Court Opinion

ID: 5249473
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:09:01.089333+00
Date Added: 2024-06-11T08:27:55.389288
License: Public Domain

Smith, J.:
Plaintiff’s husband was the owner of a profitable meat business, in which the defendant Sickinger was employed. Shortly before his death, the plaintiff’s husband incorporated the business. Seventy-five shares of the stock were given to Sickinger and plaintiff’s husband retained 175 shares. The husband died in 1915, and bequeathed 175 shares to plaintiff. Plaintiff then made an agreement, which is the subject of this action. The agreement provided that this plaintiff should turn over to' Sickinger 100 shares, which would give to him 175 shares, and she was to retain 75 shares, which was to be put in escrow. An option was given to him upon these 75 shares for $7,500. Until that option should be exercised, however, Sickinger was to run the corporation, receive $60 a week for his services, and pay other expenses of the corporation. The corporation was to redeem certain debentures which had been issued thereby on the first day of July in each year and in the meantime to pay the interest on such debentures which shall be a part of the expenses of the corporation. From the profits of the corporation, plaintiff was to receive $1,800 a year, or $150 a month. After the payment of these expenses and of the income to the plaintiff, the dividends were to be wholly the property of Sickinger. To this agreement the corporation was also a party.
It will thus be seen that here are two parties, owning the entire stock of a corporation. The plaintiff practically surrendered her stock rights in consideration of $1,800 a year, which was to be paid from the profits of the corporation. As security, however, for the payment of that sum, it was provided as to what should constitute the expenses of the corporation, and. that the indebtedness of the coloration should be paid at the rate of $1,000 a year, and among other things, that there should be no increase or diminution of the *818capital stock, and no attempted dissolution of the corporation without the consent in writing of the plaintiff and other stipulations, all looking to the stability of the corporation as the plaintiff’s security for her claim. In her complaint she alleges that the defendant Sickinger in the management of the corporation has withdrawn moneys that he had no right to withdraw; that he and the corporation have failed to pay her the moneys required by the agreement; that they have failed to have the proper audits made of the accounts of the corporation as required in the agreement; that property has been sold improperly for a consideration of less than its value, and that the affairs of the corporation have been conducted with a fraudulent intention to destroy the value of the plaintiff’s stock and to disable the corporation from performing the agreement for plaintiff’s support. The prayer for relief is for an injunction, restraining the dissolution of the corporation and for an accounting of all dividends paid and of all sums received by Sickinger from said corporation, and that payment of plaintiff’s moneys be deemed a first lien upon the profits of said corporation, and for such other relief as may be necessary or proper.
The court, at Special Term, has held that here are two causes of action, one as a minority stockholder, a representative cause of action, and ■ one in behalf of the plaintiff, personally, and has required the plaintiff to separately state and number these causes of action. The order was improperly made. I think the plaintiff was entitled to all the relief asked for in her individual capacity under the contract made. She was entitled in equity to have the source of her income preserved, as it was the intention of the parties that this corporation should be deemed her security for the payment of her moneys. The trust duty of the defendant Sickinger as a director of the corporation is the same trust duty that he owes to the plaintiff under his contract with her, and a single cause of action is alleged, namely, to preserve intact the integrity of the source of the income as stipulated in her contract, both with Sickinger and with the corporation. There is a single cause of action stated to secure rights to which plaintiff is entitled, either individually or as minority stockholder, and the fact that she is entitled to this relief, both as *819a minority stockholder and under her contract, does not make two causes of action.
The order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.
Clarke, P. J., Page, Davis and Shearn, JJ., concurred-
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.