Oshrin v. Celanese Corporation of America

| NY | Oct 21, 1943

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The allegation of paragraph twenty-first of the complaint "that the individual defendants as directors did, by common accord and understanding, and as part of the plan pursued by the defendants, Camille Dreyfus and Henry Dreyfus, for the general conduct of the business and affairs of the corporate defendant, combine their common voting strength and power as such directors so as to cause the appointment of all or nearly all of them to corporate positions paying very lucrative emoluments" is, standing alone, clearly insufficient to indicate that all or any of the individual defendants committed any wrong. The succeeding paragraphs specify "the annual salaries or other compensation received by them" and that "all or nearly all of the salaries so paid, as set forth in the two preceding paragraphs, are excessive and disproportionate to the services rendered therefor by the recipients thereof and were not fixed or paid in the best interests of the corporate defendant, but were so fixed and authorized, collectively, by said individual defendants solely for their personal gain and to the detriment of the corporate defendant." Though the allegation that a salary is "excessive" may perhaps in appropriate context be accepted as an allegation of fact rather than a conclusion of the pleader, yet in this case the allegations contained in paragraphs twenty-second and twenty-third entirely fail to show that all the individual defendants or any particular individual defendant either took part in voting an excessive salary to any director or received an excessive salary himself. Such allegations are insufficient to constitute a cause of action. Walsh v. Van Ameringen-Haebler,Inc. (257 N.Y. 478" court="NY" date_filed="1931-11-17" href="https://app.midpage.ai/document/walsh-v-van-ameringen-haebler-inc-3608474?utm_source=webapp" opinion_id="3608474">257 N.Y. 478) is not authority to the contrary. Though in that case the court held that "the allegation that the directors voted themselves excessive salaries is sufficient to call upon the defendants to answer the complaint," we pointed out in the case of Gerdes v. Reynolds (281 N.Y. 180" court="NY" date_filed="1939-07-11" href="https://app.midpage.ai/document/gerdes-v-reynolds-3629279?utm_source=webapp" opinion_id="3629279">281 N.Y. 180, at p. 185) that we so held because "proof and finding of such payment" (i.e.,payment to all the directors of excessive salaries voted to themselves by all the directors) "would, of course, dictate the conclusion that the directors must restore to the corporation the moneys which they had no right to take from its treasury." Here the complaint contains no allegations which would permit proof to support a similar finding against any defendant named in the complaint.

The judgment should be affirmed, with costs.

LOUGHRAN, RIPPEY, LEWIS, CONWAY and THACHER, JJ., concur; DESMOND, J., dissents and votes to reverse the judgments appealed from insofar as they dismiss the first cause of action and to deny the motion to dismiss on the ground that, under the rule ofWalsh v. Van Ameringen-Haebler, Inc. (257 N.Y. 478) the allegations of paragraphs twenty-first, twenty-second and twenty-third state a cause of action.

Judgment affirmed.