Liebmann v. Miniature Incandescent Lamp Corp.

Majority

p. 526

Edna K. Liebmann, Respondent, v. Miniature Incandescent Lamp Corporation, Appellant.

Headnote

Corporations — stocks and stockholders — contract — sale — action on contract of sale of stock to corporation to recover stipulated proportional share of reserve fund.

Liebmann v. Miniature Incadescent Lamp Corp., 217 App. Div. 368 , modified.

(Argued December 3, 1926;

decided December 31, 1926.)

Appeal from a judgment, entered August 2, 1926, upon an order of the Appellate Division of the Supreme Court in the first judicial department, reversing a judgment in favor of defendant entered upon a dismissal of the complaint by the court at a Trial Term without a jury and directing judgment in favor of plaintiff. The action was by a stockholder of defendant corporation to recover under an alleged agreement by the terms of which she was to receive her proportionate share of the unused portion of certain reserves as shown by a balance sheet embodied in the terms of a sale by which she transferred her shares to the corporation.

W. N. Seligsberg for appellant.

John Thomas Smith and Anthony J. Russo for respondent.

Distribution of unused portion of the, reserves set up was to be made on January 20th, 1922,' only in case these reserves “ proved too high.” Proof that the United States government claimed that the defendant was liable for an additional tax in the sum of $17,581.79 showed at least prima facie that the reserve for Federal taxes might prove insufficient. The trial judge correctly held that the defendant might retain moneys to meet that claim. If thereafter the defendant was not compelled to pay the additional tax the plaintiff might bring a new action for distribution of the amount withheld. Apparently by inadvertence the judgment of the Appellate Division includes in the amount of the net surplus which should be distributed among the stock

p. 527

holders items aggregating $3,513.08 which the plaintiff concedes should be deducted before distribution.

In other respects we agree with the conclusions arrived at by the Appellate Division.

Judgment of the Appellate Division should be modified to the extent of providing that the plaintiff is entitled to her proportionate share in a net surplus of $15,002.02 instead of a net surplus of $36,096.86, and as so modified affirmed, without costs.

His cock, Ch. J., Cardozo, Pound, McLaughlin, Crane, Andrews and Lehman, JJ., concur.

Judgment accordingly.