Opinion
May 11, 1956
Appeal from the Supreme Court, Bronx County.
The proposed sale of the Hanscom Stores and their fixtures comes within the requirements of sections 20 and 45 of the Stock Corporation Law. Consequently, the contracts of sale made before the May 3d meeting of stockholders were void. When, however, the May 3d meeting was held, the stockholders were in a position to and did authorize a sale of the assets of the business substantially in accordance with the contracts already executed. This did not constitute a ratification or validation nunc pro tunc of the previously made contracts, but it did authorize, from May 3d on, the performance of any contracts then adopted.
In so holding, we do not minimize the importance of compliance with the mandate of the statute in any case to which it is applicable. Presenting stockholders with the opportunity of ratification of a fait accompli is not the same as giving them the opportunity of advance consideration and determination. We have no hesitancy in saying, therefore, that officers and directors undertaking to act without proper approval are answerable for any damages resulting to the corporation from unauthorized action. The extent to which such liability may be removed or mitigated by subsequent stockholders' approval need not now be considered. Of course, we must be mindful of the fact in the case of this closely held corporation that the position of the stockholders was known and fixed throughout the period here involved and that fact undoubtedly bears upon any issue of prejudice to the corporation or stockholders by reason of the course pursued.
In the view we take of the matter there is no warrant for enjoining the sale. The orders should be affirmed, without costs.
Peck, P.J., Botein, Frank and Valente, JJ., concur.
Orders unanimously affirmed, without costs.