Opinion
June 25, 1996
Appeal from the Supreme Court, New York County (Beatrice Shainswit, J.).
The findings of the Special Referee, which clearly defined the issues and resolved matters of credibility, were substantially supported by the record and, therefore, properly confirmed ( Matter of Mayer v. National Arts Club, 223 A.D.2d 440; Kaplan v Einy, 209 A.D.2d 248, 250-251). Further, both the IAS Court and the Special Referee properly concluded that stock certificates, while evidence of shareholder status, are not necessary for, or determinative of, its creation ( Rocha Toussier y Asociados v Rivero, 184 A.D.2d 397, 398; Matter of Benincasa v. Garrubbo, 141 A.D.2d 636, 638).
Respondents' arguments that the issuance of shares to petitioners would have violated the Statute of Frauds is without merit. Article 8 of the Uniform Commercial Code, upon which respondents rely, applies to transfers of securities after they have been issued and thus is not the guiding statute here. Business Corporation Law § 503 (b), which provides that a subscription agreement "shall not be enforceable unless in writing and signed by the subscriber", is the controlling statute but applies only to prevent enforcement of an oral subscription by the corporation against the subscriber, which is not the case here ( see, Beck v. Motler, 42 A.D.2d 1020).
We also find that inspection was properly granted as respondents did not sustain their burden of demonstrating that the relief sought was for an improper purpose or in bad faith ( see, Matter of Mayer v. National Arts Club, supra; Matter of Curkendall v. United Fedn. of Correction Officers, 107 A.D.2d 935, 936). The IAS Court erred, however, when it declined to enjoin the expenditure of corporate funds in respondents' defense as the record appears to reveal that respondent Rothman may have pursued his position in bad faith.
We have considered respondents' other arguments and find them to be without merit.
Concur — Sullivan, J.P., Ellerin, Rubin and Tom, JJ.