Court Opinion

ID: 9516959
Source: CourtListenerOpinion
Date Created: 2023-08-06 23:57:39.749161+00
Date Added: 2024-06-11T09:38:32.975357
License: Public Domain

Pigott, J. (dissenting).
Because the majority, in my view, takes the holding in Kiamesha Dev. Corp. v Guild Props. (4 NY2d 378 [1958]) too far—to the point of practically eliminating the legal concept of a de facto corporation—I respectfully dissent.
It is conceded that at the time the property was conveyed *414from the decedent to the LLC, the articles of organization for the LLC had not yet been filed. But the sequence of events preceding the filing is important. The articles of organization and operating agreement for the LLC were executed on October 4, 2001. The decedent conveyed the property to the LLC on November 2. The articles of organization were filed on November 16 and the deed was filed on December 3, 2001. The delay in filing is about the only misstep, if a misstep at all, in an otherwise fairly normal series of events in the creation of the LLC. Five years later, only after counsel for disinherited legatees in litigation in Surrogate’s Court discovered that the filing of the articles of organization followed the execution of the deed, rather than vice versa, did the timing of the filing come into question.
It has long been held that courts may invoke the de facto corporation doctrine where there exists: (1) a law under which the corporation might be organized, (2) an attempt to organize the corporation and (3) an exercise of corporate powers thereafter (see Methodist Episcopal Union Church v Pickett, 19 NY 482, 485 [1859]; Von Lengerke v City of New York, 150 App Div 98 [1st Dept 1912], affd 211 NY 558 [1914]). All of these requirements were met here. The majority focuses on the “colorable attempt to comply with the statutory requirement” language found in Kiamesha Dev. Corp. v Guild Props. (4 NY2d 378 [1958]) to state definitively that there can be no de facto corporation here because there was no “colorable attempt.” In my view, that case, interesting in its facts, should be limited to them.
In New York, it is clear that if there is no attempt to formally organize, there will be no de facto corporation. Here, however, the organization of the LLC was complete. The record shows that the incorporators prepared and executed the articles of organization as required under Limited Liability Company Law § 203. They also executed and adopted the required operating agreement for the LLC pursuant to Limited Liability Company Law § 417 (a). Those documents reveal that the LLC was organized “solely to own, operate or manage real property and to do any and all things necessary, convenient, or incidental to that purpose.” Pursuant to that purpose, the LLC took title as grantee to the real property in the name of the LLC. And it was the decedent as grantor who executed the deed naming the LLC the grantee. Two weeks after the deed was executed—a reasonable period—the articles of organization were filed with the *415Secretary of State. The related ancillary papers, including a New York City real property transfer tax return as well as city and state transfer tax returns, which named the LLC as grantee, were executed and filed as required.
Under the circumstances of this case, I would find that the incorporators acted with sufficient alacrity to comply with the statutes, and would therefore find the conveyance to the de facto entity that existed at that time valid.
Therefore, I would reverse the order of the Appellate Division.
Chief Judge Lippman and Judges Graffeo, Read, Smith and Jones concur with Judge Ciparick; Judge Pigott dissents and votes to reverse in a separate opinion.
Order affirmed, etc.