Zeidler v. Astrosystems, Inc.

In an action to recover damages for breach of a purported contract, plaintiffs, the 38 stockholders of Linear Motion Technology, Inc., appeal, as limited by their brief, from so much of an order of the Supreme Court, Westchester County, dated July 19, 1971, as granted the branch of defendant’s motion which was to dismiss the complaint, with prejudice, pursuant to CPLR 3211 (subd. [a], pars. 3, 5), on the grounds that plaintiffs do not have legal capacity to sue and that their cause of action may not be maintained because of their disability. Order reversed insofar as appealed from, with $10 costs and disbursements, and said branch of defendant’s motion denied. Defendant’s time to answer the complaint is extended until 20 days after entry of the order to be made hereon. In our opinion, plaintiffs H. Rudolph Zeidler, Joel Martin Aurnou and Leon J. Greenspan, the three major stockholders of the corporation, who were signatories to the contract, were proper parties to bring the action notwithstanding the existence of a cause of action on behalf of the corporation. We do not find, however, that the remaining 35 stockholders were third-party beneficiaries to the contract and thus proper parties to the suit. We disagree with Special Term in its conclusion that the corporation was an adjudicated bankrupt and that such status barred the signatories to the /contract from instituting this action. The fact that the corporation was a debtor in possession pursuant to chapter XI of the Bankruptcy Act did not preclude the three individuals who signed the contract in their own right from bringing this action. Rabin, P. J., Hopkins, Martuscello, Christ and Brennan, JJ., concur.