Court Opinion

ID: 5242606
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:29:59.341318+00
Date Added: 2024-06-11T08:27:49.243242
License: Public Domain

Kruse, P. J. (concurring):
There is a notion quite prevalent that the majority owners of a stock corporation have an absolute right to manage the business of the corporation as they see fit. That is not so. The directors of a corporation are quasi trustees for all of the stockholders and it is their duty to manage its business for the best interests of the corporation and all of its stockholders, and where they act in bad faith in managing its affairs and in the interest of a majority of the stockholders and to the detriment of the minority stockholders, such conduct should be taken into account in determining the question of their compensation for service. It frequently happens that trustees are withheld any compensation for their services where they are derelict in their *56duties. This rule has often been applied to executors, receivers and other trustees. We had occasion not long ago to withhold fees from a receiver who had been unfaithful to his trust. (People v. State Bank of Forestville, 170 App. Div. 937.)
Not only have the controlling officers here voted to increase their salary over the protests of the minority, and failed to furnish an account of the moneys which they claim to have spent, but they have refused to increase the dividends, without any apparent good reason, as it seems to me, thus keeping in their control a large surplus. It seems to have been the deliberate policy of the majority directors to ignore the minority entirely, and the claim which is made that it has been their purpose to freeze out the minority is by no means without some foundation. I think if these controlling officers are allowed salaries, as stated in the prevailing opinion, they may consider themselves fortunate.