Kaminsky v. Kahn

Decision Date18 May 1965
Citation259 N.Y.S.2d 716,23 A.D.2d 231
PartiesAbraham J. KAMINSKY, Plaintiff-Respondent-Appellant, v. Albert M. KAHN, Defendant-Appellant-Respondent.
CourtNew York Supreme Court — Appellate Division

Milton Pollack, New York City, of counsel (Samuel N. Greenspoon and Barry H. Singer, New York City, with him on the brief), for appellant Albert M. Kahn.

Samuel R. Weltz, New York City, of counsel (Sidney O. Raphael and Milton B. Franklin, New York City, with him on the brief; Rephael, Searles & Vischi, New York City, attorneys), for appellant Abraham J. Kaminsky.

Before BOTEIN, P. J., and VALENTE, McNALLY, STEVENS and EAGER, JJ.

EAGER, Justice.

The interlocutory judgment, from which the defendant appeals and from a part of which the plaintiff cross appeals, adjudges and decrees, inter alia, that the defendant is accountable to the plaintiff for his handling and sales of a controlling stock interest in Spear & Company which plaintiff had transferred to the defendant; and the judgment directs an accounting before a referee.

The defendant, as an appellant, contends, first, that the plaintiff's complaint should have been dismissed in that the right to an accounting was not established. Secondly, the defendant urges that, in any event, the judgment should be modified to strike the several provisions therein which prematurely purport to determine issues which would be embraced within the subject matter of the accounting.

On October 28, 1957, the plaintiff was the owner of 129,682 shares of the common stock and 13,282 8/15ths shares of the second preferred stock of Spear & Company. Plaintiff's said holdings of common stock constituted 52.285% of the issued and autstanding shares of common stock of the company and he was the president, a director and chairman of the board of directors of the company. The plaintiff, individually however, was in serious financial difficulty and his common and preferred stock in the company was subject to or about to be subjected to pressing liens or interests of third persons. To extricate himself from his financial difficulties, the plaintiff entered into a written agreement with the defendant whereby he transferred all of his said stock in the company to the defendant as the 'sole and absolute owner' subject, however, to the lien in the amount of a certain outstanding loan in favor of Standard Financial Corporation and subject to a certain one-sixth beneficial interest held by Southern Bedding Accessories, Inc. (Southern) in the stock. The stock so transferred to the defendant, subject to the said lien and interest, was for convenience, referred to in the agreement as the 'Spear Equity', and it will be so referred to in this opinion.

The agreement between the parties provided for the satisfaction by the defendant of a substantial judgment held by Southern against the parties, a satisfaction of a judgment held by the defendant against the plaintiff, and a release by defendant of the plaintiff of claims under prior agreements relating to the stock holdings by the parties in Spear & Company. It was therein further provided that the plaintiff 'shall have a one-third (1/3) interest in the to all dividends received on the Spear Equity and any proceeds from the sale of any part thereof and any other moneys or other property received by reason of the ownership of the Spear Equity after the payment of:

'(1) The lien of Standard Financial Corporation or any renewal or substitution thereof and to the payment of any interest thereon.

'(2) All sums paid by Kahn [defendant] to Southern under the Southern Agreement, without Kahn charging interest, and any moneys paid by Kahn (and any interest paid thereon) for the purchase of shares of First Preferred Stock or any other securities of Spear & Company and any expenses paid by Kahn (and any interest paid thereon) and which are directly related to the ownership of the Spear Equity.'

The agreement also gave the defendant 'the right to designate the person or persons in whose name or names the stock representing the Spear Equity shall be registered.' It was further provided, '[i]n the event Kahn [defendant] desires at any time to sell or dispose of all or any part * * * of the Spear Equity, Kahn shall first submit written evidence of a bonafide offer to Kaminsky [plaintiff] who shall have the right and option to purchase the shares * * * at the purchase price and upon the terms and conditions set forth in said bonafide offer'.

The plaintiff, claiming a breach by defendant of his contractual obligations, had instituted a prior action for an accounting. The complaint in such action was dismissed upon the ground that the contractual provisions coupled with the allegations of the complaint, did not establish such a relationship between the parties, fiduciary or otherwise, as would entitle the plaintiff to an accounting. In affirming the dismissal of the complaint in the prior action, this court modified the order of Special Term 'to permit plaintiff to institute such action at law or in equity as may be appropriate'; and the Court of Appeals affirmed without opinion. (See Kaminsky v. Kahn, 9 A.D.2d 881, 193 N.Y.S.2d 1007, affd. 8 N.Y.2d 831, 203 N.Y.S.2d 91.)

