Court Opinion

ID: 6002981
Source: CourtListenerOpinion
Date Created: 2022-01-13 10:06:45.022477+00
Date Added: 2024-06-11T08:49:12.144769
License: Public Domain

The findings of the Special Referee, which clearly defined the issues and resolved matters of credibility, were substantially supported by the record and, therefore, properly confirmed (Matter of Mayer v National Arts Club, 223 AD2d 440; Kaplan v Einy, 209 AD2d 248, 250-251). Further, both the IAS Court and the Special Referee properly concluded that stock certificates, while evidence' of shareholder status, are not necessary for, or determinative of, its creation (Rocha Toussier y Asociados v Rivero, 184 AD2d 397, 398; Matter of Benincasa v Garrubbo, 141 AD2d 636, 638).
Respondents’ arguments that the issuance of shares to petitioners would have violated the Statute of Frauds is without merit. Article 8 of the Uniform Commercial Code, upon which respondents rely, applies to transfers of securities after they have been issued and thus is not the guiding statute here. Business Corporation Law § 503 (b), which provides that a subscription agreement "shall not be enforceable unless in writing and signed by the subscriber”, is the controlling statute but applies only to prevent enforcement of an oral subscription by the corporation against the subscriber, which is not the case here (see, Beck v Motler, 42 AD2d 1020).
We also find that inspection was properly granted as respondents did not sustain their burden of demonstrating that the relief sought was for an improper purpose or in bad faith (see, Matter of Mayer v National Arts Club, supra; Matter of Curkendall v United Fedn. of Correction Officers, 107 AD2d 935, 936). The IAS Court erred, however, when it declined to enjoin the expenditure of corporate funds in respondents’ defense as the record appears to reveal that respondent Roth-man may have pursued his position in bad faith.
*362We have considered respondents’ other arguments and find them to be without merit. Concur—Sullivan, J. P., Ellerin, Rubin and Tom, JJ.