Levy v. Paramount Publix Corp.
| Decision Date | 20 November 1934 |
| Parties | Robert S. LEVY, on Behalf of Himself and Others, Appellant, v. PARAMOUNT PUBLIX CORPORATION et al., Defendants, and Gilbert W. Kahn et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the First Judicial Department (241 App. Div. 711, 269 N. Y. S. 997), entered March 12, 1934, unanimously affirming a judgment in favor of the defendants-respondents entered upon an order of Special Term which granted a motion by such defendants for a dismissal of the complaint as to them. Plaintiff was the holder of bonds of the defendant Paramount Publix Corporation. He sued on behalf of himself and other bondholders to compel the defendants-respondents, the directors of such corporation, to account to the corporation and its creditors for their alleged official misconduct and any loss entailed thereby. The bonds were issued under an indenture which provided that no individual bondholder may bring an action ‘on or in respect of the bonds.’ unless he shows that the holders of 25 per cent. in amount of such bonds have made a demand upon the trustee under the indenture to sue and that such demand has been refused. The complaint did not allege that plaintiff's bond was due and payable, nor did it demand a money judgment for the plaintiff individually for the amount of his Bonds. Neither did it allege that a demand had been made upon the trustee to bring action, pursuant to the above provision in the indenture, nor was any excuse given for not complying with this condition. The defendants-respondents, before pleading, moved to dismiss the complaint as a against them on the grounds that it failed to state facts sufficient to constitute a cause of action as against them, and that plaintiff did not have legal capacity to bring the action. In granting the motion, the Special Term held that no action lay against the individual directors except at the suit of a judgment creditor, and that an individual bondholder could not bring a derivative action unless there had been a compliance with the condition in the indenture. 149 Misc. Rep. 129, 266 N. Y. S. 271.Samuel Zirn and Adolph Feldblum, both of New York City, for appellant.
William D. Whitney and Hugh A. Fulton, both of New York City, for respondents.
Judgment affirmed, with costs.
LEHMAN, J., not...
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