
    Ferguson et al. v. Gill.
    
      (Supreme Court, General Term, First Department.
    
    May 13, 1892.)
    1. Corporations—Liability op Officers—False Certificate—Right of Creditors.
    Where, after the filing by the officers of a corporation of a false certificate that all its capital stock has been paid in, renewal notes are given for a debt contracted by the corporation before the certificate was filed, the debt is within the terms of Laws 1848, c. 40, relating to certain corporations, and providing (section 15) that “if any certificate or report made, or public notice given, by the officers of any such company, in pursuance of the provisions of this act, shall be false in any material representation, all the officers who .shall have signed the same, knowing it to be false, shall be jointly and severally liable for all the debts of the company contracted while they are stockholders or officers thereof. ”
    2. Same—Reliance on Certificate.
    A creditor of such a company is not estopped from recovering his debt from an officer who has signed a false certificate by the fact that he knew the certificate was false, since the statute does not require that to make the officer liable the creditor must have relied on the certificate.
    8. Same—Partnership Claim—Rights of Surviving Partner.
    An officer, in an action against him under such statute by a creditor of the corporation, cannot contend that plaintiff is not the original creditor, but has obtained title to the debt by legal devolution, and cannot, therefore, enforce the penalty where the claim originally belonged to a firm of which plaintiff was a member, and one of the partners has since died, since, as each partner is the owner of the whole of the partnership assets, plaintiff’s title is not affected by his partner’s death, and there is no legal devolution.
    
      4. Same—Action against Officers—Soienter—Evidence.
    In an action under such statute by a creditor of a corporation against an officer who signed a false certificate that the capital stock had all been paid in, when plaintiff introduces evidence tending to show that the stock was issued in payment for a worthless patent, it is error to exclude testimony on the part of defendant, going to show a consultation had as to the value of the patent, since any communication made to him on the subject is admissible on the question whether ho knew that the patent was worthless.
    5. Same—Conflicting Evidence.
    In such case it is error to exclude evidence that work was done under the patent, where evidence has been given on the part of plaintiff that no work had been done under it.
    Appeal from circuit court, New York county.
    Action by James H. Ferguson and Michael j. Creegan against George H. Gill. From a judgment entered after trial for plaintiffs, and from an order denying a motion for a new trial, defendant appeals.
    Reversed.
    Argued before Yah Brunt, P. J., and O’Brien and Andrews, JJ.
    C. E. Rush-more, for appellant. B. Estes, for respondent.
   Van Brunt, P. J.

This action was brought to enforce an alleged liability of the defendant for certain debts of a corporation organized under the manufacturing act, upon the ground that the defendant, being a trustee of the corporation, joined in the making and filing of a false certificate that the capital stock of said company had all been paid in. Without considering in detail the facts developed upon the trial, it will only be necessary to refer to them in a general way, to illustrate the questions which have been raised upon this appeal. The statute under which the liability is claimed to arise, reads as follows: “If any certificate or report made, or public notice given, by the officers of any such company, in pursuance of the provisions of this act, shall be false in any material representation, all the officers who shall have signed the same, knowing it to be false, shall be jointly and severally liable for all the debts of the company, contracted while they are stockholders or officers thereof. ”

The capita! stock of the corporation in question having been issued ostensibly in payment for a patent, a certificate of paid-up stock was filed, signed by the defendant and others; and it is claimed by the plaintiffs that the patent in question was substantially worthless, to the knowledge of the defendant, and that, therefore, the certificate was false. The plaintiffs offered evidence tending to show that the patent had belonged to a previous corporation, and was sold by the receiver for a very small sum of money; and it appeared from the minutes of the corporation that on the 5th of April, 1886, the purchaser from the receiver presented a bill of sale of the patent which was purchased by the company of which the defendant was trustee for the sum of $1, and it further appeared that by resolution the value of the patent was fixed at $100,000; and 1,000 shares of stock, of the par value of $100, were issued partly to the seller and partly to other persons. On the 24th of May, 1886, it further appeared, the said seller made a proposition to sell and assign to the company in question said patent for 1,000 shares of the capital stock ot' the company, which offer was accepted by the company, and the stock issued to the seller, who subsequently distributed the stock in various ways. The plaintiffs further offered evidence tending to show that the patent in question was worthless. Upon the part of the defendant, testimony was offered, going to show a consultation had between the parties interested in this patent as to its value, which testimony was excluded, and an exception taken. Evidence was also offered that certain work had been done under the patent, which was also excluded. This we think was error. The question involved was as to the knowledge of the want of value of the letters patent, and any communications which had been made to him upon that subject were competent upon the question of scienter; and, in respect to the question as to work done, that evidence was offered to directly contradict evidence which had been given upon the part of the plaintiffs, to the effect that no work had been done under the patent,—clearly within the issue, and proper to be submitted to the jury upon the question of value.

It is further urged upon the part of the defendant that the indebtedness sued upon was not contracted subsequent to the filing of the certificate in question. But, even if the original inception of the debt was prior to that time, it appears that there were various renewal notes given, by which the debt was extended, and such renewal notes were given after the filing of the certificate, which brings the claim distinctly within the terms of the statute.

It is further urged that the plaintiffs are estopped from taking advantage of the act of the defendant in filing the certificate of fully-paid stock because they knew the value of these letters patent, and that the stock of the company was issued for the letters patent in question, and that, therefore, they could not have been deceived by the false statements contained in the certificate. This claim upon the part of the defendant rests upon the erroneous theory that reliance upon the certificate is necessary to be shown by the creditor before a recovery can be had. This is importing into the statute a provision which it does not contain. It is entirely immaterial whether the creditor relies upon the certificate or not. As long as the trustee knows the certificate to be false, and the debt is thereafter contracted while he is an officer of the company, it comes within the provisions of the statute.

It is further urged that the plaintiffs not being the original creditors of the company, but having obtained whatever title they have to the claim by assignment or legal devolution, they cannot enforce the penalty provided by statute. We are unable to see the force of this objection. The plaintiffs, and each of them, have always been the owners of the claim in question. They were partners with Henry Lovejoy, and the firm composed of those three members were the owners of the claim. The death of Lovejoy in no way affected the title of the surviving partners to the claim. As soon as his title dropped out, that of the surviving partners remained the same as it was before his death. Each partner is the owner of the whole of the copartnership assets, and can sell the same, and give a good title thereto. Consequently, by the death of Lovejoy, there was no devolution of title upon his surviving partners.

Because of the errors in the exclusion of evidence heretofore mentioned, it is necessary that the judgment should be reversed, and a new trial ordered, with costs to the appellant, to abide the final event.

O’Brien, J., concurs in the result. Andrews, J., concurs. 
      
      Laws 1848, c. 40, § 15.
     