Summary
In Wollman, the trial court ordered dissolution of Chevreau, Ltd., a corporation whose stock was held, 50% each, by two distinct parties, the Nierenberg sisters and the Littmans.
Summary of this case from Renbaum v. Custom HoldingOpinion
December 15, 1970
Order, Supreme Court, New York County, entered February 26, 1970, ordering dissolution of Chevreau, Ltd. and appointing a receiver, unanimously modified, on the law and the facts, by striking the provisions for dissolution and limiting the powers of the receiver to maintaining the status quo of the corporation subject to ordinary business activities until the further order of the court, and, as so modified, affirmed, without costs and without disbursements. Appeals from orders entered April 14, 1970 and May 22, 1970 dismissed. It is directed that this action and the action in Appeal No. 2917N ( Littman v. Nierenberg, 35 A.D.2d 934) be tried together, but not consolidated. The stock of the corporation is held, 50% each, by two distinct groups, one of which, the Nierenberg sisters, are plaintiffs, and the other, the Littmans, defendants, each group having equal representation on the board of directors. The corporation's business is the selling of artificial fur fabrics to garment manufacturers. Defendants, the Littmans, allegedly had the idea for the business and developed a market for the fabrics among its manufacturing customers. Plaintiffs are the daughters of Louis Nierenberg, the main stockholder of Louis Nierenberg, Inc., who procures the fabrics and sells them to the corporation. The Littmans, in a separate action in which they are plaintiffs, charge the plaintiffs here (the Nierenberg sisters) and Louis Nierenberg Corporation with seeking to lure away the corporation's customers for Louis Nierenberg Corporation and with doing various acts to affect the corporation's business adversely. The Nierenberg faction countered with this suit, claiming that the bringing of the other action indicates that the corporate management is at such odds among themselves that effective management is impossible. Special Term agreed, but we do not. Irreconcilable differences even among an evenly divided board of directors do not in all cases mandate dissolution (see 12 N.Y. Jur., Corporations, § 1093, p. 520; Matter of Victorian Sales Corp., 32 Misc.2d 275). Here, two factors would require further exploration. The first is that the functions of the two disputing interests are distinct, one selling and the other procuring, and each can pursue its own without need for collaboration. The second is that a dissolution which will render nugatory the relief sought in the representative action would actually accomplish the wrongful purpose that defendants (Nierenberg) are charged with in that action. It would not only squeeze the Littmans out of the business but would require the receiver to dispose of the inventory with the Nierenbergs the only interested purchaser financially strong enough to take advantage of the situation. Such a result if supported by the facts, would be intolerable to a court of equity. A trial of the issues is necessitated. On that trial it has been agreed by both counsel it would be advantageous to have the representative action and the action for dissolution tried together, though not consolidated (for a discussion of the distinction, see the comprehensive opinion in Padilla v. Greyhound Lines, 29 A.D.2d 495), and it is so directed. We affirm the appointment of a Receiver. His function, however, should be limited to the necessities indicated, namely, to the orderly functioning of the regular course of business of the corporation until the further order of the court.
Concur — Stevens, P.J., Capozzoli, Nunez, McNally and Steuer, JJ.