
    United States Light and Heat Corporation, Plaintiff, v. Guy M. Walker, Defendant.
    (Supreme Court, New York Special Term,
    April, 1916.)
    Parties — who are necessary — pleading — actions — equity.
    A complaint alleged the appointment of a receiver of a foreign corporation, that thereafter a stockholders’ protective committee was appointed, that defendant was appointed its counsel and that subsequently plaintiff corporation was organized by the advice of such committee and its counsel and defendant became its chairman; that said committee submitted to plaintiff an offer to assign to it the property of the foreign corporation in return for the issue of certain stock by plaintiff; that it was agreed that after the issue of stock to the stockholders of the foreign corporation the remainder of plaintiff's stock should be retained in its treasury and defendant’s compensation settled upon a reasonable basis by agreement between plaintiff and defendant; that defendant using his position as counsel to the committee and chairman of plaintiff’s board of directors,
    • without authority, caused a larger number of the shares of stock of plaintiff to be issued to himself, and that plaintiff was ready and willing to pay defendant such compensation as might be determined to be reasonable and fair. The prayer for relief' asked that defendant’s compensation be fixed and that he be directed to "surrender the stock so illegally issued to him. Held, that the complaint stated a good cause of action, .and, if the allegations thereof be true, a court of equity has power to grant relief. The acts of defendant were against plaintiff and as the compensation of defendant was to be paid by plaintiff the reorganization committee has no interest in the matter and is not a necessary party.
    Motion for judgment.
    Olcott, Gruber, Bonynge & McManus (Wm. M. K. Olcott and T. B. Chancellor, of counsel), for plaintiff.
    Reed, Gwinn & Deming (Horace E. Deming and Harold S. Deming, of counsel), for defendant.
   Newburger, J.

The plaintiff, a New York corporation, in its complaint alleges that on or about July 23, 1914, a receiver was appointed of the United States Light and Heating Company, a Maine corporation. That thereafter a stockholders’ protective committee was appointed, and that such committee appointed the defendant its counsel, and that subsequently the plaintiff corporation was organized by and with the advice of said committee and its counsel,1 and the defendant became its chairman. That said committee then submitted to the plaintiff an offer to assign the property of the Maine cprporation in return for the issue of certain stock by the plaintiff. The complaint further alleges it was agreed that after the issue of the stock to the stockholders of the Maine corporation the remainder of the plaintiff’s stock should be retained ill its treasury, and that the defendant’s compensation should be settled upon a reasonable basis by agreement between the plaintiff and the defendant. That the defendant, using his position as counsel to the committee and chairman of the plaintiff’s board of directors, without authority and unlawfully, caused to be issued to himself 5,000 shares of the preferred and $32,500 of the common stock of the plaintiff, and that the plaintiff is ready and willing to pay the defendant such compensation as may be determined to be reasonable and fair. The prayer for relief asks that such compensation be fixed and that the defendant be directed to surrender the stock so illegally issued to him. The defendant has demurred to the complaint upon the grounds (1) that the complaint does not state facts sufficient to constitute a cause of action; (2) that there is a defect of parties defendant. A careful reading of the complaint discloses a good cause of action against the defendant. The acts complained of were against the plaintiff, and if it be true that the defendant, without authority, issued to himself certain stobk, then a court of equity has the undoubted power to grant relief. The acts of the defendant were against the plaintiff, and, as the compensation to the defendant was to be paid by the plaintiff, I cannot conceive of any interest that the reorganization committee had or may have in the matter; therefore, they are not necessary parties to this action. Motion for judgment granted, with leave to defendant to answer upon payment of costs.

Motion granted.  