Case Name: Samuel H. Davis, Plaintiff, v. Arguls Gas & Oil Sales Company, Inc., and Others, Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1938-02-03
Citations: 167 Misc. 377
Docket Number: 
Parties: Samuel H. Davis, Plaintiff, v. Arguls Gas & Oil Sales Company, Inc., and Others, Defendants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 167
Pages: 377–378

Head Matter:
Samuel H. Davis, Plaintiff, v. Arguls Gas & Oil Sales Company, Inc., and Others, Defendants.
Supreme Court, Special Term, Kings County,
February 3, 1938.
Abraham J. Halprin, for the plaintiff.
Rubinton & Coleman, for the defendants.

Opinion:
Lockwood, J.
This is an application for an injunction pendente lite to the holding of a stockholders' meeting, the unquestionable purpose of which is to remove plaintiff, owner of one-third of the stock, as a director. Plaintiff offers to go to trial two days after an examination before trial is completed, and further offers to apply for such examination upon twenty-four hours' notice.
The motion is opposed principally on two grounds, first, that the contract made between the three equal stockholders of this closed corporation designed to prevent any two of them from outvoting the third and to provide for the continuance of the three stockholders as directors and officers is illegal; second, that plaintiff's action is premature, and he must wait until after he is removed, then seek reinstatement.
In Clark v. Dodge (269 N. Y. 410, at p. 415) the court said: " Where the directors are the sole stockholders, there seems to be no objection to enforcing an agreement among them to vote for certain people as officers. There is no direct decision to that effect in this court, yet there are strong indications that such a rule has long been recognized."
Likewise, where all the stockholders, owning shares in equal amount, agree to perpetuate themselves as directors, such agreement is not invalid. In the Clark case the Court of Appeals directly held that an agreement between the owners of all the stock of a corporation as to whom should be elected director and manager is not invalid.
The defendants' second point merits no extended discussion. Defendants claim the right to remove plaintiff because of his misconduct, irrespective of the agreement. There is no convincing proof of misconduct submitted on this motion.
Motion granted, upon plaintiff filing an approved bond in the sum of $250.
Submit order accordingly.