Vowteras v. Argo Compressor Service Corp.

• Decision Date: 03 August 1981
• Citation: 83 A.D.2d 834,441 N.Y.S.2d 562
• Parties: Nestor VOWTERAS, Respondent, v. ARGO COMPRESSOR SERVICE CORP. et al., Appellants; et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 562

441 N.Y.S.2d 562

83 A.D.2d 834

Nestor VOWTERAS, Respondent, v. ARGO COMPRESSOR SERVICE CORP. et al., Appellants; et al., Defendants.

Supreme Court, Appellate Division,

Second Department.

Aug. 3, 1981.

Morgan, Lewis & Bockius, New York City (James W. Harbison, Jr., and Michael B. Evanoff, New York City, of counsel), for appellants Argo Compressor Service Corp. and Argo Pneumatic, Inc.

William Joel Poltrak, New York City, for appellant Vowteras Realty, Inc.

Koopersmith, Feigenbaum & Potruch, Lake Success (Alexander Potruch, Kenneth Koopersmith and Michael K. Feigenbaum, Lake Success, of counsel), for respondent.

Before HOPKINS, J. P., and GIBBONS, GULOTTA and O'CONNOR, JJ.

MEMORANDUM BY THE COURT.

In an action, inter alia, to enforce an agreement to redeem stock in three close corporations, defendants Argo Compressor Service Corp., Argo Pneumatic, Inc. and Vowteras Realty, Inc. appeal from a judgment of the Supreme Court, Queens County, entered June 13, 1979, which, after a nonjury trial, awarded plaintiff the principal sum of $211,894.

By orders dated August 25, 1980 and April 6, 1981, the case was remitted to Trial Term for findings of fact pursuant to CPLR 4213 and the appeal has been held in abeyance in the interim (Vowteras v. Argo Compressor Serv. Corp., 77 A.D.2d 945, 431 N.Y.S.2d 136, 81 A.D.2d 582, 437 N.Y.S.2d 689 Trial Term has now complied sufficiently for us to review the judgment appealed from.

Judgment modified, on the law and the facts, by:

(1) deleting therefrom the provision awarding plaintiff the principal sum of $211,894, payable by Argo Compressor Service Corp., Argo Pneumatic, Inc. and Vowteras Realty, Inc., and substituting therefor a provision awarding plaintiff in his action against Vowteras Realty, Inc., the principal sum of $200,604, less the amount paid to him in his actions against Argo Compressor Service Corp. and Argo Pneumatic, Inc.;

(2) adding thereto a provision awarding plaintiff the principal sum of $114,898 in his action against Argo Compressor Service Corp.;

(3) adding thereto a provision awarding plaintiff the principal sum of $49,846 in his action against Argo Pneumatic, Inc.; and

(4) adding thereto a provision granting judgment in favor of Vowteras Realty, Inc. on its cross claim against Argo Compressor Service Corp. in the principal sum of $114,898 less the amount paid by Argo Compressor to the plaintiff and on its cross claim against Argo Pneumatic, Inc. for the principal sum of $49,846, less the amount paid by Argo Pneumatic to the plaintiff. As so modified, judgment affirmed, without costs or disbursements.

The essential elements of this dispute are set forth in our prior decision of August 25, 1980 (see Vowteras v. Argo Compressor Serv. Corp., 77 A.D.2d 945, 431 N.Y.S.2d 136, supra). To reiterate, this court remitted the case to the Trial Term for additional findings of fact on the question of whether the stock purchase agreement, the acceleration clause in the stock purchase agreement, and each appellant's guarantee of each and every obligation of the other appellants pursuant to the stock purchase agreement were enforceable (see Business Corporation Law, § 513, subd. Pursuant to subdivision (a) of section 513 of the Business Corporation Law a corporation may purchase its own shares out of surplus, only if such redemption does not render the corporation equitably insolvent. The appellants bear the burden of proving that the redemption would render them insolvent and that they lack sufficient surplus (see Richards v. Wiener Co., 207 N.Y. 59, 100 N.E. 592; Nakano v. Nakano McGlone Nightingale Adv., 84 Misc.2d 905, 377 N.Y.S.2d 996).

On appeal, appellant Vowteras Realty, Inc. did not contend that it lacked sufficient surplus to meet its obligations under the stock purchase agreement, but did contend that compliance with the stock purchase agreement would have rendered the corporation equitably insolvent. Trial Term was directed to make findings of fact on this question but has failed to comply. However, based upon our own reading of the record, we conclude that Vowteras Realty, Inc. failed to establish that compliance with any of its obligations would...