PART I bank, on the first day of July, one thousand eight hundred and forty-three, and the comptroller shall be satisfied from the facts stated by the president and cashier of such bank, on oath, that such unregistered notes so reported as in circulation on the day aforesaid, have probably been lost or destroyed, he may issue to such bank, notes in lieu thereof to an equal amount of those so lost or destroyed, the same as though such unregistered circulating notes had been returned to the comptroller's office.

Liability of stockholders for

tracted

1850.

con

af

S2. It shall be the duty of the comptroller to require of all banks asking for and receiving circulating notes under the provisions of the first section of this act, to deposit in his office stocks of this state to be, or to be made to be, equal to a stock producing six per cent per annum, equal to the amount of the notes issued.

CHAP. 226.

AN ACT to enforce the responsibility of stockholders in certain banking corporations and associations, as prescribed by the constitution, and to provide for the prompt payments of demands against such corporations and associations.

PASSED April 5, 1849.

The People of the State of New York, represented in Senale and Assembly, do enact as follows:

1. Whenever default shall be made in the payment of any debt or liability, contracted after the first day of January, one thousand eight hundred and fifty, by any corporation or joint ter January, stock association for banking purposes, issuing bank notes or any kind of paper credits to circulate as money, after the first day of January, one thousand eight hundred and fifty, the stockholders of such corporation or association shall be individually responsible, equally and ratably, such responsibility to be enforced as hereafter provided, and in no other manner, for the amount of such debt or liability, with interest, to the extent of their respective shares of stock in any such corporation or association, as hereinafter provided.

The term stockholder

apply.

22 N. Y.. 12; 18 N. Y., 207; 29 B., 369; 25 B., 416; 27 N. Y., 393; 41 B., 520; 39 B., 356.

S2. The term "stockholder," as used in this act, shall to whom to apply not only to such persons as appear by the books of the corporation or association to be such, but also to every equit. able owner of stock, although the same may appear on such books in the name of another person; and also to every person who shall have advanced the installments or purchase money of any stock in the name of any person under twentyone years of age, and while such person remains a minor, to the extent of such advance; and also to every guardian or

other trustee who shall voluntarily invest any trust funds in such stock; and no trust funds in the hands of such guardian or trustee shall be in any way liable under the provisions of this act, by reason of any such investment, nor shall the person for whose benefit any such investment may be made, be responsible in respect to such stock, until thirty days after the time when such persons, respectively, become competent and able to control and dispose of the same; but the guardian or other trustee making such investment as aforesaid, shall continue responsible as a stockholder until such responsibility devolves upon the person beneficially interested therein; and in respect to stock held by a guardian or other trustee, under a transfer of the same by a third person, or under positive directions by a third person for such investment, the person making such transfer, or giving such directions, and his executor and administrators, shall for the purposes of this act, be deemed a stockholder, and the estate of such person, if he be deceased, shall be responsible for the debts and liabilities chargeable on such stock according to the provisions of this act.

CHAP. XX.

stockhold

ed in the

$3. The persons who shall be stockholders of any corpora- Liability of tion or association described in the first section of this act, at ers describ the time of contracting any debt or liability by such corpora- first section tion or association, shall be responsible therefor, as declared in the said first section, but shall be exonerated from such responsibility in respect to any stock which shall have been transferred, previous to any default in the payment of such debt or liability, on the books of such corporation or association, to any resident of this state, of full age, in good faith and without any intent to evade such responsibility; and every assignee of any stock so transferred previous to such default, shall be responsible for debts and liabilities to the extent of such stock, in the same manner as if he had been the owner at the time of contracting such debt or liability, with the same exception in his favor, in respect to any stock transferred by him as herein provided; and the same rule of responsibility shall apply to each subsequent assignee.

25 B., 416.

residences

be kept in vided for

рове.

54. A book shall be provided and kept by every corpora- Names and tion and association described in the first section of this act, of stock in which shall be entered the names and residences of the holders to stockholders in such corporation or association on the first a book pro day of January, one thousand eight hundred and fifty, and that pur the names and residences of the original stockholders of every corporation or association organized after the day last mentioned, so far as the same are known to the officers of the bank; the number of shares held by each stockholder; every registered transfer of stock upon the books of the bank after the said last mentioned day; the names of the assignor and assignee, with their residences and the number of shares trausferred. The said book shall be at all times, during the

PART I

Book to be kept open

for inspection.

Penalty.

After 20

days, plain entitled to

tiff may be

enter an order or rule for

usual hours of transacting business, open to public inspection. And a refusal by any officer of such corporation or association to exhibit such book to any person demanding the inspection thereof, as herein provided, shall subject the said corporation or association to a penalty of fifty dollars for every such refusal. And every refusal by any such officer having once refused to exhibit such book as aforesaid, is hereby declared to be a misdemeanor, and the officer so offending, upon conviction thereof, shall be adjudged guilty of a misdemeanor, and be punished by a fine not exceeding one hundred dollars for every such subsequent refusal, or by imprisonment for a term not exceeding six months, or by both such fine and imprisonment. The said penalty may be sued for and recovered, with costs, by any person who will prosecute for the same; the one moiety thereof to be paid to such person, and the other moiety to be paid into the treasury of the state. In all proceedings under the provisions of this act, the said book shall be presumptive evidence of the truth of the contents thereof; but such presumption may be repelled by evidence by any party or person interested in repelling the same. Thus amended by Laws of 1859, ch. 365.

