Court Opinion

ID: 5357311
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:08:31.34951+00
Date Added: 2024-06-11T08:29:49.490171
License: Public Domain

Davis, J.
(concurring). I concur in result. In so far as the opinion states that the corporation is in legal effect the “ plaintiff,” I disagree.
The cause of action is that of the corporation, but it is powerless to sue. In fact, under the control of the defendant directors charged with wrongful conduct, it has interposed an answer as a defendant denying the allegations of the complaint, and is resisting the prosecution of any claim for its benefit. Under such circumstances, it seems inconsistent and incongruous to assert that it is a plaintiff in this action.
While the sum recovered belongs to the corporation, the plaintiff in a derivative stockholder’s action is the stockholder who brings it; and those who join with him at any time become plaintiffs. It is the stockholder or stockholders who control the action while it is pending and even after judgment has been rendered. (Planten v. National Nassau Bank, 174 App. Div. 254; affd., 220 N. Y. 677; Earl v. Brewer, 248 App. Div. 314; affd., 273 N. Y. 669; 4 Cook, Corporations [8th ed.], § 735. See, also, Geer, Jr., & Co., Inc., v. Eagan, 255 App. Div. 253.) The notice or knowledge of the wrongful acts which furnishes “ discovery by the plaintiff,” as provided in section 49, subdivision 4, of the Civil Practice Act, must be that of the plaintiff in the action, to wit, the stockholder who institutes the suit. In this case the plaintiff would be bound by notice to his predecessor in title, for he purchased this stock after the commission of the wrongful acts.
Whatever Statute of Limitation applies, the time when the cause of action accrued must depend on the proof developed on the trial. Courts will not be sedulous to protect- directors in actions of this kind by adopting a strict view in respect to pleadings on motions to dismiss the complaint. There should be a trial on the merits with opportunity given to those charged with wrongful acts to make full explanation of their conduct of the affairs of the corporation.
Lazansky, P. J., concurs.
Orders, in so far as appealed from, affirmed, without costs.