Summary
In Bedford v. American Aluminum Co. (51 App. Div. 537) the stock which was the subject of controversy amounted to one-half of the corporate issue, giving to its owner a veto power upon any contemplated change in the organization.
Summary of this case from Kennedy v. ThompsonOpinion
May Term, 1900.
Charles De H. Brower and Seth B. Robinson, for the appellant.
Charles H. Broas, for the respondents.
It appears that the stock of the American Aluminum and Specialty Company consisted of 400 shares, of which upon the original organization the plaintiff was the owner of 200, thus substantially giving him a veto upon any change in the organization of the company. His complaint alleges that the plaintiff and William Hillman and George W. Hillman were the directors of the company; that after the plaintiff had received his certificate for the 200 shares he surrendered it to the other directors for the purpose of having other certificates made out of smaller denominations; that the defendants Hillman have given him certificates for 150 shares and have refused to give him a certificate for the remaining 50, they claiming that he had given 50 shares of his 200 to be sold for the benefit of the corporation, and that William Hillman had done the same thing, and that 24 of these shares had been sold to a third party. The relief that the plaintiff asks is that the defendants be required to transfer to him the 50 shares of stock and be restrained from transferring them, or from issuing certificates therefor to any one except the plaintiff and other relief.
It appears from the papers that the two Hillmans had owned 200 shares, and that with the 50 shares taken from the plaintiff it is probable that they with the transferee of what they call the treasury stock would control the corporation, and it is quite apparent that such control might be disastrous to the plaintiff. There is reason, therefore, why the plaintiff should seek to maintain an equitable action to compel the transfer of the shares to him, because otherwise he would be put in a distinct minority of the stockholders of the corporation and be subject to the control of those who, under the claim he makes, own no more stock than he.
Under such circumstances an equitable action may be maintained. ( Cushman v. Thayer Mfg. Co., 76 N.Y. 365; White v. Price, 39 Hun, 395.) It is evident, too, that if the defendants during the pendency of this action are permitted to transfer the shares to some one else, the very evil which the plaintiff seeks to avert may happen to him, and, therefore, in view of these facts and the provisions of section 603 of the Code of Civil Procedure, authorizing the restraining of an act, the continuance of which during the pendency of an action would produce injury to the plaintiff, it seems to us that this case is a proper one for the granting of a temporary injunction, and the order refusing it should be reversed, with ten dollars costs and disbursements, and a temporary injunction granted, with ten dollars costs.
PATTERSON, INGRAHAM, McLAUGHLIN and HATCH, JJ., concurred.
Order reversed, with ten dollars costs and disbursements, and temporary injunction granted, with ten dollars costs.