Nemerov v. Empire Power Corp.

Action by plaintiffs, as attorneys at law, to recover the value of their services in a stockholder’s derivative suit brought on behalf of the defendant against certain directors of Empire Power Corporation, and the Long Island Lighting Company and the Empire Power Corporation, to compel the repayment of certain loans made by the Empire Power Corporation to the Long Island Lighting Company. Order granting defendant’s motion under rule 106 of the Rules of Civil Practice to dismiss the complaint as insufficient in law on the face thereof, and the judgment entered pursuant thereto, unanimously affirmed, with $10 costs and disbursements. The complaint in Rollins v. Carih Syndicate, Ltd. (258 App. Div. 816) was not approved by this court. All that was considered on that appeal was whether or not under subdivision 5 of rule 107 of the Rules of Civil Practice an existing final judgment or decree of a court of competent jurisdiction, rendered on the merits, determined the same cause of action between the parties. So much of the appeal from the order as related to the sufficiency of the complaint was dismissed as having been waived and abandoned. (N. Y. L. J., Oct. 3, 1939, p. 942, col. 7.) Moreover, in that case it was alleged that a new or additional fund or asset had been created as a consequence of the plaintiff’s efforts in the derivative action. It appears affirmatively that the acts of which complaint was made in the instant case were legal and not wrongful — there being no finding of fraud or bad faith — and concerned matters in the field of business judgment of the corporate directors. (Everett v. Phillips, 261 App. Div. 1082, affd. 288 N. Y. 227, 236.) No new asset or fund was created by plaintiffs’ efforts and hence no benefit may be said to have ensued. The cases of Strong v. Dutcher (186 App. Div. 307) and Meighan v. American Grass Twine Co. (154 F. 346) are not to the contrary. Present — Hagarty, Acting P. J., Carswell, Johnston, Adel and Lewis, JJ. [See post, p. 1049.]