S5. After the expiration of twenty days from the service of any summons or complaint or declaration, or proceeding for the recovery of any demand against any corporation or association described in the first section of this act, upon any judgment. debt or liability exceeding one hundred dollars, contracted after the first day of January next, in which the precise sum demanded shall be stated, the plaintiff shall be entitled to enter an order or rule for judgment, upon filing such complaint or other proceeding with due proof of personal service thereof upon any officer of such corporation or association, and judgment shall be rendered thereon for such demand, with interest and costs, whether an answer to such complaint or other proceeding has been served or not, unless an order shall have been filed in the office of the clerk where such judgment might be entered, granted by a justice of the supreme court or county judge, that the entry of such judgment be stayed until the issue joined or to be joined by the parties be disposed of. But no such order shall be granted without proof by affidavit to the satisfaction of such judge that the defendant in such suit has a good defence on the merits to such demand, or some part thereof, arising upon facts set forth in such affidavits.

$6. Upon the return of an execution against the property of any corporation or association described in the first section of this act unsatisfied in whole or in part, or upon proof satisfactory to any justice of the supreme court, that any such execution although not returned, cannot be satisfied out of any property of the defendant, he shall at once make an order declaring the insolvency of such corporation or association.

CHAP. XX.

made for

lution.

$7. Any creditor of any such corporation or association Application having a demand exceeding one hundred dollars arising when to be upon a debt or liability contract after the first day of January such disso next, the payment of which shall have been refused by such corporation or association, may, at any time after ten days from the time of such refusal, apply to a justice of the supreme court for an order declaring such corporation or association insolvent and for an injunction as hereinafter provided. If in the opinion of such judge, upon the facts presented, it be expedient in order to prevent fraud or injustice, he may grant an order for a temporary injunction, restraining such corporation or association, and its officers from paying out or in any way transferring or delivering to any person, any money or assets of such corporation or association, or incurring any debt or obligation, until such order be vacated or modified.

26 B., 305, 310.

58. Upon a hearing of the parties on such short notice as Duty of the judge shall appoint, he shall determine whether such cor- hearing of Judge on poration or association be clearly solvent or otherwise, and parties. may require the officers thereof to exhibit any and all of its books, papers, accounts, assets and effects, and to be examined on oath touching the same before him, or a referee to be appointed by him. If he determine that such corporation or association is clearly solvent, he shall notwithstanding continue the order for a temporary injunction if one has been granted, until the demand of the applicant be fully paid with his costs on such application; unless it shall have appeared by affidavit or otherwise that such corporation or association have a good defence on the merits to such demand.

make

$9. If the judge determine that such corporation or asso- When to ciation is not clearly solvent, he shall make an order declaring order to rethe same insolvent and shall also by order restrain such cor- strain. poration or association and its officers from exercising any of its corporate rights or any rights or privileges granted to it by law, and from collecting or receiving any debts or demands and from paying out or in any way transferring or delivering to any person any of its property, money or effects, until such order be vacated; and he shall immediately appoint a receiver of the property of such corporation or association.

more stock.

may apply

corporation

$10. Any one or more stockholders of any such corporation One or or association owning stock to the amount of one-tenth part holders of the capital thereof paid in, may at any time, in like manner for order apply to any justice of the supreme court for an order declaring to declare such corporation or association insolvent, or in imminent dan- insolvent. ger of insolvency. And if on the facts verified by affidavit presented such justice shall deem it necessary or expedient in order to prevent fraud, undue preference or injustice to creditors, he may grant an order in the nature of a temporary injunction, as specified in the seventh section of this act; upon a hearing of the parties as soon as may be practicable, he may

PART I

Power and duty of receivers.

Securities

when to be into cash.

converted

require the exhibition to him, or to a referee to be appointed by him of all the books, papers, accounts, assets and effects of such corporation or association; and an examination of the officers, servants and agents thereof under oath; and if he determine that such corporation or association is not clearly solvent, or that it is in imminent danger of insolvency, he shall make an order declaring such determination, and shall by order restrain the said corporation or association and its officers, in the same manner as provided in the ninth section. of this act, and shall also appoint a receiver of the property of such corporation or association.

$ 11. Every receiver appointed according to this act, after giving security, shall take into his possession all the property, effects, books, papers, accounts and demands against such corporation or association; including the securities, if any, which may have been deposited with the superintendent belonging to such corporation or association, excepting therefrom so much of the same as may be necessary to enable the superintendent of the banking department to pay and redeem the outstanding circulation of such corporation or association. He shall immediately give notice, by publication in such newspapers as the superintendent or any justice of the supreme court shall direct, requiring the creditors of such corporation or association to exhibit and establish their demands before him within thirty days from the time of his appointment. Such receiver shall possess all the powers of receivers of corporations under the third article of title four of chapter eight and part third of the Revised Statutes in respect to the settlement of all demands exhibited to them, and in all other respects, except as herein otherwise provided; and all such powers now conferred by law on trustees of insolvent debtors as may be applicable, and shall be subject to all the duties and obligations by law imposed on receivers of corporations except as herein modified.

Thus amended by Laws of 1855, ch. 69. 37 B., 228.

12. Under the direction of the comptroller, all securities deposited with him belonging to such corporation or association, shall be converted into cash by the receiver, with the least possible delay, and the receiver shall also convert into cash the effects and demands of such corporation or association, and for that purpose may sell at auction any of the said demands which any justice of the supreme court shall authoDividends rise to be sold; and within ninety days from the time of his appointment, unless such time be enlarged by a justice of the supreme court, which may be done for a period not exceeding ninety days, such receiver shall declare a dividend of the cash in his hands among the creditors of such corporation or association.

to be made.

Expenses to be deducted be

$ 13. Before making such dividend, the receiver shall deduct and retain the sums necessary to defray the expenses of the proceedings, and all sums which he may have paid in order to