Myer v. Myer

• Decision Date: 17 April 1947
• Citation: 296 N.Y. 979,73 N.E.2d 562
• Parties: Jerome MYER et al., Appellants, v. Abraham MYER et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

296 N.Y. 979

73 N.E.2d 562

Jerome MYER et al., Appellants,

v.Abraham MYER et al., Respondents.

Court of Appeals of New York.

April 17, 1947.

Appeal from Supreme Court, Appellate Division, First Department, 271 App.Div. 465, 66 N.Y.S.2d 83.

Action by Jerome Myer and others, as trustees for Julius Myer, under a trust indenture dated April 21, 1942, and as trustees under such trust indenture as stockholders of Myer 1890 Bottling Company, Inc., for the benefit of such Myer 1890 Bottling Company, Inc., against Abraham Myer and others, for an accounting. For some years prior to April 21, 1942, Julius Myer, the father of the plaintiffs owned 50 per cent of the capital stock of Myer 1890 Bottling Company, Inc. His sons, defendants Abraham Myer and Israel Myer, each owned and continued to own 25 per cent of the stock. On April 21, 1942, Julius Myer conveyed his stock in Myer 1890 Bottling Company, Inc., to three other sons, the plaintiffs, as trustees, by an agreement creating an inter vivos trust, under which the trustees were to pay over to the settlor all dividends declared during his lifetime. Upon the death of Julius Myer, the trust was to terminate, and the stock was to go to the plaintiffs free of the trust.

On April 5, 1945, Julius Myer was declared an incompetent, and defendant Louis J. Lefkowitz was appointed committee of his property.

The derivative stockholders' action was commenced April 18, 1946. Plaintiffs complained of numerous transactions some of which dated back to 1933, whereby their father and their two brothers were alleged to have caused Myer 1890 Bottling Company, Inc., of which they were officers and directors, to lose large sums of money by breach of their fiduciary duties. The stock of the corporate defendants, Abeisral Holding Corporation and 18-20 Broome Street Corporation, like that of the Myer 1890 Bottling Company, Inc., was owned by the individual defendants, and it was claimed in effect that such corporations were used to siphon off assets of the represented corporation.

The defendant committee and the remaining defendants moved separately but upon identical grounds to dismiss various portions of the complaint. These motions were granted in part, but were denied as to two of the main grounds urged for dismissal, 187 Misc. 769, 64 N.Y.S.2d 540. The two grounds were that plaintiffs were without legal capacity to sue as to any transactions prior to April 21, 1942, and second, that certain claims set forth in the complaint were barred by a three-year statute of limitations.

All defendants moved to dismiss the complaint as to those transactions which were alleged to have occurred prior to April 21, 1942, the date upon which plaintiffs accepted their interest in the stock of the Myer 1890 Bottling Company, Inc. Defendants contended that plaintiffs were without legal capacity to sue with respect to such transactions because of the requirements of section 61 of the General Corporation Law, Consol.Laws, c. 23, which provides ‘In any action brought by a shareholder in the right of a foreign or domestic corporation it must be made to appear that the plaintiff was a stockholder at the time of the transaction of which he complains or that his stock thereafter devolved upon him by operation of law.’

The Special Term in denying the motion...