C. Berenda Weinberg Clinic and Research Laboratories, Inc. v. Weinberg

• Decision Date: 05 March 1930
• Citation: 149 A. 362
• Parties: C. BERENDA WEINBERG CLINIC AND RESEARCH LABORATORIES, Inc. v. WEINBERG et al.
• Court: New Jersey Court of Chancery

149 A. 362

C. BERENDA WEINBERG CLINIC AND RESEARCH LABORATORIES, Inc

v. WEINBERG et al.

Court of Chancery of New Jersey.

March 5, 1930.

Syllabus by the Court.

Suit by the C. Berenda Weinberg Clinic and Research Laboratories, Inc., against C. Berenda Weinberg and others. Decree for complainant advised.

Cole & Cole, of Atlantic City, for complainant.

William Charlton, of Atlantic City, for defendants Weinberg.

Bourgeois & Coulomb and Morris Bloom, all of Atlantic City, for defendant Berenstein.

Bolte & Tripician, of Atlantic City, for defendant National Savings & Trust Company.

INGERSOLL, Vice Chancellor.

C. Berenda Weinberg is a physician, resident of Atlantic City, deeply interested in research work in connection with the ills of the human body, the discovery of remedies therefor, and the method for the cure of the diseases of mankind. He was not in a position financially to proceed with the investigations to the extent desired by him.

Isadore Stettenheim and Frederick Stettenheim, father and son, who had been patients of Weinberg and apparently felt under obligations to him, to use Weinberg's words, "placed $25,000 at his disposal" for the purpose of assisting in the purchase and equipment of a building for medical and research purposes. Weinberg insists that, so far as the father was concerned, this money was to be a loan, but, so far as the son was concerned, it was to be a gift.

Upon the 21st day of March, 1922, a certificate of incorporation of the C. Berenda Weinberg Clinic and Research Laboratories was recorded in the clerk's office of Atlantic county, and on the 23d day of March, 1922, was duly filed in the office of the secretary of state of New Jersey.

Said certificate stated the name of said corporation to be "C. Berenda Weinberg Clinic and Research Laboratories"; that its principal office in the state of New Jersey was "109 South Iowa Avenue, Atlantic City, New Jersey"; that "C. Berenda Weinberg" was the agent in charge; and that the objects for which it was formed were "the operation of an institution for the study and treatment of gastro-intestinal diseases and research on the internal secretions; the results, observations and discoveries that result from such researches to be given from time to time for the benefit of the public through proper medical channels; it also being the purpose to provide proper facilities for the treatment of indigent patients free of charge"; that the capital stock was $25,000, divided into 500 shares of the par value of $50 each, and the incorporators were C. Berenda Weinberg, 22 South Illinois avenue, Atlantic City, N. J., 1 share, Solton Engel, 17 Cedar street, New York City, N. Y., 1 share, and Robert G. Grey, 17 Cedar street, New York City, N. Y., 38 shares. Robert G. Grey and Solton Engel were employees of Stettenheim, Grey as secretary or confidential man and Engel as a clerk, and manifestly the $25,000 advanced by Stettenheim was for the purpose of the incorporation, used as the basis for issuing said shares of stock.

The first meeting of the corporation was held at the office of Stettenheim, or of Grey, at 17 Cedar street, New York City, on the said 23d day of March, 1922. It may be, however, that this date "23d" is incorrect, as it is in writing, filling a blank left in the minutes, which are typewritten, and which were probably prepared in advance; the place of the meeting also being in writing in a blank space left therein.

A form of by-laws was read and adopted. An amendment to said by-laws was passed as follows: "Neither the president nor any ether officer or director may contract a debt on behalf of the corporation, or sell, assign or transfer any property, real or personal, belonging to the corporation, without the sanction of the entire board at a regular or special meeting." It will be noted that this method of amendment of the by-laws was in violation of section 26 of the by-laws which had just been adopted.

The three incorporators were elected directors. On the 25th of March, 1922, the three directors met and elected themselves as officers, as follows: President and treasurer, C. Berenda Weinberg; vice president, Solton Engel; Secretary, Robert G. Grey.

It was "ordered that C. Berenda Weinberg be authorized to open a bank account in the Chelsea National Bank, to deposit moneys therein, and to draw checks thereon, in the name of C. Berenda Weinberg Clinic and Research Laboratories, as Treasurer of the company."

It was "resolved that C. Berenda Weinberg be and he is hereby appointed the agent of the company in charge of the registered office, upon whom process against the company may be served in accordance with the laws of New Jersey." The amendment to the bylaws as adopted by the stockholders was read.

