only the sum of $100,000, instead of $101,- be treated in law as a part of the purchase 000 they had covenanted to pay.

money, and, the vendees having refused to On these undisputed facts plaintiffs insist pay the same on closing title, a vendor's lien that the sum of $1,000 so paid by them to was at once impressed upon the premises Flora Levy was under compulsion in order sold. to secure the closing of the sale of the It is of no importance whether the defendMadison street property and clear the title ant Louis J. Levy was the real purchaser of the Allen street property from the lien of the $13,000 mortgage and the collateral of the collateral mortgage, the plaintiffs hav- mortgage, using his wife's name as a cover. ing contracted to convey the same to Weil We may assume Mrs. Levy purchased in and Mayer free and clear. The transaction good faith. The vendees were entitled by the at the time of closing the title is thus stated terms of the collateral mortgage to secure by one of the attorneys for the plaintiff on its satisfaction by payment of $4,000 on the the witness stand: "There was paid on the $13,000 mortgage. The vendees, by accepting $13,000 mortgage at the time of the closing title to the Madison street premises on the simply the $1,000. The other $3,000 that law day, took it subject to the mortgage upon was to be paid at the time of the closing of which the vendors had paid $1,000. The the title was a matter to be paid by the vendees now insist that, while they were algrantees, and that was conceded to them on lowed the full amount of the $13,000 on the closing in the figures I have given, and taking title, when in fact only $12,000 was the $1,000 also, the whole $13,000 was deduct- due thereon, they are under no liability to ed from the purchase money, although there refund the vendors the $1,000 paid under the was only $12,000 unpaid.” Mrs. Levy, as express terms of the collateral mortgage. In the owner of the $13,000 mortgage, was en- a court of equity such a suggestion cannot titled to a payment of $1,000 thereon before be entertained-forms give way to substance discharging the lien of the collateral mort- —and the vendees must pay for the premises gage on the Allen street property; the plain- the sum agreed upon. They cannot escape tiffs paid $1,000, and the balance of $3,000 payment of $1,000 by reason of Mrs. Levy's was due to her from her husband and his purchase of the $13,000 mortgage.

The codefendant as vendees of the Madison street | rights of the parties were not changed by property under the contract with plaintiffs. that incident. If she saw fit to extend to the vendees fur- Mr. Warvelle, in his recent treatise on the ther time in which to pay, it did not con- "American Law of Vendor and Purchaser of cern the plaintiffs. The sale of the Madison Real Property," vol. 2, § 678, states: "The street property and the collateral mortgage | implied lien of a vendor for the unpaid puron the Allen street property to secure the chase money, though having many apparent payment of the third mortgage for $13,000 on analogies in the law, is nevertheless sui the Madison street property are one trans- generis and distinguished from all those action and are to be construed together things to which it may bear some resemThe vendees in the Madison street contract blance. *

* It appears to be founded were given the full credit for the $13,000 upon the presumption that the vendor does mortgage when taking title, notwithstanding not intend unconditionally to part with his the fact that the vendors (the plaintiffs) had land without payment, and that, in common paid $1,000 thereon to the assignee thereof, honesty, he who buys land from another Mrs. Levy. The bald proposition of the should pay for it, or, if he does not, that the vendees is that, while there is really due 'on land should be held for whatever he fails to said mortgage only $12,000, they are to evade pay.” It has been sometimes said by learned payment of $1,000 of the purchase money courts that equity judges have experienced paid for their account by the vendors, in difficulty in finding a solid basis upon which order to escape loss under their contract to to rest the lien. As between the original sell the Allen street property free and clear parties and persons having actual notice of of all incumbrances.

the lien no better foundation is required than We are not called upon to determine the that above stated. Garson v. Green, 1 Johns. position of the vendees if they had refused Ch. 308; Bradley v. Bosley, 1 Barb. Ch. 125; to take title on the law day; the question Stafford v. Van Rensselaer, 9 Cow. 316; Sey. now presented is as to the vendors' rights, mour v. McKinstry, 106 N. Y. 230, 239, 12 the vendees having taken title subject to the N. E. 348, 14 N. E. 94; Dusenbury v. Hulbert, $13,000 mortgage. The appellant vendees in- 39 N. Y. 541. sist that the payment of $1,000 to Flora Levy The order appealed from should be affirmwas a transaction that cannot be considered ed, and judgment absolute ordered for the in the matter of the sale of the Madison plaintiffs on appellants' stipulation, with street property, and that, if vendors have costs in all the courts. any remedy, it is an action for their subrogation to the extent of the amount in question, CULLEN, C. J., and WERNER, WILto the rights of Flora Levy in the $13,000 LARD BARTLETT, HISCOCK, and CHASE, mortgage. We are of opinion that this view JJ., concur. GRAY, J., absent. of the legal situation is erroneous, and that the payment of the $1,000 by vendors is to Ordered accordingly.

