191 Misc. 479 | N.Y. Sup. Ct. | 1948
The executrix of the will of the deceased plaintiff in a stockholder’s derivative action, who died since its
The defendants oppose the substitution of the executrix and contend that the substitution is prohibited by section 61 of the General Corporation Law as amended in 1944 (L. 1944, ch. 667), which, so far as here applicable, reads: “ In any action brought by a shareholder in the right of a foreign or domestic corporation it must be made to appear that the plaintiff was a stockholder at the time of the transaction of which he complains or that his stock thereafter devolved upon him by operation of law.”
This recent enactment adopts the rule which has long prevailed in the Federal courts and is now found in subdivision (b) of rule 23 of the Federal Buies of Civil Procedure. It was held under the predecessor of this rule that a derivative action does not abate on the plaintiff’s death and that the action may be continued by the executor if the stock has devolved on him by the terms of the will. (Spring v. Webb, 227 F. 481.) The defendants concede on the present motion that the action does not abate but insist that the executrix has not legal capacity to continue it. They urge that the decedent’s stock comes to her by his voluntary act, his will, and not by operation of law.
On this motion the court must decide whether the defendants’ position is well taken. The court in Spring v. Webb (227 F. 481,
There is nothing in the language, history or purpose of section 61 of the General Corporation Law which calls for the application of a different rule when during the pendency of a derivative suit the plaintiff’s stock passes by will to his estate. So far as the question for decision here is concerned, no real distinction is found between intestate and testate succession. In each case the critical event from which the succession springs is death, an event over which the decedent has no control. What follows in the disposition of the property left by him is as much the operation of law in the one ease as in the other. There certainly is nothing in section 61 of the General Corporation Law which requires the denial of the right of the personal representative who has become the owner of the decedent’s stock by the terms of his will to continue a derivative action properly commenced by the decedent in his lifetime. The motion to substitute the executrix is accordingly granted. Settle order.