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(202 N.Y.S.)

defendant from its treasury. Until 1919 the by-laws of the defendant. provided that any property owner in Sea Gate might become a member thereof upon filing an application and agreeing to conform to its bylaws, rules, and regulations. The defendant prepares annually a budget of the amount necessary for its operations for the ensuing year. This amount is apportioned among the property owners at Sea Gate, whether members or not, according to the appraised value of their real estate respectively. The moneys collected and received from such property owners were used to pay operating expenses and the surplus to retire the bonds and pay the purchase-money mortgage. The purchase price of the property in question was paid by members and nonmembers alike.

In 1919, the by-laws were changed, so that, in addition to the property qualifications, an applicant for membership had to be elected by the board of directors. After this change over 30 persons applied for membership, but were refused, and the applications have not been acted upon, and some of them have been pending a long time. In 1922, the board of directors of defendant recommended to the association a plan to sell to a corporation to be formed, with a capital of $175,000, consisting of 175,000 shares of $1 each par value, all its real estate, assessed for $151,250, except its rights and easements in the streets and sewers, for $149,380, to be paid for by stock in the new corporation amounting to that sum in par value, the unsold stock to be disposed of by the new corporation to pay taxes and other expenses. The defendant was then to distribute the stock received by it for the real estate sold to the new corporation amongst its members in the ratio of 35 $1 shares to every $1,000 in real estate owned by a member, according to the 1922 assessment. This plan was submitted to the members of the defendant at a meeting on August 1, 1922, and was adopted by a vote of 6,643 in favor and 2,604 opposed.

The learned trial court in its decision found, among other things, that the proposed transfer by the defendant of the real estate in question would strip it of all its property; that membership in the defendant was a valuable property right, because it conferred rights and privileges not accorded to the public, and that among other property of defendant are the beach at Sea Gate and the bathing houses erected thereon; that the action proposed to be taken by defendant was illegal, and would be a distribution of all defendant's property among its members for their own enrichment; that all property owners in Sea Gate. whether members of defendant or not, have an equitable claim upon the real property in question, for the reason that they and their predecessors in title had paid therefor and contributed to its maintenance; that the sale or transfer of such real property to such new corporation would be in violation of their rights, and would work a great injury to plaintiff's property, and deprive her of rights and privileges to which she is now. entitled as a member of defendant. Judgment was directed in favor of the plaintiff, restraining the defendant from transferring such real property and carrying out the plan contemplated. From this judgment defendant appeals.

[1] It is claimed by the appellant that the proposed action of the defendant is a valid exercise of its corporate powers; that it has the right to make the transfer with the approval of the court, take the stock of the new corporation, and distribute it among its members. It is also urged in substance that the application by the defendant to the court for leave to make the sale or transfer in question cannot or at least ought not to be enjoined, because the illegality, justice, and wisdom of the sale may be determined in the proceeding taken to obtain the court's approval. The latter contention in my opinion has no merit. I think the plaintiff clearly has the right to invoke the aid of a court of equity to restrain an attempted illegal act on the part of the defendant. She is not obliged to await the application to the court to approve the sale and intervene in that proceeding. Such approval might be and usually is obtained without notice (General Corporation Law, § 72), and indeed the sale and transfer might be consummated without previous approval by the court and thereafter application be made to confirm the same (Membership Corporations Law, § 13, as amended by Laws 1915, c. 154). Manifestly, the remedy afforded to plaintiff by such procedure is inadequate.

Respondent urges that the proposed plan is not a sale within the meaning of the statute, but a mere attempt to divide the property of the defendant among its members. Whether or not it is, strictly speaking, a sale, does not seem to me of any importance. Assuming it to be a sale, as contended by appellant, it is clearly a sale of practically all of defendant's property. In this property, every member of the corporation has valuable rights and interests as members. Without this property, the purposes for which the defendant was formed cannot successfully be accomplished. Its members as such will lose all rights and privileges previously enjoyed in the property proposed to be sold. It is true that they may obtain their proportionate share in the stock of the new corporation, but that corporation will be purely a business corporation, organized solely for profit and having purposes entirely distinct from those of the defendant and which may even become antagonistic thereto.

