Opinion
February 1, 1943.
This application under section 25 of the General Corporation Law, to declare null and void the election of respondent Barney Penn as a director and officer of respondent corporation, and for other relief, has been stayed on the ground that the validity of such election was arbitrable by virtue of the provisions of an agreement dated February 16, 1933, entered into by appellant, respondent Isidore Penn, and the corporation. That agreement provided for the arbitration of any dispute between appellant and respondent Isidore Penn, each of whom owned fifty per cent of the stock of the corporation, which might arise "out of this agreement" and, also, for the arbitration of any cause of action with which any of the parties should deem himself vested "by virtue of this agreement, or an alleged breach thereof." Respondent Barney Penn was purportedly elected to succeed to the offices made vacant by the resignation of one Feldman, and although the agreement provided for the election of Feldman as an officer and director, it made no provision for the election of his successor. Such election was governed by the by-laws of the corporation and the question of its validity did not arise out of the agreement, nor is the appellant's application to set aside the election made by virtue of the agreement or a breach thereof. Also, since the structure of respondent corporation and the rights of respondent Barney Penn are involved, the question of the validity of the election cannot be described as a dispute between appellant and respondent Isidore Penn so as to be arbitrable under the agreement. Order staying the application pending arbitration reversed on the law, with ten dollars costs and disbursements, and the matter remitted to Special Term, to proceed in accordance with the provisions of section 25 of the General Corporation Law. On this phase of the case the petition and affidavits present disputed questions of fact. Close, P.J., Hagarty, Carswell, Taylor and Lewis, JJ., concur.