Steinway v. Steinway & Sons

40 N.Y.S. 718 (1896)

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Steinway v. Steinway & Sons

New York Supreme Court
40 N.Y.S. 718 (1896)

  • Written by Haley Gintis, JD

Facts

In 1876, William Steinway (defendant) and his brothers, C. F. Theodore Steinway and Albert Steinway, incorporated Steinway & Sons (corporation) (defendant). The purpose of Steinway & Sons, as stated in the certificate of incorporation, was to manufacture and sell pianos and other types of musical instruments. When the corporation was first established, the primary manufacturing plant was in New York City. However, the incorporators believed that the operations would become too large for the city and created a plan to move the plant to Astoria, New York. Accordingly, the corporation acquired 400 acres of land in Astoria. The corporation began building a manufacturing plant on the land along with residential houses for the corporation’s employees. Additionally, the corporation contributed money to the church, school library, and water supply in the area. The purpose of building the homes and investing in the community was to improve employee well-being so that the corporation could attract and retain good employees. The decision to invest in the community proved to be successful as the corporation retained employees and continued to profit. However, in response to the corporation’s expenditures, Henry W. T. Steinway (Steinway) (plaintiff) brought an action against the corporation’s trustees in his shareholder capacity. Steinway alleged that the acquisition of real estate and the various contributions were ultra vires or wasteful, extravagant, unnecessary, and had no connection with the corporation’s purpose stated in the certificate of incorporation.

Rule of Law

Issue

Holding and Reasoning (Beekman J.)

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