Case ID: ad2d_34/html/0628-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles Heit, Respondent, v. Whitney Stone et al., Appellants.
   Order entered December 10, 1968, insofar as it denied defendants’ cross motions for a protective order against the plaintiff’s examination 'before trial of the defendants Whitney Stone and Stone & Webster Incorporated, unanimously modified on the law, on the facts and in the exercise of discretion, with $30 costs and disbursements to defendants-appellants, and the cross-motions granted. The Special Term found that plaintiff’s complaint was apparently drawn on the basis of information which W. R. Grace & Co. had disclosed to its stockholders. The complaint, the court further found, contained allegations of an inferential and eonelusory nature, but “no factual allegations of wrongdoing, other than an allegation as to the interlocking status of two defendants, which may be the basis for further exploration.” The mere fact that a transaction between corporations having common directors results in one corporation realizing a profit does not constitute sufficient special circumstances to entitle a shareholder in a derivative action to conduct examinations before trial of both corporations. A conflict of interest warranting inquiry is not shown by eonelusory allegations of impropriety based solely on the circumstance of interlocking directorships. (Stull v. Studebaker Corp., 30 A D 2d 527; Begener v. Party Tyme Prods., 24 A D 2d 742; Pewrson v. Rosenberg, 22 A D 2d 225; Nomako v. Ashton, 20 A D 2d 331.) Concur — Capozzoli, J. P., McGivern, McNally and Tilzer, JJ.