Chess Enterprises, Inc. v. Beldon Associates

1 A.D.2d 840, 148 N.Y.S.2d 804, 1956 N.Y. App. Div. LEXIS 6328

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: February 20, 1956
• Status: Published

Opinion

Order denying motion to dismiss the first and third causes of action for insufficiency modified by striking out the ordering paragraph and by substituting therefor a provision denying the motion with respect to the first cause of action and granting the motion with respect to the third cause of action, and as so modified, affirmed, without costs. Respondent may, if so advised, plead over the third cause of action within ten days after the entry of the order hereon. The third cause of action against appellant Belford, an “ officer and large stockholder ” is insufficient. A corporation is distinct from its stockholders. (Brock v. Poor, 216 N. Y. 387.) There is no allegation that appellant Belford as an officer in the corporate appellant participated in any manner in the alleged fraud or that he acted as agent for that corporation in connection therewith. An officer and stockholder is liable to a defrauded party only if he participated in the fraud. (Arthur v. Griswold, 55 N. Y. 400; Downey v. Finucane, 205 N. Y. 251; Churchill v. St. George Development Co., 174 App. Div. 1.) The complaint does not plead facts which establish that appellant Belford received any benefit from the transaction, except a possible indirect benefit as a stockholder. Nolan, P. J., Wenzel, Beldock, Murphy and Kleinfeld, JJ., concur.