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CHAP. IX.
Art. IX.

of the State, and forfeiting its corporate rights, privileges, and franchises, may be maintained, as prescribed in the next section :

1. Where the corporation has remained insolvent for at least one year.

2. Where it has neglected or refused, for at least one year, to pay and discharge its notes or other evidences of debt.

3. Where it has suspended its ordinary and lawful business for at least one year.

4. If it has banking powers, or power to make loans on pledges or deposits, or to make insurances, where it becomes insolvent or unable to pay its debts, or has violated any provision of the act, by or under which it was incorporated, or of any other act binding upon it.

Webster v. Turner, 12 Hun, 264 ; People v. Albany, etc., Railroad Co., 15 id. 126.

$ 1786. [Amended 1880, chap. 301.] An action, specified in the Id. : by last section, may be maintained by the attorney-general, in the to be

brought. name and in behalf of the people, and whenever a creditor or stockholder of any corporation submits to the attorney-general a written statement of facts, verified by oath, showing grounds for an action under the provisions of the last section, and the attorneygeneral omits for sixty days after this submission, to commence an action specified in the last section, then, and not otherwise, such creditor or stockholder may apply to the proper court for leave to commence such an action, and on obtaining leave may maintain the same accordingly. $ 1787. In an action brought as prescribed in this article, the Temporary

iujunction, court may, upon proof of the facts authorizing the action to be maintained, grant an injunction order, restraining the corporation, and its trustees, directors, managers, and other officers, from collecting or receiving any debt or demand, and from paying out, or in any way transferring or delivering, to any person, any money, property, or effects of the corporation, during the pendency of the action ; except by express permission of the court. Where the action is brought to procure the dissolution of the corporation, the injunction may also restrain the corporation, and its trustees, directors, managers and other officers, from exercising any of its corporate rights, privileges, or franchises, during the pendency of the action ; except by express permission of the court. visions of title second of chapter seventh of this act, relating to the granting, vacating, or modifying of an injunction order, apply

The pro

CHAP. IX.
Art. IX.

Receiver

may be

Permanent and temporary receiver. Powers, etc., of

to an injunction order, granted as prescribed in this section ; except that it can be granted only by the court.

$ 1788. (Amended 1882, chap. 399.) In such an action, the appointed. court may also, at any stage thereof, appoint one or more receivers

of the property of the corporation. A receiver, so appointed before a final judgment, is a temporary receiver, until final judg

ment is entered. A temporary receiver has power to collect and temporary receiver.

receive the debts, demands, and other property of the corporation; to preserve the property and the proceeds of the debts and demands collected ; to sell, or otherwise dispose of, the property, as directed by the court ; to collect, receive, and preserve the proceeds thereof; and to maintain any action or special proceeding, for either of those purposes. He must qualify as prescribed by law, for the qualification of a permanent receiver. Unless additional powers are specially conferred upon him, as prescribed in the next section, a temporary receiver has only the powers specified in this section, and those which are incidental to the exercise thereof. A receiver, appointed by or pursuant to a final judgment in the action, or a temporary receiver who is continued by the final judgment, is a permanent receiver, and has all the powers and authority conferred, and is subject to all the duties imposed upon a receiver appointed* the voluntary dissolution of a corporation.

(See R. S., Part III, Chap. VIII, Title IV, Art. 2, 8 42, ante, p. 239.) Additional 8 1789. A temporary receiver, appointed as prescribed in the

last section, is, in all respects, subject to the control of the court.

In addition to the powers conferred upon him, by the provisions temporary receiver. of the last section, the court may, by the order or interlocutory

judgment appointing him, or by an order subsequently made in the action, or by the final judgment, confer upon him the powers and authority, and subject him to the duties and liabilities, of a permanent receiver, or so much thereof as it thinks proper; except that he shall not make any distribution among the creditors or stockholders, before final judgment, unless he is specially directed

so to do by the court. Making § 1790. Where the action is brought by a creditor of a corpora

tion, and the stockholders, directors, trustees, or other officers, or parties.

any of them, are made liable by law, in any event or contingency, for the payment of his debt the persons, so made liable, may be made parties defendant, by the original or by a supplemental

powers and

duties may be conferred

upon

stockholders, etc.,

* The word “ upon ” left out of engrossed bill.

CHAP. IX.

separate

action,

complaint; and their liability may be declared and enforced by Art. IX. the judgment in the action.

$ 1791. Where the stockholders, directors, trustees, or other When officers of a corporation, who are made liable, in any event or action may contingency, for the payment of a debt, are not made parties against defendant, as prescribed in the last section, the plaintiff in the action may maintain a separate action against them, to procure a judgment, declaring, apportioning, and enforcing their liability.

$ 1792. In an action, brought as prescribed in either of the last Proceedtwo sections, the court must, when it is necessary, cause an account either to be taken of the property and of the debts of the corporation, and thereupon the defendants' liability must be apportioned accordingly; but, if it affirmatively appears, that the corporation is insolvent, and has no property to satisfy its creditors, the court may, without taking such an account, ascertain and determine the amount of each defendant's liability, and enforce the same accordingly.

