Tornick v. Dinex Furniture Industries, Inc.

• Decision Date: 20 March 1989
• Citation: 148 A.D.2d 602,539 N.Y.S.2d 68
• Parties: Frank TORNICK, Respondent, v. DINEX FURNITURE INDUSTRIES, INC., et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 68

539 N.Y.S.2d 68

148 A.D.2d 602

Frank TORNICK, Respondent, v. DINEX FURNITURE INDUSTRIES, INC., et al., Appellants.

Supreme Court, Appellate Division Second Department.

March 20, 1989.

Armon & Eisenberg, Great Neck (Richard Eisenberg, of counsel), for appellants.

Goldweber and Hershkowitz, Mineola (Marcia B. Hershkowitz, of counsel), for respondent.

Before BROWN, J.P., and EIBER, KOOPER and BALLETTA, JJ.

MEMORANDUM BY THE COURT.

In an action by a former shareholder of the defendant corporation, inter alia, for an accounting, the defendants appeal from so much of an order of the Supreme Court, Kings County (Ramirez, J.), dated November 13, 1987, as denied their motion for summary judgment dismissing the complaint as against the individual defendants.

ORDERED that the order is affirmed insofar as appealed from, with costs.

While we agree that the court erred in determining that Business Corporation Law § 720 creates a cause of action personal to the plaintiff by which he might proceed against the defendant officers and directors (see, Abrams v. Donati, 66 N.Y.2d 951, 489 N.E.2d 751, 498 N.Y.S.2d 782, rearg denied 67 N.Y.2d 758, 490 N.E.2d 1234, 500 N.Y.S.2d 1028; Rapoport v. Schneider, 29 N.Y.2d 396, 278 N.E.2d 642, 328 N.Y.S.2d 431; L.W. Kent & Co. v. Wolf, 143 A.D.2d 813, 533 N.Y.S.2d 119. See also, 3 White, New York Corporations § 720.02[1] [13th ed] ), we nevertheless conclude that under the circumstances presented, the plaintiff has stated a cause of action against the defendant officers and directors in their individual capacities for redress of an alleged wrong personal to him.

It is well settled that corporate directors and officers assume a fiduciary role in relation to the corporate entity and the shareholders (see, Wolff v. Wolff, 67 N.Y.2d 638, 490 N.E.2d 532, 499 N.Y.S.2d 665; Alpert v. 28 Williams St. Corp., 63 N.Y.2d 557, 473 N.E.2d 19, 483 N.Y.S.2d 667, rearg denied 64 N.Y.2d 1041, 478 N.E.2d 211, 489 N.Y.S.2d 1028; Aronson v. Crane, App.Div., 535 N.Y.S.2d 417). Moreover, "[t]he fact that a particular act of directors may constitute a wrong to the corporation which may be righted ordinarily on behalf of the corporation does not bar a stockholder from having redress if that act effects a separate and distinct wrong to him independently of the wrong to the corporation. Redress of this latter wrong is available to him personally despite the right of a present stockholder to redress the wrong in a derivative action so far as it relates to the corporation" ( Hammer v. Werner, 239 App.Div. 38, 44, 265 N.Y.S. 172, see, Rothmiller v. Stein, 143 N.Y. 581, 38 N.E. 718; Von Au v. Magenheimer, 126 App.Div. 257, 110 N.Y.S. 629, affd. 196 N.Y. 510, 89 N.E. 1114; see also, 3A Fletcher Cyclopedia Corporations § 1282 [Perm ed]; 15 NY Jur 2d, Business Relationships § 1031). At bar, the plaintiff has alleged, inter alia, that in order to deprive him of his share of the corporation's profits the defendants caused the corporation to offer him an inadequate price for his stock, and when he declined to sell, the defendants redistributed his shares among themselves without compensating the plaintiff therefor.

Although we conclude that the plaintiff may proceed against the defendant officers and directors in their individual capacities, review of the record discloses that there exist triable issues of fact with...