78 N.E.-69

-

(186 N. Y. 285)

This action was brought by a stockholder STOKES v. CONTINENTAL TRUST CO. OF

to compel his corporation to issue to him at CITY OF NEW YORK.

par such a proportion of an increase made (Court of Appeals of New York. Nov. 13, 1906.) in its capital stock as the number of shares 1. APPEAL - RECORD - QUESTIONS PRESENTED held by him before such increase bore to FOR REVIEW-QUESTIONS IN INTERMEDIATE the number of all the shares originally is. COURT. Code Civ. Proc. & 1338, provides that on ap

sued, and in case such additional shares peal to the Courts of Appeals from a reversal

could not be delivered to him for his damof a judgment entered in the trial court, it must ages in the premises. The defendant is a be presumed that the judgment was not reversed

domestic banking corporation in the city of upon a question of fact unless the contrary clearly appears. On an appeal from a judgment

New York, organized in 1890, with a capital of the Appellate Division, reversing a judgment stock of $500,000, consisting of 5,000 shares of the special term, no exceptions appeared in of the par value of $100 each. The plaintiff. the record except those taken to the conclusions

was one of the original stockholders, and of law found by the trial court, and the record was silent as to whether or not the reversal was

still owns all the stock issued to him at the based on a question of fact. Held, that the date of organization, together with enough determination of the appeal in the Court of Ap- more acquired since to make 221 shares in peals must turn on whether the legal conclu

all. . On the 29th of January, 1902, the desions of the trial court were justified by the facts found.

fendant had a surplus of $1,048,450.94, which [Ed. Note.-For cases in point, see Cent. Dig.

made the book value of the stock at that vol. 3, Appeal and Error, $ 2950.]

time $309.69 per share. On the 2d of Janu2. CORPORATIONS_RIGHTS OF STOCKHOLDERS

ary, 1902, Blair & Co., a strong and influen-ISSUE OF NEW STOCK.

tial firm of private bankers in the city of A stockholder has a right to a proportion- New York, made the following proposition ate share of new stock issued for money only, of which, aside from waiver, he cannot be de

to the defendant: "If your stockholders at prived without his consent, except when the

the special meeting to be called for January stock is issued at a fixed price not less than par, 29th, 1902, vote to increase your capital stock and he is given the right to take at that price from $500,000 to $1,000,000 you may deliver in proportion to his holding, or in some other

the additional stock to us as soon as issued equitable way whereby he may protect his interests.

at $450 per share ($100 par value) for our[Ed. Note.-For cases in point, see Cent. Dig.

selves and our associates, it being understood vol. 12, Corporations, $8 587, 589.]

that we may nominate ten of the 21 trustees 3. SAME-WAIVER.

to be elected at the adjourned annual meetA corporation, having a large surplus, re- ing of stockholders." The directors of the ceived from an outsider an offer to purchase all of an additional issue of stock at a certain pre

defendant promptly met and duly authorized mium. At a meeting, called to consider the

a special meeting of the stockholders to be proposition, a stockholder voted to increase the called to meet on January 29, 1902, for the stock, but protested against the sale to the out

purpose of voting upon the proposed increase sider, voted against it, and, prior to the acceptance by a majority vote of the outsider's offer,

of stock and the acceptance of the offer to himself offered to purchase his own proportion

purchase the same. Upon due notice a meetate share of the new issue at par, and subse- ing of the stockholders was held accordingly, quently renewed his offer, making formal tender more than a majority attending either in perof payment. Held, that while he was not entitled to his share of the new issue at par, his

son or by proxy. A resolution to increase offer and conduct did not constitute a waiver

the stock was adopted by the vote of 4,197 of his right to subscribe for his share at the shares, all that were cast. Thereupon the price fixed by the acceptance of the offer of the plaintiff demanded from the defendant the outsider.

right to subscribe for 221 shares of the new 4. SAME-MEASURE OF DAMAGES. A stockholder, who has not been given an

stock at par, and offered to pay immediately opportunity to subscribe to his proportionate

for the same, which demand was refused. share of a new issue of stock at the price fixed A resolution directing a sale to Blair & Co. by the stockholders, and who has offered to take

at $450 a share was then adopted by a yote his share at par, is entitled only to the difference between the market value and such fixed

of 3,596 shares to 241. The plaintiff voted price, and not between the market value and the

for the first resolution, but against the last, par value offered by him.

and before the adoption of the latter he pro[Ed. Note.-For cases in point, see Cent. Dig. tested against the proposed sale of his provol. 12, Corporations, $ 589.]

portionate share of the stock, and again deHaight and Willard Bartlett, JJ., dissenting manded the right to subscribe and pay for

the same, but the demand was refused. On Appeal from Supreme Court, Appellate Di- the 30th of January, 1902, the stock was invision, First Department.

