3. CORPORATIONS (§ 477*)—Mortgages-VALIDITY-PERSONS ENTITLED TO DEMAND CANCELLATION. Where minority shareholders of a corporation agreed to the mortgaging of its property in consideration of advances by another, and after the advances were made refused to consent to the mortgages, they are not entitled to the aid of a court of equity to cancel mortgages executed by one to whom the directors of the corporation transferred its property to evade the statute requiring the consent of two-thirds of the stockholders, for they do not come into court with clean hands. [Ed. Note. For other cases, see Corporations, Cent. Dig. §§ 1857-1863, 1865-1869; Dec. Dig. § 477.*] Action by the Georgia Building Company and others against Cyril H. Burdett and others. On motion by defendant for judgment on the pleadings, and on plaintiffs' demurrer to the separate defense and counterclaim in the answer, brought on as a contested motion. Defendants' motion for judgment denied, and plaintiffs' demurrer overruled. Charles Dushkind, of New York City, for plaintiffs. BENEDICT, J. [1] The separate defense stated in the amended answer served herein, and which is therein also styled a counterclaim, is not, in my opinion, obnoxious to the demurrer which the plaintiff has interposed. While it is true that it should not, strictly speaking, have been pleaded both as a defense and counterclaim without separation, the plaintiff did not ask to have such severance made, but demurred to it as a counterclaim on the ground that it is not of the character specified in section 501 of the Civil Code, and also that it does not state facts sufficient to constitute a cause of action, and demurred to it as a "defense or counterclaim" upon the ground that it is insufficient in law upon the face thereof. By thus demurring, the plaintiff cannot prevail if the defendant's answer be good either as a defense or as a counterclaim; whereas, had the plaintiff first compelled the separation to be made, he might perhaps thereafter have prevailed upon a demurrer addressed to one or the other form of the defendant's pleading, if the court should then have held that the facts pleaded did not constitute a defense or a counterclaim, as the case might be. The action is in equity, and the principal relief sought is to have canceled certain mortgages, 29 in number, for the aggregate sum of $64,300, which are alleged to have been executed by the defendant Vernewl Realty & Construction Corporation through a transferee to whom the real property of the corporation had been transferred, so as to enable the statute, requiring the consent of two-thirds of the stockholders, to be disregarded, in fraud of the rights of minority shareholders, including the plaintiffs in the action. [2, 3] The plaintiffs set up in their complaint an alleged fraudulent scheme by certain individual defendants, officers and directors of said company, to mortgage its property to another company, the defendant Montrose Realty Company, of which such individual defendants are also alleged to be officers and directors, to the detriment of the stockholders of the former company. Numerous circumstances connected *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes with the alleged fraud are set forth, but the only one that need be here considered is this: That a majority of the directors, in order to avoid the necessity of securing the consent of the holders of two-thirds of the capital stock issued and outstanding, authorized the transfer of the premises to a dummy, who gave the mortgage to the Montrose Realty Company. The defense and counterclaim set up in the answer is in substance that the plaintiff corporations were engaged in erecting buildings on land owned by them, and were embarrassed financially, and that, to save the properties, the Vernewl Realty & Construction Corporation was formed for the purpose of taking over the said land and partly completed buildings and completing the buildings, and that the plaintiffs agreed that the new company might give second mortgages, upon the premises so to be conveyed to it, to whomsoever should advance the money for the purpose of completing the buildings; that by agreement duly made by the Vernewl Company through its directors with the Montrose Realty Company, the latter company did undertake to complete the buildings and to furnish certain funds therefor and did advance the money, it being part of such agreement that the mortgages should be given as security and that the plaintiff corporations, holding more than one-third of the stock of the Vernewl Company, in violation of their agreement upon the organization of the Vernewl Company, refused to give their consent to the mortgages, and therefore the directors of the Vernewl Company, to carry out their agreement with the Montrose Realty Company, resorted to the device above mentioned. It scarcely need be said that such a device is wholly ineffectual to do away with the necessity of obtaining the consent of the stockholders in due form as required by statute; and, on the facts stated in the pleadings, the mortgages are invalid in law (although it is probable that they may be treated as equitable mortgages). But the question remains whether the plaintiffs are entitled to invoke the aid of a court