[2] Again, this proposed sale divests the defendant of all its property and brings nothing in return to the defendant itself. The distribution among its members of the stock of the new corporation gives nothing to the defendant. No benefit or advantage, pecuniary or otherwise, results to the defendant. On the contrary, it divests itself of all its property now being managed and controlled in the interest of all its members for its corporate purposes, entirely without consideration. The distribution of stock in the new corporation among defendant's members may be advantageous to them; it is of no advantage or value to the defendant as a membership corporation. It receives nothing from the proposed grantee which can be applied to its corporate purposes. Clearly, then, its application to the court to make this proposed sale or transfer could not show, nor could the court properly find, that the interests of the defendant would be promoted thereby. This the statute clearly requires. General Corporation Law, §§ 71, 73.

(202 N.Y.S.)

In my opinion, therefore, the learned trial court was right in directing judgment in plaintiff's favor, restraining the execution of this plan. The judgment should be affirmed, with costs. Judgment unanimously affirmed, with costs.

(121 Misc. Rep. 762)

ST. LOUIS UNION TRUST CO. et al. v. HOFFSTAEDTER. (Supreme Court, Special Term, New York County. December 11, 1923.) Executors and administrators 524(1)-Foreign trust company may sue in this state as foreign executor.

Decedent Estate Law, § 160, permitting a foreign executor to sue in this state in his capacity as executor in like manner as a nonresident, permits suit by a foreign trust corporation as a foreign executor, notwithstanding the use of the word "his" in the statute; Banking Law, § 223, authorizing the appointment by the courts of this state of a foreign trust company as executor, provided there are reciprocal provisions in the laws of the given foreign state, not being applicable to the question of bringing suit.

Action by St. Louis Union Trust Company and another, executors of the will of Warwick Massey Hough, deceased, against Ethel Hoffstaedter. On motion to strike out a separate defense. Motion granted.

White & Case, of New York City (Ernest G. Fifield, of New York City, of counsel), for plaintiffs.

Dos Passos Bros., of New York City (Cyril F. Dos Passos, of New York City, of counsel), for defendant.

PROSKAUER, J. By the separate defense challenged on this motion defendant claims that the plaintiff, St. Louis Union Trust Company, a Missouri banking corporation, suing as a foreign executor, has no capacity to sue. Section 160 of the Decedent Estate Law (as added by Laws 1920, c. 919, § 1) provides that:

"An executor

* duly appointed in any other state

may

sue or be sued in any court in this state in his capacity of executor in like manner and under like restrictions as a nonresident may sue or be sued.

"

Defendant contends that, because the statute uses the pronoun "his," it cannot refer to a corporation. It might with equal reason be argued that it could not refer to a woman. There is abundant authority for the proposition that a word like "his" may in appropriate cases be interpreted as referring to a corporation. Lewis & Potter v. Commonwealth, 134 Ky. 837, 838, 121 S. W. 643; Olcott v. Tioga R. Co., 20 N. Y. 210, 75 Am. Dec. 393; Mayor of Hereford v. Morton, 15 L. T. N. S. 187, 2 British Rul. Cas. 253; 7 R. C. L. 33-35, 767; 20 Ann. Cas. 737. Defendant further claims, however, that by section 223 of the Banking Law is provided that a foreign trust company, which by the law of its own state may be appointed an executor, "may be appointed and may accept appointment and may act as executor of, or trustee under,

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the last will and testament of any deceased person in this state," provided there are reciprocal provisions in the law of the given foreign state, and that, because there is no such reciprocal provision in Missouri, this trust company cannot sue here. The statute obviously refers not to the right of the plaintiff to begin a suit here, but merely to the right to be appointed an executor in this state by our courts. This section is of no avail to defendant, either in itself or as support to her interpretation of the Decedent Estate Law.

Motion granted. Ordered accordingly.

(207 App. Div. 333)

DWORSKY v. HERSTEIN.

(Supreme Court, Appellate Division, First Department. December 14, 1923.) 1. Trade-marks and trade-names and unfair competition 40-Parties' practical interpretation of dissolution agreement held conclusive as respects right to use corporate trade-name, etc.

