Johnson v. Beneficial Loan Society, Inc.

251 A.D. 839, 296 N.Y.S. 717, 1937 N.Y. App. Div. LEXIS 7894

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: June 11, 1937
• Status: Published

Opinion

Action brought upon two alleged causes by plaintiffs, holders of Series B debenture bonds of defendant Beneficial Loan Society, Inc., and accompanying certificates of profit sharing, (a) to set aside the transfer of the assets of that defendant to defendant Beneficial Industrial Loan Corporation as being in fraud of creditors of the former; (b) to procure an accounting from certain defendants for their acts of misconduct to the detriment of defendant Beneficial Loan Society, Inc., and (e) to procure distribution of interest payments to the bondholders. In our opinion (a) there is no authority for striking out the name of a defendant foreign corporation as an incident to the setting aside of service of the summons upon it; (b) the plaintiffs’ showing was sufficient legally to warrant the examination of Morgan and Hirschfield to procure then testimony to be used in opposition to the motion to set aside service of summons upon defendant Beneficial Industrial Loan Corporation before that motion and the motions of defendants Watts and Clarence Hodson & Company, Inc., to dismiss the complaint were determined.

(1) Order granting the motion of defendant Beneficial Loan Society, Inc., to vacate service of summons upon it and to strike its name from the summons and complaint, modified so as to provide that the motion be granted to the extent of vacating service of the summons and complaint, and that otherwise it be denied, and as so modified affirmed, without costs. Lazansky, P. J., Hagarfy, Johnston, Adel and Taylor, JJ., concur.

(2) Order granting the motion of defendant Beneficial Industrial Loan Corporation to vacate service of summons upon it and to strike its name from the summons and complaint reversed on the law and the facts, without costs, and motion denied, with leave to that defendant to renew only in that phase which contemplates the setting aside of service, after the examination of H. A. Morgan and Harold J. Hirschfield shall have been had. Lazansky, P. J., Hagarty and Taylor, JJ., concur; Johnston and Adel, JJ., dissent and vote to modify the order so as to provide that the motion be granted to the extent of vacating service of the summons and complaint and to deny the motion in other respects.

(3) Order denying the motion of the plaintiffs for the examination of H. A. Morgan, Harold J. Hirschfield, and Charles Henry Watts (Civ. Prae. Act, § 307, and Rules Civ. Prae. rule 120) modified so as to provide that the motion be granted as to H. A. Morgan and Harold J. Hirschfield and that it be denied as to Charles Henry Watts, and as modified affirmed, without costs; the examination to proceed on five days’ notice. Lazansky, P. J., Hagarty and Taylor, JJ., concur; Johnston and Adel, JJ., dissent and vote to affirm without modification.

(4) Orders granting respectively motions of defendants Watts and Clarence Hodson & Company, Inc., to dismiss the complaint upon various grounds, and the judgment of dismissal of the complaint as to those defendants, thereon entered, reversed on the law and the facts, without costs, and each motion denied, with leave to renew it after the examination of H. A. Morgan and Harold J. Hirschfield. Lazansky, P. J., Hagarty and Taylor, JJ., concur; Johnston and Adel, JJ., dissent and vote to affirm.