Groff v. Rome Metallic Bedstead Co.

Laughxin, J. :

The defendant companies are domestic corporations having their principal and only places of business at Rome, Oneida county, H. Y. The Rome Metallic Bedstead Company, which for brevity will be called the Rome Company, was organized in 1895 with a capital stock of 1,000 shares of the par value of $50 each, and its business is the manufacture of iron bedsteads. It has been successful, and at the times of the "transactions in question had a large surplus, which made its stock worth several times its par value. It does not appear that there have been any actual sales of the stock other than those out of which the suit arose. On the 15th day of January, 1903, it purchased of one Dyett, a stockholder and director, 255 shares of its own capital stock and 51 shares of stock in the Manhattan Company for the consideration of $115,000 payable in the promissory notes of the company, indorsed by the remaining directors, including the plaintiff. It is conceded that the Manhattan stock thus purchased was worth $10,200, which would indicate that the company paid about eight times the par value of the capital stock of its own issue purchased by it. Shortly after this transaction the plaintiff became ill and unable to attend to business. He had been a director but was not re-elected at the annual meeting on the 12th of January, 1904. In his absence and without his knowledge, on or about the 9th of September, 1903, the company resold this stock to the Central Company for $63,750, payable in notes secured by the stock as collateral. This is a stockholder’s action to set aside this resale upon the ground that the same was collusive and fraudulent and a waste of the corporate assets, and a diversion thereof to the Central Company in which the defendants Carpenter are alleged to have a controlling interest; and it is alleged that the stock was worth at least $40,000 more than the price at which it was resold. The defendants claim that the resale of the stock was necessary ; that the same was made for its full value and that on purchasing the stock from Dyett the company, with a view to getting rid of him, paid more than it was worth. The plaintiff now resides in the city of Hew York. The transactions all took place in Rome, which, in and of itself, is a material consideration in connection with the convenience of witnesses. (Jacobs v. Davis, 65 App. Div. 144; Thompson v. MacKinnon, 57id. 329 ; Osterhout v. Robe, 39 id. 413.)

*154It is unnecessary to analyze the affidavits presented by the respective parties. They are in some respects insufficient in not showing that the witnesses have been interviewed or that they have stated that they will testify to the facts which it is expected to prove by them. In the main it is evident that the witnesses proposed to be called by the respective parties are unnecessary or that they could not give competent evidence. All of the parties except the plaintiff reside in Oneida county, near the county seat; and while the rule is that the convenience of parties and of expert witnesses will not be consulted on motions of this character, yet there is a class of expert witnesses that form an exception to the rule, and such are those who may testify to the value of property from personal knowledge as distinguished from those who give their opinions on an assumed state of facts. It is manifest that the value of this stock cannot be shown by market quotations or by sales. It depends upon the value of the plant and assets of the company. The real question to be tried is whether this stock, is being sold at less than the fair and reasonable price that could be obtained therefor. This is a going business corporation. It may be assumed that many of its books and records which would be required upon a trial are necessary for daily use in the transaction of the corporate business. It is evident that no stockbrokers in New York can throw any light on the value of this stock, and that its real value must be determined by the testimony of witnesses familiar with the plant and property and business of the corporation. These witnesses reside in Rome. Therefore, although the moving papers are in some respects deficient, it is manifest from the conceded facts and the nature of the issue to be tried that the case should be tried in Oneida county.

It follows, therefore, that the order should be reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.

Van Brunt, P. J., Patterson, O’Brien and Hatch, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.