APPEAL by the defendants, Francis J. Nekarda and others, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 2d day of July, 1910, upon the decision of the court rendered after a trial at the New York Special Term.
L. B. Treadwell of counsel [Richard W. Darling with him on the brief], for the appellant Nekarda.
James M. Gorman, for the appellant Orbach.
Clayton J. Heermance of counsel [Rosenthal & Heermance, attorneys], for the appellant Pressberger.
William E. Cook of counsel [Joseph H. Kohan and Henry A. Petersen with him on the brief], Steiner & Petersen, attorneys for the respondents.
This is a derivative action brought by minority stockholders of the Home Alliance Realty Company, a domestic corporation. The defendants Nekarda, Orbach, Zemek and Slabey were incorporators and trustees. Defendant Tenner was a real estate broker, defendant Pressberger was the owner of a contract for the purchase of certain real estate situated on Long Island, which he conveyed to the Home Alliance Realty Company for the sum of $90,500. The court has found that the defendants Orbach and Nekarda, promoters and incorporators, entered into a conspiracy to defraud the corporation by representing that the purchase price of the property was $90,500, causing the company to pay said sum therefor to Pressberger, when, as matter of fact, the real price was $76,000, and that they entered into an agreement by which Pressberger was to pay back to them $14,000 of the purchase price received from the company, which was to be divided between Orbach, Nekarda and Tenner; that said agreement was partially carried out; that Pressberger paid to Nekarda $7,385, of which sum Nekarda paid to Orbach $3,492.50, to Tenner $200 and retained $3,692.50 himself.
The action is to recover for the benefit of the company from its promoters and unfaithful trustees the $14,000 which it was fraudulently caused to pay for its property above the real price, and from the defendant Pressberger the $6,615, the portion of said $14,000 alleged to still remain in his hands.
We are satisfied that the judgment appealed from, so far as the defendants Orbach, Nekarda and Tenner are concerned, is right, and that the evidence fully sustains the finding of the learned court at Special Term of their fraudulent conspiracy to despoil their associates and the corporation for their own benefit.
The defendant Pressberger was not a promoter, or incorporator,
or stockholder of the corporation, and had no connection therewith. He was in effect the owner of the property which was proposed to be and was ultimately purchased. His price for said property was $1,000 an acre, and he did enter into an agreement in writing with the defendant Nekarda under which he agreed to pay him $14,000. The court found that the defendant Pressberger did not knowingly or actually defraud the Home Alliance Realty Company and did not unlawfully conspire to defraud the Home Alliance Realty Company.
Pressberger claims, upon that finding, that the conclusion of law that he is liable to the said Home Alliance Realty Company in the sum of $6,615 with interest thereon from December 10, 1906, at the rate of two and one-half per cent per annum, is unwarranted. The respondents undertake to support it upon the theory that the $14,000 in excess of the real price of the property which went into his hands and which he agreed to pay to Nekarda was a trust fund which they were entitled to pursue. Pressberger claims that assuming that ...