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Bedford v. American Aluminum & Specialty Co.

51 A.D. 537 Court N.Y. App. Div. English

Delivered by *538 Rumsey, J.:

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p. 537
George P. Bedford, Appellant, v. American Aluminum and Specialty Company and Others, Respondents.

Headnote

Action to compel the issue to the plaintiff of corporate stock in place of stock of like amount surrendered by him for reissue — temporary injunction restraining its issue to others.
Where a director oí a corporation, owning one-half- of its capital stock, surrenders his certificate of stock to th,e other directors, who own the remaining half of the capital stock, in order to obtain new certificates of smaller denominations, and the other directors issue to him certificates for only a portion of his stock, claiming that he has directed the remaining portion to be sold for the benefit of the corporation, the defrauded director is entitled to maintain an action to compel the other directors to transfer to him the shares of stock wrongfully withheld, and, under section 603 of the Code of Civil Procedure, to an injunction pendente lite, restraining them from transferring of issuing certificates for such shares to any other'person.
Appeal by the plaintiff, George P. Bedford, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 29th day of March, 1900, denying his motion for an injunction pendente lite.
Charles De H. Brower and Seth B. Robinson, for the appellant.
Charles H. Broas, for the respondents.

It appears that the stock of the American Aluminum and Specialty Company consisted of 400 shares, of which upon the original organization the plaintiff was the owner of- 200, thus substantially giving him a veto upon any change' in the organization of the company. His complaint alleges that the plaintiff and William Hillman and George W. Hillman were the directors of the. company; that after the plaintiff had received his certificate for the 200 shares he surrendered it to the other directors for the purpose of having other certificates made out of smaller, denominations; that the defendants Hillman have given him certificates for 150 shares and have refused to give him a certificate for the remaining 50, they claiming that he had given 50 shares of his 200 to be sold for the benefit of the corporation, and that William Hillman had done the same thing, and that 24 of these shares had been sold to a third party. The relief that the plaintiff asks is that the defendants be required to transfer to him the 50 shares of stock and. be restrained from transferring* them, or from issuing certificates therefor to any one except the plaintiff' and other relief.

It appears from the papers that the two Hillmans had owned 200 shares, and that with the 50 shares taken from the plaintiff it is probable' that they with the transferee of what they call the treasury stock would control the corporation, and it is quite apparent that-such control might be' disastrous to the plaintiff. There is reason, therefore, why the plaintiff should seek to maintain an equitable action to compel the transfer of the shares to him, because otherwise he would be put in a distinct minority of the stockholders of the corporation an.d be subject to the control of those who, under the claim lie makes, own no more stock than he.

. Under such circumstances'an equitable action may be maintained. (Cu shman v. Thayer Mfg. Co., 76 N. Y. 365 ; White v. Price, 39 Hun, 395 .) It is evident, too, that if the defendants during the pendency of this action are permitted to transfer the shares to some one else, the very evil which the plaintiff seeks to avert may happen to him, and, therefore, in view of these facts and the provisions of section 603 of the Code of Civil Procedure, authorizing the restraining of an act, the continuance of which during the pendency of an action would produce injury to the

p. 539
plaintiff, it seems to us that this case is a proper one for the granting of a temporary injunction, and the order refusing it should be reversed, with ten dollars costs and disbursements, and a temporary injunction granted, with ten dollars costs.

Patterson, Ingraham, McLaughlin and Hatch, JL, concurred.

Order reversed, with ten dollars costs and disbursements, and temporary injunction granted, with ten dollars costs.

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