[Download] "Matter Hyman Caplan v. Lionel Corporation" by Court of Appeals of New York # eBook PDF Kindle ePub Free
eBook details
- Title: Matter Hyman Caplan v. Lionel Corporation
- Author : Court of Appeals of New York
- Release Date : January 02, 1964
- Genre: Law,Books,Professional & Technical,
- Pages : * pages
- Size : 59 KB
Description
Cross appeals from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered February 24, 1964, which (1) modified, on the law and the facts, an order of the Supreme Court at Special Term (Mitchell D. Schweitzer, J.), entered February 5, 1964 in New York County, in a proceeding pursuant to section 619 of the Business Corporation Law, setting aside elections of directors of respondent-appellant Lionel Corporation held on October 16, 1963 and November 14, 1963 and, among other things, designating a Referee to supervise meetings of the stockholders for the election of directors, and (2) dismissed, as academic, an order of said Special Term, entered February 10, 1964 in New York County, empowering the Referee to call a special meeting of the stockholders for an election of new directors and making incidental provisions with respect thereto. The modification consisted of striking all of the provisions of the order entered February 5, 1964 except that which set aside the elections held on October 16, 1963 and November 14, 1963. On March 8, 1963 one Roy Cohn, a stockholder and a director of the Lionel Corporation, agreed that he would sell 55,000 shares of his stock in said corporation to Defiance Industries, Inc., (Defiance); that one half of said stock would be delivered on March 8, 1964 and the remainder on March 8, 1965, and that Defiance would have an irrevocable proxy with respect to the stock until the latter date. Special Term found that these 55,000 shares constituted less than 3% of the total outstanding stock of the corporation, and that, after Cohn entered into this agreement with Defiance, six of the ten directors on the board of directors thereof, all six of them were Cohn's designees, resigned and six designees of Defiance took their place, by election of the remaining directors. By agreement dated October 9, 1963 Defiance sold its interest in the Cohn agreement, and the documents executed by him pursuant thereto, to A. M. Sonnabend, the transaction to close on October 24, 1963, and this agreement provided that ""Prior to the closing a majority of the directors of Lionel shall be persons designated by ""Sonnabend. Special Term found that, after the execution of this agreement, the six directors designated by Defiance resigned; that on October 16, 1963 six designees of Sonnabend were elected by the remaining directors to take their place, and that Cohn then resigned and on November 14, 1963 another designee of Sonnabend was elected by the remaining directors to take his place. The Appellate Division stated that the management of a corporation could not be bought apart from actual stock control; that a change of directors by resignation and filling of vacancies was proper where there was a transfer of the majority of the stock or of such a percentage as gave working control, but there was no claim in the present case that the stock interest transferred even approximated such a percentage; that petitioner, as a stockholder of the corporation, was a party aggrieved by the contested elections and had the right to bring the proceeding, but that, although the elections of the seven substituted directors were properly vacated, the vacancies thereby created had to be filled by election by the three remaining directors under the provision of the Business Corporation Law (§ 705, subd. [a]) that vacancies in a board of directors were to be filled by vote of a majority of directors remaining in office, even though less than a quorum remained, in the absence of a by-law providing for the filling of vacancies by the stockholders. Motion by petitioner for a stay.