Friday, November 22, 2013

Heller v. Boylan case brief

Heller v. Boylan case brief summary
29 N.Y.S.2d 653 (1941)


CASE SYNOPSIS
Plaintiff stockholders filed a derivative action suit against defendant recipient directors and defendant non-recipient directors seeking recovery of alleged improper payments to defendants. The suit derived from an incentive compensation by-law of the company, and plaintiffs maintained that large bonus payments bore no relation to the value of the services for which they were given resulting in waste and spoliation of company profits.

CASE FACTS
Plaintiff stockholders filed a derivative action suit seeking to recover from defendant recipient directors and defendant non-recipient directors for alleged improper payments arising from an incentive compensation by-law of the company. Plaintiffs alleged that large bonus payments bore no relation to the value of the services for which they were given and that defendants committed waste and spoliation in giving away corporate property against the protest of plaintiffs. Plaintiffs also alleged that the company's treasurer misinterpreted the by-law to defendants' undue enrichment.

DISCUSSION

  • The court held that the incentive compensation payments should remain undisturbed, that defendant recipient directors were to restore to the company $ 2,018,033.44 representing the total overpayments made due to the treasurer's misinterpretation of the by-law, and that plaintiffs' objections to all other payments as miscomputations were overruled. 
  • The court also held that the profits of the company to be shared by defendants were restricted to those earned in the manufacture and sale of tobacco and that profits of its subsidiaries not engaged in the business were excluded from compensation.

CONCLUSION
The court held that the incentive compensation payments should remain undisturbed and that defendant recipient directors were to restore to the company $ 2,018,033.44 representing the total overpayments due to the misinterpretation of the by-law. The court also held that plaintiff stockholders' objections to all other payments as miscomputations were overruled.

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