Gearing v. Kelly - 11 N.Y.2d 201, 227 N.Y.S.2d 897, 182 N.E.2d 391 (1962)

Rule:

In a proceeding under N.Y. Gen. Corp. Law § 25, the court sits as a court of equity, which may order a new election as justice may require.

Facts:

Appellants, who owned half of the stock of the Radium Chemical Company, Inc., sought, within the provisions of N.Y. Gen. Corp. Law § 25, to set aside the election of a corporate director. Appellant director deliberately and intentionally stayed away from the meeting at which said election was held for the purpose of preventing a quorum and of paralyzing the attending directors from acting. The district court dismissed appellants’ petition.

Issue:

Under the circumstances, could appellant successfully set aside the election of a corporate director under the provisions of N.Y. Gen. Corp. Law § 25?

Answer:

No.

Conclusion:

The court held that the appellants’ petition was properly dismissed, where it was certain that appellant director, with the full indorsement and support of appellant stockholder, deliberately and intentionally stayed away from the meeting at which said election was held for the sole purpose of preventing a quorum and of paralyzing the attending directors from acting. Under such circumstances, appellants were barred from invoking an exercise of the equitable powers lodged in the courts under section 25 of the General Corporation Law. Furthermore, the relief sought by appellants, the ordering of a new election, would be of no avail to them, since appellant director would be required to attend as evidence of her good faith. Such a futile act will not be ordered.