Court Opinion

ID: 3593261
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:41:18.903202+00
Date Added: 2024-06-11T07:42:19.153026
License: Public Domain

The sale by the respondent, Twenty-six Sixty Broadway Corporation, of a building which was its principal asset, and its acceptance in payment therefor of $25,000 in cash and a mortgage of $475,000, was validated by corporate action taken pursuant to section 20 of the Stock Corporation Law. Concededly the transaction received the formal consent of more than two-thirds of the respondent's stockholders. However, I do not find in that circumstance a legal reason why the three appellants, as non-consenting stockholders, are required to accede to the sale which, in result, requires them to accept, in place of the aliquot interests formerly owned by them in the property sold, a like proportion in a mortgage upon the premises in an amount equal to nineteen-twentieths of the sale price.
It is not denied that before the sale was consummated in accord with section 20 of the Stock Corporation Law the appellants, in good faith, served upon the respondent timely written notices of their objections to the sale and demanded payment for their stock. Nor is it denied that pursuant to section 21 of the Stock Corporation Law, and as a means of enforcing their demands, the appellants, within the statutory period, instituted the present proceedings to bring about an appraisal of their respective stock holdings. *Page 256 
The business of the respondent corporation is not the purchase and sale of real estate generally. According to answers interposed in these proceedings the respondent corporation was organized "for the purpose of holding title to a single parcel of real estate," and its articles of incorporation authorize it "To acquire, hold, manage, improve, develop, sell, mortgage or lease * * *" that single parcel of real property. It also appears that after it had acquired upon foreclosure sale the building at 2660-2668 Broadway, which then comprised its chief asset, it "administered, managed, utilized and operated" the premises "for the benefit of the various estates, funds and persons [including the appellants] entitled to participating shares in the original mortgage * * *."
As stockholders of the respondent corporation, the appellants had the right, under section 20 of the Stock Corporation Law and in the exercise of their business judgment for the protection of their own interests, to with-hold their consent to the sale for $500,000 of the corporation's chief asset under a contract which called for a cash payment of only $25,000 and a mortgage for the balance of the purchase price. I find no provision in section 21 of the Personal Property Law or any other statute which, by direct statement or by implication, requires of the appellants, as non-consenting stockholders, that they acquiesce in the change in the assets of the corporation which results from the corporate action thus taken. To the contrary, when the Legislature enacted section 21 of the Personal Property Law it specifically provided (subd. 4) that the stockholders of a business corporation, such as the respondent — organized to acquire property which is the subject of sale on foreclosure — "shall have the same power tovote to authorize or confirm any sale, mortgage, lease, option or other disposition of any or all of its property that ispossessed by individual stockholders of a business corporation * * *." (Emphasis supplied.) Thus did the Legislature preserve to non-consenting stockholders the statutory rights which the appellants now invoke under sections 20 and 21 of the Stock Corporation Law. *Page 257 
As I view the decision about to be made it construes section 21 of the Personal Property Law in such a way as to limit the rights of non-consenting stockholders, upon the sale of corporate assets, in derogation of rights previously granted to such stockholders by sections 20 and 21 of the Stock Corporation Law and preserved to them by section 21, subdivision 4, of the Personal Property Law. In other words, the court, by judicial construction, is about to enlarge the scope of the statute as to a subject upon which I find expressed therein a contrary legislative intent. We have no right by interpretation to add to or take away from the clear mandate of the statute.
The orders should be reversed and the petitioners' application for the appointment of appraisers pursuant to sections 20 and 21 of the Stock Corporation Law should be granted.
LOUGHRAN, RIPPEY and DESMOND, JJ., concur with FINCH, J.; LEWIS, J., dissents in opinion in which LEHMAN, Ch. J., and CONWAY, J., concur.
Order affirmed.