Opinion
June, 1893.
James H. Ryan, for plaintiff.
Walter C. Anthony, for defendants.
The following question is presented for decision: "Under the law as it stood in September, 1891, could a manufacturing corporation organized under the act of February 17, 1848, in contemplation of insolvency, make a general assignment for the benefit of creditors without preferences?"
The right of corporations, trading or religious, to make assignments, if not restrained by statute, seems to have been settled. DeRuyter v. St. Peter's Church, 3 N.Y. 238; Haxtun v. Bishop, 3 Wend. 13; Robinson v. Bank, 21 N.Y. 406; Hurbut v. Carter, 21 Barb. 221; Hill v. Reed, 16 id. 280.
The Revised Statutes (Chap. 18, pt. 1, tit. 4, § 4), relating to the assignment of property by a corporation in contemplation of insolvency, provides, "And it shall not be lawful to make any transfer or assignment in contemplation of the insolvency of such company to any person or persons whatever; and every such transfer and assignment to such officer, stockholder or other person, or in trust for them or their benefit, shall be utterly void."
It has been repeatedly held that a general assignment by a corporation for the benefit of creditors without preferences is absolutely void. Harris v. Thompson, 15 Barb. 62; Robinson v. Bank of Attica, 21 N.Y. 406; Sibell v. Remsen, 33 id. 96.
Chapter 18 of part 4 of the Revised Statutes, of which the provision above quoted constitutes a part, was entirely repealed by chapters 564 and 565 of the Laws of 1890, the repeal to take effect in May, 1891. It was provided that existing laws should be continued in force, "modified or amended" so as to conform to the provisions of those chapters. Section 48 of said chapter 564 was substituted in place of that portion of the Revised Statutes heretofore alluded to, and was the law in force and regulating all corporations after it took effect in May, 1891, and necessarily was in force in September following, the time referred to in the question submitted for decision.
It is contended that the substituted provision does not in terms prevent a corporation from making an assignment in contemplation of its insolvency. It reads as follows: "No corporation which shall have refused to pay any of its notes or other obligations when due, in lawful money of the United States, nor any of its officers or directors, shall assign any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt; and no officer, director or stockholder thereof shall make any transfer or assignment of its property or of any stock therein to any person in contemplation of its insolvency; and every such transfer or assignment to such officers, directors or other person, or in trust for them or for their benefit, shall be void."
The point is made that the statute prohibits an officer, director or stockholder of a corporation from making an assignment of its property, but that it does not prohibit the corporation.
Section 8 of the Statutory Construction Law (Chap. 677, Laws of 1892) provides that "words in the singular number include the plural, and in the plural number include the singular."
Adopting that rule of construction, the statute must be read as prohibiting the officers, directors or stockholders of a corporation from making an assignment or transfer of its property.
Necessarily, therefore, the prohibition includes all the officers, directors and stockholders. That which all of the officers, directors and stockholders are debarred from doing, the corporation is in effect prevented from doing, because it can only act through its officers, directors or stockholders.
It would seem to follow that a general assignment made by a corporation through the action of its officers and directors comes within the condemnation of the statute.