Summary
holding plaintiff was entitled to have merged corporation substituted for absorbed corporation when merger officially took place after the summons was served
Summary of this case from Bryant v. Waste Management, Inc.Opinion
June 11, 1909.
Yorke Allen, for the appellant.
Maurice Goodman, for the respondent.
The action is to restrain the defendants from using the word "Sarony" in connection with the photograph business, the plaintiff claiming to have purchased the right to the use of that name from the representatives of Napoleon Sarony, who had for a long time carried on the photographic business under such alleged trade name designation.
Summons was served on the defendant Sarony Company, photographers, and a motion was made to set aside such service on the ground that, prior to the commencement of the action and in January, 1906, such corporation had been merged in the Marceau Company, Limited. The certificate of merger was claimed to have been ineffectual and defective in that it stated that the directors of the Marceau Company owned all the capital stock of the Sarony Company, instead of stating that the corporation itself owned all the stock of the latter company. A motion to set aside the service of the summons was denied, and on appeal to this court the order was affirmed. ( 121 App. Div. 926.) Thereafter and on the 9th day of December, 1907, for the purpose of correcting whatever defect may have existed in the original certificate of merger, the Marceau Company filed a new certificate of merger with the Sarony Company, alleging that the corporation owned the stock, which latter certificate is not criticised. Thereupon the plaintiff made this motion to have the Marceau Company substituted as defendant in place and stead of the Sarony Company on the ground that there had been a transfer of interest and devolution of liability from the one corporation to the other. This motion was denied and the plaintiff appeals.
The respondent, the Sarony Company, answered and set up various defenses, including one that it was not a proper party defendant in this action, because the Marceau Company should have been sued instead of it on account of the merger which had taken place, and urges that such defense will be destroyed if substitution is permitted, and also insists that the first certificate of merger was valid, and hence the Sarony Company never should have been sued at all.
The validity of the first certificate of merger was directly involved in the former motion to set aside the service of summons on the Sarony Company, for if it in fact had been merged service of summons upon it was improper and should have been set aside. The Special Term and this court having refused to set it aside necessarily held that the attempted merger was ineffectual. However that may be, unquestionably the Sarony Company has now been merged in the Marceau Company, and section 756 of the Code of Civil Procedure prescribes that in case of a transfer of interest or devolution of liability an action may be continued by or against the original party unless the court directs the person to whom the interest is transferred or upon whom the liability is devolved to be substituted in the action or joined with the original party as the case requires.
The Marceau Company is carrying on whatever photographic business the Sarony Company carried on and if plaintiff's rights are now being violated with respect to the use of the word "Sarony" they are being violated by the Marceau Company. The action being in equity, if such facts appeared upon the trial the court might order the trial suspended and direct the plaintiff to bring in the additional party. ( Ackerman v. True, 120 App. Div. 172. ) Under the provisions of section 756 of the Code above stated, the plaintiff was entitled to have the Marceau Company substituted in place of the corporation which it had absorbed by merger, and the motion should have been granted.
The order, therefore, must be reversed, with ten dollars costs and disbursements, and the motion granted, without costs.
INGRAHAM, McLAUGHLIN, CLARKE and SCOTT, JJ., concurred.
Order reversed, with ten dollars costs and disbursements, and motion granted, without costs.