Opinion
November 13, 1967
Order of the Supreme Court, Westchester County, dated May 31, 1967, which denied appellants' application to confirm an arbitration award dated January 10, 1967 and dismissed the proceeding, reversed, on the law and the facts, with $10 costs and disbursements, and petition granted to the extent that the award is (1) modified so as to include a limitation that payments thereunder to appellants shall be limited to years in which a surplus is available for that purpose and (2) confirmed as so modified. Under the unusual facts at bar we conclude that the 1962 "award" herein was actually a new and substituted agreement adopted in the form of an award by the parties in place of their November, 1956 stockholders' agreement and for the purpose of providing a plan for the redemption of appellants' stock. The fact that the 1962 "award" was not confirmed within the statutory period did not diminish its character as a continuing agreement which, among other things, provided for arbitration. Hence the arbitrators who rendered the 1967 award at bar were empowered to do so by the 1962 "award", a conclusion respondent did not contest by moving to stay the proceeding leading to the 1967 award. Instead, respondent participated in the latter proceeding, thus precluding itself from later attacking the 1962 "award" as a valid agreement to arbitrate (see, CPLR 7511, subd. [b], par. 2; S. Weinstein-Korn-Miller, N.Y. Civ. Prac., par. 7503.30). The 1967 award, however, directs respondent to redeem appellants' stock notwithstanding the fact that there is an undisputed deficit in respondent's surplus account. Plainly an award may not be confirmed if it directs an act which would violate the criminal and civil law (see, Matter of Western Union Tel. Co. [ Amer. Communications Assn.], 299 N.Y. 177; Penal Law, § 190.35, subd. 1, par. [e]; Business Corporation Law, §§ 513, 514). Therefore we modify the form of the 1967 award to include a limitation that payments thereunder to appellants shall be limited to years in which a surplus is available for that purpose ( Matter of Friedman [ Video Tel.], 281 App. Div. 815). Christ, Acting P.J., Brennan, Hopkins, Benjamin and Munder, JJ., concur.