of equity to have them canceled. If, as alleged in the answer, the plaintiffs agreed that such mortgages might be given, and in violation of their agreement, after the money had been advanced, refused to consent thereto, then they do not come into equity with clean hands, and equity will not aid them. The defense as pleaded is therefore sufficient. Whether defendants can have any affirmative relief upon the facts alleged need not, for reasons already stated, be determined at this stage of the action. Some support for the conclusion above reached is derived from Hamilton Trust Co. v. Clemes, 163 N. Y. 423, 57 N. E. 614, although in that case the objectors were judgment creditors of the corporation, and not stockholders. But, assuming the facts alleged in the answer to be true, the plaintiffs, by their own acts, have in the case at bar deprived themselves of the right to invoke the equitable jurisdiction of this court, and hence are in no better position than were the judgment creditors in the case above cited. It may be noted, also, that the contract between the Vernewl Company and the Montrose Realty Company was made during the first year of the former's existence, when presumably the directors named in the certificate of incorporation were still in office; and such directors, it would seem from the case above cited, possess somewhat wider powers to bind the corporation than those elected by the stockholders. The complaint states a cause of action, and the separate defense is good, at least as a defense. The defendants' motion for judgment on the pleadings is therefore denied, and the plaintiffs' demurrer to the separate defense and counterclaim is overruled, with leave to the plaintiffs to withdraw the same and serve a reply within 20 days. (164 App. Div. 540) BARNES v. ROOSEVELT. (No. 304-11.) (Supreme Court, Appellate Division, Third Department. November 25, 1914.) VENUE (§ 50*)-CHANGE OF PLACE OF TRIAL-LOCAL PREJUDICE. In an action for libel brought in Albany county, the county of the plaintiff's residence, against a resident of another county, where the alleged statements reflected upon certain departments of the state government and upon the county organizations of both political parties in Albany county, and where the plaintiff had been for many years the Republican leader in that county, and had controlled the policy of a large newspaper therein, in which the defendant and his views had been vigorously assailed, the place of trial of the action will be changed to another county, to avoid any possible partiality in the jurors. [Ed. Note. For other cases, see Venue, Cent. Dig. § 73; Dec. Dig. § 50.*] Howard, J., dissenting. Appeal from Special Term, Albany County. Action by William Barnes against Theodore Roosevelt. From an order denying defendant's motion for a change of the place of trial (87 Misc. Rep. 55, 149 N. Y. Supp. 291), the defendant appeals. Reversed, and place of trial changed. Argued before SMITH, P. J., and KELLOGG, LYON, HOWARD, and WOODWARD, JJ. Bowers & Sands, of New York City (John M. Bowers and W. H. Van Benschoten, both of New York City, of counsel), for appellant. Ivins, Wolff & Hoguet, of New York City (William M. Ivins, Harold J. Roig, and James S. Y. Ivins, all of New York City, of counsel), for respondent. PER CURIAM. The order appealed from denied the motion of the defendant to change the place of trial from the county of Albany to a county to be named by the court. While the record is voluminous, the single question involved upon this appeal is whether there is reason to believe that an impartial trial cannot be had in the county of Albany. When such a conclusion is reached, the statute makes it the duty of the court to change the place of trial. The questions to be determined by the jury relate mainly to the truthfulness or falsity of certain statements made by the defendant regarding the plaintiff, the making of which the defendant will seek to justify. The statements also reflect upon certain departments of the state government, and *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes upon both political organizations in the county. The issues thus involved are largely personal and political, and have been the subject of much comment by the parties to the action, as well as by the adherents of each. The plaintiff has been a member of the Republican state committee for the district embracing the county of Albany, the place of his residence, for about 20 years, and has long been generally recognized as very influential in the councils of his party, and in fact as the leader and largely in control of the Republican organization of the county. During such time he has also been in control of the policy of a newspaper of large circulation and influence, in the columns of which, both before and after the commencement of this action, the defendant and his views have been vigorously assailed. While the personal and political activities of the plaintiff have doubtless engendered enmities to a greater or lesser extent, they have also resulted in creating obligations to the plaintiff, strong friendships, and a large personal and political following. The defendant, although for periods temporarily sojourning in the county of Albany, has long resided in the county