Court Opinion

ID: 5769907
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:30:04.476342+00
Date Added: 2024-06-11T08:41:44.751236
License: Public Domain

McGivern, J. (dissenting).
On the most basic grounds, I disagree with the majority. We are dealing with a statutory proceeding, principally involving sections 1104 and 1109 of the Business Corporation Law. Pursuant to these sections, the court may entertain the petition or dismiss it. It can do no other. See, Matter of Radom & Neidorff (307 N. Y. 1) particularly the analysis of predecessor statutes contained in the dissenting opinion of then Judge, now Chief Judge Fuld. In contravention of the statutes, in the instant case, a judicial thunderbolt has sundered the corporation. I can find no case in the Court of Appeals or in any Appellate Division that would sanction such sudden and unprovided for death without a preliminary hearing. The statute, section 1109, does not permit it. A hearing is mandated. (20 Carmody-Wait 2d, New York Practice, § 121:280; Matter of Whitehall Art Co., 6 A D 2d 399; Matter of Venice Amusement Corp., 14 A D 2d 742.) In the latter case this court, reversed an order entertaining a petition for dissolution under then section 103 of the General Corporation Law, in view of the" fact that on the argument of the appeal it appeared the parties had apparently agreed that the corporation be sold as a going business, for which reason it remanded the matter to Special Term for reconsideration. But, in so disposing of the matter, it gave clear recognition of the statutory mandate requiring a hearing. It said: ‘1 In the event that upon such reconsideration the court determines a statutory hearing to be in order, such hearing should be held before the court rather than a Referee ’ ’ (emphasis supplied). And indeed, upon the breakdown of the apparent agreement Special Term, upon reconsideration, vacated a stipulation pursuant to which “ the parties waived the hearing required by Sections 106 and 113 of the General Corporation Law as a prerequisite to the sale of the assets and the dissolution of the corporation” and, after noting the foregoing decision of this court, directed 1 ‘ that the statutory hearing take place before the Court on proper notice.” (Matter of Venice Amusement Corp., 235 N. Y. S. 2d 54, 55, 56.) Thus, both Special Term and the majority herein are out of line with all the recorded precedents on this point. (Matter of Seamerlin Operating Co. [Searing-Merlino], 307 *283N. Y. 407; Matter of Radom & Neidorff, supra; Matter of Venice Amusement Corp., supra; Matter of Cantelmo [Brewer], 275 App. Div. 231; Matter of Clemente Bros, 19 A D 2d 568.)
In my judgment, the respondent herein has showed more than enough to command a hearing and an opportunity to present his proof, particularly regarding his claim that petitioner, in bad faith, is attempting to squeeze him out of a profitable venture without fair compensation. We cannot ignore the contention that petitioner’s own accountant evaluated the enterprise as having a book value alone of approximately $300,000, less only some undetermined amount which would be required for payment of income taxes, yet petitioner’s apparently best offer to the respondent is $60,000. This, notwithstanding the alleged suggestion by petitioner’s attorney that respondent be offered a $250,000 ‘ ‘ package ’ ’. Again, according to the cases, unless the petitioner acts in good faith, or if his bald purpose is to squeeze out his erstwhile partner without fair compensation, the courts will turn him back. (Matter of Seamerlin Operating Co. [Searing-Merlino], supra; Matter of Clemente Bros, supra; Matter of Cantelmo [Brewer], supra.)
This petitioner has already been rejected thrice by various Special Terms, the last time in an opinion that explicitly impugned his good faith. In the first instance, Special Term (Mr. Justice Fi-Yim) nullified a board of directors meeting convoked by petitioner, directed a restoration of funds improperly diverted, and made permanent a restraint against petitioner and others, preventing them from interference with respondent’s rights and privileges. In the second instance, Special Term (Mr. Justice G-elleb) enjoined petitioner and one Aczel from any attempts to vote the nonvoting stock of the latter. In the third instance, Special Term (Mr. Justice Spectok-) dismissed an action ostensibly brought by Aczel, as nominal plaintiff but apparently inspired by petitioner, to compel respondent to attend a specially noticed directors’ meeting, one of whose purposes was to consider the removal of respondent and reduction of the quorum required for meetings. Although the dismissal of the latter proceeding against respondent was on the ground he had not been validly served, the court also observed “ serious doubts are raised with respect to the bona tides of plaintiff’s application.”
Accordingly, in my view, the granting of an order of dissolution without the holding of the required statutory hearing was erroneous, as was the appointment of a receiver, which was premature and unwarranted. (Matter of Whitehall Art Co., 6 A D 2d 399, supra.) I would reverse the order appealed from *284and remand the matter for a hearing, pursuant to the provisions of section 1109 of the Business Corporation Law.
Stevens, P. J., Eager and McNally, JJ., concur with Steuer, J.; McGtvern, J., dissents in opinion.
Order entered on April 30, 1969, modified on the law to provide that the application for approval by the court so directed in the 10th ordering paragraph of the order be upon notice to all parties with an opportunity to be heard, and, as so ordered, affirmed, without costs and without disbursements.