Weinert v. Kinkel

• Decision Date: 16 January 1947
• Citation: 296 N.Y. 151,71 N.E.2d 445
• Parties: WEINERT et al. v. KINKEL et al.
• Court: New York Court of Appeals Court of Appeals

296 N.Y. 151

71 N.E.2d 445

WEINERT et al.

v.KINKEL et al.

Court of Appeals of New York.

Jan. 16, 1947.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by William Weinert and another, stockholders of March Gold, Inc., suing on behalf of themselves and on behalf of all other stockholders of said corporation, against Edward G. Kinkel and others, for defendants' breach of their fiduciary duty as directors of March Gold, Inc. From a judgment of the Appellate Division of the Supreme Court 269 App.Div. 401, 56 N.Y.S.2d 92, unanimously affirming a judgment of the Supreme Court for plaintiffs, entered upon a report of an official referee (Charles B. Sears), defendants appeal.

Affirmed. Thedore Kiendl, William R. Meagher, Alfred L. Becker and Howard S. Tuthill, all of New York City, and James O. Moore, of Buffalo, for appellant.

Frank G. Raichle, of Buffalo, for respondents.

PER CURIAM.

This stockholders' derivative action against directors of a Delaware corportion was commenced after the corporation had been dissolved for nonpayment of taxes; although temporarily revived during part of the time during which the present action was in progress, the corporation thereafter forfeited its charter for a second time, and it is not now, and for some time has not been, a body corporate. The evidence clearly establishes defendants' breach of their duty as directors. The sole question of consequence upon this appeal is whether the dissolved corporation is an indispensable party and whether its absence as a party defendant is fatal to the judgment rendered.

The technical argument made by appellants disregards realities and should not prevail. It has been recognized that the court may dispense with the presence of a defunct corporation in a derivative action, if the circumstances warrant such exercise of its equitable powers. Cohen v. Dana, 287 N.Y. 405, 410, 411, 40 N.E.2d 227, 230;Norman v. General American Transportation Corporation, 181 Misc. 233, 47 N.Y.S.2d 390, affirmed 267 App.Div. 758, 45 N.Y.S.2d 929;O'Brien v. O'Brien, 238 Mass. 403, 131 N.E. 177; 13Fletcher on Corporations, s 5997. Such circumstances are here present. As observed by the learned referee, the defendant directors dominated and controlled the board; they were residents of New York; the corporation's business was done here; and, as provided by the by-laws and authorized by the certificate of incorporation, the corporate meetings were held in this State....