Glenn v. Hoteltron Systems, Inc.
New York Court of Appeals
547 N.E.2d 71 (N.Y. 1989)
Herbert Kulik (plaintiff) and Jacob Schachter each owned 50 percent of Ketek Electric Corporation, and Kulik's shareholder derivative suit established that Schachter diverted over $362,000 in Ketek's corporate assets and opportunities to Hoteltron Systems (defendant), a company Schachter wholly owned; the Appellate Division held the resulting damages should be awarded to Ketek itself rather than to Kulik individually, and Kulik appealed, arguing this result was unfair since Schachter, as the wrongdoer, would indirectly recoup half the award through his own 50-percent ownership of Ketek.
Whether an innocent shareholder who successfully brings a derivative suit is entitled to recover the resulting damages personally, rather than having them awarded to the corporation.