Steinthal v. Cohn

• Citation: 16 N.Y.2d 767,262 N.Y.S.2d 494,209 N.E.2d 815
• Parties: , 209 N.E.2d 815 Martin B. STEINTHAL et al., Respondents, v. Roy M. COHN, Appellant.
• Decision Date: 09 July 1965
• Court: New York Court of Appeals

Page 494

262 N.Y.S.2d 494 16 N.Y.2d 767, 209 N.E.2d 815 Martin B. STEINTHAL et al., Respondents,
v.
Roy M. COHN, Appellant. Court of Appeals of New York. July 9, 1965.

Appeal from Supreme Court, Appellate Division, First Department, 22 A.D.2d 644, 252 N.Y.S.2d 977.

Action was brought to recover damages in the amount of $552,200, the sum allegedly lost by the plaintiffs as the result of the failure of defendant to fulfill an alleged obligation to purchase the shares of stock of first corporation from the plaintiffs. The defendant in a letter of plaintiffs on June 29, 1961 stated that an agreement reached with second corporation provided for the registration of 30,500 shares of stock of first corporation to be received by the plaintiffs in liquidation of the second corporation, and that in event registration statement for the stock had not been filed by September 15, 1961, or, if filed, had not become effective by November 15, 1961, the defendant would on notice of 20 days from plaintiffs purchase the 30,500 shares from the plaintiffs at $17.78 per share or procure some other person to make the purchase, and that, in event the shares were registered and the plaintiffs were not able to sell the shares for at least $17.78 per share net, the plaintiffs were to offer the shares to the defendant at the price of $17.78 per share net, and that the defendant might either purchase the shares at that price, or, in event of his failure to do so, the plaintiffs were to be free to sell the shares, and that the defendant was required to pay the plaintiffs the difference between the net proceeds of the sale, if less than $17.78 per share, and that if total net proceeds to the plaintiff from any sale of 30,500 shares should be less than $800,000, defendant would purchase from the plaintiffs that number of additional shares from the first corporation at $17.78 per share as would make total of net proceeds to the plaintiffs equal $800,000, and that notice by plaintiffs to defendant to make the purchase should be given on or prior to January 25, 1962, and, if not so given, obligation of defendant should be at an end. The plaintiffs on January 17, 1962, notified the defendant that in accordance with the agreement of June 29, 1961 they were requesting the defendant to purchase 44,995 shares of the first corporation at a net price of $17.78 per share, but the defendant did not purchase the stock. The stock was subsequently registered, and the plaintiffs in 1963 sold the stock on the New York Stock Exchange and commenced the action to recover the difference between the price received by them on the sale and $800,000.

The Supreme Court, Special Term, New York County, Joseph A. Sarafite, J., 261 N.Y.S.2d 952, granted a cross motion by the plaintiffs for summary judgment and entered judgment thereon, and the defendant appealed.

The Appellate Division, 22 A.D.2d 644, 252 N.Y.S.2d 977, unanimously affirmed the order of the Special Term granting the cross motion for summary judgment and the judgment entered thereon and held that the agreement of June 29, 1961 required the defendant to purchase or find a purchaser for the 30,500 shares of stock at $17.78 per share whether or not the shares were registered, or to make up the difference if the shares were sold to another for less, and that if the net proceeds of any sale of the shares, whether registered or not, were less than $800,000, the defendant was required to buy an additional number of shares at $17.78 per share so as to make the total $800,000, and that though notice to defendant to purchase was defective, the defect could have been cured by giving the defendant ten additional days within which to buy, and such curable defect was waived by failure of defendant to ask for additional time. The defendant appealed to the Court of Appeals by permission of the Appellate Division.

Page 495

[209 N.E.2d 816] [16 N.Y.2d 769] Frank G. Raichle, Buffalo, Frank S. Polestino and Robert S. Cohen, New York City, for appellant.

J. Howard Carter, Lee W. Meyer and Ronald S. Daniels, New York City, for respondents.

Order affirmed, with costs.

DESMOND, C. J., and DYE, BURKE and BERGAN, JJ., concur.

VAN VOORHIS, J., dissents in the following opinion in which FULD and SCILEPPI, concur.

VAN VOORHIS, Judge (dissenting).

The question presented to us on this...