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Manacher v. Central Coal Co., Inc.

Supreme Court of New York, Appellate Division

June 21, 1954

ALFRED T. MANACHER, Respondent,
v.
CENTRAL COAL CO., INC., et al., Appellants, et al., Defendant.

Page 381

APPEAL from an order of the Supreme Court at Special Term (EDER, J.), entered December 4, 1953, in New York County, which denied a motion, made by defendants-appellants under rule 106 of the Rules of Civil Practice for a dismissal of the amended complaint on the ground that it does not state facts sufficient to constitute a cause of action.

COUNSEL

Eli Whitney Debevoise of counsel (Abraham Wilson and Michael H. Goff with him on the brief; Kadel, Wilson & Potts, attorneys), for appellants.

Samuel Gottlieb of counsel (Harry Giesow with him on the brief; Gainsburg, Gottlieb, Levitan & Cole, attorneys), for respondent.

BASTOW, J.

All of the defendants named in this action, except the defendant, Milton D. Manacher, appeal from an order denying their motion to dismiss the amended complaint for failure to state facts sufficient to constitute a cause of action. The original complaint was dismissed upon a similar motion with leave to replead (Manacher v. Central Coal Co., 125 N.Y. S.2d 260). We conclude that the amended pleading must be dismissed for legal insufficiency.

The amended pleading alleges that 'long prior to the commencement of this action' three brothers (Irving Manacher, Bernard Manacher and Morris Manacher) agreed to engage in the fuel business in corporate form and by such agreement agreed with each other to carry on a joint enterprise 'for the benefit of themselves and the family groups headed by each so as to maintain and preserve in each brother and in each family group a one-third proprietary interest in said joint business enterprise'. It is further alleged that to effectuate this agreement a principal corporation, eleven subsidiary corporations and thirteen affiliate corporations were organized. These twenty-five corporate entities, all defendants herein, 'were organized and operated for the aforesaid purpose of carrying on and effectuating said joint business enterprise'.

Page 382

Pursuant to the agreement, it is alleged, stock in these corporations was issued to and held and owned by the three brothers and their respective family groups in equal thirds.

It is further alleged that since 1933 and following the death of their father, Bernard Manacher, the plaintiff and his brother, Milton D. Manacher, named as a defendant, have constituted one of the groups. In 1937 or 1938, the Morris Manacher group transferred its stockholdings in the various corporations to a personal holding corporation 'which said corporation became party to the aforesaid agreement with the same force and effect as though originally party thereto.' In March, 1939, the stock of this holding corporation was sold to a so-called 'Stephens Group', consisting of three individuals, who were not members of any family group, and in 1943 the third brother, Irving Manacher, or his family group, purchased the stock from the 'Stephens Group' thus acquiring 'ownership and control of two-thirds of the corporate stock' of the principal corporation, the affiliate and subsidiary corporations.

The pleading sets forth that pursuant to the agreement and throughout the years the enterprise was carried on for the benefit of the three groups. There follow ten paragraphs reciting examples thereof; such as, equal stock ownership; equal representation on the corporate boards, and among the officers; issuance of equal stock when a new corporation was formed; use by the corporations of one another's funds and use of consolidated financial statements. The complaint contains allegations as to the maintenance of the original agreement and that the comprehensive business as organized and maintained in effect and in fact constituted a joint venture.

The gravamen of the action is found in the paragraphs of the complaint relating to the third brother of the original group--the defendant Irving Manacher. It is alleged that he conspired to procure for himself and his group the controlling interest in the enterprise. Contained in a mass of conclusory allegations we find the principal moving allegations to be that this defendant breached the original agreement by acquiring in 1943 the stock of the holding corporation from the 'Stephens Group' without the knowledge and consent of the group represented by plaintiff and his brother, and acquired this interest through the wrongful use of the funds, assets and property of the joint business enterprise.

The prayer for relief seeks a declaratory judgment that an agreement of joint venture was ...


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