127 Misc. 169 | N.Y. Sup. Ct. | 1926
The Mount Vernon Dye Casting Corporation is a business corporation organized under and existing by virtue of the laws of the State of New York. The by-laws of this company provide among other things that the directors (numbering seven) shall be elected at the annual meeting of the stockholders to be held on the last Saturday in January of each year. The petitioner alleges that the election of the directors held on January 30, 1926, was illegal, inasmuch as the holders of thirty-five shares of the capital stock of the corporation were not permitted to vote at that meeting. An examination of the papers submitted on this application discloses that prior to May, 1924, a number of stockholders transferred their stock (aggregating ninety-five shares) to the petititioner and several other persons. These shares Were subsequently transferred on the books of the corporation and new certificates issued to the transferees. In January, 1925, an action was instituted against the new holders of these shares of stock in the Supreme Court, Westchester county, for a decree directing that the transfers be set aside on the ground that they were invalid, having been made contrary to one of the provisions of the by-laws of the respondent corporation, which provided in substance that a transfer of the stock should not be made by a stockholder until the corporation was given a ninety-day option in which to purchase the stock, and failed to exercise it. After a trial of the issues raised in that action the learned justice rendered his decision holding that these transfers were invalid and void and that the transferees “ acquired no right or title to the said * * * shares of stock by the transfer of the same on the books of the Mount Vernon Dye Casting Corporation * *
On appeal to the Appellate Division the judgment entered was affirmed. (See Hassel v. Pohle, 214 App. Div. 654.) Thereafter on the 12th day of January, 1926, the petitioner addressed a letter to the respondent corporation in which he asked that new
This objection is not well' founded. With the exception of Louise Pohle, none of the persons to whom the proxies were issued were “ the illegal transferees ” of the stock they attempted to vote. There is no competent proof from which a conclusion can be reached that the original owners of this stock have not repaid the purchase price, nor is there a scintilla of evidence purporting to establish that those persons to whom the proxies were issued paid any consideration therefor. The validity of the proxies was not attacked at the meeting of the stockholders, nor was any question raised at that time relative to the repayment of the purchase price for the illegally transferred stock. The petitioner urges that respondents refused tc permit this stock to be voted, while the latter contend that the petitioner and “ his associates ” sat idly by and did not attempt to vote. I believe petitioner’s version. The respondents’ story does not impress me.
As a further objection to granting this application the respondents direct the court’s attention to the proposition that this proceeding is an attempt to adjudicate the legal title to the stock in question. They argue that in the judgment entered in the action tried in Westchester county, the court directed that the corporation, its officers, agents and inspectors of election be and are enjoined from accepting and counting the ninety-five stock votes represented by this stock, the transfer of which was declared “ null and void.” The transferees did not attempt to vote the stock as the owners thereof, but only as the duly authorized representatives of the lawful owners. The judgment in the former action provided that the transfer was a nullity. The new holders acquired no rights; the title still remained in the original owners. The failure of ■ the officers of- the corporation to issue new stock in response to the requests of the petitioner and the other transferees, prior to the election, even if this were necessary, did not confer any additional rights on such transferees nor did it deprive the lawful owners of their respective rights and privileges in the premises.
Accordingly, I conclude that the election of the directors was illegal. It is set aside and a new election ordered. Settle order on notice.