(dissenting). The question at issue is whether dissenting stockholders are entitled to have their shares appraised and purchased under section 21 of the Stock Corporation Law, upon the ground that the corporation has conveyed ‘ ‘ its property, rights, privileges and franchises, or any interest therein or part thereof ” pursuant to section 20 of the same act. It was said in Matter of Timmis (200 N. Y. 177, 180-181) per Vann, J.: “ The substance of the sections in question was first enacted by chapter 638 of the Laws of 1893, probably to meet the situation as it was left by a line of judicial decisions ending in 1892. The valuable opinion of Judge Allen in Abbot v. American Hard Rubber Co. (33 Barb. 578), after standing the test of time and criticism for thirty years, was followed by People v. Ballard (134 N. Y. 269). These cases and those which intervened established the law that a corporation cannot sell all its *639property, or even a part thereof so integral as to be essential for the transaction of its ordinary business, because such a sale is wholly or partly an act of self-destruction and a practical dissolution without compliance with law ”.
It was admitted by appellants’ counsel upon the argument that if the property transferred by this corporation had been sold for cash, instead of for stock in the purchasing corporation, the sale would not have been such as is described in section 20, and appellants would not have been entitled to have their stock appraised under section 21. The decisive circumstance is, therefor, that the property is being sold for stock instead of for cash. To hold that this gives rise to a right of appraisal would involve a misconstruction of the statute, which does not accord to objecting minority stockholders the right to have their shares appraised in all cases of sales of corporate assets out of the usual course of business, but only in event of a sale of a part of the corporate assets “ so integral as to be essential for the transaction of its ordinary business ” (Matter of Timmis, supra, p. 181). It has, of course, been said truthfully that such a sale is not in the usual course of business, but the test is whether the property sold is essential to the transaction of the ordinary business of the corporation. The property transferred by this corporation, claimed to create a right to an appraisal in appellants, is or is not essential to the transaction of its ordinary business, without regard to whether it is sold for cash or some other consideration.
If the shares of stock taken by respondent in the purchasing corporation are worth substantially less than the value of the property transferred, or if the vendor corporation is forbidden by the Banking Law to retain such stock, that would at most have furnished a ground for restraining the sale altogether as illegal or as a waste of corporate assets. In that event, no valid sale could be made pursuant to section 20 of the Stock Corporation Law, even if two thirds of the outstanding voting shares approved; the remedy of the minority would be to enjoin the sale, rather than to have their shares appraised and bought out, which can only be done in event of a valid sale.
It may well be that the assets thus disposed of were rendered unnecessary to the further conduct of the business of respondent corporation, in consequence of its having earlier disposed of its banking and fiduciary business to Bankers Trust Company. That was a transfer of an integral part of the business of the corporation, and would have given rise to a right of appraisal, except that in August, 1950, it was approved by respondent’s *640stockholders, including appellants. The disposal of the assets presently involved is merely an aftermath of that prior transaction. Having narrowed the scope of its business by the earlier sale to Bankers Trust Company, the assets involved in this proceeding were no longer needed as working capital, and the object of selling them for stock in the purchasing corporation was immediately to distribute the shares of stock so acquired among its stockholders. The same thing could have been done, though subject to greater tax liability, if these assets had been sold for cash. This program was approved by the Superintendent of Banks and by the Banking Board, and the Commissioner of Internal Revenue has ruled it to be a tax-free transfer. The assets described in the plan have been transferred to the new corporation in exchange for its capital stock, which has been distributed. Appellants are no more entitled to have their stock appraised and purchased by the corporation than would have been the case if the sale of these assets had been for cash, followed by its distribution to the stockholders as a dividend.
The opinion in Matter of United Gas Corp. (58 F. Supp. 501, affd. 162 F. 2d 409) explains and cites with approval Matter of Timmis (supra). Matter of Fulton (257 N. Y. 487, 492) construes Matter of Timmis in the same manner, and indicates that the language of the opinion in the later case of Matter of Miglietta (2660 Broadway Gorp.) (287 N. Y. 246, 254) was not intended to be any broader. In the Miglietta case, the right of appraisal was denied in the case of a salvage corporation, which had been formed for the purpose of liquidating properties which it acquired. Such transactions were ‘ ‘ in the regular course of the business of the corporation and in furtherance of the express objects of its existence ” (Matter of Miglietta [2660 Broadway Corp.], supra, p. 254, citing Matter of Timmis). Clearly, it was not intended to change the more precise statement of the rule in Matter of Timmis, by extending thé right of appraisal to any sale outside of the regular course of business, such as might be covered by the Bulk Sales Act (Personal Property Law, § 44). The transfer must still have been an act of at least partial self-destruction of the corporation by disposing of an integral part of its business. The point in the Miglietta case was simply that a transaction could not fall into that category if it was merely being conducted in furtherance of the business of the corporation. The decision in the Miglietta case contains no indication that it was intended to depart from the statutory test, which has been made to depend upon whether the corporation conveys “ its property, rights, privileges and franchises, or any interest *641therein or any part thereof ’ ’. This language refers exclusively to the nature of the property transferred, and not to thé character of the consideration which is received in exchange.
The precise language from Matter of Timmis that is quoted above, and which, together with, the language of the- statute, forms the basis of this dissent, was quoted with approval- in Matter of Bacon (Susquehanna Silk Mills) (287 N. Y. 1, 4-5) in an opinion per Lehman, Ch. J. Likewise, the annotation upon this point (9 A. L. R. 2d 1306) indicates that although the right to an appraisal is denied in the case of a sale made in the regular course of business, the converse is not true unless the sale be such as to prevent the corporation from accomplishing purposes or objects for which it was incorporated, due to . the alienation of an integral part of the business. To. the same effect is the “ Commentary ” on the history and purpose of the statute appended to section 20 of the Stock Corporation Law in White on Corporations (Yol. 3 [12th ed.], pp. 606 et seq.).
The order appealed from should be affirmed, with costs.
Peck, P. J., Glennon, Dore and Bergan, JJ., concur in Per Curiam opinion; Yan Yoobhis, J., dissents and votes to affirm, with costs, in opinion.
Order modified in accordance with the opinion herein and, as so modified, affirmed, without costs. Settle order on notice. [See 282 App. Div. 668.]