GEORGE EHRET, JR., and GEORGE F. TROMMER, as Executors, etc., of WILLIAM G. RINGLER, Deceased, Respondents,
GEORGE RINGLER COMPANY, Defendant. ANNA HACHEMEISTER and J. EDWARD JETTER, as Administrators with the Will Annexed of HENRY HACHEMEISTER, Deceased, Appellants.
APPEAL by Anna Hachemeister and another, as administrators, etc., from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 21st day of February, 1911.
David Leventritt, for the appellants.
John M. Bowers, for the respondents.
This is an appeal from an order of the Special Term appointing a receiver of the corporation known as George Ringler & Co., a going and solvent concern carrying on a large brewing business. This action results from a contest over certain shares of stock in the corporation, the ownership of which practically involves the question of its control and management. The corporation is capitalized at $600,000 divided into 6,000 shares. This stock was owned equally by Henry Hachemeister and William G. Ringler until Henry Hachemeister died in July, 1907, leaving a will by which he appointed William G. Ringler and another his executors and trustees. Ringler alone qualified, and received letters testamentary, and he thereupon became the owner of all of the capital stock, holding 3,000 shares in his own right and 3,000 in his capacity as executor and trustee of the Hachemeister estate. The by-laws of the corporation require that there shall be five trustees, each of whom must be the owner or holder of at least one share of capital stock. Ringler accordingly transferred, out of his individual holdings, five shares each to Mrs. Hachemeister, widow of Henry Hachemeister, deceased, and to George F. Trommer, Arthur Strauss and Isaac Kugelman. This stock was transferred to the respective transferees upon the books of
the company and certificates of stock issued to them. These certificates they indorsed and handed to William G. Ringler among whose papers they were found after his death. It is conceded as to Trommer, Strauss and Kugelman that these transfers were made merely to qualify them to be trustees, and that they never acquired any beneficial interest in the stock thus transferred to them. It is claimed by plaintiffs that the same is true as to the stock transferred to Mrs. Hachemeister, but she asserts the contrary, and the question is involved in another action now pending in this court.
William G. Ringler died January 23, 1910, leaving a will by which plaintiffs were appointed executors and trustees. They duly qualified and letters testamentary were issued to them. Immediately upon their qualification, finding among Ringler's papers the certificate for five shares which had been issued to Mrs. Hachemeister and which she had indorsed, they transferred the shares to themselves, surrendering her certificate and taking out a new one. They also issued a certificate for five shares to John T. Wilson, and one for five shares to George Ehret, Jr. Since Mrs. Hachemeister had ceased to be a stockholder of record the trustees declared her office as trustee to be vacant, and elected John T. Wilson a trustee in her place. George Ehret, Jr., was also elected a trustee in place of William G. Ringler, deceased. Meanwhile Mrs. Hachemeister and one J. Edward Jetter were appointed administrators with the will annexed of Henry Hachemeister, deceased, and Mrs. Hachemeister began an action to enforce her claim to the absolute ownership of the five shares of stock above mentioned. The administrators cum testamento annexo of Henry Hachemeister, deceased, then moved at Special Term to oust all the trustees of the company on the ground that none of them were qualified, because none were, when elected, the beneficial owners of stock in the company. This motion was made under section 32 of the General Corporation Law (Consol. Laws, chap. 23; Laws of 1909, chap. 28) which reads as follows: '§ 32. Powers of Supreme Court Respecting Elections.--The Supreme Court shall, upon the application of any person or corporation aggrieved by or complaining of any election of any corporation or any proceeding, act or matter touching the same,
upon notice thereof to the adverse party, or to those to be affected thereby, forthwith and in a summary way, hear the affidavits, proofs and allegations of the parties, or otherwise inquire into the matters or causes of complaint, and establish the election or order of a new election, or make such order and give such relief as right and justice may require.'
Mr. Justice BISCHOFF, who heard the application at Special Term, held that a director's qualification by holding stock involves and requires his ownership of the beneficial interest therein. He accordingly held that the election of Trommer, Strauss and Kugelman at the last stockholders' meeting on October 30, 1909, was irregular and of no effect, and enjoined these persons from further acting as trustees under such election. He did not pass upon the application as to Ehret and Wilson, because they had not been elected at a stockholders' meeting, but had been elected by the board of trustees to fill vacancies, which, as he considered, was not a matter concerning which the section above quoted conferred summary jurisdiction upon the court. ( Matter of Ringler & Co., 70 Misc. 581.) An order embodying this decision was signed by the justice and deposited with the special deputy to the county clerk assigned to act as clerk of Special Term, Part I, but, as it is said, has not yet been transmitted to the county clerk himself. It was claimed upon the argument, and seems to be assumed by all parties, that an order thus deposited has not become effective, and that filing with the special deputy county clerk is not equivalent to filing with the county clerk. The contrary was distinctly held in Fink v. Wallach (109 A.D. 718). We must assume, therefore, that the order above mentioned was effectual to oust Trommer, Strauss and Kugelman from their offices as trustees, and that order is not before us for review upon this appeal. This left the corporation with only two trustees, less than a quorum.
The statute under which the order appealed from was made is section 306, subdivision 3, of the General Corporation Law (formerly Code Civ. Proc. § 1810, subd. 3). It provides as follows: 'A receiver of the property of a corporation can be ...