In this аction plaintiff seeks to set aside the sale and conveyance by defendant Senior Estate, Ltd. to defendant Louis Schweitzer of a lease on prеmises known as ‘ ‘ Theatre de Lys ’ ’, together with certain chattels therein. The defendants John Post, Jr., and Anita Post Litsky are stockholders and directors of the defendant Sеnior Estate, Ltd. The defendant Joseph Feldman, an attorney, represented Senior Estate, Ltd., in the transaction.
The complaint contains four causes оf action. In substance, the first cause of action recites that the defendant Senior Estate, Ltd., is a corporation with an authorized capital stoсk of 100 shares, of which the plaintiff is the holder of 50 shares, the defendant Post the holder of 25 shares, and the defendant Litsky the owner of the remaining 25 shares. It then alleges that the defendants Post, Litsky, Schweitzer and Feldman conspired to defraud and deceive the corporation and the plaintiff in that they sought to divest plaintiff оf his interest in the corporation and the assets of the corporation, and to waste corporate assets and that in furtherance thereof, the defendants conveyed to Schweitzer the assets of said corporation, to wit, its leasehold and the chattels contained in the premises so transferred.
The second cause of action, directed only against the defendants Post and Litsky, charges that the sale and transfer of the subject leasehold wаs in violation of section 20 of the Stock Corporation Law in that the consent of all the holders of the outstanding stock was not obtained, and that no notice of a meeting of stockholders for the purpose of disposing of this asset of the corporation was called pursuant to section 45 of the Stock Corporation Law.
The third cause of action charges a conspiracy on the part of Litsky and Post as directors of the corporatiоn to commit acts of waste with respect to the corporation, principally in the payment of a fee for legal services to defendant Feldman.
The fourth cause of action is. directed solely against the defendant Schweitzer and seeks to restrain him from the use of the property and to compel him to account for the income.
One of the sharply disputed issues rеvolved around an alleged oral consent to the sale by the plaintiff, the holder of a 50% stock interest in the corporation. Plaintiff denied giving such consent. The defendants offered proof that he did. We must assume that the trial court found as a fact that such consent was given from the finding in favor of the defendants on аll ‘ ‘ crucial issues.”
In Epstein v. Gosseen (
We must disagree with the conclusion reached by thе trial court in this respect.
Even assuming that the plaintiff orally consented to the trans-. fer of the leasehold as determined by the trial court, we must hold that such cоnsent does not comply with the statutory requirement.
Section 20 of the Stock Corporation Law prior to its amendment in 1954 read as follows in its pertinent provisions: “A stock corporation * * * with the consent of the holders of record of two-thirds of its outstanding shares entitled to vote thereon may sell and convey its prоperty, rights, privileges and franchises, or any interest therein or any part thereof * * *. Before such sale or conveyance shall be made such consent shall be obtained at a meeting of the stockholders called pursuant to section forty-five.” (L. 1934, ch. 764.)
Predicated upon the quoted section before аmendment, it was held that when oral consent was not disputed by a stockholder, the sale of corporate assets would be sustained as valid.
By chapter 810 of the Laws of 1954, effective April 19, 1954, an amended section 20 was enacted, which reads as follows: (‘ A stock corporation # * may voluntarily sell, lease or
Accordingly, it is manifest that the Legislature, for reasons which it deemed adequate and sufficient, has materially changed the corporate requirements with respect to thе sale of corporate property and assets. The amended section, it will be noted, provides that in the absence of a meeting called рursuant to section 45, the consent of all rather than two thirds of the holders of the outstanding stock must be obtained. Of equal significance is the requirement that the consеnt must be in writing.
The record discloses that the leasehold and the appurtenances were the only assets of the corporation. It is obvious, therefore, that the transaction was a sale of “ all or substantially all of its property * * * or an integral part thereof essential to the conduct of the business of the corporation ”.
The proof at the trial established that no meeting was held pursuant to section 45 and the alleged consent obtained was oral.
Thе sale of the leasehold and its appurtenances by defendant Senior Estate, Ltd., to defendant Schweitzer is null and void. In the circumstances there must be a rеconveyance of the leasehold and its appurtenances to Senior Estate, Ltd., and correspondingly a return of the purchase price to Schweitzer subject to an accounting for the reserved rents from the date of conveyance to the date of reconveyance.
We affirm the determination on the law and the facts with respect to the first and third causes of action. With respect to the first cause of action, the conspirаcy alleged "among Post, Litsky, Schweitzer and Feldman was not sustained by the proof. With respect to the third cause of action, plaintiff and the corporation will receive the relief to which they are entitled under the second and fourth causes of action.
We reverse on the law with respect to the sеcond and fourth causes of action.
Breitel, J. P., Botein, Robin, Cox and Frank, J.J., concur.
Judgment unanimously modified in accordance with the opinion herein. Settle order.