creased, and on the same day was sold to Action by William E. D. Stokes against Blair & Co. at the price named, although the the Continental Trust Company of the city plaintiff formerly renewed his demand for of New York. From an order of the Appel- 221 shares of the new stock at par, and tenlate Division (91 N. Y. Supp. 239) reversing dered payment therefor, but it was refused a judgment in favor of plaintiff, entered upon the ground that the stock had already after trial at Special Term, plaintiff appeals. been issued to Blair & Co. owing in part to Reversed, and judgment of the trial court the offer of Blair & Co. which had become modified and affirmed.

known to the public, the market price of the

in part.

stock had increased from $450 a share in General Term in the first district. The court September, 1901, to $550 in January, 1902, held that the plaintiff was entitled to no reand at the time of the trial, in April, 1904, it lief because he did not own any shares when was worth $700 per share. Prior to the the new stock was issued but only an option, special meeting of the stockholders, by au- and that he could not claim to be an actual thority of the board of directors, a circular holder until he had exercised his right of letter was sent to each stockholder, including election. The court further said, however, the plaintiff, giving notice of the proposition that if he was the owner of shares at the made by Blair & Co. and recommending that time of the new issue he had no absolute it be accepted. Thereupon the plaintiff noti- right as such owner to a distributive allotfied the defendant that he wished to sub- ment of the new stock. Matter of Wheeler scribe for his proportionate share of the new was decided by Judge Mason at Special stock, if issued, and at no time did he waive Term, and, although the point was not directhis right to subscribe for the same. Before ly involved, the learned judge said: “As I the special meeting, he had not been definite- understand the law all these old stockholdly notified by the defendant that he could ers had a right to share in the issuing of this not receive his proportionate part of the in- new stock in proportion to the amount of crease, but was informed that his proposi. stock held by them. And if none of the stock tion would "be taken under consideration." was to be apportioned to the old stockholdAfter finding these facts in substance, the ers, they had certainly the right to have the trial court found, as conclusions of law, that new stock sold at public sale, and to the the plaintiff had the right to subscribe for highest bidder, that they might share in the such proportion of the increase, as his hold- gains arising from the sale. In short, the ings bore to all the stock before the increase old stockholders, as this was good stock and was made; that the stockholders, directors,

above par, had a property in the new stock, or and officers of the defendant had no power a right at least to be secured the profits to be to deprive him of that right, and that he was derived from a fair sale of it if they did not entitled to recover the difference between the wish to purchase it themselves; and they have market value of 221 shares on the 30th of been deprived of this by the course which January, 1902, and the par value thereof, or these directors have taken with this new stock the sum of $99,450, together with interest by transferring or issuing it to themselves from said date. The judgment entered ac- and others in a manner not authorized by cordingly was reversed by the Appellate Di- law." In Currie v. White the point was not vision, and the plaintiff appealed to this directly involved, but Judge Folger, referring court, giving the usual stipulation for judg- to the rights acquired under a certain conment absolute in case the order of reversal tract, said: "One of these rights was to take should be affirmed.

new shares upon any legitimate increase of Ernest Hall, for appellant. William B. the capital stock, which right attaches to Hornblower, for respondent.

the old shares, not as profit or income, but

as inherent in the shares in their very creVANN, J. (after stating the facts). No ex- ation," citing Atkins v. Albree, 12 Allen ception worthy of notice appears in the re- (Mass.) 359; Brander v. Brander, 4 Ves. 800, cord, except those filed to the conclusions and notes, Sumner Ed. While this was said of law found by the trial judge. If those in a dissenting opinion, Judge Rapallo, who conclusions are supported by the facts found, spoke for the court, concurred, saying, “As the Appellate Division had no power to re- to the claim for the additional stock, I converse the judgment rendered by the Special cur in the conclusions of my learned Brother Term on questions of law only, as, from the Folger.” The fair implication from both silence of the record, it must be presumed opinions is that if the plaintiff had preserved was done. Code Civ. Proc. § 1338. If the his rights, he would have been entitled to facts found did not warrant the legal con- the new stock. clusions of the trial court the order of re- In other jurisdictions the decisions support versal was right and should be affirmed. the claim of the plaintiff with the exception Thus the question presented for decision is of Ohio Insurance Co. v. Nunnemacher, 15 whether according to the facts found the Ind. 294, which turned on the language of plaintiff had the legal right to subscribe for the charter. The leading authority is Gray and take the same number of shares of v. Portland Bank, decided in 1807 and rethe new stock that he held of the old ? The ported in 3. Mass. 364, 3 Am. Dec. 156. In subject is not regulated by statute, and the that case a verdict was found for the plainquestion presented has never been directly tiff, subject, by the agreement of the parties, passed upon by this court, and only to a to the opinion of the court upon the evilimited extent has it been considered by dence in the case whether the plaintiff was courts in this state. Miller v. Illinois Cen- entitled to recover, and, if so, as to the tral R. R. Co., 24 Barb. 312; Matter of Wheel- measure of damages. The court held that er, 2 Abb. Pr. [N. S.] 361; Currie v. White, stockholders who held old stock had a right 45 N. Y. 822. In the first case cited judg- to subscribe for and take new stock in proment was rendered by a Cirided vote of the portion to their respective shares. As the