206 Misc. 977 | N.Y. Sup. Ct. | 1954
This motion (pursuant to rule 106 of the Buies of Civil Practice) is made by all of the defendants to dismiss for insufficiency on its face the first cause of action pleaded in the supplemental complaint. The corporate defendants additionally move (in pursuance of the same rule) to dismiss the cause of action on the ground that in any event it fails to set forth facts sufficient to state a cause of action against them.
The complaint pleads three counts, the first of which (in behalf of Marcus, the individual plaintiff) is alone the subject of this motion to dismiss. The complaint therein purports to state a cause of action for damages for deceit. It is predicated upon fraudulent misrepresentations alleged to have been made in connection with the negotiation of an agreement providing for the sale of certain corporate stock. The issue on the first branch of the motion is whether the cause of action is the individual plaintiff’s or whether it belongs to the plaintiff corporation, 42nd Street Fotoshop, Inc. If the latter, the pleading insofar as attacked is insufficient.
I have come to the conclusion that the application to dismiss should be denied, as I believe the cause to be adequately pleaded. But I do not rest my determination upon the principal opposition urged by the respondent. “ Piercing the corporate veil ” is not an open sesame to disregarding the corporate entity on every occasion. The facts, the nature of the action or defense and the relief requested must all be taken into account, and in proper perspective (cf. Sasmor v. V. Vivaudou, Inc., 200 Misc. 1020). I agree with the moving parties here that the naked
I hold that the cause of action as pleaded is sufficient upon another ground. While certain clauses in the agreement annexed to the pleading would of course be controlling in any conflict with the conclusory allegations of the complaint (Malco Trading Corp. v. Mendelson-Silverman, Inc., 240 App. Div. 322, 325, affd. 264 N. Y. 651), that principle is inapplicable here. True, the agreement seems to give credence to the view that it was the plaintiff corporation (rather than Marcus) which sold the stock to the defendants. But it is alleged in the pleading that it was Marcus, the individual plaintiff, who owned the stock, and that as a result of having been deceived it was this plaintiff who was induced to execute and who executed the agreement pursuant to which he sold the shares to the defendants. It may thus be within the purview of the complaint that, while the individual plaintiff was really the shareholder and was the person defrauded, the assignment of his stock to the corporation and the transfer of that stock by the corporation to the defendants were all part of the same transaction, integrated in the single agreement which is the subject of attack. In such circumstances the loss was the individual plaintiff’s and the transfer of the stock by him to the corporation which he controlled was an intermediate step in the transaction assailed, with the corporation a mere instrumentality of ultimate conveyance. That is a matter for proof upon the trial. I hold that the plaintiff Marcus states a sufficient first cause for action in the supplemental complaint, however inartistically it may seem to have been framed (Bentrovato v. Crinnion, 206 Misc. 648, 655).
That branch of the motion as seeks to dismiss the first cause of action for insufficiency at the behest of the corporate defendants must also be denied. This phase of the application involves another issue entirely — whether the cause of action is sufficiently pleaded as against the defendants, Weimet Film Co., Inc., and Weimet Camera Corporation, rather than as against the defendants, Weiss and Metzler. In most of the complaint
Nor do I think it fatal to the cause of action set up against the corporate defendants that it is not expressly asserted in the complaint that the persons in complete domination of the corporate affairs did not, in making the representations, act with authority from the corporations or within the scope of their employment. Here, perhaps the precept to be invoked is not only that of “ piercing the corporate veil ” (so as to hold a corporation liable for the wrong done by an individual), but also by what I shall call the ethical principle of not inequitably
The motion to dismiss the first cause of action pleaded in the supplemental complaint is denied in its entirety. Order signed.