McQuade v. Stoneham case brief summary
263 N.Y. 323
SYNOPSIS: Defendants appealed from the judgment of the Appellate Division of the Supreme Court in the First Judicial Department (New York), which affirmed a ruling in favor of the plaintiff to reinstate him as treasurer of a corporation.
FACTS:
-Plaintiff and defendants purchased seventy shares of stock.
-As a part of the transaction the parties agreed to use their best endeavors for the purpose of continuing as directors of the company.
-Defendants did not keep their agreement with the plaintiff to use their best efforts to keep him as treasurer.
-The defendants argued that the contract was void because the directors held their office charged with the duty to act for the corporation according to their best judgment and that any contract which compelled a director to keep a person in office and at a stated salary is illegal.
HOLDING:
-The court held that the plaintiff could not continue to serve as treasurer of a corporation because, as a city magistrate, he was prohibited from attempting to make the management of a business an outside activity.
RULES:
As a city magistrate, the plaintiff was obligated to the duties of his office.
OUTCOME: The court reversed and dismissed the plaintiff's cause of action because he could not continue as treasurer of a corporation due to the fact that he was also serving as a city magistrate. Plaintiff was strictly prohibited by law from serving as a corporate officer.
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263 N.Y. 323
SYNOPSIS: Defendants appealed from the judgment of the Appellate Division of the Supreme Court in the First Judicial Department (New York), which affirmed a ruling in favor of the plaintiff to reinstate him as treasurer of a corporation.
FACTS:
-Plaintiff and defendants purchased seventy shares of stock.
-As a part of the transaction the parties agreed to use their best endeavors for the purpose of continuing as directors of the company.
-Defendants did not keep their agreement with the plaintiff to use their best efforts to keep him as treasurer.
-The defendants argued that the contract was void because the directors held their office charged with the duty to act for the corporation according to their best judgment and that any contract which compelled a director to keep a person in office and at a stated salary is illegal.
HOLDING:
-The court held that the plaintiff could not continue to serve as treasurer of a corporation because, as a city magistrate, he was prohibited from attempting to make the management of a business an outside activity.
RULES:
As a city magistrate, the plaintiff was obligated to the duties of his office.
OUTCOME: The court reversed and dismissed the plaintiff's cause of action because he could not continue as treasurer of a corporation due to the fact that he was also serving as a city magistrate. Plaintiff was strictly prohibited by law from serving as a corporate officer.
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Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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