Guttmann v. Conda Co. , 290 N.Y.S. 874 ( 1936 )

Plaintiff, in an effort to fortify the sufficiency of his amended complaint, incorporated allegations which were inappropriate and unnecessary for the cause of action he was seeking to enforce. For this reason the learned Special Term concluded the action was a, derivative one to compel the individual defendants to account for their alleged wrongful acts as directors of the corporate defendant. As the amended complaint so viewed did not allege the corporation had either refused or unreasonably failed, after demand, to bring the action, the amended complaint was dismissed with leave to plead over within ten days. Instead of serving an amended complaint, plaintiff appealed from the order. Meanwhile defendants entered judgment dismissing the complaint, and plaintiff also appeals from the judgment. A demand is not necessary when the gist of the action is the wrongful acts of these same directors and sufficient facts are alleged to show the futility of making a demand. (Levy v. Pacific Eastern Corporation, 153 Misc. 488, 492, and cases cited; Planten v. National Nassau Bank, 174 App. Div. 254, 259. See, also, Hammer v. Werner, 239 id. 38, 44.) As we read the amended complaint the action is to compel the individual defendants, who were former directors of the corporation, and who upon its dissolution as liquidating trustees received certain moneys, part of which were to be expended for specified purposes and the balance to be distributed among the former shareholders, to account for the moneys which it is alleged were expended for other purposes. As the amended complaint is carelessly drawn and contains allegations which are inappropriate and unnecessary for such a cause of action, and the order granted plaintiff permission to plead over, it will be affirmed, without costs, so plaintiff may serve a new pleading limited to the essential allegations. Order affirmed, without costs, with leave to plaintiff to serve an amended complaint within ten days from the entry of the order hereon. Appeal from the judgment is dismissed. Plaintiff may move at Special Term to vacate the judgment. Lazansky, P. J., Carswell, Davis, Johnston and Adel, JJ., concur.