192 A.D. 368 | N.Y. App. Div. | 1920
The action is brought for the dissolution of an alleged copartnership and an accounting, and the appointment of a receiver. The plaintiff is an actress of some repute in the presentation of plays in “ Yiddish.” The defendant Pauline Edelstein had a lease on the People’s Theatre, expiring on May 31, 1919, upon which a deposit of $8,000 had been made.
The plaintiff was elected president, Joseph Edelstein was elected secretary and treasurer and Joseph Barondess was elected as a third director. All the affairs of the business were conducted by the corporation in accordance with the law relating to corporations. Over 800 checks were put in evidence signed “ People’s Producing Co., Inc., Bessie Thomashefsky, Pres., J. Edelstein, Treas.” Meetings of the board of directors were held and dividends on the stock declared from time to time. The profits were thus paid out as dividends, and not as profits of partnership.
The plaintiff has brought this action on the theory that the parties were copartners and that the corporation was a mere empty shell or cloak thrown around their copartnership operations, and prays that the copartnership be dissolved, a receiver appointed and the People’s Producing Co., Inc., be required to account for and deliver over to such receiver all the property in the possession or standing in the name of People’s Producing Co., Inc., and for an accounting. An interlocutory judgment in accordance with the prayer of the complaint has been granted.
It is true as urged by the learned counsel for the respondent that equity will disregard the forms of a corporation in certain
The proof does not show that the parties ever entered into a copartnership. The feasibility of forming such a relation was discussed and they met at the attorney’s office with that end in view, but instead of forming a copartnership the parties elected to transact then business under corporate forms with freedom from individual liability, and they did so.
The judgment in this case directs the transfer of all the property of the corporation to a receiver of the copartnership. There is no allegation that there are not creditors of the corporation whose rights would be jeopardized by such a procedure, nor is there any reason given nor is it shown, if cause exists for a dissolution of the corporation, why the orderly procedure under the statute for that purpose should not be followed.
The judgment should be reversed, with cost to appellants, and the complaint dismissed, with costs to the defendants. The findings inconsistent with this opinion will be reversed.
Submit order containing new findings upon notice.
Clarke, P. J., Laughlin, Dowling and Greenbaum, JJ., concur.
Judgment reversed, with costs, and complaint dismissed, with costs. Settle order on notice.