In re Radom & Neidorff, Inc. - 307 N.Y. 1, 119 N.E.2d 563 (1954)

Rule:

There is no absolute right to dissolution under certain circumstances. Even when majority stockholders file a petition because of internal corporate conflicts, the order is granted only when the competing interests are so discordant as to prevent efficient management and the object of its corporate existence cannot be attained. The prime inquiry is, always, as to necessity for dissolution, that is, whether judicially-imposed death will be beneficial to the stockholders or members and not injurious to the public.

Facts:

Radom & Neidorff, Inc. is a domestic corporation which has, for many years, conducted, with great success, the business of lithographing or printing musical compositions. For some thirty years prior to February 18, 1950, Henry Neidorff, now deceased, husband of respondent Anna Neidorff, and David Radom, brother-in-law of Neidorff and brother of Mrs. Neidorff, were the sole stockholders, each holding eighty shares. Henry Neidorff's will made his wife his executrix and bequeathed her the stock, so that, ever since his death, petitioner-appellant David Radom and Anna Neidorff, brother and sister, have been the sole and equal stockholders. Although brother and sister, they were unfriendly before Neidorff's death and their estrangement continues. On July 17, 1950, five months after Neidorff's death, Radom brought this proceeding, praying that the corporation be dissolved under section 103 of the General Corporation Law.

Issue:

Was the dispute between the parties as equal stockholders sufficient grounds to order the voluntary dissolution of the corporation?

Answer:

No

Conclusion:

The court found that the material facts of the case were undisputed but held that dissolution was not warranted. Even though the court recognized that the parties not only disliked and distrusted one another, the court concluded that despite their feuding there was no stalemate or impasse as to corporate policies. Furthermore, the court determined that the corporation was healthy and that dissolution was not necessary for the protection of the public. The court held that the petitioner was not entitled to dissolution under the circumstances because the stockholders' competing interest were not so discordant as to prevent efficient management and that the dispute regarding the payment of petitioner's salary was also insufficient.