Samuel Gilbert v. Frank Burnside Et Al‪.‬

[6 A.D.2d 834 Page 834] Action by respondent, allegedly the holder of 100 shares of stock of appellant Glen Alden Corporation out of the more than
1,700,000 shares issued and outstanding, "suing on behalf of himself and all other stockholders of said Corporation", to recover
money damages arising out of a proposed purchase by that corporation of the assets of appellant List Industries Corporation
or, in the alternative, for an injunction against consummating the transaction. The appeals are from so much of an order as
denied appellants' cross motions to dismiss the complaint and as granted respondent's motion for an injunction pendente lite
upon the filing of an undertaking in the sum of $2,500. Order modified (1) by striking therefrom the first ordering paragraph
and by substituting therefor a provision dismissing the complaint for failure to state facts sufficient to constitute a cause
of action, and (2) by striking therefrom the third ordering paragraph and by substituting therefor a provision that the motion
for an injunction pendente lite is denied. As so modified, order insofar as appealed from affirmed, with $10 costs and disbursements
to appellants, with leave to respondent to serve an amended complaint, if he be so advised, within 20 days from the entry
of the order hereon, upon the payment of such costs and disbursements. In our opinion the cause of action alleged is a derivative
one, in the right of the corporation, and is not a representative one, in the right of the individual stockholders. (Cf. Niles
v. New York Cent. & Hudson Riv. R.R. Co., 176 N. Y. 119, 123-124; Kavanaugh v. Commonwealth Trust Co. of N. Y., 181 N.
Y. 121, 123; Pletman v. Goldsoll, 37 N. Y. S. 2d 781.) The complaint, however, expressly alleges that "this is a representative
action, with plaintiff acting in a representative capacity, as it is based upon a primary or personal right belonging to the
plaintiff-stockholder and those of his class" and that "this is a representative suit, not a derivative one". Under such circumstances,
where the complaint is insufficient upon the theory explicitly pleaded, the court should not attempt to sustain it upon a
theory expressly disclaimed. (Cf. Marciano v. Metropolitan Life Ins. Co., 179 Misc. 758, 759.) The complaint being insufficient
as to all the defendants it should be dismissed as against all the appellants, since they all moved for dismissal, even though
some of them did not rely upon the insufficiency of the complaint as a ground for that relief. We are also of the opinion
that there was no abuse of discretion by the Special Term in denying the motion to dismiss, insofar as the motion was based
upon the claim that the court should refuse to take jurisdiction of the action because it involves the internal affairs of
two foreign corporations. (Cf. Miller v. Quincy, 179 N. Y. 294; Travis v. Knox Terpezone Co., 215 N. Y. 259; Ernst v. Rutherford
& Boiling Springs Gas Co., 38 App. Div. 388; Weinstein v.