Yorkville Business Protective Corp. v. Friedman

City of New York Municipal Court

Yorkville Business Protective Corp. v. Friedman

143 Misc. 333, 256 N.Y.S. 552, 1932 N.Y. Misc. LEXIS 994

DecidedApril 5, 1932

StatusPublished

This text of 143 Misc. 333 (Yorkville Business Protective Corp. v. Friedman) is published on Counsel Stack Legal Research, covering City of New York Municipal Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Yorkville Business Protective Corp. v. Friedman, 143 Misc. 333, 256 N.Y.S. 552, 1932 N.Y. Misc. LEXIS 994 (N.Y. Super. Ct. 1932).

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Opinion

Sulzberger, J.

Plaintiff is a business corporation organized under article 2 of the Stock Corporation Law (as added by Laws of 1924, chap. 441). The action is on an unpaid note against the maker and indorser. The maker is a stockholder of the plaintiff. The substance of the transaction was a loan by the corporation to one of its stockholders. Payment is resisted on the ground that in engaging in this transaction plaintiff violated section 140 of the Banking Law, and, hence, the note is void.

The conscience of the court is not stirred by this defense. Indeed, as was stated in Phelan v. Granite Bituminous Paving Co. (227 Mo. 666, 711, per Lamm, J.): “ It is a sad bird that befouls its own nest.” As I read the precedents, I do not think that I am constrained to hold that the consummated transaction of the loaning of money by a corporation to its own stockholders, who received the benefit therefrom, comes within the purview of the prohibition contained in section 140 of the Banking Law. (Meserole Securities Co. v. Cosman, 253 N. Y. 130; Businessmen’s Mortgage & Credit Corp. v. Dobjinsky, 135 Misc. 628.)

Judgment for the plaintiff as claimed in the complaint.

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Sulzberger, J.

Plaintiff is a business corporation organized under article 2 of the Stock Corporation Law (as added by Laws of 1924, chap. 441). The action is on an unpaid note against the maker and indorser. The maker is a stockholder of the plaintiff. The substance of the transaction was a loan by the corporation to one of its stockholders. Payment is resisted on the ground that in engaging in this transaction plaintiff violated section 140 of the Banking Law, and, hence, the note is void.

The conscience of the court is not stirred by this defense. Indeed, as was stated in Phelan v. Granite Bituminous Paving Co. (227 Mo. 666, 711, per Lamm, J.): “ It is a sad bird that befouls its own nest.” As I read the precedents, I do not think that I am constrained to hold that the consummated transaction of the loaning of money by a corporation to its own stockholders, who received the benefit therefrom, comes within the purview of the prohibition contained in section 140 of the Banking Law. (Meserole Securities Co. v. Cosman, 253 N. Y. 130; Businessmen’s Mortgage & Credit Corp. v. Dobjinsky, 135 Misc. 628.)

Judgment for the plaintiff as claimed in the complaint.

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Bluebook (online)

143 Misc. 333, 256 N.Y.S. 552, 1932 N.Y. Misc. LEXIS 994, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yorkville-business-protective-corp-v-friedman-nynyccityct-1932.

Opinion

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