Summary
In Stevenson v. Cowan (84 App. Div. 135) it was held that "the abandonment of the company's business during the years 1895 and 1896 was merely temporary, and that the directors of the corporation were not relieved from the consequences of the failure of the corporation to file annual reports during those years."
Summary of this case from Costello v. OuttersonOpinion
May Term, 1903.
Henry M. Stevenson, appellant, in person.
Edwin D. Wagner, for the respondents.
The trial court found: "That in the year 1894, the Cattaraugus Water Company abandoned its organization and business, and went out of business," and upon such finding of fact dismissed the plaintiff's complaint.
From the meagre record it appears that the company continued in the business for which it was incorporated until 1894, when the village of Cattaraugus erected a plant in opposition to that of said company. From some time in the latter part of 1894 the company had no receipts, and it did no business thereafter. Subsequently an action was brought by the company against the village of Cattaraugus relating to the supply of water, the complaint in which action was sworn to by the defendant Cowan, as president of said company. That action was tried in July, 1895, and Cowan was one of the witnesses, and testified that he was the president of said company. In March, 1896, proceedings to foreclose the mortgage upon the company's property and franchises were commenced and a sale of all said property and franchises occurred on the 28th day of July, 1896. The company was insolvent during the years 1895 and 1896, but no action was ever brought against it, nor proceedings instituted by it, for the dissolution of said company or for the distribution of its assets among its creditors. The most that can be said from the record before us is that the business for which the company was incorporated had become unprofitable by reason of opposition on the part of the village in which it was situated, and that it had temporarily ceased doing business and exercising its franchises, and had commenced an action to establish its claimed rights. Such action could only have been brought with the hope and intention of resuming business as soon as such rights were established, and the business had again become desirable. So far as appears, the company owned all the rights, property and franchises during the years 1895 and 1896 that it had ever owned. There was not a dissolution of the company either in law or in fact. The abandonment of its organization and business would seem to have been temporary, and had the litigation been successful, or for any other reason the resumption of business had been desirable, it could have proceeded with the business for which it was incorporated at any time prior to the sale on the 28th of July, 1896. Merely ceasing to do business does not relieve directors from filing an annual report. While a technical dissolution of the company is not necessary to relieve directors from the consequences of not filing an annual report, the abandonment of the business and its franchises must be certain and final, and such as to put the company beyond the possibility of resuming business. ( Horrocks Desk Company v. Fangel, 71 App. Div. 313. ) The defendants contend that there is not sufficient evidence that they were directors of the company in the years 1895 and 1896. The trial court has not passed upon that question. The evidence of the defendant Cowan, previously mentioned, and the admissions of the defendants McAlpine and Brock, made in 1897, are at least sufficient to make the question of their being directors in 1895 and 1896 a question of fact to be determined by the trial court.
The judgment should be reversed on the law and facts and a new trial granted, with costs to the appellant to abide the event.
All concurred.
Judgment reversed on law and facts and new trial granted, with costs to appellant to abide event.