Glenn v. Hoteltron Systems, Inc.
Court of Appeals of New York
547 N.E.2d 71 (N.Y. 1989)
Jacob Schachter and Herbert Kulik (plaintiff) each owned 50 percent of Ketek Electric Corporation (Ketek). Kulik brought a shareholder derivative suit in the New York Supreme Court, and Schachter was found liable for diverting Ketek’s corporate assets and opportunities to Hoteltron Systems, Inc. (Hoteltron) (defendant). Schachter wholly owned Hoteltron. At trial for damages, the trial court found over $362,000 in Hoteltron profits resulting from the diversion of Ketek’s assets and opportunities. Schachter appealed, and the Appellate Division of the New York Supreme Court held that the damages should be awarded to Ketek, rather than Kulik individually. Kulik appealed, arguing that the result was unfair, because Schachter, the wrongdoer, owned half of Ketek and would thus reap half of the damages.
Rule of Law
Holding and Reasoning (Wachtler, C.J.)
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