Estate of Purnell v. LH Radiologist, P.C.
| Decision Date | 25 June 1996 |
| Citation | 644 N.Y.S.2d 274,228 A.D.2d 360 |
| Parties | In re Application of the ESTATE OF Frank M. PURNELL, Deceased, et al., Petitioners-Respondents-Appellants, v. LH RADIOLOGIST, P.C., et al., Respondents-Appellants-Respondents. |
| Court | New York Supreme Court — Appellate Division |
Joseph H. Einstein, for petitioners.
John M. Brickman, for respondents.
Before SULLIVAN, J.P., and ELLERIN, RUBIN and TOM, JJ.
Order, Supreme Court, New York County (Beatrice Shainswit, J.), entered March 6, 1995, which, inter alia, granted petitioners' motion to confirm the report of the Special Referee finding them to be shareholders of the corporation in question and, as such, entitled to inspection of the corporate books and records, and denied respondents' cross-motion to reject the report, is unanimously affirmed, with costs to petitioners. Order, same court and Justice, entered May 18, 1995, which, inter alia, granted petitioners' motion to compel production of the corporate books and records, and denied that branch of the motion seeking to enjoin respondents from using corporate funds for further litigation of this matter, is unanimously modified, on the law and the facts, to foreclose the use of corporate funds in this matter to pay respondents' legal fees, and otherwise affirmed, with costs to petitioners.
The findings of the Special Referee, which clearly defined the issues and resolved matters of credibility, were substantially supported by the record and, therefore, properly confirmed (Matter of Mayer v. National Arts Club, 223 A.D.2d 440, 637 N.Y.S.2d 58; Kaplan v. Einy, 209 A.D.2d 248, 250-251, 618 N.Y.S.2d 777). Further, both the IAS court and the Special Referee properly concluded that stock certificates, while evidence of shareholder status, are not necessary for, or determinative of, its creation (Rocha Toussier y Asociados v. Rivero, 184 A.D.2d 397, 398, 585 N.Y.S.2d 384; Matter of Benincasa v. Garrubbo, 141 A.D.2d 636, 638, 529 N.Y.S.2d 797).
Respondents' argument that the issuance of shares to petitioners would have violated the Statute of Frauds is without merit. Article 8 of the Uniform Commercial Code, upon which respondents rely, applies to transfers of securities after they have been issued and thus is not the guiding statute here. Business Corporation Law § 503(b), which provides that a subscription agreement "shall not be enforceable unless in writing and signed by the subscriber", is the controlling statute but...
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