Case Name: Mrs. Ruth Leopold BARNETT et al. v. BARNETT ENTERPRISES, INC.
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1966-02-07
Citations: 182 So. 2d 728
Docket Number: No. 2153
Parties: Mrs. Ruth Leopold BARNETT et al. v. BARNETT ENTERPRISES, INC.
Judges: Before YARRUT, CHASEZ and HALI, JJ-
Reporter: Southern Reporter, Second Series
Volume: 182
Pages: 728–735

Head Matter:
Mrs. Ruth Leopold BARNETT et al. v. BARNETT ENTERPRISES, INC.
No. 2153.
Court of Appeal of Louisiana. Fourth Circuit.
Feb. 7, 1966.
Rene H. Himel, Jr., New Orleans, for relator.
Steeg & Shushan and Montgomery, Barnett, Brown &1 Read, New Orleans, for respondents.
Before YARRUT, CHASEZ and HALI, JJ-

Opinion:
HALL, Judge.
We issued certiorari herein on the relation of the defendant corporation in order to review a judgment of the Judge of Division "F" of the Civil District Court for the Parish of Orleans rendered on November 22, 1965, on a rule to compel answers to interrogatories. Our writ was limited to a review of such judgment insofar only as such judgment would compel the disclosure of experts' opinions or conclusions obtained by defendant in preparation for trial.
The background of the case is as follows: Ten minority stockholders of Barnett En terprises Inc. pursuant to the right granted them under the provisions of LSA-R.S. 12:52 filed ten separate suits praying for judgments against the corporation for the fair cash value of their shares which they alleged to be $2,500.00 per share. Alternatively they prayed that the Court fix and determine the value of their shares and render judgments in their favor for the amount so fixed. Following answers filed by the corporation the ten suits were consolidated for trial. The corporation's answers reveal, insofar as pertinent hereto, an averment that the fair cash value of its shares does not exceed $375.00 per share (a price which it had offered to pay prior to suit in accordance with LSA-R.S. 12:52).
Prior to the consolidated cases being called for trial on the merits plaintiffs served written interrogatories on the corporation pursuant to the provisions of LSA-C.C.P. 1491. The corporation answered certain of the interrogatories and filed a list of its objections to others, attaching thereto an affidavit signed by its president in support of its objections. Plaintiffs thereupon brought a rule against the corporation to show cause why it should not be compelled to answer the interrogatories to which it had objected. The judgment rendered by the District Judge on this rule forms the subject matter of the writ issued herein.
The only portion of this judgment which is complained of by Relator is the following:
"It is ordered, adjudged and decreed that there be judgment herein ordering defendant to answer the following interrogatories :
"4. Furnish the valuation figures shown in appraisals which defendant has in reference to each item of real estate owned by it."
In the affidavit attached to defendant's objections to the interrogatories there appears the following statement made under oath by its president:
"The only appraisals which defendant has of its immovable properties- and shares of stock were prepared at the behest of its counsel in anticipation-of and prepration for trial of this case."
This statement is nowhere disputed of record nor was it disputed by plaintiffs' counsel either in his brief or in oral argument..
The narrow question before us is-whether in a minority stockholder's suit brought under the provisions of LSA-R.S. 12:52 the District Judge was empowered to compel defendant to answer interrogatories calling for the disclosure by defendant of the valuation figures shown in appraisals made by experts, which were obtained by it in anticipation of and in preparation for trial, in view of the prohibition-contained in LSA-C.C.P. Article 1452 that:.
" The court shall not order the production or inspection of any part of the writing that reflects the mental impressions, conclusions, opinions, or theories of an attorney or an expert,"
and in view further of the following provision contained in LSA-C.C.P. Article 1491:
" The provisions of Article 1452 are applicable for the protection of the party from whom answers to interrogatories are sought under this article."
The prohibition contained in Article 1452 is absolute. (See State Through Dept. of Highways v. Spruell, 243 La. 202, 142 So.2d 396, 400).
Plaintiffs here are not seeking the production or inspection of any writings, but seek only to have defendant to reveal in answer to interrogatories the conclusions arrived at by its experts. While the Article 1452 in terms refers only to writings we are of the opinion that what the Legislature must have intended to forbid was the revelation of any of the conclusions of experts and not merely the physical viewing or «copying of their writings. We cannot hold that the Legislature intended on the one hand to forbid the production or inspection of any part of the writing that reflects -the conclusions or opinions of an expert and on the other hand to permit such con- • elusions or opinions to be obtained by oral depositions or by answers to interrogatories. To so hold would lead to the absurdity of •shielding the physical writing from view while permitting the revelation of its consents, and would result from a practical •standpoint in the complete nullification of She prohibition contained in Article 1452.
