Weisman v. Awnair Corp. of America

• Decision Date: 03 July 1957
• Parties: , 144 N.E.2d 415 Norman J. WEISMAN et al., Appellants, v. AWNAIR CORPORATION OF AMERICA et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 745

165 N.Y.S.2d 745

3 N.Y.2d 444, 144 N.E.2d 415

Norman J. WEISMAN et al., Appellants, v. AWNAIR CORPORATION OF AMERICA et al., Respondents.

Court of Appeals of New York.

July 3, 1957.

Osmond K. Fraenkel and Harold Epstein, New York City, for appellants.

Sidney Orenstein, New York City, for respondents.

CONWAY, Chief Judge.

Plaintiffs appeal to this court from a judgment, entered upon an amended order of the Appellate Division, Second Department, which (1) reversed an order of the Supreme Court, Nassau County, denying a motion under rule 106 (subd. 4) of the Rules of Civil Practice to dismiss the complaint upon the ground that it does not state facts sufficient to constitute a cause of action, and (2) dismissed the complaint.

The complaint reads as follows:

'First: Plaintiff Awnair Inc. is a corporation organized and existing under the laws of the State of New York.

'Second: On information and belief, defendant Awnair Corporation of America is a corporation organized and existing under the laws of the State of New Jersey, and doing business in the State of New York.

'Third: On information and belief, defendant Arrow-Awnair Inc. is a corporation organized and existing under the laws of the State of New Jersey and doing business in the State of New York.

'Fourth: On information and belief, defendant Awnair Corporation of America is the owner of certain letters patent, trade names and trademarks relating to the manufacture and distribution of awnings and accessories.

'Fifth: On information and belief, defendant Arrow-Awnair Inc. is a wholly owned subsidiary of defendant Awnair Corporation of America.

'Sixth: On information and belief, defendant Mark Mitchell is an officer, director and stockholder of defendant corporations.

'Seventh: On information and belief, defendant Al Levine is an officer, director and stockholder of defendant corporations.

'Eighth: On or about the 1st day of April, 1954 plaintiff Weisman and defendants entered into an agreement and joint venture for the purpose of selling, distributing, merchandising and exploiting the products of defendant Awnair Corporation of America in the territories of Nassau, Suffolk, Queens and Kings Counties in the State of New York through a corporation to be organized by Weisman under the laws of the State of New York; that forty (40%) percent of the common stock of said corporation was to be issued to the defendants Mitchell and Levine or their nominees, and the balance to Weisman and/or his nominees; that the corporation when organized was to have the exclusive distribution of the products of the defendant Awnair Corporation of America in the aforesaid territories.

'Ninth: Thereafter and in reliance upon such agreement, plaintiff Weisman caused plaintiff corporation Awnair Inc. to be organized under the laws of the State of New York and commenced extensive and exhaustive advertising, selling, distributing and merchandising of the said products of defendant Awnair Corporation of America, expending large sums of money in such activities.

'Tenth: The stock of said plaintiff Awnair Inc. has never actually been issued but plaintiff Weisman has at all times been ready, able and willing to issue forty (40%) percent of the stock of said corporation to defendants Mitchell and Levine or to their nominees upon their advising him to whom they wanted said stock issued.

'Eleventh: Continuously thereafter plaintiff Weisman and plaintiff Awnair Inc. have devoted their best efforts to the distribution and exploitation of the products of defendant Awnair Corporation of America, and have faithfully performed all of the provisions of said joint venture on their part to be performed except, as hereinabove stated, as to the issuance of said shares of stock, and as to that plaintiff Weisman is ready, willing and able to issue said stock as soon as he is informed how to do so.

'Twelfth: On or about October 8, 1955 defendant Awnair Corporation of America notified plaintiffs that it would not permit plaintiffs to continue the distribution and exploitation of its products subsequent to November 30, 1955, but that after that date defendant Mitchell would operate as distributor instead of plaintiff in the territories hereinabove referred to in paragraph Eighth hereof.

'Thirteenth: Upon information and belief, subsequent to November 30, 1955 defendants Mitchell and Arrow-Awnair Inc. have purported to act as distributors of the products of Awnair Corporation of America in the aforesaid territories and have refused to accept orders taken by plaintiffs subsequent to November 30, 1955.

