Teich v. Lawrence

Per Curiam. In this stockholders derivative action, two defendants moved for an order dismissing the first, second and fourth causes of action on the ground that this action thereon was not commenced within the time limited by law for the commencement thereof. (See Rules of Civil Practice, rule 107, subd. 6.) Special Term granted the motion. On appeal by the plaintiffs to the Appellate Division the order was so modified that the motion to dismiss was granted as to second and fourth causes of action and otherwise denied. Thus as to the first cause, this action was held to have been commenced in time. The ease is now here on cross appeals. We agree with the courts below in their ruling that the second and fourth causes were barred when this action was commenced against the moving defendants. The contrary ruling which the Appellate Division made in respect of the first cause was based on the view that the first cause sought a judgment on the ground of fraud within' Civil Practice Act, section 48, subdivision 5. This was error. A stockholders’ derivative action belongs to the corporation that has been wronged. The present complaint alleged no fraud upon the defendant corporation in whose behalf the plaintiffs sue. (See Lever v. Guaranty Trust Co., 289 N. Y. 615.) On plaintiffs’ appeal, the judgment should be affirmed, without costs. On defendants’ appeal, the order of the Appellate Division should be reversed and the judgment of the Special Term affirmed, with costs in the Appellate Division and in this court. The question certified should be answered in the affirmative. Lehman, Ch. J., Loughran, Lewis, Conway, Desmond and Thacher, JJ., concur; Rippey, J., taking no part. Judgment accordingly.