Heit v. Stone

Appellate Division of the Supreme Court of New York

Heit v. Stone

34 A.D.2d 628, 309 N.Y.S.2d 100, 1970 N.Y. App. Div. LEXIS 5221

CourtAppellate Division of the Supreme Court of the State of New York

DecidedApril 2, 1970

StatusPublished

Cited by1 cases

This text of 34 A.D.2d 628 (Heit v. Stone) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Heit v. Stone, 34 A.D.2d 628, 309 N.Y.S.2d 100, 1970 N.Y. App. Div. LEXIS 5221 (N.Y. Ct. App. 1970).

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Opinion

Order entered December 10, 1968, insofar as it denied defendants’ cross motions for a protective order against the plaintiff’s examination 'before trial of the defendants Whitney Stone and Stone & Webster Incorporated, unanimously modified on the law, on the facts and in the exercise of discretion, with $30 costs and disbursements to defendants-appellants, and the cross-motions granted. The Special Term found that plaintiff’s complaint was apparently drawn on the basis of information which W. R. Grace & Co. had disclosed to its stockholders. The complaint, the court further found, contained allegations of an inferential and eonelusory nature, but “no factual allegations of wrongdoing, other than an allegation as to the interlocking status of two defendants, which may be the basis for further exploration.” The mere fact that a transaction between corporations having common directors results in one corporation realizing a profit does not constitute sufficient special circumstances to entitle a shareholder in a derivative action to conduct examinations before trial of both corporations. A conflict of interest warranting inquiry is not shown by eonelusory allegations of impropriety based solely on the circumstance of interlocking directorships. (Stull v. Studebaker Corp., 30 A D 2d 527; Begener v. Party Tyme Prods., 24 A D 2d 742; Pewrson v. Rosenberg, 22 A D 2d 225; Nomako v. Ashton, 20 A D 2d 331.) Concur — Capozzoli, J. P., McGivern, McNally and Tilzer, JJ.

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Order entered December 10, 1968, insofar as it denied defendants’ cross motions for a protective order against the plaintiff’s examination 'before trial of the defendants Whitney Stone and Stone & Webster Incorporated, unanimously modified on the law, on the facts and in the exercise of discretion, with $30 costs and disbursements to defendants-appellants, and the cross-motions granted. The Special Term found that plaintiff’s complaint was apparently drawn on the basis of information which W. R. Grace & Co. had disclosed to its stockholders. The complaint, the court further found, contained allegations of an inferential and eonelusory nature, but “no factual allegations of wrongdoing, other than an allegation as to the interlocking status of two defendants, which may be the basis for further exploration.” The mere fact that a transaction between corporations having common directors results in one corporation realizing a profit does not constitute sufficient special circumstances to entitle a shareholder in a derivative action to conduct examinations before trial of both corporations. A conflict of interest warranting inquiry is not shown by eonelusory allegations of impropriety based solely on the circumstance of interlocking directorships. (Stull v. Studebaker Corp., 30 A D 2d 527; Begener v. Party Tyme Prods., 24 A D 2d 742; Pewrson v. Rosenberg, 22 A D 2d 225; Nomako v. Ashton, 20 A D 2d 331.) Concur — Capozzoli, J. P., McGivern, McNally and Tilzer, JJ.

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Bluebook (online)

34 A.D.2d 628, 309 N.Y.S.2d 100, 1970 N.Y. App. Div. LEXIS 5221, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heit-v-stone-nyappdiv-1970.

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