'Fourteenth: Defendants, despite demand by plaintiffs to discontinue such actions, are continuing to distribute and exploit the products of defendant Awnair Corporation of America to the exclusion of the plaintiffs in the aforesaid territories and have refused despite demand therefor to account to the plaintiffs for the transactions now being conducted by the defendants, all in violation of the rights of the plaintiffs in said joint venture.

'Fifteenth: Plaintiffs have no adequate remedy at law.

'Wherefore, plaintiffs demand judgment permanently restraining defendants and each of them from continuing to distribute or exploit any of the products of defendant Awnair Corporation of America in the territories of Kings, Queens, Nassau and Suffolk Counties, State of New York, except through plaintiffs and pursuant to the joint venture agreement hereinabove set forth, and that pending the trial and determination of this action defendants be temporarily restrained from such activities; and that defendants and each of them account to plaintiffs for any profits made by them arising out of the distribution or exploitation of the products of defendant Awnair Corporation of America in the territories of Kings, Queens, Nassau and Suffolk Counties, State of New York, since November 30, 1955.'

It will be noted that the complaint is framed in equity and that the plaintiffs rely upon the facts pleaded as stating an equitable cause of action for an injunction and an accounting. While the 'distinction between actions at law and suits in equity and forms of those actions and suits have been abolished' (Maflo Holding Corp. v. S. J. Blume, Inc., 308 N.Y. 570, 575, 127 N.E.2d 558, 561; Civil Practice Act, § 8) and the plaintiff could have sought both legal and equitable relief in this action because of the merger of law and equity, no demand for damages has been made or is sought by plaintiffs and plaintiffs make no claim whatever that the complaint states a cause of action of law for damages (see Maflo Holding Corp. v. S. J. Blume, Inc., supra). Therefore, all we must determine is whether plaintiffs' complaint states facts sufficient to constitute a cause of action in equity for an injunction and accounting (see Terner v. Glickstein & Terner, 283 N.Y. 299, 301, 28 N.E.2d 846, 847; Doyle v. Allstate Ins. Co., 1 N.Y.2d 439, 442, 154 N.Y.S.2d 10, 12; Merry Realty Co. v. Shamokin & Hollis Real Estate Co., 230 N.Y. 316, 324, 130 N.E. 306, 309; Jackson v. Strong, 222 N.Y. 149, 153-154, 118 N.E. 512, 513; Bradley v. Aldrich, 40 N.Y. 504, 511).

The plaintiffs' contention is that the exploitation and distribution of the products was pleaded to be the subject of a joint venture, and that, therefore, the fiduciary relationship which exists between joint venturers precludes the defendants from continuing themselves these activities to the exclusion of plaintiffs and entitles plaintiffs to an injunction and an accounting. In our judgment that argument is untenable.

The portion of the complaint which sets forth the agreement of the parties is vague, indefinite and conclusory. It contains only bare legal conclusions that a joint venture was entered into by the individual plaintiff and defendants. Thus, it alleges that 'Weisman and defendants entered into an agreement and joint venture'. The complaint further asserts that the distribution and exploitation of the products the claimed subject of the joint venture was to be accomplished solely by and through the corporate plaintiff, which is not alleged to have been a party to the agreement pleaded for the obvious reason that it was not in existence at the time the contract pleaded was entered into. Plaintiffs urge that the terms of the joint venture were stated in the complaint, namely, that plaintiffs were to receive 60% of the profits and the individual defendants, or their nominees, 40%. This statement cannot be accepted as quite accurate for the complaint does not state that the corporate plaintiff is to receive anything. The allegation contained in the complaint is that the individual defendants, or their nominees, were to receive 40% of the common stock of the corporation to be formed and the plaintiff Weisman and/or his nominees were to receive the balance of the stock. This makes it clear that the joint venture which the plaintiffs are straining to construct is really contemplated by them to have been among three individuals, Weisman, Mitchell and Levine, and what is pleaded is an agreement between plaintiff Weisman and the individual defendants to conduct a business enterprise as joint venturers through the instrumentality of a corporation presenting itself to the world as the responsible entity. This they may not do for the rule is well settled that a joint venture may not be carried on by individuals through a corporate form. See Brock v. Poor, 216 N.Y. 387, 401-410, 111 N.E. 229, 234-237; Crespi v. Crespi, 238 App.Div. 794, 262 N.Y.S. 910; Seigel...