Summary
In Brooklyn Trust Co. v. Jesper, 248 App. Div. 896, 290 N.Y.S. 642, it appears to have been thought that the making of a mortgage by a corporation when its capital is impaired will at once render the mortgage invalid as against creditors.
Summary of this case from In re Bay Ridge InnOpinion
October 23, 1936.
Action by a judgment creditor to recover a sum of money from a stockholder and director of a corporation on the theory that he received assets of the corporation which constituted an illegal distribution thereof. Judgment for the plaintiff reversed on the law and the facts, with costs, and the complaint dismissed, with costs. The court found that the bonds and mortgages executed to the defendant Jesper were valid when executed on May 1, 1929. They could only be valid if at that time there existed a surplus equal to or greater than the amount of the mortgages. The evidence discloses that the fair value of the property was in excess of $345,000 and that the plaintiff acquiesced in a fixation of value of the property on May 1, 1929, disclosed to it in April, 1930, of $400,000. The finding, therefore, should have been that the fair valuation of the property was in excess of $345,000. The undisputed facts show that there was no bad faith in the transaction of May 1, 1929, so far as the defendant Jesper was concerned. In any event the total amount received in payment of these mortgages by Jesper was $3,800. This sum is less than the difference between the value found by the trial court and the total of unpaid debts, inclusive of capital stock as of May 1, 1929. Hence he has received no assets of the corporation, in an amount representing a distribution thereof, that can be chargeable to other than existing surplus as of May 1, 1929. Findings of fact and conclusions of law inconsistent herewith are reversed and new findings and conclusions will be made. The appeal from the intermediate order denying motion to dismiss the complaint or to require a separate stating and numbering of the causes of action is dismissed, without costs. Lazansky, P.J., Carswell, Davis, Johnston and Adel, JJ., concur. Settle order on notice.