Opinion
June 22, 1999.
Appeal from the Supreme Court, New York County (Sheila Abdus-Salaam, J.).
Plaintiff asserts that the exemption of holders of unsold shares from subletting restrictions and fees imposed on shareholder-tenants such as himself constitutes differing treatment of holders of the same class of stock in violation of Business Corporation Law § 501 Bus. Corp. (c). The exemption from subletting restrictions and fees in favor of the holders of unsold shares was, however, permissibly imposed on the cooperative's Board of Directors pursuant to the offering plan governing defendant's cooperative conversion ( see, 13 NYCRR 18.3[w][8]). The exemption of the sponsor, as holder of unsold shares, from defendant cooperative corporation's otherwise applicable strictures as to subletting is, moreover, justified by obligations imposed upon the sponsor that are not shared by other shareholders. The sponsor must provide renewal leases to non-purchasing tenants who remain in possession pursuant to a non-eviction plan ( see, General Business Law § 352-eeee Gen. Bus.), and the discharge of that obligation would be rendered difficult, if not impossible, by subjecting the sponsor to restrictions on subletting applicable to other cooperative proprietary leaseholders. While we recognize that plaintiff does not sue to impose the obligations of tenant shareholders with respect to subletting upon the sponsor, but rather to have the tenant shareholders freed, in the manner of the sponsor, of those obligations, the rationale favoring the exemption for the sponsor does not exist for the tenant-shareholders and, in the absence of such a rationale favoring the tenant-shareholders, we find no basis to conclude that the failure to afford them the same exemption as the sponsor deprives them of equal treatment within the meaning of Business Corporation Law § 501 Bus. Corp. (c). The challenged restrictions upon tenant-shareholder subletting serve numerous legitimate ends of the cooperative corporation. Among these are the promotion of the residential nature of the cooperative and the consequent facilitation of the cooperative's vitally important access to financing. It is not consistent with the Legislature's evident intent in amending Business Corporation Law § 501 Bus. Corp. (c) (L 1986, ch 598, § 1) in response to Fe Bland v. Two Trees Mgt. Co. ( 66 N.Y.2d 556) to employ that section as plaintiff would, to turn exemptions such as these, necessitated by law and legislatively sanctioned public policy, into devices for stripping residential cooperative corporations of their essential managerial prerogatives ( see, Mogulescu v. 255 W. 98th St. Owners Corp., 135 A.D.2d 32, 38-39, lv dismissed in part and denied in part 73 N.Y.2d 868; see also, Matter of Levandusky v. One Fifth Ave. Apt. Corp., 75 N.Y.2d 530, 536-537; Weisner v. 791 Park Ave. Corp., 6 N.Y.2d 426). Our determination in Wapnick v. Seven Park Ave. Corp. ( 240 A.D.2d 245) is not to the contrary since in that case the differential treatment involved affected similarly situated tenant shareholders, and, accordingly, could not have been justified by the considerations implicated herein.
We have considered plaintiff's other arguments and find them to be unpersuasive.
Concur — Rosenberger, J. P., Williams, Tom, Wallach and Buckley, JJ.