Malloy v. O'Neill

• Decision Date: 04 August 1997
• Citation: 242 A.D.2d 260,661 N.Y.S.2d 34
• Parties: , 1997 N.Y. Slip Op. 7056 Patrick E. MALLOY III, et al., Respondents, v. John O'NEILL, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 34

661 N.Y.S.2d 34

242 A.D.2d 260, 1997 N.Y. Slip Op. 7056

Patrick E. MALLOY III, et al., Respondents, v. John O'NEILL, Appellant.

Supreme Court, Appellate Division Second Department.

Aug. 4, 1997.

Cullen and Dykman, Garden City, (Michele Daz-Miranda, of counsel), for appellant.

Esseks, Hefter & Angel, Riverhead, (William W. Esseks, Jane Ann R. Kratz, and Carmela M. DiTalia, of counsel), for respondents.

Before THOMPSON, J.P., and PIZZUTO, FRIEDMANN and KRAUSMAN, JJ.

MEMORANDUM BY THE COURT.

In an action seeking declaratory relief and specific performance of a stockholders' agreement, the defendant appeals from a judgment of the Supreme Court, Suffolk County (Underwood, J.), entered August 8, 1996, which, upon an order of the same court, also dated August 8, 1996, granting the plaintiffs' motion for summary judgment and denying his cross motion for summary judgment dismissing the complaint, is in favor of the plaintiff and against him, inter alia, directing specific performance of the provision of the stockholders' agreement granting a right of first refusal to purchase the shares of stock held by the appellant in a corporation named Malloy Air East, Inc.

ORDERED that the judgment is modified, on the law, by deleting the fourth and fifth decretal paragraphs thereof and substituting therefor a provision directing that the amounts of $6,258 and $892.99, representing stockholder loans payable to the plaintiff Malloy Air East, Inc., by the defendant, shall be deducted from the purchase price of the 49 shares of stock which the plaintiff Patrick E. Malloy III is entitled to have transferred to him upon payment of the book value thereof; as so modified, the judgment is affirmed, without costs or disbursements, and the matter is remitted to the Supreme Court, Suffolk County, for a hearing to determine the book value of John O'Neill's 49 shares of stock as provided for in Article III of the Agreement.

The plaintiffs commenced this action for declaratory relief and specific performance of a shareholders' agreement dated November 19, 1979, which contained a right of first refusal with respect to the transfer of shares of stock in the corporation. The plaintiffs alleged that the transfer by the defendant John O'Neill of his 49 shares in the plaintiff corporation, Malloy Air East, Inc. (hereinafter Malloy Air), triggered the plaintiff Patrick E. Malloy's (hereinafter Malloy) right of first refusal or preemptive right to purchase the shares as provided in Article IV of the stockholders' agreement. Malloy owns the remaining 51 issued shares of Malloy Air. Article III of the Agreement provides that in the event of a transfer of shares, such as was made by the defendant, the purchase price shall be established by the book value of the stock as of the close of the last fiscal year of the corporation preceding the date on which the sale of stock is to take place, and determined by the accountants regularly employed by Malloy Air.

"The effect of a right of first refusal, also called a preemptive right, is to bind the party who desires to sell not to sell without first giving the other pa...