Goldberg v. Weihman

Plaintiffs, as receivers appointed pursuant to the provisions of article 23-A of the General Business Law (commonly known as the “ Martin Act ”), sue for an accounting and damages alleged to have been sustained through the waste, mismanagement and negligence of defendants, as directors of the Equitable Merchants Association, Inc. The acts complained of do not affect property or assets of the corporation derived by means of the fraudulent practices denounced by the statute above referred to. Therefore, plaintiffs have not legal capacity to sue. (Pickup v. Duplex Safety Window Corporation, 238 App. Div. 807.) Schultze v. Manufacturers Trust Co. (242 id. 262), relied upon by respondents, has no application. There, although the action was commenced under the Martin Act, the order entered upon consent appointed plaintiff receiver of the corporation instead of limiting his receivership to property contemplated by the statute. We held, as the court had jurisdiction of the subject-matter, that defendant may not attack the judgment collaterally. Order entered August 28, 1934, in so far as it denies defendant’s motion to dismiss the complaint, reversed on the law, with ten dollars costs and disbursements, and motion granted, with ten dollars costs. Appeal from that part of the order which grants defendant Weihman’s motion to make the complaint more definite and certain, and appeal from the order entered August 8, 1934, denying plaintiff’s motion for an injunction pendente lite, dismissed, without costs. Lazansky, P. J., Young, Carswell, Scudder and Johnston, JJ., concur.