Court Opinion

ID: 5396776
Source: CourtListenerOpinion
Date Created: 2022-01-08 10:19:38.297437+00
Date Added: 2024-06-11T08:30:21.020333
License: Public Domain

Peck, P. J.
(dissenting). On the facts, I cannot find such a clear showing of waiver as to justify reversing the findings of the trial court. There were extended negotiations between the parties and a number of false starts toward a bonus arrangement, but it seems clear that the contemplation of a bonus arrangement was premised upon Webb and Carmel assuming the payment of the bonus as a gift to the larger preferred stockholders, as an equalization measure, and that when Webb *526announced that he could not follow through on this program the matter drifted without ever reaching a firm agreement. There was no valid corporate resolution in the matter and I am unable to see that there was any firm informal agreement. Indeed, it appears that the bonus arrangement was positively disadvantageous to Mrs. Wouk and there is no reason why she should have accepted it. It is worthy of note in this connection that she is not in the same position with Merin and Podolnick, who by reason of the larger bonus payments they would have received would have derived some advantage from the arrangement.
On the law, I am satisfied that the weight of authority, accepted understanding of what the law is and should be and modern corporate practices favor the plaintiff. Michael v. Gayey-Caguas Tobacco Co. (190 App. Div. 618) is perhaps distinguishable (Note, 25 A. L. R. 2d 800, 806). But there has been much growth in corporate experience and law in the intervening years. The English case upon which the Michael decision relied has since been rejected in England (Matter of Springbok Agric. Estates, Ltd., [1920], 1 Ch. 563; cf. Matter of Dominion Tar & Chem. Co., Ltd., [1929] 2 Ch. 387, with Matter of Roberts & Cooper, Ltd., [1929] 2 Ch. 383); and the generality of decisions in this country has established the law in conformity with plaintiff’s contention in this case (Hay v. Hay, 38 Wn. [2d] 513 [1951]; Penington v. Commonwealth Hotel Constr. Corp., 17 Del. Ch. 394 [1931]; Willson v. Laconia Car Co., 275 Mass. 435 [1931]. See Note, 25 A. L. R. 2d 788.) I think that on the basis of reason, practice and authority we should follow the line of decisional law.
I am further persuaded to this view by the like treatment which is accorded by the certificate of incorporation to preferred stockholders in respect to accumulated dividends on redemption and dissolution. On redemption a preferred stockholder is certainly entitled to the contemplated benefits of a provision for the payment of accumulated dividends and a similar provision in respect to dissolutions can hardly he given a different construction. It is noted that the appellants in this case recognize the force of this analogy and try to argue in their brief that there is some difference in the certificate provisions as to the payment of accumulated dividends on redemption and on dissolution.
It is true that there is for no apparent reason a slight difference in wording in case of redemption and dissolution, *527but I cannot see that the words have any different meaning. In the case of redemption, the provision is for the payment of the redemption value of the preferred stock “ together with any accumulated dividends due thereon ”, whereas in the case of dissolution it is for the payment of the par value of the preferred stock “ with any arrearage of dividends to which the holders of such Preferred Stock may be entitled.”
The appellants concede that in the case of redemption the preferred stockholders would be entitled to accumulated dividends which accrued by the mere lapse of time. The argument that in the case of dissolution, on the contrary, they are restricted to arrearages of dividends — not accumulated dividends — attempts a distinction which to my mind lacks substance and might encourage the use of dissolutions as a device to wipe out dividend rights. I see no difference between “ arrearage of dividends ” and “ accumulated dividends ”.
Accordingly, I dissent and vote to affirm.
Dore, Cohn and Callahan, JJ., concur in Per Curiam opinion; Peck, P. J., dissents and votes to affirm, in opinion in which Botein, J., concurs.
Judgment modified in accordance with the opinion herein and, as so modified, affirmed. Settle order on notice.