## Facts

- Gimpel Farms, Inc. was a closely held, third-generation family dairy corporation founded in 1931.
- Shareholder-family members historically participated in management, took compensation through salaries and perquisites, and never received dividends.
- Robert Gimpel, a minority shareholder who acquired shares by gift and bequest, was employed in a managerial position until 1974.
- Robert was discharged after admittedly embezzling corporate funds.
- After his discharge, other family insiders continued to run the company and draw substantial salaries; Robert received no financial return from his shares, was excluded from management, denied access to corporate books, and was not issued proper stock certificates.
- Robert sought judicial dissolution for “oppression” under New York Business Corporation Law (BCL) § 1104-a and asserted derivative-type claims under BCL § 626.
- The court treated defendants’ dismissal motion as one for summary judgment based on extensive affidavits.

## Issues

1. Whether the majority’s conduct toward Robert constituted “oppressive” conduct warranting judicial dissolution under BCL § 1104-a.
2. What standard should define “oppression” in a long-standing, family close corporation when the complaining shareholder obtained shares by gift or devise rather than by voluntary investment.
3. Whether relief short of dissolution was appropriate to protect a minority shareholder’s statutory rights (e.g., stock certificates and access to records).

## Decision

- The court denied judicial dissolution, holding that the record did not show oppression sufficient to justify dissolution under BCL § 1104-a.
- The court rejected applying an expansive “reasonable expectations” approach as dispositive for a shareholder who acquired shares by gift or bequest in a mature family corporation.
- The court required proof of conduct that was inherently oppressive (burdensome, harsh, and wrongful; reflecting a lack of probity and fair dealing) and found that standard unmet.
- Despite denying dissolution, the court ordered the corporation to issue proper stock certificates to Robert and to provide him full access to corporate records.

## Legal Principles

- “Oppression” under BCL § 1104-a has been analyzed under two formulations: (1) frustration of a shareholder’s reasonable expectations, and (2) inherently oppressive conduct that is burdensome, harsh, and wrongful and reflects a lack of probity and fair dealing.
- In a long-standing family close corporation where the complaining shareholder obtained shares by gift or devise, expectations associated with the original founders’ bargain do not automatically transfer with the shares; successors may be held to a stricter showing than original capital-committing participants.
- Discharge from employment and exclusion from management do not, without more, establish statutory oppression warranting dissolution, particularly when the circumstances show a legitimate basis for exclusion and the enterprise historically operated without dividends.
- Even when dissolution is denied, the court may grant corrective relief to enforce basic shareholder rights, including proper issuance of stock certificates and inspection/access to corporate records.

## Conclusion

The court refused to dissolve a long-running family corporation because the minority shareholder failed to prove inherently oppressive conduct under BCL § 1104-a, but it granted limited relief to enforce his continuing rights as a shareholder by compelling issuance of stock certificates and access to corporate records.


Gimpel v. Bolstein, 125 Misc. 2d 45, 477 N.Y.S.2d 1014 (Sup. Ct. Queens Cnty. 1984)