Hillcrest Paper Co. v. Ohlstein

Appellate Division of the Supreme Court of New York

Hillcrest Paper Co. v. Ohlstein

10 Misc. 2d 286, 172 N.Y.S.2d 827, 1958 N.Y. Misc. LEXIS 3659

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

DecidedMarch 20, 1958

StatusPublished

Cited by5 cases

This text of 10 Misc. 2d 286 (Hillcrest Paper Co. v. Ohlstein) 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

Hillcrest Paper Co. v. Ohlstein, 10 Misc. 2d 286, 172 N.Y.S.2d 827, 1958 N.Y. Misc. LEXIS 3659 (N.Y. Ct. App. 1958).

Pincite

Opinion

*287 Irving H. Saypol, J.

Defendants, appearing specially, move for an order vacating the service of the summons and complaint. Actually they seek the dismissal of the complaint, contending that the institution of this suit is unauthorized, and that plaintiff lacks capacity to sue. In fact, that ground is urged for dismissal pursuant to rule 107 of the Rules of Civil Practice. Consequently the special appearance must be overruled (Civ. Prac. Act, § 237-a).

The person verifying the complaint is the sole officer and director of the plaintiff corporation. At the time of the verification the remaining officers and directors had resigned. No defendant is a stockholder of record. Upon this record it is established that the business and affairs of the plaintiff corporation were surrendered to and are now in the sole charge of the single remaining officer and director.

Defendants rely on Tidy-House Paper Corp. v. Adlman (4 A D 2d 619). That authority supports the plaintiff’s contention. There each of two individuals owned 50% of the stock of the corporation and the control of the board of directors was equally divided between them. While there it was stated that failure to seek approval of the directors for institution of suit is the same as though approval had been expressly refused, approval here if one there be, must rest in the action of the sole remaining officer and director, and the question is therefore raised whether authority to institute this suit may be thus presumed. Apparently no stockholders’ agreement exists for none is referred to which may have any effect upon the resolution of this issue. Since the entire management and operation of the company was left to the remaining officer and director, it was his authority and responsibility to institute suits for the protection and preservation of the business and assets of the company, and strangers to the corporation may not be permitted to question that authority (Rothman & Schneider v. Beckerman, 2 N Y 2d 493; Matter of Paloma Frocks [Shamokin Sportswear Corp.] 3 N Y 2d 572-575, 576). Since none of the defendants is an officer, director or stockholder of the corporation, the rule of equal control does not apply and the right to invoke the rule was voluntarily surrendered.

The motion is denied.

Free access — add to your briefcase to read the full text and ask questions with AI

*287 Irving H. Saypol, J.

Defendants, appearing specially, move for an order vacating the service of the summons and complaint. Actually they seek the dismissal of the complaint, contending that the institution of this suit is unauthorized, and that plaintiff lacks capacity to sue. In fact, that ground is urged for dismissal pursuant to rule 107 of the Rules of Civil Practice. Consequently the special appearance must be overruled (Civ. Prac. Act, § 237-a).

The person verifying the complaint is the sole officer and director of the plaintiff corporation. At the time of the verification the remaining officers and directors had resigned. No defendant is a stockholder of record. Upon this record it is established that the business and affairs of the plaintiff corporation were surrendered to and are now in the sole charge of the single remaining officer and director.

Defendants rely on Tidy-House Paper Corp. v. Adlman (4 A D 2d 619). That authority supports the plaintiff’s contention. There each of two individuals owned 50% of the stock of the corporation and the control of the board of directors was equally divided between them. While there it was stated that failure to seek approval of the directors for institution of suit is the same as though approval had been expressly refused, approval here if one there be, must rest in the action of the sole remaining officer and director, and the question is therefore raised whether authority to institute this suit may be thus presumed. Apparently no stockholders’ agreement exists for none is referred to which may have any effect upon the resolution of this issue. Since the entire management and operation of the company was left to the remaining officer and director, it was his authority and responsibility to institute suits for the protection and preservation of the business and assets of the company, and strangers to the corporation may not be permitted to question that authority (Rothman & Schneider v. Beckerman, 2 N Y 2d 493; Matter of Paloma Frocks [Shamokin Sportswear Corp.] 3 N Y 2d 572-575, 576). Since none of the defendants is an officer, director or stockholder of the corporation, the rule of equal control does not apply and the right to invoke the rule was voluntarily surrendered.

The motion is denied.

Cite This Page — Counsel Stack

Bluebook (online)

10 Misc. 2d 286, 172 N.Y.S.2d 827, 1958 N.Y. Misc. LEXIS 3659, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hillcrest-paper-co-v-ohlstein-nyappdiv-1958.

Opinion

Related

Cite This Page — Counsel Stack