Avedon v. Gem Dress House, Inc.

Headnote

Contract — agreement between founders of a corporation that one of them upon certain conditions should be entitled to certain percentage of dividends — upon failure of corporation to declare dividends, action at law may not be maintained against it to recover percentage of surplus profits.

Avedon v. Gem Dress House, Inc., 194 App. Div. 678 , affirmed.

Appeal, by permission, from a judgment entered February 18, 1921, upon an order of the Appellate Division of the Supreme Court in the first judicial department, which affirmed an order of Special Term granting a motion by defendant for judgment on the pleadings and directed final judgment in favor of defendant dismissing the complaint. The complaint alleged that plaintiff and one Wadler entered into a written contract to form the defendant corporation, and that defendant should be employed thereby for a certain period at the end whereof he was to resign as officer and director and be entitled to a sum equal to the dividends on one-half of the stock. It further alleged that plain

tiff performed on his part until he was unjustly discharged; that defendant had earned profits but through bad faith had refused to declare dividends and demanded judgment for a sum equal to one-half of said profits. The Appellate Division held .that plaintiff had no cause of action at law to recover from the corporation the amount which he assumes the corporation should have declared as dividends.