The District Court's judgment orders defendant to furnish "the valuation •figures shown in appraisals." In other words it orders the furnishing of the "con-clusions" and "opinions" of defendant's •experts. A party called upon to answer interrogatories under the provisions of Article 1491 is entitled in our opinion to the "protection" of all of the provisions of Article 1452 including protection against being compelled to reveal in any manner the conclusions or opinions of its experts or attorneys obtained or prepared in anticipation of litigation or in preparation for trial.
It is true that in State Through Dept. of Highways v. Spruell, 242 La. 202, 142 So. 2d 396; and in State Through Dept. of Highways v. Riverside Realty Co., Inc., La.App., 152 So.2d 345, discovery depositions were permitted to be taken of real estate experts concerning appraisals made by them in preparation for trial but these two cases were condemnation proceedings brought by the State Department of Highways. Condemnation proceedings brought by the Department of Highways are sui generis in that the conclusions of its expert appraisers as to the value constitute an -essential part of its initial pleadings and are thus made a matter of public record ab initio. Mention is made of this fact in note 7 on page 400 of the report of the Spruell case. Moreover the opinion in the Spruell case took pains to point out that the order which it approved " did not direct the witness to answer any questions that reflect his mental impressions, conclusions, opinions, or theories."
Plaintiffs seem to recognize that State Highway condemnation proceedings differ from other cases in that the conclusions of its experts must be revealed in its original petitions. However plaintiffs contend that the instant case may be analogized to the Spruell and Riverside cases in that "the conclusion of the expert who appraised the Barnett stock has already been divulged by their alternative offer of $375.00 per share" and argue that they are therefore entitled in line with the decisions in those cases to discovery of the elements upon which this value was based including the valuation of its real estate. The short answer to this contention is that the figure of $375.00 per share does not purport to be the conclusion or opinion of any expert but is merely a statement required by LSA-R.S. 12:52 to be made by the corporation of "the value it will agree to pay" for the stock.
Plaintiffs contend that they as shareholders owning more than 2% of all outstanding shares of the corporation are entitled under the provisions of LSA-R.S. 12:38, subd. E "to examine any and all of the books and records of the corporation, and to make extracts therefrom" and that they are therefore entitled to obtain discovery of the valuation placed on the corporation's real estate by its experts in anticipation of or in preparation for trial of this case.
The record reveals that plaintiffs have endorsed their stock certificates to the corporation and have placed the endorsed certificates in escrow "to be delivered to the corporation upon the payment of the value" thereof all in accordance with the provisions of LSA-R.S. 12:52. The effect of such action on their status as stockholders is a matter upon which there seems to be a diversity of opinion. In some jurisdictions having' similar laws the view is taken that after a stockholder has demanded payment for his shares he loses all rights as a stockholder except the right to receive payment therefor. In other jurisdictions stockholder rights cease only after payment for the shares has been received. (See Fletcher, Cyclopedia Corporations, Vol. 13, § 5905, p. 357) This matter has not been considered by any of the Courts of this state and we see no necessity for doing so here because plaintiffs have not been denied the right to examine any of the ordinary books and records of the defendant corporation. In fact they have already obtained or have Court orders to obtain all of the information desired by them. None of these Court orders is in contest here except the order to obtain discovery of the valuation figures shown in appraisals which defendanfs experts prepared in anticipation of and preparation for trial of this case.
Plaintiffs and defendant are dealing at arm's length. They have now become adversaries in a law suit, and we see no reason why their procedural rights should not in all respects be governed by the same provisions of law which are applicable to all other law suits. We do not hold that the discovery articles in question here have the effect of repealing the provisions of LSA-R.S. 12:38, subd. E for we find no irreconcilable conflict between them. LSA-R.S. 12:38, subd. E in terms authorizes inspection of corporate records by a stockholder only "for a proper purpose," and we hold that the discovery of appraisals (or the conclusions or opinions) of experts obtained in anticipation of and in preparation for trial is not a "proper purpose" since such discovery is a violation of the law as expressed in LSA-C.C.P. Article 1452.
For the foregoing reasons it is ordered that that part of the judgment of November 22, 1965 complained of by Relator which orders the defendant to furnish "the valuation figures shown in appraisals which defendant has in reference to each such item of real estate owned by it" be and the same is hereby voided and annulled. It is further ordered that this case be remanded to the District Court for further proceedings according to law consistent with the views herein expressed; plaintiffs-appellees to pay the costs of this appeal.
Judgment annulled in part, and case remanded.