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Broderick v. Abrams

Decided: January 30, 1934.

JOSEPH A. BRODERICK, AS SUPERINTENDENT OF BANKS OF THE STATE OF NEW YORK, PLAINTIFF,
v.
BENJAMIN ABRAMS ET AL., DEFENDANTS



On motions by various defendants, to strike out the complaint as to them respectively.

For the plaintiff, McDermott, Enright & Carpenter (Arthur Ofner, of the New York bar, on the brief).

For the defendants, Walter J. Bilder, Eichmann & Seiden, Howard Ewart, Gross & Gross, Harrison & Roche, Lichtenstein, Schwartz & Friedenberg.

Before Justice Parker, at chambers.

Parker

[112 NJL Page 309] PARKER, J. One of the grounds originally urged was misjoinder of parties, the facts being that several hundred defendants have been joined in what is nominally one action, but several hundred actions combined for convenience, as stockholders of the defunct Bank of the United States, and are severally charged with individual liability to the extent of the par value of the shares held by them respectively.

I disposed of this objection in another case a few weeks ago. See Beatty v. Lincoln Bus Co., 11 N.J. Mis. R. 938; 169 A. 286.

The other principal ground is that by the statute of 1897 (section 94b of the Corporation act as reprinted in Compiled Statutes), it is enacted that "no action or proceeding shall be maintained in any court of law of this state against any stockholder, * * * of any domestic or foreign corporation by or on behalf of any creditor of such corporation to enforce any statutory personal liability of such stockholder, * * * for or upon any debt, default or obligation of such corporation, whether such statutory personal liability be deemed penal or contractual -- if such statutory personal liability be created by or arose from the statutes or laws of any other state or foreign country, and no pending or future action or proceeding to enforce any such statutory personal liability shall be maintained in any court of this state other than in the nature of an equitable accounting for the proportionate benefit of all parties interested, to which such corporation and its legal representatives, if any, and all of its creditors and all of its stockholders shall be parties." Comp. Stat., p. 1656.

The proposition advanced by the defendants is that this statute, which it is admitted was in existence in New Jersey before the organization of the Bank of the United States, bars any such action as the present one, which is by a quasi -receiver not appointed by any court but ex officio pursuant to statute, and for the benefit of all the creditors (and principally the depositors) of the defunct Bank of the United States.

One answer made to this by plaintiff is that the case is not within the language of the statute. Another answer made is that if it is within the language of the statute, there is an impairment of the obligation of a contract. A third answer made seems to be that to deny the right of action in this case would be in defiance of the full faith and credit clause of the United States constitution.

An abstract of the complaint is perhaps necessary. It is

in two counts but they are both alike, except that the second count merely charges certain "equitable" owners of shares with the alleged responsibility for one hundred per cent. assessment; whereas the first count relates to the "legal" owners who are in far greater number.

The averments are that plaintiff is and was on December 11th, 1930, the superintendent of banks of the State of New York; that the Bank of the United States is a corporation organized under the banking law of that state and doing business in the city of New York; that its capital amounted to $25,000,000, and the stock was owned by nearly twenty-one thousand stockholders all over the United States and in foreign countries; that on December 11th, 1930, by virtue of the Banking law and in view of the financial condition of the bank, the plaintiff as New York superintendent of banks took possession of its business and property and is engaged in liquidating the institution ...


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