Opinion
June 22, 1987
Appeal from the Supreme Court, Suffolk County (Doyle, J.).
Ordered that the plaintiff's cross appeal is dismissed for failure to perfect the same in accordance with the rules of this court (see, 22 NYCRR 670.20 [f]); and it is further,
Ordered that the order is reversed insofar as appealed from, on the law, the motion is granted, the complaint is dismissed insofar as it is asserted against the appellants-respondents, and the action against the remaining defendants is severed; and it is further,
Ordered that the appellants-respondents are awarded one bill of costs payable by the plaintiff.
Davis Aircraft was engaged in the business of designing, manufacturing and selling restraints used in aircraft. Prior to November 1984 Davis Aircraft conducted its manufacturing operations out of a building located in Northport, New York. Since the Northport facility required extensive repairs, Davis Aircraft commenced a search for a new building. Subsequently, Davis Aircraft and the defendant Thomas Mara entered into an agreement whereby the Northport building would be exchanged for a building owned by the defendant Mara in Bohemia, New York. The defendant Bruce T. Davis, president of Davis Aircraft, alleged that the Bohemia facility was "significantly more efficient for manufacturing" than was the Northport facility. He further added that Davis Aircraft continued to be in the same business as it had before the move and that it had not discontinued any of its former operations. The plaintiff alleged that the transaction was voidable as the corporation did not obtain the required authorization from its shareholders. We disagree.
Pursuant to Business Corporation Law § 909 (a), shareholders' approval is required whenever a corporation attempts "[a] sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the usual or regular course of business actually conducted by such corporation". The purpose of the statute was to prevent a corporation from disposing of a major portion of its property without obtaining prior approval of its shareholders (see, Matter of Timmis, 200 N.Y. 177, 181; Matter of Miglietta [2660 Broadway Corp.], 287 N.Y. 246, rearg denied 288 N.Y. 661). The transaction in question was merely a transfer of Davis Aircraft's operations from one building to another. In this regard, there is no factual dispute that Davis Aircraft has engaged in the same business as it had prior to the exchange. Thus, the transaction did not result in a liquidation, in whole or in part, of Davis Aircraft's business. Under these circumstances, we find that shareholder approval was not required (see, Matter of Avard [Oneita Knitting Mills], 5 Misc.2d 817, appeal dismissed 2 A.D.2d 647; Matter of Rudel [Eberhard Faber Pencil Co.], 2 Misc.2d 957). Therefore, summary judgment is granted to the defendants Davis Aircraft, Arthur Schmidt, Francis Nestor and Bruce T. Davis because the instant transaction did not fall within the purview of Business Corporation Law § 909 (a). Mangano, J.P., Niehoff, Weinstein and Kunzeman, JJ., concur.