Opinion
February, 1911.
Katz Sommerich, for motion.
Bowers Sands, opposed.
This is a motion to vacate an order appointing a referee in a proceeding for voluntary dissolution of a corporation pursuant to section 170 et seq. of the General Corporation Law. The attorneys for the petitioner raised two preliminary objections. First, that there was no reason given for the granting of the order to show cause returnable in less than five days instead of giving the usual notice of motion. In this they are mistaken, as the fact that provision had to be made for substituted service on Geo. Ehret, Jr., and the short interval of time remaining before the return of the order before the referee were each sufficient reasons for the granting of the order to show cause. Second, that the grounds for the motion to vacate were not set forth in the order to show cause. Rule 37 requires that, where a motion is made to vacate an order because of irregularities, such irregularities must be specified. In this case the objection is jurisdictional and upon the merits and is not required to be set forth in the order to show cause. Agnew v. Latham, 54 Misc. 61; Andrews v. Schofield, 27 A.D. 90. This proceeding was commenced by the petition of George Ehret, Jr. and George F. Trommer, as executors of the last will and testament of William G. Ringler, deceased. The petition is signed "George Ehret, Jr., by George F. Trommer, George F. Trommer as executors of the last will and testament of William G. Ringler, deceased." By what right Trommer assumes to sign the name of Ehret is not stated. This shows, however, that the necessity of having Ehret as coexecutor with Trommer a party to the proceeding was recognized. The statute provides that "an affidavit made by each petitioner to the effect that the matters of fact stated in the petition and schedules are just and true, so far as the affiant knows or has means of knowing the same, must be annexed to the petition and schedule." § 175. In this matter the affidavit of Trommer alone is annexed to the petitioner's schedules. The attorney for the petitioner seeks to justify this by claiming that these coexecutors "constitute an entity and are regarded in law as an individual person," and that the acts of one are deemed to be the acts of all. If this be sound in regard to the affidavit required, then it would be also correct as to the signing of the petition. The petitioner's attorney must hold that one executor could institute the proceeding, and hence his affidavit attached to the petition is the only affidavit required; or, if he concedes that each executor must sign the petition, then it follows that each executor must make the affidavit. The petition is signed only by Trommer as executor. One executor has no power to sign the name of his coexecutor by virtue of his office, nor could Ehret give him that right by power of attorney or otherwise. This proceeding is instituted by one of the two coexecutors. It is well settled that, in an action or proceeding by or against several executors, all must be parties. Brodle v. Hulse, 5 Wend. 313; Scranton v. Farmers Mechanics' Bank, 33 Barb. 527. The petitioner's attorney seeks to reason from section 1817 of the Code of Civil Procedure that this requirement has been obviated. But it has been expressly held that this section "does not change the rule that, in an action for or against executors, all the qualified and acting executors must be made parties." Simpson v. Simpson, 44 A.D. 492, 494. It is true that "co-executors, however numerous, constitute an entity and are regarded in law as one person. Consequently, the acts of any of them in respect to the administration of estates are deemed to be the acts of all, for they have all a joint and entire authority over the whole property. It would seem to follow from this principle that they have the powers of joint and several agents of one principal and that any act done or performed by one within the scope and authority of his agency is a valid exercise of power and binds his associates." Barry v. Lambert, 98 N.Y. 300, 308. But this is limited to acts of a ministerial nature; acts that call for the exercise of judgment and discretion one of several cannot do. The concurrence of all is necessary. Perry Trusts, § 411; Fritz v. City Trust Co., 72 A.D. 532. The institution of these proceedings is not a mere ministerial act. The bulk of the estate is invested in the stock of this corporation. Whether that corporation shall be dissolved, its assets sold and its stockholdings reduced to cash requires the exercise of judgment and discretion of the highest degree. Therefore, both upon law and in reason, one coexecutor could not bring this proceeding. On the other hand, if George Ehret, Jr., should be deemed to be a petitioner, then the statutory requirement with respect to the affidavits is not met. The proceeding is purely statutory and the statute must be substantially followed or the entire proceeding is invalid. Hitch v. Hawley, 132 N.Y. 212. As to the question of fact presented by the affidavits as to the stockholdings of the respective parties, I do not feel that to be a matter that can be considered in this proceeding. It seems to be conceded that the holdings, as shown by the books of the corporation of William G. Ringler's estate, are 3,000 shares. Whether five shares were wrongfully transferred from Mrs. Hachemeister must be determined in an appropriate action or proceeding directly brought to determine that issue. It cannot be considered collaterally in this proceeding. But, conceding that the stock of the corporation is equally divided into not more than two independent ownerships or interests, it must be further shown that it would be beneficial to the interests of the stockholders that the corporation should be dissolved. It is alleged in the petition that the present directors are friendly to the petitioner's interest, and, by reason of the equally divided stock and the impossibility of any one voting a majority of the stock against them, that they cannot be ousted; that the earnings of the company have been greatly increased under the management of the present officers and of the petitioners; that the company is solvent, with large surplus, and is earning large profits. Under such circumstances, how is it beneficial to the stockholders that this corporation should be dissolved? There is not as much shown here as was stated in the petition in Matter of Pyrolusite Manganese Co., 29 Hun, 431, which the court held to be entirely insufficient. The sole reason seems to be (so far as the petition discloses the reason) that it is unpleasant for the officers and directors to continue to hold over, knowing that one-half of the stockholders desire to make a change. However their personal feelings may be hurt, it does not and should not interfere with their giving their best endeavors, which have been so signally beneficial to the stockholders in the past; and the consciousness of a duty well performed should be a sufficient balm for their wounded feelings. This proceeding is brought on one day's notice to the Attorney-General, who appeared in court and consented, on the return day, to its being added to the printed calendar, and stated there was no opposition to the application. While the Attorney-General has the right to accept such notice as he deems sufficient, the purpose of giving him notice is to insure some publicity to the proceedings, otherwise they might be granted ex parte. The course pursued in this matter not alone defeated the publicity that the application would have had from the printing of the calendar in the Law Journal; but, by stating that there was no opposition, led to the granting of the motion without the scrutiny of the papers by the court that would have been given to an ex parte application. For the reasons given, the motion to vacate the order of November 11, 1910, should be granted, with ten dollars costs.
Motion granted.