On March 23, 1922, a proxy is entered in the following words:

"We, the undersigned, being all the incorporators of the C. Berenda Weinberg Clinic and Research Laboratories, organized under the laws of the State of New Jersey, do hereby waive notice of the time, place and purpose of the first meeting of the incorporators of the said company, and do fix the 23d day of March, A. D. 1922, at 11 A. M. o'clock, in the City of New York, as the time and the place of said meeting.

"And we do hereby waive all the requirements of the statutes of New Jersey as to the notice of this meeting, and the publication thereof; and we do consent to the transaction of such business as may come before said meeting."

On April 30, 1923, minutes of stockholders' and directors' meetings appear as follows:

"The annual stockholders meeting, which was adjourned from April 2nd, 1923, was held today in the office of the company in Atlantic City, New Jersey.

"Present: C. Berenda Weinberg, Solton Engel (by proxy), Robert G. Grey (by proxy), comprising all of the stockholders of the corporation.

"The minutes of the first meeting of the corporation were read, together with the bylaws as heretofore adopted and all of which are hereby confirmed.

"The following were chosen directors of the company to serve for one year and until their successors are chosen and qualify: C. Berenda Weinberg; Solton Engel; Robert G. Grey.

"There being no further business, the meeting adjourned.

"[Signed] C. Berenda Weinberg,

"Pres. & Treas."

"The annual directors meeting was held In Atlantic City, N. J.

"The following directors were present: C. Berenda Weinberg, Solton Engel (by proxy), Robert G. Grey (by proxy).

"The reading of the minutes of the previous meeting was dispensed with.

"The following were unanimously chosen officers of the company to serve for one year and until their successors are chosen and qualify: President and treasurer C. Berenda Weinberg; Vice president, Solton Engel; secretary, Robert G. Grey.

"There being no further business, the meeting was adjourned.

"[Signed] C. Berenda Weinberg,

"Pres. & Treas."

It was proven that these minutes were prepared by Grey in New York, sent to Weinberg at Atlantic City to sign and place in the minute book as a minute of the annual stockholders' and annual directors' meetings. Then follow minutes as follows:

"May 1st, 1923. "A regular monthly meeting of the Board of Directors was held this day at 12 o'clock noon in the New York office of the company at 17 Cedar Street.

"Present: Solton Engel and Robert G. Grey, a quorum under the by-laws.

"The minutes of the annual meeting were read and approved as read.

"There being no unfinished business and no new business offered, the meeting adjourned.

"[Signed] Robert G. Grey,

"Secretary."

Minutes in identically the same form (except the changing of the word "annual" to "previous") appear for alleged meetings on June 1, 1923, July 3, 1923, August 1, 1923, September 4, 1923, October 11, 1923, November 1, 1923, December 1, 1923, January 2, 1924, February 1, 1924, March 1, 1924.

On March 13, 1924, appears a proxy to Weinberg in the same form as that of April 27, 1923, and minutes of alleged meetings of the stockholders and directors, duly signed by C. Berenda Weinberg as president and treasurer in the same form as those of 1923. Then follow minutes of directors' meetings in the same form as above.

On November 29, 1924, appears a proxy signed by C. Berenda Weinberg, naming I. M. Stettenheim as his proxy at any meeting of the directors or stockholders.

On December 1, 1924, appears a minute of a meeting of the directors, all being present, at which the following resolution was passed:

"Resolved that C. Berenda Weinberg, President and Robert G. Grey, Secretary, be authorized to give Hamilin and Company, 17 Cedar Street, New York City, three promissory notes as follows: $750, payable April 1st, 1925. $750, payable Aug. 1st, 1925. $1,000, payable Dec. 1st, 1925.

"Resolved further that C. Berenda Weinberg, President, and Robert G. Grey, Secretary, be authorized and hereby are authorized to sign these notes on behalf of the company."

This minute was not signed by Grey, the secretary, but bears the signature of C. Berenda Weinberg as president.

The minutes of the meetings of the directors on January 2, 1925, February 2, 1925, and March 2, 1925, follow as before.

On March 10, 1925, there appears the usual proxy to C. Berenda Weinberg, and on April 1, 1925, the stereotyped minutes of the stockholders' and the directors' meetings appear.

The minutes of the directors' meetings appear as of May 1, 1925, June 1, 1925, July 1, 1925, and August 1, 1925, in the same form as above.

On September 1, 1925, the same minute appears, except that Grey was not present, having given a proxy to Engel, who signs the minute.

The minutes of the directors' meetings appear as of October 1, 1925, November 2, 1925, December 1, 1925, and January 2, 1926, in the same form as above.

On January 19, 1926, a waiver of notice of a special meeting of the C. Berenda Weinberg Clinic and Research Laboratories, not specifying whether of stockholders or directors, and a minute of such meeting appears as...