Title: TRYON v. Smith
Citation: 191 Or. 172, 229 P.2d 251
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: March 21, 1951

Affirmed March 21, 1951.
*173 Ralph E. Moody, of Salem, argued the cause and filed a brief for appellants.
Charles A. Hart, of Portland, argued the cause for respondent. With him on the brief were Hugh L. Biggs and Hart, Spencer, McCulloch, Rockwood &amp; Davies, both of Portland.
Before BRAND, Chief Justice, and ROSSMAN, LUSK, LATOURETTE and TOOZE, Justices.
AFFIRMED.
*174 LATOURETTE, J.
Actions by former minority stockholders of the First National Bank of Eugene against Richard Shore Smith, former president and director of said bank, who, together with his family and bank directors, owned approximately 70 per cent of the capital stock of said bank, to recover damages for alleged fraud in the sale of stock of said bank to Transamerica Corporation. A jury having been waived, the respective actions were consolidated and heard as one by the trial court which made findings of fact and conclusions of law against plaintiffs and entered judgment in favor of defendant Smith, from which judgment plaintiffs appeal.
The undisputed evidence discloses that Transamerica made an offer to Smith to purchase from Smith all of the outstanding capital stock of the bank. Smith refused the offer and told Transamerica that he would "have nothing to do with any of the stock except the controlling interest of the stock in which I am interested, including my own and that of my family." Smith also told Transamerica that if it desired to purchase stock of the minority it would have to deal directly with them, that he wanted the minority to have the privilege of selling their stock, and that they were entitled to more than book value and should have at least $220.00 per share. The evidence discloses that the book value of the stock was $200.00 per share at the time of the transactions, and that actual sales theretofore made were for $160.00 and $170.00 per share, to the knowledge of some of the minority stockholders.
Transamerica then proceeded to deal with the minority stockholders and offered them $220.00 per *175 share for their stock, telling at least some of them that Smith and his associates were to receive for their stock more than Transamerica offered to pay to the minority stockholders for their stock. The minority stockholders thereupon signed up with Transamerica for the sale of their stock at $220.00 per share. Inquiry was never made of Smith or his associates by the minority stockholders of the price Smith and his associates were to receive from Transamerica for their stock, nor did Smith or his associates ever suggest to the minority stockholders, or any of them, that they should sell their stock; in other words, Smith and his associates had nothing whatsoever to do, directly or indirectly, with the sale of the stock of the minority stockholders. In the sale of their stock, the minority stockholders acted freely, at arm's length, and of their own volition. When the sale of the stock was consummated, Smith and his associates received from Transamerica for their stock $460.00 per share as against $220.00 per share which the plaintiffs received for their stock.
The basis for a right of recovery by plaintiffs is found in paragraphs V, VI, VII and VIII of the various complaints, which follow:
*177 1, 2. The trial court having tried the case without a jury, its findings are conclusive on this court, unless there is no substantial evidence in the case to sustain such findings. We have carefully scrutinized the evidence and find a total absence of any evidence in the record to sustain such allegations other than that Transamerica offered in the beginning of the transactions to pay to Smith for all of the bank's stock the book value of such stock, plus the sum of $500,000.00, which offer Smith conceded was made.
3. There is a further reason why the findings of the trial court are binding on this court, and that is because plaintiffs made no objections to its findings, nor did they request other, different or additional findings; therefore, we may not consider the evidence on which the findings were based. Consolidated Freightways, Inc., v. West Coast Fast Freight, Inc., 188 Or. 117, 212 P. (2d) 1075, 214 P. (2d) 475; McPherson v. State Industrial Accident Commission, 169 Or. 190, 196, 127 P. (2d) 344; School District 106 v. New Amsterdam Cas. Co., 132 Or. 673, 676, 288 P. 196.
Counsel, in his presentation of the appeal, frankly admits this to be the law but counters with the propositions that "(a) The findings of fact do not support the judgment." and "(b) The conclusion is contrary to law, under the facts as found."
The conclusion of law formulated by the trial court is as follows:
*178 The judgment, omitting the recitals, follows:
Plaintiffs' position on this proposition is made clear by their argument as follows:
Plaintiffs, in order to support their position, declare the law to be that majority stockholders of a corporation stand in a fiduciary relation and are under obligations of trust and confidence to the minority stockholders, and for that reason Smith was guilty of unfaithfulness in not apprising the minority stockholders of the Transamerica offer and of what he and his associates were to receive from Transamerica for their stock.
4. It is generally held that majority stockholders may sell their stock at any time and for any price obtainable without informing other stockholders of the price or terms of sale, provided they act in good faith. 3 Fletcher, Corporations (Perm. Ed.), § 900; 19 C.J.S., Corporations, 171, § 793, 13 Am. Jur., Corporations, *179 962, § 1010; Roby v. Dunnett, 88 F.2d 68; Stanton v. Schenck, 251 N.Y.S. 221, 140 M. 621; Levy v. American Beverage Corp., 38 N.Y.S.2d 517, 265 App. Div. N.Y. 208; Ryder v. Bamberger, 172 Cal. 791, 158 P. 753; McCord v. Martin, 47 Cal. 717, 191 P. 89; Blakeslee v. Wallace, 45 F.2d 347.
The rule is well laid down in Fletcher, supra, at p. 306, as follows:
In 19 C.J.S., supra, we find the following:
In the case of Roby v. Dunnett, supra, the court held that a majority stockholder has a right to dispose of his shares of stock for any price at any time without being liable to other stockholders, "as long as he does not dominate, interfere with, or mislead other stockholders in exercising the same rights."
*180 5, 6. There being no fiduciary relationship existing between the stockholders of the bank so far as the sale of individual stock was concerned, there was no duty upon the part of Smith to apprise minority stockholders of Transamerica's offer. The fact that Smith et al. received more for their stock than the minority is no evidence of fraud, since it is generally recognized that the stock of majority stockholders is of more value than that of the minority. Stanton v. Schenck, supra.
We have carefully read the authorities briefed by plaintiffs and find in every instance that the cases dealt with corporate management, sales of minority stock to majority stockholders, or matters not germane to the question before us, with these two exceptions: Enyart v. Merrick, 148 Or. 321, 34 P.2d 629, and Dunnett v. Arn, 71 F.2d 912.
In the Enyart case, we held that a director of a corporation occupied a fiduciary relationship with a minority stockholder by reason of the assumption of dominion, custody and control by the director over the stock belonging to the minority stockholder, and that "The law is well-settled that a director is not to be permitted to deal with the corporate stock of other shareholders nor with the assets of the corporation so as to make a profit for himself as distinguished from his share of dividends in which his fellow stockholders participate."
In the Dunnett case, the majority stockholders actively urged the minority stockholders, coupled with certain misrepresentations, to sell their stock to a third party. The minority stockholders acted upon the advice and misrepresentations of the majority stockholders  a clear case of fraud.
*181 The facts in the above cases are a far cry from the facts in the instant case.
No case has been cited holding that a fiduciary relationship exists between majority and minority stockholders under facts comparable to the facts in this case.
7. Since there was no fiduciary relationship between the parties and no fraud, duress, domination or interference on the part of Smith in the sale of plaintiffs' stock to Transamerica, the judgment of the trial court is affirmed.