The mom-and-pop business is engrained in the American psyche as a symbol of combined domestic and business durability. I have two theories about that. One, in the olden days if the business was incorporated, chances are the husband owned 100% notwithstanding the wife’s equal labors. Two, those were the days before a 50% divorce rate.
Today, women have become equal forces as entrepreneurs and managers in most areas of the business world. Combine that with the high incidence of unmarried couples not only living together, but also going into business together, and you have a sure-fire recipe for heated business divorce cases when a good number of these couples inevitably break up.
The mix of personal and business relationship turned volatile in a recent case (read opinion here) in which the girlfriend – let’s call her Barbie – commenced a proceeding for judicial dissolution of a company she allegedly owned 50-50 with her former boyfriend – let’s call him Ken – alleging that he had looted, wasted or diverted company assets and was engaging in oppressive acts toward her. The court’s opinion doesn’t describe the company business, though it does mention that the company owned the house in which Barbie lived. Indeed, Barbie filed for dissolution shortly after Ken caused the company to serve her with eviction papers.
Ken asked the court to dismiss Barbie’s case on the ground she was not a shareholder and therefore lacked standing. The company’s stock register listed Ken and Barbie as the only two shareholders with 100 shares each. Relying on § 624(g) of the Business Corporation Law (BCL), Barbie contended that the register was prima facie evidence of ownership even if the stock certificate never was physically delivered to her. Ken countered that Barbie had failed to pay an agreed upon price of $165,000 for her shares, and cited BCL § 504(h) which states that stock certificates may not be "issued" until payment is made for the shares. Barbie did not claim that the shares were a gift nor, apparently, did she deny her agreement and failure to pay $165,000. The court found for Ken and dismissed the case.
Did Mattel ever make a Shareholder Barbie?
The case, Matter of Sanyou New York, Inc., 2007 NY Slip Op 33326(U) (Sup Ct Queens County Sept. 25, 2007), was decided by Justice Joseph P. Dorsa of the Queens County Supreme Court.