Puro v. Puro

• Decision Date: 21 April 1976
• Parties: Arthur PURO, Plaintiff, v. Louis PURO, Individually and as Trustee of Aaron Arthur Puro, et al., Defendants.
• Court: New York Supreme Court

Page 633

393 N.Y.S.2d 633

89 Misc.2d 856

Arthur PURO, Plaintiff, v. Louis PURO, Individually and as Trustee of Aaron Arthur Puro, et al., Defendants.

Supreme Court, Individual Calendar, New York County, Part 11.

April 21, 1976.

Lawson F. Bernstein, pro se.

Millard & Greene, by Lawson F. Bernstein, New York City, for plaintiff Arthur Puro.

Paul, Weiss, Rifkind, Wharton & Garrison, by George Felleman, New York City, for defendant, Louis Puro.

Milton Davidoff, New York City, for defendant, Estate of Joseph Puro.

Rosenman, Colin, Freund, Lewis & Cohen, by Ambrose Doskow, New York City, for defendant, Estate of Sam Puro.

SIDNEY H. ASCH, Justice.

Plaintiff moves to reargue the determination of this Court which granted summary judgment in favor of defendants and which denied plaintiff's motion to dismiss certain counterclaims and affirmative defenses.

Plaintiff, Arthur Puro, seeks to invoke the equity powers of this Court to compel Louis Puro and his co-defendants to elect Arthur a director and officer of Purofied Down Products Corp. ('Purofied') pursuant to a Stockholders Agreement dated May 1, 1951.

In 1945 Louis and Sam Puro wished to give their younger brothers an equity interest in Purofied. Joseph and Jacob were given stock unconditionally. Louis and Sam, however, did not think it advisable to give Arthur an outright interest in Purofied. Accordingly, Louis placed 125 shares of Purofied in trust for Arthur and named himself as trustee.

In 1951 the shareholders of Purofied, namely, Louis, Sam, Joseph, Jacob and Louis, as trustee, executed a Stockholders Agreement among themselves and Purofied. Paragraph Second of that agreement, which is sought to be enforced herein, provided as follows:

'Second: The parties agree that so long as the individuals hereto are Stockholders of the Corporation, and there is no breach of any of the terms, covenants and conditions of this agreement, and subject to the terms, covenants and conditions of this agreement, as follows:

(A) At all future elections to vote and cause the election and retention in office of Louis Puro, as President and Director, by the votes of Sam Puro, Jacob Puro, and Joseph Puro: Jacob Puro, as Vice President and Director, by the votes of Louis Puro, Sam Puro and Joseph Puro: Sam Puro as Secretary and Treasurer and Director, by the votes of Louis Puro, Jacob Puro and Joseph Puro: Joseph Puro, as Second Vice-President and Director, by the votes of Louis Puro, Sam Puro and Jacob Puro: Arthur Puro, as Third Vice-President and Director, by the votes of Louis Puro, Sam Puro, Jacob Puro and Joseph Puro: and that none other than they shall constitute the officers and members of the Board of Directors of said Corporation.

(B) The Corporation agrees to and does hereby employ Louis Puro, Sam Puro, Jacob Puro, Joseph Puro, and Arthur Puro, to work in and about the affairs of the Corporation as employees, officers and members of the Board of Directors. Each of said parties shall devote so much of his time and attention to the business of the Corporation as he shall in his discretion deem necessary for the proper and orderly conduct of the business of the Corporation.

(C) The Corporation agrees to pay a salary unto each of the individuals as the parties and the Board of Directors of the Corporation shall agree at a duly constituted meeting held for such purpose as to the salaries to be paid to each of the parties hereto, and such sum or sums may be changed, modified, increased or decreased from time to time as in the judgment of the Board of Directors it may seem proper.'

Paragraph Twenty-First of the same agreement reads as follows:

'Twenty First: This agreement or any part thereof cannot be altered, modified, changed, revised, terminated or waived except by the unanimous written consent of all the parties hereto first obtained and this provision itself cannot at any time be waived.'

On April 10, 1974, Louis, Jacob, and the Estates of Sam and Joseph (who had died) amended the Agreement by eliminating Paragraphs Second through Thirteenth. Among the several provisions of the Agreement which were eliminated was the very one under which Arthur brought this action, Paragraph Second, which had provided for the election of Arthur as officer and director. The Agreement as amended contains no provision providing for the election of directors or officers.

