Court Opinion

ID: 5325628
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:50:33.578772+00
Date Added: 2024-06-11T08:29:22.958759
License: Public Domain

O’Malley, J.
The question presented is not free from doubt. The opinion of Mr. Justice Martin, predicated as it is upon the context of sections 490 and 496 of the Banking Law, merely, seems logical. However, a contrary view is equally deducible when the reason for the statute and other circumstances are considered.
This is a case of merger, whereby one corporation entirely loses its identity. A dissenting stockholder in such a corporation is quite properly given the opportunity of having his stock appraised and purchased. He in justice should not be required to accept an interest in another corporation against his will. On the other hand, a stockholder in the bank which absorbs another still retains an interest in the bank in which he originally invested. Appellants knew at the time of acquiring such interest that the assets and *357liabilities of the bank would change from time to time, even over their dissent. Furthermore, they were bound to foresee that in the administration of the affairs of such an institution some contracts might be made and obligations assumed which would not meet with their approval.
Had the corporation in which the appellants are stockholders acquired the franchise and assets of the other institution pursuant to the provisions of sections 20, 21 and 45 of the Stock Corporation Law, they clearly would not have had the right to the relief they now seek. Such right would have been available only to a stockholder in the institution, the franchise and assets of which were acquired.
It is to be noted, moreover, that, if the appellants are correct, the trust company in which they hold stock would be required to violate the provisions of section 108, subdivision 6, of the Banking Law, prohibiting a bank from being the purchaser or holder of shares of its own capital stock unless such is necessary to prevent loss upon a debt previously contracted in good faith. Even in the case of such a purchase the stock so purchased or acquired must be sold at public or private sale within six months from the time of its purchase or acquisition. A violation subjects the bank to a penalty to be paid the State in a sum twice the amount of the purchase.
I am, therefore, of the opinion that the provisions of section 496 of the Banking Law apply only to a stockholder in the bank losing its identity by merger with another and not to a dissenting stockholder of the absorbing bank.
The orders appealed from should, therefore, be affirmed, with ten dollars costs and disbursements.
Finch, P. J., and McAvov, J., concur; Merrell and Martin, JJ., dissent and vote to reverse and grant the motion, in an opinion by Martin, J., in each proceeding.