p. 280In the Matter of Soll C. Roehner, Appellant, against Gracie Manor, Inc., Respondent.
p. 281Daniel Jacobs and Samuel Hof man for appellant.
I. The Appellate Division erred in holding that the sale of the sole corporate asset was within the regular' course of the business of the corporation in the circumstances of this case. The sale by a corporation of the only asset it has ever owned or operated is outside of the regular course of its business when the very motive and sole inducing cause of such sale was the decision by the stockholders to effect the dissolution of the corporation and the liquidation of its affairs. (Eisen v. Post, 3 N Y 2d 518 ; Matter of Timmis, 200 N. Y. 177 ; Matter of Miglietta [2660 Broadway Corp.], 287 N. Y. 246 ; Strauss v. Midtown Enterprises, 5 Misc 2d 823 , 270 App. Div. 837 , 295 N. Y. 993 ; Matter of Leventall, 241 App. Div. 277 .) II. Since the sale of the sole corporate asset was not made in the regular course of the corporate business, appellant is entitled to have the
p. 282value of Ms stock interest appraised and paid where, as in the case at bar, the majority stockholders have consummated such sale without compliance with the requisite procedure prescribed by sections 20 and 45 of the Stock Corporation Law. The appraisal remedy provided by section 20 is particularly vital to the minority stockholder where, as here, the majority stockholders refuse, in violation of their agreement, to dissolve the corporation and to liquidate its affairs. (Starrett Corp. v. Fifth Ave. & Twenty-Ninth St. Corp., 1 F. Supp. 868 ; Gottfried v. Gottfried Baking Co., 1 A D 2d 994 , 2 A D 2d 664 ; Matter of Drosnes, 187 App. Div. 425 ; Ambler v. Smith, 237 App. Div. 226 .) III. The irregular and illegal action of the majority stockholders in disregarding the clear mandate of sections 20 and 45 affords appellant an election of remedies. Appellant may adopt the sale and seek an appraisal of his stock interest. He is not relegated to an action to rescind and set aside the sale. In any event, respondent is estopped from insisting upon adherence to the letter of the statute that it has itself flouted. (Beloff v. Consolidated Edison Co. of N. 7., 300 N. Y. 11 ; Anderson v. International Minerals & Chem. Corp., 295 N. Y. 343 ; Kavanaugh v. Kavanaugh Knitting Co., 226 N. Y. 185 ; Warnecke v. Forty Wall St. Bldg., 8 Misc 2d 317 ; Bown v. Ramsdell, 227 App. Div. 224 ; Matter of Hurd [Broadway & 58th St., Corp.], 5 Misc 2d 443 .) IV. Appellant’s conduct does not estop him from asserting his clear right to an appraisal of his stock interest.Jacob Mishler for respondent.
I. The sale was made in the regular course of business. (Eisen v. Post, 3 N Y 2d 518 ; Matter of Timmis, 200 N. Y. 177 ; Matter of Miglietta [2660 Broadway Corp.], 287 N. Y. 246 .) II. The petition is insufficient in law. (Matter of Marcus [Macy & Co.], 297 N. Y. 38 ; Matter of Kinney [Bush Term Bldgs. Co.], 306 N. Y. 207 .) III. Appellant is a consenting stockholder.We agree with the Appellate Division that ordinarily the sale by a real estate corporation of its sole asset is not outside the regular course of business so as to require stockholder consent (Stock Corporation Law, § 20; Eisen v. Post, 3 N Y 2d 518 ). The reason for this principle ceases to apply, however, where as is here alleged such sale is pursuant to a prior plan of corporate dissolution. Eisen v. Post
p. 283(supra) did not hold to the contrary, since the majority opinion there was predicated upon the presumptive continuation of the corporation in business.
While normally petitioner would be entitled to a trial as to the existence of such a plan of dissolution, in this case his own allegations of fact—which we must deem true — defeat such a right. The provision in section 20 of the Stock Corporation Law for the protection of minority stockholders was a recognition of the injustice “ of requiring them to abandon, change or limit their business ” (Matter of Timmis, 200 N. Y. 177 , 181). Petitioner here was not “ required ” to do anything. He concededly agreed to a sale of the corporate assets pursuant to the plan of dissolution, and now objects to the particular sale only because such plan was not carried out. Section 20 was clearly not intended to benefit a person in such a situation. Whatever rights he may have to enforce any agreement to dissolve or his claim that the property was sold for less t.lmn its actual value or whatever rights he may have in any other respect as a minority stockholder may not be asserted in the present proceeding.
The order should be affirmed, with costs.
Chief Judge Coxway and Judges Desmoxd, Dye, Fuld, Vax Voorhis and Burke concur.
Order affirmed.