A threshold issue raised is whether the law of the case doctrine bars summary judgment. In 1973, Arthur Puro moved this Court for a preliminary injunction. Defendants cross-moved for summary judgment. On February 15, 1973, Mr. Justice Clifford A. Scott denied both motions.

If the 'law of the case' rule is dispositive of these motions, the Court has no need to consider the other aspects of the matter. However, review of the cases on that doctrine indicates that the motions should not be denied on that ground alone. Judge Learned Hand in a similar situation stated that the doctrine was not inflexible and only a 'cautionary admonition to be applied when the occasion demands it.' (Dictograph Products Company v. Sonotone Corporation, 2 Cir., 230 F.2d 131, 134.) He accordingly sustained the granting of summary judgment by a District Court Judge after the same application had been denied by another District Court Judge.

The doctrine has been held not to bar a second summary judgment motion where a change in facts is asserted. (N. A. Berwin and Co. Inc. v. American Safety Razor Corp., Sup., 117 N.Y.S.2d 727.) The agreement herein was changed after the prior motion for summary judgment was decided. This amendatory agreement was a substantial change in the facts. And more than two years have elapsed since the prior motion was decided. The Court of Appeals affirmed plaintiff's contempt of court and his violation of Justice Dollinger's and Justice Leff's order, November 21, 1973, eight months after Judge Scott's decision (Puro v. Puro, 33 N.Y.2d 805, 350 N.Y.S.2d 658, 305 N.E.2d 778). For these reasons the prior decision does not bar consideration of these motions. (See, Cohen v. New York Herald Tribune, Inc., 63 Misc.2d 87, 103, 310 N.Y.S.2d 709, 725; Werthner v. Olenin, 186 Misc. 829, 831, 62 N.Y.S.2d 646, 648; Walker v. Gerli, 257 App.Div. 249, 251, 12 N.Y.S.2d 942, 944; Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 56 L.Ed. 1152.)

A principal argument on this motion relates to defendants' position that if there ever was a duty on the defendants to elect Arthur, that duty ended when Paragraph Second was terminated by the 1974 amendatory agreement. It is clear that if the signatories had modified their agreement before the action had been instituted by plaintiff, his interest, if any, under the Second Paragraph would have been extinguished. No matter what the sequence of events, however, the result must be the same.

The signatories expressly reserved their right to amend the Agreement. On April 10, 1974, Louis, Jacob and the respective estates of Sam and Joseph modified the Agreement by, Inter alia, eliminating Paragraph Second--the Express provision Arthur herein relies upon.

Accordingly, plaintiff asks this Court to enforce a provision to the Agreement which no longer exists. If there ever was a duty on the defendants to elect Arthur, that duty ended when Paragraph Second was terminated.

Because the signatories to the Agreement expressly reserved their right to amend it in Paragraph Twenty-First, plaintiff had no vested right to be elected an officer and director of Purofied.

In Salesky v. Hat Corporation of America, 20 A.D.2d 114, a putative third-party beneficiary sought to enforce a contract which, unamended, named her as the beneficiary. The signatories duly modified it naming another party the beneficiary. The Court held that the contract, by its terms, allowed the signatories to modify or terminate it. Since the signatories reserved the right to amend or modify the contract, the Court held that the putative beneficiary had no rights under the contract.

Plaintiff argues that by instituting a lawsuit alleging rights under the Agreement, the parties' ability to modify it was terminated.

But the authorities cited by plaintiff to support this proposition are inapposite. Gifford v. Corrigan, 117 N.Y. 257, 22 N.E. 756 and Stein v. Severino, 41 Misc.2d 209, 245 N.Y.S.2d 634 were both suits by creditor beneficiaries, on contracts which did not contain express amendatory provisions; and both involved substantial elements of reliance not present here. Stein involved a suit by the wife's attorney following a matrimonial action on a stipulation between the husband and wife that he pay her attorneys' fees of $2,000. The Court held that the attorney had accepted and adopted the stipulation And had acted in reliance on it by withdrawing his pending motion to fix his fee.

Gifford affords plaintiff even less support. There the owner of a mortgage sued a grantee to enforce the grantee's assumption agreement, despite the grantee's release by his grantor. The Court held that for a creditor to recover on a third party contract, his knowledge, assent And reliance were required. Id., 117 N.Y. at 262, 22 N.E. at 757. For several years, the mortgagee had permitted the grantee to take rents and profits, thus showing reliance on the protections of the assumption agreement....