53 N.Y.S. 289 | N.Y. Sup. Ct. | 1898
. The petitioner, who is a stockholder of the Kinder-hook & Hudson Railway, seeks by this application to have the
Many grounds are urged in support of the application, but one of which — that the election was secured by the improper use of a temporary injunction — will be briefly considered.
The Kinderhook & Hudson Railway was incorporated in 1895, it being a reorganization of the former Kinderhook & Hudson Railway Company. Hnder the plan of reorganization agreed upon, the interests of the stockholders of the old company not having been distinct from those of the bondholders and the stock of such company never having had any value, 40 per centum of the stock of the new company was distributed pro rata among the bondholders and the balance of 60 per centum thereof was registered in the name of and issued to the reorganization committee and their successors, with power to such committee, as stated in the plan, “ of voting thereupon until such time, not to exceed five years from the date of the sale of the property, as the condition of the road shall in their judgment warrant the distribution thereof among the bondholders.”
The reorganization committee consisted of nine men, two of whom are now dead and no successors to them have been'appointed. All of the remaining members of the committee except two had before the election in question sold 'and transferred all the stock held by them in the new company as individuals.
Prior to the election, Mr. Charles D. Haines brought an action to test the right of the reorganization committee to vote upon the 60 per centum of stock standing on the books of the company in their names. In this action Mr. Haines, on the 9 th day of April, procured from a justice of this court an order that the Kinderhook & Hudson Railway and the seven surviving members of the reorganization committee show qause at a Special Term to be held on the 14th day of April following, why an order should not be made restraining such individuals, during the pendency
Since the argument of this motion the right of the surviving members of this committee to'vote as a committee upon the stock held by them has been sustained by the court after a hearing upon' the merits of the questions presented by the order to show cause, above referred to, and the injunction has been dissolved. Haines v. Kinderhook & Hudson Railway Co., 23.Misc. Rep. 605.
1 think I should follow this determination and give it controlling effect on this motion.
The holders of 60 per centum of the stock having been prevented from participation in the election by the use of the temporary injunction, which has since been dissolved, and the control of the company having been obtained by a minority of the stockholders by the use of such injunction alone I think the election should be set aside.
Motion to set aside election of directors granted, with $10 costs..
Motion granted, with $10 costs.