ROSENFELD V. FAIRCHILD ENGINE AND AIRPLANE CORP.
309 N.Y.168, 128 N.E.2d 291 (1955)
NATURE OF THE CASE: This is a stockholder's derivative action brought by the Rosenfeld (P) to compel the return of $261,522, paid out of the corporate treasury to reimburse both sides in a proxy contest for their expenses. Rosenfeld (P) sought review of an order that affirmed a judgment of the Supreme Court in favor of Fairchild (D) upon a decision of an official referee that dismissed P's stockholder derivative action.
FACTS: P is suing Allis (D) who was on the old board but reelected to the new board, McComas, Fairchild and Wilson (Ds) defeated members of the old board. The expenses of the old board were $134,000 and of the new $127,500 and both amounts were paid from the corporate treasury. Of the amount in controversy $106,000 was spent out of corporate funds by the old board of directors while still in office in defense of their position in said controversy; $28,000 was paid to the old board by the new board after the change of management following the proxy contest, to compensate the former directors for such of the remaining expenses of their unsuccessful defense as the new board found was fair and reasonable; payment of $127,000, representing reimbursement of expenses to members of the prevailing group, was expressly ratified by a 16 to 1 majority vote of the stockholders. The Appellate Division has unanimously affirmed a judgment of an Official Referee, dismissing P's complaint on the merits, and we agree.
ISSUE:
RULE OF LAW:
HOLDING AND
DECISION:
LEGAL ANALYSIS:
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