Thereafter, the plaintiff brought this action; and both Special Term and this court have rejected defendant's attack upon the complaint herein, this court specifically holding that such complaint stated a cause of action for equitable relief. In reaching this conclusion, this court (Rabin, J.) stated, among other things:

'* * * we recognize that under the terms of the agreement the plaintiff sold his stock to the defendant and title thereto passed to the latter. However, the defendant did not acquire unfettered control of that stock. He could not do as he pleased with the stock for his holdings were subject to the rights of the plaintiff expressly retained by him under the agreement. The agreement provided that the plaintiff was to have a first option to repurchase the stock; he was to receive one-third of the dividends thereon and, in the event of a sale thereof to a third party, he was entitled to one-third of the sales price over and above the moneys advanced by the defendant. It is the protection of these rights that entitles the plaintiff to equitable relief.' (Kaminsky v. Kahn, 13 A.D.2d 143, 145, 213 N.Y.S.2d 786, 788.)

This court further held that '[t] he relief to which the plaintiff is ultimately entitled, if any, can be moulded by the Court after trial.' (Ibid, p. 146, 213 N.Y.S.2d p. 789.)

Now, following the trial, the right of the plaintiff to judgment is not to be foreclosed upon the narrow ground, urged by the defendant, that the agreement between the parties did not create a fiduciary relationship and that, therefore, the plaintiff is not entitled to an accounting. The question instead is, did the plaintiff, on the basis of the allegations of his pleadings, establish a right to any relief at the hands of the court, and, if so, were the directions for an accounting and the other provisions of the judgment proper.

At this stage of the action, it is immaterial that the relief eventually to be accorded to the plaintiff by a final judgment herein may be limited to a monetary recovery. The Supreme Court in this State is a court of general original jurisdiction in law and equity (see N.Y.Const. Art. 6, § 7, subd. a., and, in conformity with its all inclusive powers, the court is authorized in any action to render such judgment as is appropriate to the proofs received in conformity with the allegations of the pleadings, irrespective of the nature of the relief demanded, subject, of course, in a proper case, to the imposition of such terms as may be necessary to protect the rights of any party. (See CPLR 3017(a).) The court, within the framework of the pleadings in any case, may draw upon its broad reservoir of powers established by law or formulated under the principles of equity, and utilize any of them to afford complete relief to a party. (Cf. Susquehanna S.S. Co. v. Andersen & Co., 239 N.Y. 285, 294, 146 N.E. 381, 384.)

A plaintiff may properly be limited to a recovery based upon the transactions, occurrences, or series of transactions or occurrences set out in his complaint (see CPLR 3013), but, if he establishes a right to money damages on the basis thereof, his complaint should not be dismissed merely because it was framed to support a cause of action for equitable type relief. The present day trend, under CPLR, is to give total effect to the statutory abolishment of 'the distinctions between actions at law and suits in equity, and the forms of those actions and suits' (CPLR 103(a)), and it would be a reproach to the efficiency of our courts if, under such circumstances, the court were to dismiss a complaint and remit the plaintiff to the necessity of bringing a new action at law. (See Lane v. Mercury Record Corp. (Valente, J.), 21 A.D.2d 602, 252 N.Y.S.2d 1011.) The court has power to render whatever judgment is appropriate under the plaintiff's allegations and the proofs 'so long as its jurisdiction was properly couched in the first instance and it is retained.' (April Productions v. G. Schirmer, Inc. (Breitel, J.), 284 App.Div. 639, 643, 131 N.Y.S.2d 341, 345, revd. on other grounds 308 N.Y. 366, 126 N.E.2d 283, 69 A.L.R.2d 1305. See, also, Jamaica Savings Bank v. M. S. Investing Co., 274 N.Y. 215, 220, 8 N.E.2d 493, 494, 112 A.L.R. 1485.) Therefore, with due regard to the defendant's right to a jury trial, unless waived, and upon such terms and proceedings as may be proper, the court, following a trial of an action wherein plaintiff has demanded equitable relief, may award the plaintiff a recovery of money damages where, as here, such a recovery is rupported by the plaintiff's allegations and proofs. (See I.H.P. Corp. v. 210 Cent. Park South Corp., 16 A.D.2d 461, 464, 228 N.Y.S.2d 883, 886, affd. 12 N.Y.2d 329, 239 N.Y.S.2d 547, 189 N.E.2d...

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