A provision of an agreement to dissolve a corporation that neither of the parties thereto should use "the name 'Belnor Hat Company' or 'Ronley Hat Company,' in that combination and arrangement, as a trade-name, firm name, labor or trade-mark," and that the liquidation agreement was specifically made "in consideration and because of the covenant that neither of said parties shall so directly or indirectly use or permit said names or words to be used," was ambiguous, and the practical interpretation of the parties, showing an intention that neither should use the word "Belnor," "Belnord," or "Belnorde," or other similar name, either in its name or advertising, was therefore conclusive on them.

2. Equity 65 (2)—Writing letters to old customers of corporation held violation of dissolution agreement, precluding equitable relief against other member, under clean hands maxim.

Where, a few weeks after the dissolution of a corporation manufacturing women's hats, known to the trade under the name "Belnor," one of the parties thereto sent letters to all the old customers, stating that the person who was the sole creator of Belnor hats was now, a member of the new firm, and that the same style, quality, and workmanship which made the Belnor hats famous would apply to the hats of the new corporation, it was such a flagrant violation of the contract of dissolution, providing that neither party to the agreement would directly or indirectly use such name in its advertising, that the court, under the clean hands maxim, would refuse equitable relief in an action to restrain the other member from using such name.

Dowling, J., dissenting.

Appeal from Supreme Court, New York County.

Action by Harold P. Dworsky against David Herstein, trading under the name of the Dave Herstein Company. From an interlocutory judgment, enjoining defendant from using the names "Belnor," "Belnord," or "Belnorde," or any similar name, and adjudging that plaintiff recover such sums as the referee appointed should ascertain that plaintiff had suffered because of the use by defendant of those names, fendant appeals. Reversed, and complaint dismissed. Argued before CLARKE, P. J., DOWLING, SMITH, FINCH, and MARTIN, JJ.

de

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(202 N.Y.S.)

A. A. Silberberg, of New York City (Louis Marshall, of New York City, of counsel), for appellant.

Harold H. Straus, of New York City (David L. Podell, of New York City, of counsel, and J. J. Podell, of New York City, on the brief), for respondent.

SMITH, J. The plaintiff and the defendant had been associated together since May, 1915, as the owners of stock of the corporation known as the Belnor Hat Company, Inc. The business conducted by them was the manufacturing and marketing of trimmed and tailored hats of special designs for women, and had increased very decidedly during the time that the parties continued to be associated, and the name "Belnor" in the pennant-shaped triangle had become associated with the product of this corporation. On the 23d day of May, 1919, the plaintiff and the defendant entered into an agreement terminating the corporation, and providing with great care for the method by which the relationship of the parties should be terminated and the corporation which they owned should be dissolved. In addition to the Belnor Hat Company, Inc., the parties were doing business under the firm name of "Ronley Hat Company," which partnership was also to be dissolved. Among the numerous clauses of the dissolution agreement was the following:

"(13) Neither of the parties hereto shall at any time hereafter, directly or indirectly, use or permit to be used either the name 'Belnor Hat Company' or 'Ronley Hat Company' in that combination and arrangement, or the words 'successors to Belnor Hat Company,' or 'Ronley Hat Company,' as a tradename, firm name, label, or trade-mark, and in this respect the parties stipulate that the liquidation agreed on herein is specifically made upon the terms herein set forth, in consideration and because of the covenant that neither of said parties shall so directly or indirectly use or permit either of said firm names or words to be used."

This clause 13 of the contract is to my mind clearly an ambiguous clause. The provision that they shall not use the names "Belnor Hat Company," or "Ronley Hat Company," "in that combination and arrangement," would seem to give authority to use the words in any other combination or arrangement. On the other hand, in the latter part of that paragraph of the contract it is stated that the liquidation. agreed on therein is specifically made upon the terms therein set forth, "in consideration and because of the covenant that neither of said parties shall so directly or indirectly use or permit either of said firm names or words to be used." (Italics mine.) With this ambiguous contract the practical interpretation of the parties thereto is, I think, conclusive upon them. It is clear that the plaintiff interprets the contract otherwise, from the fact alone, as indicated, of the bringing of this action. As to the defendant, the fact that the word "Belnor" was not used at all by him thereafter, and that there were only modifications of that word used, would indicate his acknowledgment of the fact that he did not have the right to use the word "Belnor." It is clear, therefore, from the acts of the parties under the dissolution contract, that it was not intended that either party should use the word "Belnor," either in its name or in its advertising.

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