Ottmann v. Blaugas Co.

Appellate Division of the Supreme Court of New York

Ottmann v. Blaugas Co.

171 A.D. 197, 157 N.Y.S. 413, 1916 N.Y. App. Div. LEXIS 5298

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

DecidedFebruary 11, 1916

StatusPublished

Cited by1 cases

This text of 171 A.D. 197 (Ottmann v. Blaugas Co.) 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.

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Ottmann v. Blaugas Co., 171 A.D. 197, 157 N.Y.S. 413, 1916 N.Y. App. Div. LEXIS 5298 (N.Y. Ct. App. 1916).

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Opinions

Scott, J.:

In my opinion the evidence failed to establish liability on the part of these directors who were not members of the executive committee and who are not shown to have had any knowledge of or any hand in preparing the so-called booklet containing the false statements which constitute the basis of this action. They were not members of a syndicate of promoters seeking to sell stock for their individual benefit as were the defendants in Downey v. Finucane (205 N. Y. 251) and Lehman-Charley v. Bartlett (202 id. 524), but simply directors of a corporation which employed an agent to sell stock for the benefit of the corporation. ■ What interest such directors had in the corporation or to what extent they would be benefited by its successful flotation does not appear. As to these directors the rule is applicable which is clearly stated in Arthur v. Griswold (55 N. Y. 400) and Rives v. Bartlett (215 id. 33), and recognized in Downey v. Finucane (supra).

In Rives v. Bartlett this court (156 App. Div. 552) applied the Finucane case to a state of facts which upon the record much resembled the facts shown by the present record. The Court of Appeals said: “The doctrine of the Finucane case has no application to the facts of this case. In that case the defendants were held liable for the acts of Fenn, not on the ground [199]*199that he was a co-director, but because they had constituted him an agent of a syndicate organized for their personal profit, and because he acted as agent of the syndicate and not as agent of the corporation. In this case there is nothing upon which to base a claim that Bartlett was the agent of the appellants except the bare fact that he was a co-director, and that is not sufficient. ”

In my opinion this exactly expresses the position of the defendants who were directors of the company but not members of the executive committee, and, therefore, as to these defendants the judgment should be reversed, with costs, and the complaint dismissed, with costs, and in other respects modified in accordance with the opinion of Mr. Justice Page, and, as so modified, affirmed, with costs against the remaining defendants.

Clarke, P. J., and Smith, J., concurred; Page and Dowling, JJ., dissented.

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Scott, J.:

In my opinion the evidence failed to establish liability on the part of these directors who were not members of the executive committee and who are not shown to have had any knowledge of or any hand in preparing the so-called booklet containing the false statements which constitute the basis of this action. They were not members of a syndicate of promoters seeking to sell stock for their individual benefit as were the defendants in Downey v. Finucane (205 N. Y. 251) and Lehman-Charley v. Bartlett (202 id. 524), but simply directors of a corporation which employed an agent to sell stock for the benefit of the corporation. ■ What interest such directors had in the corporation or to what extent they would be benefited by its successful flotation does not appear. As to these directors the rule is applicable which is clearly stated in Arthur v. Griswold (55 N. Y. 400) and Rives v. Bartlett (215 id. 33), and recognized in Downey v. Finucane (supra).

In Rives v. Bartlett this court (156 App. Div. 552) applied the Finucane case to a state of facts which upon the record much resembled the facts shown by the present record. The Court of Appeals said: “The doctrine of the Finucane case has no application to the facts of this case. In that case the defendants were held liable for the acts of Fenn, not on the ground [199]*199that he was a co-director, but because they had constituted him an agent of a syndicate organized for their personal profit, and because he acted as agent of the syndicate and not as agent of the corporation. In this case there is nothing upon which to base a claim that Bartlett was the agent of the appellants except the bare fact that he was a co-director, and that is not sufficient. ”

In my opinion this exactly expresses the position of the defendants who were directors of the company but not members of the executive committee, and, therefore, as to these defendants the judgment should be reversed, with costs, and the complaint dismissed, with costs, and in other respects modified in accordance with the opinion of Mr. Justice Page, and, as so modified, affirmed, with costs against the remaining defendants.

Clarke, P. J., and Smith, J., concurred; Page and Dowling, JJ., dissented.

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171 A.D. 197, 157 N.Y.S. 413, 1916 N.Y. App. Div. LEXIS 5298, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ottmann-v-blaugas-co-nyappdiv-1916.

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