Greenfield v. Denner

• Decision Date: 29 May 1959
• Citation: 6 N.Y.2d 867,160 N.E.2d 118,188 N.Y.S.2d 986
• Parties: , 160 N.E.2d 118 Harry GREENFIELD, Suing Individually and also on behalf of Clermont Cravat Company, Inc., Respondent-Appellant, v. Harry B. DENNER et al., Appellants-Respondents, and Clermont Cravat Company, Inc., Defendant.
• Court: New York Court of Appeals Court of Appeals

Page 986

188 N.Y.S.2d 986

6 N.Y.2d 867, 160 N.E.2d 118

Harry GREENFIELD, Suing Individually and also on behalf of Clermont Cravat Company, Inc., Respondent-Appellant, v. Harry B. DENNER et al., Appellants-Respondents, and Clermont Cravat Company, Inc., Defendant.

Court of Appeals of New York.

May 29, 1959.

Appeal from Supreme Court, Appellate Division, First Department, 6 A.D.2d 263, 175 N.Y.S.2d 918.

First stockholder, suing individually and also on behalf of corporation, brought action against second and third stockholders, the corporation, and others to recover for damages to first stockholder's investment in the corporation, and, in behalf of corporation, to recover for damages resulting from liquidation of business of corporation and misappropriation of its assets and good will.

The Special Term, Edger J. Nathan, Jr., J., entered certain orders, and appeals were taken.

The Appellate Division, 6 A.D.2d 263, 175 N.Y.S.2d 918, reversed with directions and held that complaint by 30 per cent stockholder in three-man corporation for damages caused to his investment in corporation by means of an allegedly fraudulent liquidation thereof stated a cause of action for damages suffered by him in his individual right that would not be recoverable through channels of his derivative stockholder's action, and that therefore he was entitled to maintain action individually for damage to his investment along with the derivative action. Breitel, J., dissented.

The Appellate Division, 6 A.D.2d 1034, 178 N.Y.S.2d 1007, denied motions for leave to reargue, but granted motions for leave to appeal to the Court of Appeals.

The Appellate Division certified to the Court of Appeals four questions:

1. Does the first cause of action allege facts sufficient to constitute a cause of action?

2. If question No. 1 be answered in the affirmative, is the defense pleaded in the amended answer of the defendants Denner and Mehler to the first cause of action sufficient in law?

3. If question No. 1 be answered in the affirmative, is the defense pleaded in the amended answers of the defendants Nitchun, Berkowitz and Mason Neckwear Co., Inc., to the first cause of action sufficient in law?

4. Are the defenses to the second cause of action pleaded in the amended answers of the defendants sufficient in law?

The first stockholder appealed to the Court of Appeals.

George Trosk and Schlesinger & Krinsky, New York City (Isidor E. Schlesinger and Samuel Bushwick, New York City,...