Rosenfeld v. Fairchild Engine & Airplane Corp.
Court of Appeals of New York
128 N.E.2d 291 (N.Y. 1955)
In a policy-related proxy contest (as opposed to a personal contest for power) for a board of directors election in Fairchild Engine & Airplane Corp. (Fairchild) (defendant), Fairchild’s treasury paid $106,000 in defense of the old board of director’s position; $28,000 to the old board by the new board after the change to compensate the old board for their failed campaign; and $127,000 reimbursing expenses that the new board members incurred in their campaign. That reimbursement was ratified by a majority vote of the stockholders. The policy question behind the proxy contest was the long-term and very expensive pension contract of a former director, Carlton Ward. Rosenfeld (plaintiff), brought suit to compel the return of the above payments to the Fairchild treasury. The lower court dismissed Rosenfeld’s complaint. He appealed.
Rule of Law
Holding and Reasoning (Froessel, J.)
Dissent (Van Voorhis, J.)