Matter of Kemp & Beatley, Inc.
Court of Appeals of New York
473 N.E.2d 1173 (1984)
Dissin and Gardstein (plaintiffs) hold a combined 20.33 percent of the stock of Kemp & Beatley, Inc. (defendant), a New York close corporation. Both were long-time employees of Kemp & Beatley and held significant management positions. During their employment they and the other shareholders received either dividends or bonus compensation in proportion to their stock holdings each year. Dissin resigned in 1979, and Gardstein was terminated in 1980. After the plaintiffs left, the company began to make its annual distributions on the basis of service rendered to the corporation, rather than stock ownership. As a result, Dissin and Gardstein no longer received annual distributions. In response, Dissin and Gardstein petitioned the court for dissolution of the company, arguing that the controlling shareholders had frozen them out via fraudulent and oppressive conduct. The trial court ordered the company dissolved unless the controlling shareholders bought out the plaintiffs. The appellate court affirmed.
Rule of Law
Holding and Reasoning (Cooke, C.J.)
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