68 id. 680). (See, also, cases cited 3 Cook Corp. [6th ed.] 2434, 2435.) -It is unnecessary in this case to express an opinion on the main question for we are satisfied that, if not a stockholder of record, it at least must appear that plaintiff is the owner or holder of a certificate for shares under, such circumstances as give him a right to have them transferred to him on the books of the company. This the complaint fails to do.' It is not alleged that plaintiff was a stockholder or the owner of shares. Mor does it appear for what purpose he recovered ” the certificate from Travers, or that it was assigned to or is held by him under circumstances giving him the right to have the shares represented thereby transferred to him. As was said by Comstock, J., in Emery v. Pease (20 N. Y. 62, 64): “We are required, and we are always inclined to give a liberal and benign construction to pleadings, under the present system; but if a party either ignorantly or willfully will omit the very fact on which his case •depends, and will content himself with averring evidence inconclusive in its nature, he must take the*consequences of his error if objection be made at the proper time.”

The demurrer being good upon the grounds above mentioned, it is not necessary for us to determine whether the complaint shows that the plaintiff suffered damage from the acts complained of.

The order should be affirmed, with ten dollars costs and disbursements to each respondent, with leave to the plaintiff to amend on payment of costs in this court and in the court below.

Soott and Dowling, JJ., concurred; Clarke, J., concurred in result.

Ingraham, P. J.:

I concur with Mr. Justice Hotchkiss that there is no ground for making the plaintiff a party in his capacity as “assignee of Travers,” hut I do not think on this complaint that this is an objection to the plaintiff’s maintaining a cause of action if he' alleged one in any other capacity. In the complaint he described himself as liquidator of a Canada bank and also as assignee of Travers. If he owned this stock in any capacity he was entitled to maintain such an action as the ownership of the stock conferred upon him. Whether he held it as assignee of Travers or as liquidator or in any other capacity it added nothing to his cause of action to describe the capacity in which he owned the stock, and I think the court would have had the power on the trial to strike out the words “assignee of Travers” as mere surplusage. The complaint did not attempt to set up two causes of action, one based upon the plaintiff’s ownership of the stock as liquidator and one as the assignee of Travers. What the complaint sought was to enforce a right which vested in him as the owner of the stock, and I agree with Mr. Justice Hotchkiss that it was at least necessary for him to allege such facts as' established such ownership as-would entitle the plaintiff to a judgment requiring the defendant to transfer to him the stock the title to which he claimed. But whether his source of title was through Travers or through the hank was quite immaterial, and, therefore, his alleging that he sued as liquidator and as assignee of Travers was not a ground of demurrer either as an improper joinder of causes of action or as a failure to allege facts sufficient to constitute a cause of action. I quite agree with Mr. Justice Hotchkiss that there is no fact alleged in this complaint which would show that Travers had any cause of action to enforce the, claim alleged in this complaint, and that, therefore, no cause of action vested in the plaintiff by virtue of the assignment from Travers; but, as plaintiff does not seek to enforce any cause of action that did vest hi Travers, a mere incorrect recital that he sued as assignee of Travers would not make the complaint demurrable if it had appeared that, he individually was the owner of the stock in question, and as such entitled to maintain the action.

Upon the other grounds stated I concur in the affirmance of . the orders appealed from.

Orders affirmed, with ten dollars costs and disbursements, with leave to plaintiff to amend on payment of costs.  