Opinion
July 28, 1980
In a proceeding for the judicial dissolution of a domestic corporation, the appeals are from (1) an order of the Supreme Court, Nassau County, dated January 24, 1980, which, inter alia, ordered the dissolution of the corporation and appointed a receiver to collect and distribute the corporation's assets and (2) a further order of the same court, dated January 25, 1980, which "supplemented" the prior order by, inter alia, striking the "sixth" and "ninth" decretal paragraphs of said order and authorizing the receiver to perform certain acts. Orders modified, on the law, by deleting therefrom the provisions which granted dissolution. As so modified, orders affirmed, without costs or disbursements, and proceeding remitted to Special Term for a hearing consistent herewith. The trial of this dissolution proceeding pursuant to section 1104 (subd [a], par [3]) of the Business Corporation Law was truncated by a purported stipulation of settlement after the parties and Trial Justice conferred in chambers. However, the stipulation does not suffice to dispose of the case because at the outset of its entry on the record appellant replied in the negative when Special Term inquired whether the parties had admitted they could not work together. Under the circumstances, a new hearing is necessary to determine whether the alleged dissension between the parties within their closely held corporation makes continued association unworkable and whether the continuance of the corporate business no longer is advantageous to the shareholders (see Business Corporation Law, § 1104, subd [a], par [3]; Matter of Talvin v. Munsey Candlelight Corp., 69 A.D.2d 865; see, also, Legislative Studies Reports, McKinney's Cons Laws of N.Y., Book 6, Business Corporation Law, § 1104, p 175; 4 White, NY Corporations, pars 1104.01, 1111.01, subd [3]). Allegations of petitioner's bad faith constitute a defense to a dissolution proceeding and must be heard by Special Term as well (see Matter of Clemente Bros., 19 A.D.2d 568, affd 13 N.Y.2d 963; Matter of Whitehall Art Co., 6 A.D.2d 399; Matter of Surchin v. Approved Business Machs. Co., 55 Misc.2d 888; Mares v. Foster, 35 Misc.2d 852, affd 19 A.D.2d 695). We have concluded, nevertheless, that the receiver should maintain his position in the interim. Hopkins, J.P., Damiani, Lazer and Cohalan, JJ., concur.