People v. Abbott Maintenance Corp.

• Decision Date: 05 July 1960
• Citation: 11 A.D.2d 136,201 N.Y.S.2d 895
• Parties: PEOPLE of the State of New York, Plaintiff-Appellant, v. ABBOTT MAINTENANCE CORPORATION, Inc., and Instalment Department, Inc., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 895

201 N.Y.S.2d 895

11 A.D.2d 136

PEOPLE of the State of New York, Plaintiff-Appellant, v. ABBOTT MAINTENANCE CORPORATION, Inc., and Instalment Department, Inc., Defendants-Respondents.

Supreme Court, Appellate Division, First Department.

July 5, 1960.

Samuel A. Hirshowitz, New York City, of counsel (Paxton Blair, Albany, George C. Mantzoros, New York City, and Gretchen W. Oberman, Brooklyn, with him on the brief; Louis J. Lefkowitz, Atty. Gen.), for appellant.

Daniel Rhoades, New York City, of counsel (Rhoades & Rhoades, New York City, Attys.), for respondent Abbott Maintenance Corp.

Abraham J. Gellinoff, New York City, of counsel (Herman S. Axelrod and Maitland M. Axelrod, New York City, with him on the brief; Axelrod & Axelrod, New York City, Attys.), for respondent Instalment Department, Inc.

Before BOTEIN, P. J., and VALENTE, STEVENS and BERGAN, JJ.

PER CURIAM.

The Attorney General, having obtained the judicial permission required by General Corporation Law, § 92, maintains this action in the name of the People of the State of New York for the dissolution of the two corporate defendants. Judgment is sought annulling defendants' certificates of incorporation and 'terminating their corporate existence.'

At the end of a protracted trial, the complaint was dismissed at Trial Term because the judge was of opinion that there was 'a complete lack of right in the people in reference to the litigation.' 22 Misc.2d 1019, 1026, 200 N.Y.S.2d 210 at page 218. Additionally, as to defendant Instalment Department, Inc., the court found there was an absence 'of any evidence to support the allegations of the complaint;' and as to defendant Abbot Maintenance Corporation the court found no basis for forfeiture of its charter 'in the absence of showing of wrong to the public generally.'

We are of opinion the court was right in holding a case had not been made out against Instalment Department; but as to Abbott Maintenance the record sustains a case prima facie for vacating its corporate charter within General Corporation Law, § 91, and the case should have gone to the jury.

The initial interest of the People in the continuance of the charter of the defendants was established judicially when, in pursuance of General Corporation Law, § 92, leave was granted the Attorney General to institute the action to vacate the corporate charters and to annul the existence of the corporations.

In this case the application was made to and permission granted by a Justice of the Supreme Court; it is not disputed that defendants applied to vacate the order and that the litigated order denying the application to vacate the initial permission has become final.

Even without the support implied by this threshold judicial permission, we would be of opinion the Attorney General had demonstrated sufficiently the interest of the People in the corporate acts complained of to warrant the institution of the action (People v. Ballard, 134 N.Y. 269, 293, 32 N.E. 54, 59).

The interest of the People in the subject matter is a somewhat different question than the range and scope of relief to be granted by the judgment; and it does not necessarily follow that because the action is properly instituted for sufficient cause, the court will ultimately dissolve the corporation or cancel its charter.

Indeed, the answer of defendant Abbott does not put in issue the interest of the People; but rests on denials; and seeks affirmatively and collaterally to attack the order granting permission to institute the action on the ground of factual misrepresentation and concealment in the application for the order, an issue which is not properly here.

As the case reaches this court, the argument pursued by Abbott is somewhat narrower than the grounds for decision announced at Trial Term. Abbott would sustain the order of dismissal because it contends that there was not sufficient proof of 'extensive wrongdoing' which was 'so injurious to the general public' as to warrant the annulment of its corporate...