Jacuzzi v. Jacuzzi Bros., Inc.

SALSMAN, J.

This appeal is from an order denying appellants ’ motion to enjoin Nathan G- Gray and Richard F,

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Swisher from representing respondents as their attorneys. The action is a stockholders’ derivative suit, and its primary purpose is to set aside a transfer of substantial assets of the corporation alleged to have been' made for an inadequate consideration.

From the record it appears that appellant Jacuzzi Bros., Incorporated, is a California corporation, and that Candido Jacuzzi is its general manager. Joseph Jacuzzi, Giocondo Jacuzzi, Dante Jacuzzi and Carmelo Guarneri are directors. Also named as a defendant is Jacbros, S.A., Geneva, the latter being a Swiss corporation to which it is alleged the assets formerly owned by Jacuzzi Bros., Incorporated, were transferred. Nathan G. Gray was the attorney for Jacuzzi Bros., Incorporated, for some 25 years, and during a portion of that time he served as chairman of its board of directors. Gray’s services were terminated in May 1956, although during 1957 he completed the collection of some accounts on which he had previously been engaged. After 1957 Gray had no official connection with the corporation nor did he act thereafter as its attorney. Attorney Richard F. Swisher was made a member of the board of directors of Jacuzzi Bros., Incorporated, in early 1961, but resigned from the board in the fall of that year.

The complaint herein was filed October 26,1961. The plaintiffs are Rodolfo Jacuzzi, Rosie Jacuzzi, Rino Marin, Stella Marin, Silviano Marin and George Marin, and they own a substantial, although minority, interest in Jacuzzi Bros., Incorporated. Together, the stock ownership of respondents consists of approximately 19 per cent of the voting shares and approximately 15 per cent of the nonvoting shares. The complaint seeks to set aside the transfer of certain assets owned by Jacuzzi Bros., Incorporated, in foreign countries, and transferred by the corporation to Jacbros, S.A., Geneva. It is alleged that the price which Jacuzzi Bros., Incorporated, received for its foreign assets did not represent the fair value of the property. Other allegations make the charge that the effect of the transfer of the foreign assets of Jacuzzi Bros., Incorporated, to Jacbros, S.A., Geneva was to vest control and management of such assets in Candido Jacuzzi, individually, since he is one of three directors of Jacbros, S.A., Geneva, and it is alleged that the other two directors are mere dummies who have no financial interest in that corporation. The complaint also seeks to annul a royalty agreement between Candido Jacuzzi and Jacuzzi Bros., In