of Nassau, at the extreme southerly end of the state, and were the place of trial located in that county, and the motion one to change the place of trial from the county of Nassau, the statements above made as to the relations of the defendant to his neighbors and other residents. of his county would doubtless, to more or less of an extent, be applicable to such motion. Under the statute either county of Albany or Nassau is a proper county to be designated as the place of trial, as being the county in which one of the parties resided at the time of the commencement of the action, yet in our judgment, under the peculiar circumstances of this litigation, neither party should be compelled to try the action in the county in which the other party resides. Jurors are but individuals, and are subject to impressions and influences of which often they are themselves unconscious. The fairness of the trial should be above suspicion, and the place of trial should be one as to which neither party shall have reasonable ground of apprehension as to the strict impartiality of each juror. For the foregoing reasons, we think that the order appealed from should be reversed. The determination of this motion is in nowise affected by the allegations in the defendant's affidavit of possible irregularities or acts of favoritism on the part of any public officer of Albany county. Indeed, we think the charges in that regard utterly fail, and the action of this court is based wholly upon the grounds hereinbefore stated. Justice, as far as possible, must be administered without even the appearance of partiality. The place of trial is therefore changed to the county of Onondaga, HOWARD, J. (dissenting). I regret that I cannot concur with my colleagues in their conclusion that the venue in this case should be changed. William Barnes has sued Theodore Roosevelt for libel. The defendant alleges that he will not be able to obtain an impartial jury or get a fair trial in Albany county, and he is asking the court to or der the trial into some other county. The Code says that, "where there is reason to believe that an impartial trial cannot be had" (Code Civ. Proc. § 987) in the county where the venue is laid, the court may change the place of trial. Unless there is reason for such belief in this case, the place of trial cannot be changed, for the plaintiff brought his suit in the proper county-the county where the Code commanded him to bring it. And the courts must not lightly send suitors out of the county where the venue is properly laid. "Facts, and not the mere impressions and conclusions of the parties or their witnesses, should be considered and should control." People v. Long Island Railroad Co., 16 How. Prac. 106. The reasons-or it would be better to say the matters which the defendant puts forth as reasons-why the trial should be removed from Albany county may be divided into four parts: First, by insinuation, he accuses the county clerk and other public officials, burdened with the duty of preparing the jury lists and drawing the jurors in Albany county, of the purpose of violating their oaths of office and violating the law by tampering with the jury system of the county to the detriment and prejudice of the defendant; second, he presents a report of the Bayne investigating committee, purporting to show that the jury lists are actually made up in a partisan and political way, and are not composed of the names of fair and impartial jurors, as they should be; third, the plaintiff is alleged to be the owner of a newspaper widely circulating in Albany county, which has published and is publishing matter antagonistic and hostile to the defendant; fourth, the plaintiff is alleged to be the leader of the Republican organization of Albany county, and therefore, and for that reason, exercises now, and will exercise at the trial, great influence over the jurors brought into court, and will obtain in this way an unfair advantage over the defendant. Singling out the county clerk as the one official most likely to lend himself to "jury fixing," the defendant presents the following novel argument in support of his contention: He alleges that while the county clerk was state senator he had made up his mind to vote for the so-called "Agnew-Hart Racing Bill," and informed Senator Agnew of his purpose to do so; but subsequently, at the request of the plaintiff, he changed his mind and voted against the bill. Because of this circumstance the court is asked to conclude that the county clerk will now violate his oath and violate the law by tampering with the jury boxes in his custody. In other words, because an official on some previous occasion had performed a perfectly lawful act at the request of the plaintiff, this court is asked to conclude that on this occasion he will commit a crime. Such logic as this is unknown to the law, unknown to justice, repugnant to fair play, and contrary to common sense. William J. Grattan, the county clerk, has been elected and re-elected to public office time and time again by the voters of Albany county. His public career has been indorsed and repeatedly indorsed by his fellow citizens. If public approval counts for anything, the upright walk of Mr. Grattan's life has been well established. How |