H.M.R. Enterprises, Inc. v. National Offset, Inc.

• Decision Date: 23 June 1958
• Citation: H.M.R. Enterprises, Inc. v. National Offset, Inc., 177 N.Y.S.2d 797, 12 Misc.2d 997 (N.Y. Sup. Ct. 1958)
• Parties: H. M. R. ENTERPRISES, Inc., Plaintiff, v. NATIONAL OFFSET, Inc., Defendant.
• Court: New York Supreme Court

Page 797

177 N.Y.S.2d 797

12 Misc.2d 997

H. M. R. ENTERPRISES, Inc., Plaintiff, v. NATIONAL OFFSET, Inc., Defendant.

Supreme Court, Special and Trial Term, New York County, Part XIII.

June 23, 1958.

Kent, Hazzard, Jaeger & Wilson, White Plains, for plaintiff.

Louis B. Brodsky, New York City, for defendant.

HENRY EPSTEIN, Justice.

Plaintiff corporation sues to compel defendant corporation to transfer on its books to the name of plaintiff a stock certificate for 15 15/16 (fifteen and fifteen-sixteenths) shares of capital stock of defendant and to deliver to plaintiff a new certificate for said shares in due and proper form. The added prayer for damages of $10,000 was withdrawn at the opening of the trial. Substantial loans were made by plaintiff to Eastern Operators, Inc., a New York corporation in which Harry Siskind had a substantial interest. Siskind was president of defendant corporation and personally guaranteed the repayment of the loans. To persuade plaintiff to make the loans, which had been several times refused, Siskind assigned his shares of stock in defendant corporation as security for such loans. 'Eastern' defaulted and plaintiff recovered a judgment against 'Eastern' and Harry Siskind in the Supreme Court, Westchester County, for $36,741.83. Thereafter, on May 4, 1956, plaintiff held a sale of Siskind's stock, assigned under an agreement of April 21, 1955. This was on due notice to Siskind, his attorney and defendant corporation. No bids were made or received and plaintiff bought the stock. Then plaintiff through its attorney-in-fact and president, Maitland Brenhouse, offered the stock to defendant for transfer and reissue to plaintiff. Defendant corporation refused, alleging a stockholders' agreement of March 15, 1949 restricting transfer of shares without first offering them to the remaining stockholders for purchase. Siskind testified that he told Brenhouse of the restriction and that a typewritten notation of said restriction was clipped by a paper clip to the certificate when delivered to plaintiff. Brenhouse categorically denied this.

The certificate of stock in question contains no such restriction on its face, nor is there any mark thereon to support Siskind's testimony. The purported restriction on the typewritten slip reads:

'All stock certificates issued by the corporation shall be marked on the face thereof 'sale, transfer, pledge, etc. of this stock is restricted by the terms of a Stockholders Agreement dated 26 day of January, 1950', which may be examined at the office of the corporation No. 203 E. 18th Street, New York, N. Y. No dividend shall be paid on any shares transferred, pledged, assigned or encumbered in violation of this agreement.' (Deft's Exhibit B).

This testimony and the exhibit were obviously designed to avoid the interdict of the statute--section 176 of the Personal Property Law:

'There shall be no lien in favor of a corporation upon the shares represented by a certificate issued by such corporation and...