In Cohn v. Mishkoff Costello Co. (256 N.Y. 102) it was held that the courts of New York will not take jurisdiction in ordinary cases to regulate the internal affairs of a corporation which ought to be managed under the laws and by the direction of the courts of the State or country where it is organized.Summary of this case from Strassburger v. Singer Mfg. Co.
Argued February 9, 1931
Decided March 24, 1931
Appeal from the Supreme Court, Appellate Division, First Department.
Henry Hofheimer, Milton Mansbach and Louis J. Paley for appellant.
Frank E. Nowve and Philip I. Schick for respondents.
The action is brought by a stockholder against the defendant, a foreign corporation organized under the laws of the State of Indiana, demanding judgment that defendant either redeem shares of its stock at par value with accumulated interest or in the alternative declare a dividend out of its surplus.
The courts of this State will not take jurisdiction, in ordinary cases, to regulate the internal affairs of a corporation which ought to be managed under the laws and by the direction of the courts of the State or country where it is organized. ( Travis v. Knox Terpezone Co., 215 N.Y. 259, 264.) While it is not always easy to say when jurisdiction will be taken and when declined, and while contracts between a foreign corporation and its members will usually be enforced in the courts of this State, it seems clear that the jurisdiction now invoked must be declined under the principle stated. Considerations of convenience, of efficiency and of justice point to the courts of Indiana as the appropriate tribunals to regulate the internal affairs of the defendant corporation by determining:
(a) Whether the defendant corporation is under a duty to change its corporate structure by the redemption of its stock in all events in ten years after date at par value and accumulated interest. ( Topken, Loring Schwartz, Inc., v. Schwartz, 249 N.Y. 206.)
(b) Whether the directors of defendant, after demand, have in bad faith refused to declare dividends.
The orders should be reversed and the motion to dismiss the complaint granted, with costs in all courts and ten dollars costs of motion, and the questions certified answered in the negative.
CARDOZO, Ch. J., POUND, CRANE, LEHMAN, KELLOGG, O'BRIEN and HUBBS, JJ., concur.
Orders reversed, etc.