Opinion
February 20, 1962
Appeal in a minority stockholder's action brought to enjoin payments of salary to the corporation's president and for other relief (1) by plaintiff from an order of the Supreme Court at Special Term, entered in Sullivan County, which denied plaintiff's motion for an injunction pendente lite and to strike the appearance of the attorneys for said corporation, and (2) by certain defendants from an order of said court which denied a motion to dismiss the complaint as insufficient. Appellants from the latter order cite Kalmanash v. Smith ( 291 N.Y. 142) holding insufficient mere conclusory statements "which express no more than a difference of opinion between a stockholder and directors as to the value of an employee's services" (p. 155); but whether or not some allegations of the complaint before us are thus defective, other allegations state that the payments to the president were "without any consideration therefor to the Corporation" and in a subsequent paragraph it is charged that the corporation "receives no return or benefit by reason of such payments." Under the liberal construction we are bound to give the pleading, it must be held sufficient. We find plaintiff's appeal also without merit. As respects the application for a temporary injunction, the proof that the defendant president is possessed of large means is undisputed as is the resultant implication that a judgment recovered against him in this action will be collectible. Plaintiff should be entitled to renew his application, however, upon showing a change in the circumstances or in the event that defendants shall not be ready for trial within a reasonable time or that trial shall be delayed for any other reason beyond plaintiff's control. As respects the denial of plaintiff's motion to strike out the appearance of the attorneys for the defendant corporation, on the ground that they were not retained by authority of the corporation, although, apparently, by consent of three of the four officers and directors, we consider that Special Term's determination was warranted, at least in the peculiar situation here existent, in which plaintiff and his brother, apparently united in interest, hold 30% of the stock and the certificate of incorporation provides that action at a stockholders' meeting shall require "the affirmative vote of the holders of at least eighty-five percent of the total issued and outstanding stock of the corporation" and that the board of directors may act only upon "the affirmative unanimous vote of the directors * * * present" (plaintiff's said brother being a director), and that a quorum of the board "shall consist of all the members". Our affirmance is not to be construed as approval of any action which may follow the retainer; and the retaining officers, as well as the retained attorneys, remain bound, of course, to serve Taylor, JJ., concur.
only the best interests of the corporation as such may subsequently appear in the light of the proof. Order denying motion to dismiss the complaint affirmed, without costs. Order denying motion for an injunction and to strike attorneys' appearance modified, in accordance with this memorandum decision, so as to provide that the denial of injunctive relief be without prejudice and, as so modified, affirmed, without costs. Coon, J.P., Gibson, Herlihy, Reynolds and