Gilbert v. Burnside

• Decision Date: 12 June 1961
• Citation: 13 A.D.2d 982,216 N.Y.S.2d 430
• Parties: Samuel GILBERT, and others, stockholders of Glen Alden Corporation, suing on behalf of themselves and all other Stockholders of said Corporation, and for the benefit of and in the right of said Glen Alden Corporation, Respondents, v. Frank BURNSIDE, and others, and List Industries Corporation, Defendants, Francis O. Case, Dudley G. Layman, Albert A. List, Royal B. Lord, Thomas Stokes and Glen Alden Corporation, Appellants.
• Court: New York Supreme Court — Appellate Division

Page 430

216 N.Y.S.2d 430

13 A.D.2d 982

Samuel GILBERT, and others, stockholders of Glen Alden Corporation, suing on behalf of themselves and all other Stockholders of said Corporation, and for the benefit of and in the right of said Glen Alden Corporation, Respondents, v. Frank BURNSIDE, and others, and List Industries Corporation Defendants, Francis O. Case, Dudley G. Layman Albert A. List, Royal B. Lord, Thomas Stokes and Glen Alden Corporation, Appellants.

Supreme Court, Appellate Division, Second Department.

June 12, 1961.

O'Brien, Driscoll & Raftery, New York City, for appellants List, Lord and Layman; Arthur F. Driscoll, New York City, of counsel.

Dewey, Ballantine, Bushby, Palmer & Wood, New York City, for appellants Case and Stokes; John E. F. Wood, New York City, of counsel.

William F. Whitman, New York City, for appellant Glen Alden Corp.

Robert L. Bobrick, New York City, for respondents.

Before BELDOCK, Acting P. J., and UGHETTA, KLEINFELD, CHRIST and PETTE, JJ.

MEMORANDUM BY THE COURT.

In a derivative stockholder's action for the benefit of the corporation, to surcharge defendants for waste by reason of their conduct in propagating an unlawful reorganization plan, the several defendants appeal as follows from a judgment of the Supreme Court, Kings County, entered June 16, 1960, upon a decision of the Special Term rendered December 31, 1959, after a nonjury trial; and from an order of said court, made May 4, 1960, denying the motion of defendant Francis O. Case and defendant fendant Stokes for a new trial on the ground of newly discovered evidence:

(1) Defendants Albert A. List and Francis O. Case, and defendants Lord, Layman and Stokes appeal from so much of said judgment as directs recovery from them by plaintiffs, for the benefit of the Glen Alden Corporation, of the sum of $118,321.08, plus costs; and as directs that out of such recovery the corporation shall pay $40,000 to plaintiffs' attorneys for their disbursements and for the reasonable value of their services in this action.

(2) Defendant Glen Alden Corporation appeals from so much of the judgment as directs it, out of the recovery against the five individual defendants named, to pay the sum of $40,000 to plaintiffs' attorneys for their disbursements and services.

(3) Said defendants Case and Stokes also appeal from the order denying their motion for a new trial.

Judgment, insofar as appealed from by the said defendants, reversed on the law and the facts, with costs, and the complaint as to them dismissed, with costs.

Findings of fact contained in the Special Term's opinion (Gilbert v. Burnside, Sup., 197 N.Y.S.2d 623), which are inconsistent herewith, are reversed, and new findings of fact are made as indicated herein. Appeal from order dismissed as academic, without costs.

On March 20, 1958, a reorganization agreement was entered into between Glen Alden Corporation and List Industries Corporation. On June 30, 1958, the highest court in Pennsylvania declared the reorganization plan invalid because no right of appraisal was given to Glen Alden's dissenting stockholders (Farris v. Glen Alden Corporation, 393 Pa. 427, 143 A.2d 25).

This is a derivative action by stockholders of Glen Alden Corporation for its benefit, against both corporations and their directors, for moneys disbursed by Glen Alden in negotiating, proposing, and...