IN RE: William LIPTON (2003)

In a proceeding pursuant to Business Corporation Law article 11 for judicial dissolution of a corporation, Carmel Professional Office Park, Inc., appeals from an order of the Supreme Court, Putnam County (Hickman, J.), dated July 9, 2002, which, after a hearing, in effect, directed that $6,967.57 of the funds in the account of the temporary receiver be distributed to the petitioner.

ORDERED that on the court's own motion, the appellant's notice of appeal is treated as an application for leave to appeal, and leave to appeal is granted (see CPLR 5701[c] );  and it is further,

ORDERED that the order is reversed, on the law, with costs, and the temporary receiver is directed to distribute the remaining funds, including the $6,967.57, to the corporation.

The Supreme Court erred in directing the temporary receiver to distribute a portion of the funds in his account to the petitioner, a former shareholder of the corporation.  Business Corporation Law § 1116 requires the temporary receiver to redeliver all remaining property to the corporation when a dissolution proceeding no longer exists.   In this case, the dissolution proceeding no longer existed once the parties reached an agreement whereby the petitioner sold his interest in the corporation to the other shareholder (see Matter of Giordano v. Stark, 229 A.D.2d 493, 645 N.Y.S.2d 517;  Matter of Sternberg v. Osman, 181 A.D.2d 899, 582 N.Y.S.2d 208).   Accordingly, all of the funds remaining in the temporary receivers' account, including the $6,967.57, should have been returned to the corporation (see Business Corporation Law § 1116).