Telsey v. Jabil Realty Co.

In an action by the administrator of a deceased minority stockholder of the corporate defendant to require the individual defendants to account for, and restore to the corporation, money alleged to have been diverted and misappropriated, plaintiff appeals from a judgment dismissing the complaint on the merits, after trial before an Official Referee. Judgment unanimously affirmed, with costs. Plaintiff complained that the individual defendants, as officers and directors of the defendant corporation, had paid to themselves, out of corporate assets, debts due to them, which were outlawed by the Statute of Limitations. The record discloses that the debts were honestly due and that although no payment had been made on the indebtedness due the defendant Jacob Telsey, from 1940 until 1949, a payment was made in the latter year on account of this indebtedness, by means of a credit to Jacob Telsey, of the amount of a debt owed by him to the corporation. In our opinion this payment was sufficient to take the corporate indebtedness out of the operation of the statute. (Cf. Green v. Disbrow, 79 N. Y. 1; Sandel v. Sommers, 131 App. Div. 537, and Lawrence V. Harrington, 122 N. Y. 408.) Under the circumstances disclosed, the individual defendants may not be held to account for moneys received on account of valid claims against the corporation, nor may plaintiff, as the representative of a minority stockholder be heard to complain that the corporation has been damaged by the payment of its just debts. (Cf. Kelly Asphalt Bloch Co. V. Broohlyn Alcatraz Asphalt Co., 190 App. Div. 750, 191 App. Div. 922, mod. 232 N. Y. 304, and House v. Carr, 185 N. Y. 453, 458.) Present — Nolan, P. J., Adel, MaeCrate, Schmidt and Murphy, JJ-