$ 1793. A final judgment in an action, brought against a cor- Judgment; poration, as prescribed in this article, either separately or in con-property of junction with its stockholders, directors, trustees, or other officers, to be dismust provide for a just and fair distribution of the property of the corporation, and of the proceeds thereof, among its fair and honest creditors, in the order and in the proportions prescribed by law, in case of the voluntary dissolution of a corporation.

$ 1794. Where the stockholders of a corporation are parties to id, i stock the action, if the property of the corporation is not sufficient to tions to be

recovered. discharge its debts, the interlocutory or final judgment, as the case requires, must adjudge that each stockholder pay into court the amount due and remaining unpaid, on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the corporation.

$ 1795. If it appears, that the property of the corporation, and Id.; as to the sums collected or collectible from the stockholders, upon their

liabilities of

directors stock subscriptions, are or will be insufficient to pay the debts of holders. the corporation, the court must ascertain the several sums, for which the directors, trustees, or other officers, or the stockholders of the corporation, being parties to the action, are liable; and must adjudge that the same be paid into court, to be applied, in such proportions and in such order as justice requires, to the payment of the debts of the corporation.

and stock

CHAP. IX.
Art. IX

Effect of this article limited.

$ 1796. This article does not repeal or affect any special provision of law, prescribing that a particular kind of corporation shall cease to exist, or shall be dissolved, in a case or in a manner, not prescribed in this article; or any special provision of law, prescribing the mode of enforcing the liability of the stockholders of a particular kind of corporation.

1797

directs,

leave of court,

(ART. 4) — ACTION BY THE PEOPLE TO ANNUL A CORPORATION.
SEC.

Action by attorney-general, when legislature directs.
1798. Id.; by leave of court.
1799. Leave, when and how granted.
1800. Action triable by a jury.
1801. Judgment.
1802. Injunction may issue.

1803. Copy of judgment-roll to be filed and published, Action by § 1797. The attorney-general, whenever he is so directed by the attorneygeneral, legislature, must bring an action against a corporation created by when legislature or under the laws of the State, to procure a judgment, vacating

or annulling the act of incorporation, or any act renewing the corporation, or continuing its corporate existence, upon the ground that the act was procured upon a fraudulent suggestion, or the concealment of a material fact, made by or with the knowledge

and consent of any of the persons incorporated. Id. ; by

$ 1798. Upon leave being granted, as prescribed in the next section, the attorney-general may bring an action against a corporation created by or under the laws of the State, to procure a judgment, vacating the charter or annulling the existence of the corporation, upon the ground that it has, either,

1. Offended against any provision of an act, by or under which it was created, altered, or renewed, or an act amending the same, and applicable to the corporation ; or

2. Violated any provision of law, whereby it has forfeited its charter, or become liable to be dissolved, by the abuse of its powers; or

3. Forfeited its privileges or franchises, by a failure to exercise its powers; or,

4. Done or omitted any act, which amounts to a surrender of its corporate rights, privileges, and franchises ; or,

5. Exercised a privilege or franchise, not conferred upon it by law.

People v. Cohocton Stone Road, 25 Hun, 15; People v. Boston, Hoosac Tunnel and Western Railway Co., 27 id. 528.

CHAP. IX.

when and

$ 1799. Before granting leave, the court may, in its discretion, Art. ix. require such previous notice of the application, as it thinks proper, Leare, to be given to the corporation, or any officer thereof, and may hear how

granted. the corporation in opposition thereto.

People v. Boston, Hoosac Tunnel and Western Railway Co., 27 Hun, 528. $ 1800. An action, brought as prescribed in this article, is tria- Action

triable by ble, of course and of right, by a jury, as if it was an action speci- a jury. fied in section 968 of this act, and without procuring an order, as prescribed in section 970 of this act.

§ 1801. Where any of the matters, specified in section 1797 or Judgment. section 1798 of this act, are established in an action, brought as prescribed in either of those sections, the court may render final judgment that the corporation, and each officer thereof, be perpetually enjoined from exercising any of its corporate rights, privileges, and franchises ; and that it be dissolved. The judgment must also provide for the appointment of a receiver, the taking of an account, and the distribution of the property of the corporation, among its creditors and stockholders, as where a corporation is dissolved upon its voluntary application, as prescribed in chapter seventeenth of this act. People v. Cohocton Stone Road, 25 Hun, 15.

$ 1802. In an action, brought as prescribed in this article, an Injunction injunction order may be granted, at any stage of the action, máy issue. restraining the corporation, and any or all of its directors, trustees, and other officers, from exercising any of its corporate rights, privileges, or franchises ; or from exercising certain of its corporate rights, privileges, or franchises, specified in the injunction order; or from exercising any franchise, liberty, or privilege, or transacting any business, not allowed by law. Such an injunction is deemed one of those specified in section 603 of this act, and all the provisions of title second of chapter seventh of this act, applicable to an injunction specified in that section, apply to an injunction granted as prescribed in this section, except that it can be granted only by the court.

§ 1803. Where final judgment is rendered against a corporation, Copy of in an action, brought as prescribed in this article, the attorney-roll to be general must cause a copy of the judgment-roll to be forthwith published. filed in the office of the secretary of State ; who must cause a notice of the substance and effect of the judgment, to be published, for four weeks, in the newspaper printed at Albany, in which legal notices are required to be published, and also in a

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