## Facts

- Steinway & Sons incorporated in 1876, with a stated purpose of manufacturing and selling pianos and other musical instruments; the former partnership’s assets were transferred to the corporation for most of its stock.
- Anticipating growth beyond its New York City facilities, the corporation acquired roughly 400 acres in Astoria, New York, and relocated its main manufacturing operations there.
- On the Astoria tract, the corporation built employee housing and funded or supported community facilities (including a church, school, library, and water supply) to attract and retain a stable workforce.
- A shareholder, Henry W. T. Steinway, sued in equity to restrain the corporation and its trustees/directors, arguing the real estate acquisitions and community expenditures were ultra vires and wasteful, and unrelated to the corporate purpose.
- The shareholder did not allege fraud or bad faith; his claim focused on lack of corporate authority.
- Over many years, the shareholder had participated in corporate affairs, attended meetings, approved financial statements, and accepted the benefits of the corporation’s profitability and dividends without timely objection.

## Issues

1. Whether acquiring and developing extensive real estate, including employee housing and community facilities, exceeded the corporation’s chartered purposes and was ultra vires.
2. Whether the challenged expenditures constituted actionable waste warranting equitable intervention at a shareholder’s request.
3. Whether long-term shareholder participation and acquiescence barred equitable relief absent fraud or bad faith.

## Decision

- The court dismissed the complaint and entered judgment for the corporation and its trustees/directors.
- The court held the Astoria acquisition, plant relocation, employee housing, and community-support expenditures were not ultra vires because they were reasonably related to the corporate business and within incidental corporate powers.
- The court declined to characterize the expenditures as waste where they were undertaken in good faith, supported workforce stability, and contributed to corporate success.
- The court treated the shareholder’s long acquiescence and acceptance of benefits as an equitable bar to later challenge absent fraud or similar wrongdoing.

## Legal Principles

- A corporation is limited by its chartered purposes but has incidental powers to undertake acts reasonably necessary or appropriate to carry out those purposes under practical business conditions.
- Acts not expressly listed in the charter may be valid if they bear a reasonable relation to the corporation’s primary business and are pursued in good faith for corporate benefit.
- Courts generally will not restrain managerial decisions as “waste” where directors act in good faith and the expenditures are plausibly connected to corporate advantage.
- A shareholder who knowingly permits a course of conduct over time and accepts its benefits may be denied equitable relief challenging that conduct, especially absent fraud or bad faith.

## Conclusion

The court upheld the corporation’s real estate development and employee-welfare expenditures as permissible incidental powers tied to maintaining an effective workforce for large-scale manufacturing, and it dismissed the shareholder’s suit based on the reasonable business connection, absence of fraud, and the shareholder’s long acquiescence.


Steinway v. Steinway & Sons, 40 N.Y.S. 718 (N.Y. Sup. Ct. 1896)