Opinion
December 30, 1942.
Present — Hagarty, Carswell, Taylor and Close, JJ.; Adel, J., not voting.
Stockholder's representative action. Order granting the motion of respondents to dismiss the amended complaint and particularly the first, second and fourth causes of action with respect to respondents, modified on the law by striking out such parts as grant the motion generally and by substituting in place thereof a paragraph providing that the motion is granted to the extent of dismissing the second and fourth causes of action and otherwise denied. The judgment is modified on the law to conform to the provisions of the modified order. As thus modified, the order and judgment, in so far as appealed from, are unanimously affirmed, with one bill of ten dollars costs and disbursements to appellants, with leave to respondents to answer within ten days from the entry of the order hereon. The first cause of action, as alleged, is not an action which may be brought within ten years after its accrual, as provided in section 53 of the Civil Practice Act. The action is for actual fraud, in that respondents participated in a scheme wherein certain stock was sold to the Equity Corporation's subsidiary for a grossly inflated price, the proceeds of which sale were paid through respondents' corporations to the majority stockholder of the Equity Corporation, and in return for all of which respondents obtained the stock which gave them control of the Equity Corporation. On this appeal we must deem the allegations of the complaint as statements of fact. On that basis the transaction was an actual fraud and nothing else, and the time for bringing an action thereon began to run from the date of the discovery of the fraud, as provided by section 48, subdivision 5, Civil Practice Act.