Koster v. Shenandoah Corp.

258 A.D. 1079, 18 N.Y.S.2d 38, 1940 N.Y. App. Div. LEXIS 8965

Opinion

In an action brought on behalf of plaintiff and all other stockholders of a corporation wherein it is alleged that the assets of such corporation were undervalued as a basis of consolidation, as the result of which the stockholders did not receive shares commensurate in value to their former holdings, which undervaluation resulted from the fraud of the individual officers and directors who are named as defendants, orders granting motions of defendants-respondents for judgment on the pleadings and dismissal of the complaint, and judgments entered in accordance therewith, unanimously affirmed, with ten dollars costs and disbursements. Although the appellant emphasizes the fact that part of the relief sought is for an accounting by the individual defendants accused of wrongful acts and restoration of the assets, to the extent to which they were undervalued, so as to be made available to the stockholders, such relief would constitute a virtual setting aside of the consolidation overwhelmingly voted for by the stockholders of the corporation in which plaintiff held stock and effected in accordance with the laws of the State of Delaware, under which laws the four corporations which were consolidated had been created. In addition, the relief would require a minute scrutiny of each of the four Delaware corporations involved to determine the correctness of the proportionate value assigned in the consolidation agreement. The plaintiff’s holdings were not large, and she declined a remedy provided by the laws of Delaware to dispose of such holdings at an appraised value. Whether or not that remedy is exclusive may be determined by the courts of Delaware. Under all the circumstances, we are of opinion that, in the exercise of sound discretion, jurisdiction of this action should be declined. Present — Lazansky, P. J., Hagarty, Johnston, Adel and Taylor, JJ.