Frank v. Carlisle, 27 N.E.2d 28

Frank v. Carlisle

27 N.E.2d 28 | NY | 1940

The complaint contains allegations that the individual defendants and the corporate defendants Floyd L. Carlisle Co., Inc., and Schoellkopf, Hutton Pomeroy, Inc., by concerted action through a complicated series of transfers of stock and assignments of a contract, procured the issuance to the defendant Floyd L. Carlisle Co., Inc., for the benefit of the individual defendants of 200,000 shares of stock of the Northeastern Power Corporation alleged to be worth $7,000,000 for property which cost the individual defendants and the defendant Floyd L. Carlisle Co., Inc., not to exceed $50,000. The individual defendants were, from the time of the organization of the Northeastern Power Corporation, directors of that corporation, and the property, costing not to exceed $50,000, consisting of shares of corporate stock which the Northeastern Power Corporation received, had been acquired by the individual defendants through the agency of other corporations wholly controlled and dominated, directly or indirectly, by the individual defendants with the intention of so transferring the property to the Northeastern Power Corporation and securing large secret profits for themselves. Thus a cause of action in favor of the Northeastern Power Corporation is alleged. (Pollitz v.Wabash R.R. Co., 207 N.Y. 113; New York Trust Co. v.American Realty Co., 244 N.Y. 209.) While the allegations are somewhat vague and general in relation to intent, domination and control, we find them sufficient within the authorities to state these *511 abstract concepts. A cause of action in favor of the Northeastern Power Corporation being alleged, there is a statement of its assignment to the defendant Niagara Hudson Power Corporation, of which the plaintiff is a stockholder, and of the other necessary facts for the foundation of a stockholder's derivative action. The second alleged cause of action repeats the first and adds statements of waste and misappropriation. It is not necessary to consider here whether the second cause of action adds anything of substance to the first cause of action, the allegations of which we find sufficient. It is, perhaps, needless to say that our decision is founded solely upon the allegations of the complaint and that no possible defense, affirmative or negative, is before us.

The judgment of the Appellate Division should be reversed and the orders of the Special Term affirmed, with costs in this court and in the Appellate Division.

LEHMAN, Ch. J., LOUGHRAN, FINCH, RIPPEY, SEARS, LEWIS and CONWAY, JJ., concur.

Judgment accordingly.