Rodgers v. Bell

Appellate Division of the Supreme Court of New York

Rodgers v. Bell

202 A.D.2d 1040, 610 N.Y.S.2d 111, 1994 N.Y. App. Div. LEXIS 3424

Appellate Division of the Supreme Court of the State of New York·Decided March 11, 1994·Published

Opinion

—Order and judgment unanimously affirmed with costs to plaintiff. Memorandum: Despite the fact that there were two shareholders in Gateway Structural Products, Inc., a close corporation, there never was more than one director, in violation of Business Corporation Law § 702. The court did not abuse its discretion in this shareholder’s derivative action in voiding disproportionate salary increases to the majority shareholder/sole director/president and secretary, a personal loan by the corporation to him, and a corporate loan to a separate corporation. There was proof that the corporation was not authorized to take those actions and that the other shareholder had no knowledge of them and thus could not have consented (see, Matter of Rye Psychiatric Hosp. Ctr. v Schoenholtz, 66 NY2d 333, 338-339; Lehman v Piontkowski, 93 AD2d 809, 814, affd 61 NY2d 703). Likewise, the court did not abuse its discretion in awarding plaintiff counsel fees of $22,500, to be paid from the judgment. (Appeals from Order and Judgment of Supreme Court, Monroe County, Stander, J. —Shareholders’ Derivative Action.) Present — Green, J. P., Pine, Fallon, Callahan and Boehm, JJ.

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—Order and judgment unanimously affirmed with costs to plaintiff. Memorandum: Despite the fact that there were two shareholders in Gateway Structural Products, Inc., a close corporation, there never was more than one director, in violation of Business Corporation Law § 702. The court did not abuse its discretion in this shareholder’s derivative action in voiding disproportionate salary increases to the majority shareholder/sole director/president and secretary, a personal loan by the corporation to him, and a corporate loan to a separate corporation. There was proof that the corporation was not authorized to take those actions and that the other shareholder had no knowledge of them and thus could not have consented (see, Matter of Rye Psychiatric Hosp. Ctr. v Schoenholtz, 66 NY2d 333, 338-339; Lehman v Piontkowski, 93 AD2d 809, 814, affd 61 NY2d 703). Likewise, the court did not abuse its discretion in awarding plaintiff counsel fees of $22,500, to be paid from the judgment. (Appeals from Order and Judgment of Supreme Court, Monroe County, Stander, J. —Shareholders’ Derivative Action.) Present — Green, J. P., Pine, Fallon, Callahan and Boehm, JJ.

Rodgers v. Bell, 202 A.D.2d 1040, 610 N.Y.S.2d 111, 1994 N.Y. App. Div. LEXIS 3424 (N.Y. Ct. App. 1994).

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Opinion

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