Benincasa v. Garrubbo

• Decision Date: 13 June 1988
• Parties: In the Matter of Matthew BENINCASA, Appellant, v. Guy GARRUBBO, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 797

529 N.Y.S.2d 797

141 A.D.2d 636

In the Matter of Matthew BENINCASA, Appellant, v. Guy GARRUBBO, et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

June 13, 1988.

Sichol & Hicks, P.C., Suffern (William R. Sichol Jr., of counsel), for appellant.

Paul S. Shoock, Nyack, for respondents.

Before THOMPSON, J.P., and BROWN, WEINSTEIN and RUBIN, JJ.

MEMORANDUM BY THE COURT.

In a proceeding pursuant to CPLR article 78 wherein the petitioner seeks to compel disclosure of the respondents' corporate records pursuant to Business Corporation Law § 624, the petitioner appeals (1) from a judgment of the Supreme Court, Rockland County (Edelstein, J.), dated October 27, 1986, which, upon granting the respondents' motion for summary judgment, dismissed the proceeding, and (2) as limited by his brief, from so much of an order of the same court, dated May 20, 1987, as, upon granting petitioner's motion to renew, adhered to the original decision.

ORDERED that the appeal from the judgment is dismissed, as that judgment was superseded by the order, made upon renewal; and it is further,

ORDERED that the order is reversed insofar as appealed from, the judgment is vacated, and the matter is remitted to the Supreme Court, Rockland County, for a trial in accordance herewith; and it is further,

ORDERED that Paul S. Shoock, Esq. is disqualified from representing the respondents and no further proceedings shall be taken against the respondents, without leave of the court, until the expiration of 30 days after service upon them personally of a copy of this decision and order, which shall constitute notice to appoint another attorney under CPLR 321(c); and it is further,

ORDERED that the petitioner is awarded one bill of costs.

The petitioner Matthew Benincasa was a director and the Secretary Treasurer of Rockland Motor Cars, Ltd., formerly known as Porsche/Audi of Rockland Inc., until August 30, 1986. The respondents are Rockland Motor Cars, Ltd. and its president Guy Garrubbo.

On September 20, 1982, the petitioner and the respondents entered into an agreement which provided for the petitioner's purchase of 30% of all the corporate outstanding stock "for a total consideration" of $75,000. The section of the contract entitled "Conditions" read in pertinent part as follows:

"This agreement shall be subject to the following conditions:

"A) The approval of this sale and of the PURCHASER as a stockholder by Volkswag[e]n

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"D) The execution of a Shareholder's agreement".

On the same day, the parties entered into a shareholders' agreement which listed the petitioner as a 30% shareholder.

On July 1, 1986, the petitioner made a written request to inspect the minutes and records of the respondent corporation and his request was denied.

On or about August 19, 1986, the petitioner commenced the instant proceeding to compel an inspection pursuant to Business Corporation Law § 624. In the petition, he alleged that he was entitled to the inspection due to his ownership of 30% of the outstanding corporate stock since September 20, 1982. By notice of motion dated August 28, 1986, the respondents moved to dismiss the petition. In the affidavit, the respondent Guy Garrubbo claimed the petition was legally insufficient because the petitioner was not a shareholder of record in the respondent corporation. Garrubbo alleged that on September 20, 1982, he and petitioner entered into a series of agreements wherein the petitioner was afforded the opportunity to purchase 30% of the stock in the respondent corporation for total consideration of $75,000. He claimed that franchisor approval was intended to be a condition precedent to the actual transfer of the stock. He further claimed that on May 31, 1985, the petitioner submitted his application for approval as a shareholder with the franchisor and that "[t]o date" no approval had officially been made. The petitioner alleged that the reason no approval had been received was Garrubbo's interference with his application.

By judgment dated October 27, 1986, the Supreme Court dismissed the proceeding, holding the condition requiring franchisor approval was a condition precedent which had not been fulfilled, and thus the petitioner was never actually issued the stock as required under Business Corporation Law § 624. We disagree for several reasons.

Initially, we note that summary judgment is a drastic remedy to be granted only when there is no clear triable issue of fact presented ( Andre v. Pomeroy, 35 N.Y.2d 361, 362 N.Y.S.2d 131, 320 N.E.2d 853) and even the color of a triable issue forecloses the remedy ( Newin Corp. v. Hartford Acc. & Ind. Co., 62 N.Y.2d 916, 479 N.Y.S.2d 3, 467 N.E.2d 887). In deciding a summary judgment motion, the evidence must be construed in a light most favorable to the party opposing the motion (Weiss v. Garfield, 21 A.D.2d 156, 249 N.Y.S.2d 458). We also note that the mere fact that the petitioner's name does not appear on a record of stockholders or the fact that he does not physically possess stock certificates is not dispositive here because these facts are not conclusive evidence of not owning stock ( see, U.S. Radiator Corp. v. State of New York, 208 N.Y. 144, 101 N.E. 783; Matter of Rappaport, 110 A.D.2d 639, 487 N.Y.S.2d 376). Rather, we find the petitioner could have owned 30% of the corporate stock which would entitle him to the discovery he seeks to compel (Business Corporation Law § 624) if the conditions set forth in the contract of sale were intended by the parties to be a condition subsequent. A condition subsequent does not delay the enforceability of a contract; it only preserves the possibility that a contract can be set aside later in time if the condition is not fulfilled (see, Board of Educ. v. Statewide Vending Corp., 84 A.D.2d 754, 443...