Gimpel v. Bolstein

Supreme Court of New York, Special Term · 1984 · Corporations

125 Misc. 2d 45 (1984)

Updated August 22, 2026

Corporationsclose corporationsminority shareholder oppressionjudicial dissolutionderivative actionsinspection rightsBCL 1104-aBCL 626

Facts

Gimpel Farms, Inc. was a family dairy corporation whose participants historically took returns from the business through salaries and perquisites rather than dividends, and no dividends had ever been paid. Robert Gimpel, a shareholder, had been discharged from his managerial job after the court deemed it established for purposes of the motion that he had stolen from the company. After his discharge, Robert was excluded from management, received no salary or other benefits, was offered an allegedly inadequate buyout, and was denied meaningful access to corporate information and records. He sought dissolution based on oppression and diversion of assets, and also asserted derivative claims including excessive salaries and denial of inspection rights.

Issue

Whether the majority's continued exclusion of Robert from management, refusal to pay dividends while insiders received salaries and perquisites, and denial of access to records constituted oppression or waste justifying dissolution under BCL § 1104-a, and whether his derivative claims for waste and inspection could proceed. Also at issue was whether the court could grant relief short of dissolution.

Rule

Dissolution under BCL § 1104-a is a drastic, discretionary remedy and should be ordered only when it is the only means by which the complaining shareholder can reasonably expect a fair return on the investment or when it is reasonably necessary to protect the shareholder's rights and interests. Oppression may be evaluated either by reference to frustrated reasonable expectations or by asking whether majority conduct is burdensome, harsh, wrongful, or lacks probity and fair dealing; where present shareholders acquired their interests by gift or bequest and the petitioner himself destroyed any reciprocal expectations by theft, the reasonable-expectations test may not apply. Even when dissolution is denied, the court may fashion lesser equitable relief to protect the shareholder, including access to records and requiring either substantial dividends or a good-faith buyout offer. In derivative claims, courts defer to directors' judgment absent clear abuse, bad faith, or fraud, but a shareholder has statutory and common-law inspection rights absent bad faith, with the burden on the corporation to show bad faith.

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Maple Crest Produce, Inc., a family-owned corporation in Rochester, New York, has operated for decades without paying dividends, instead compensating active family members through salaries and benefits. Nora Levin inherited a minority block of shares from her aunt and petitions for dissolution, claiming oppression because no dividends are paid; the record also shows that the corporation could provide her a fair economic return through a court-ordered distribution or a buyout without liquidating the business.

How should the court most likely rule on Nora’s petition for dissolution?

Explanation. The majority opinion treats dissolution under BCL § 1104-a as a drastic, discretionary remedy. It should be ordered only when it is the only reasonable means for the shareholder to obtain a fair return or is reasonably necessary to protect the shareholder’s rights and interests. If the shareholder can be protected through a lesser equitable remedy such as dividends, access to information, or a buyout offer, dissolution may be denied.