Evangelista v. Longo

In a stockholder’s derivative action for an accounting and for other relief, defendants appeal from so much of an order of the Supreme Court, Queens County, dated November 3, 1960, as grants plaintiff’s motion to strike out, as patently insufficient in law, the first separate defense of estoppel and the third separate defense of “ unclean hands ” pleaded in defendants’ answer to the amended complaint. Order, insofar as appealed from, reversed, with $10 costs and disbursements; and, as to said first and third defenses, plaintiff’s motion is denied. Plaintiff, and the individual defendants other than Diamond, are the sole stockholders of the corporate defendant. Plaintiff was also an officer and director of the corporation. The amended complaint alleges waste and diversion of corporate assets. The answer, inter alia, alleges as defenses that the disbursements complained of were approved and, in many instances, initiated by plaintiff, who personally benefited therefrom. In our opinion, it was error to strike out the first and third separate defenses alleging estoppel and the doctrine of “ unclean hands ”; they are legally sufficient (Capitol Wine & Spirit Corp. v. Pokrass, 277 App. Div. 184 , affd. 302 N. Y. 734 ; Ripley v. Colwell, 206 Misc. 46 ; Diamond v. Diamond, 307 N. Y. 263 ). Beldock, Kleinfeld, Christ and Brennan, JJ., concur; Nolan, P. J., concurs in result.