Opinion ID: 1690757
Heading Depth: 1
Heading Rank: 1

Heading: In finding the option invalid, the trial court relied on Iowa Code section 496A.76 (1989),[1] which provides:

Text: A sale, lease, exchange or other disposition of all, or substantially all, the property and assets, with or without the good will, of a corporation, if not made in the usual and regular course of its business, may be made upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as may be authorized in the following manner.... The statute then provides a plan for seeking, and requires the consent of, corporate shareholders. SOBI did not obtain its shareholders' permission to dispose of its assets in granting the option. As mentioned, because it was just being organized at the time, SOBI had no stockholders when the option was granted. The trial court nevertheless concluded that section 496A.76 applied. First Interstate challenges the applicability of section 496A.76 on a number of grounds. We pass what might be the strongest: that the sale of Savings Bank's stock was in the usual course of SOBI's business. See Sutherland v. Kaonohi Ohana, Ltd., 776 F.2d 1425, 1427-28 (9th Cir.1985), cert. denied, 475 U.S. 1109, 106 S.Ct. 1517, 89 L.Ed.2d 916 (1986) (because corporation was organized only to sell its only asset, sale was in ordinary course of business). Because this contention was not urged in district court we cannot consider it on appeal. First Interstate did preserve error on another ground for its challenge. It is clear that noncompliance with section 496A.76 is a complaint available only to SOBI's shareholders, not to the corporation itself. Rodgers v. Baughman, 342 N.W.2d 801, 807 (Iowa 1983) (statute's primary purpose is to protect shareholders and is not assertible by the corporation itself). The trial court erred in finding the option invalid on the basis of section 496A.76. SOBI thinks the trial court's finding of invalidity can be supported on another ground: lack of consideration. The trial court thought there was consideration for the option and we agree. The stated consideration was $250,000. Although the note for this amount was not made payable directly to SOBI, that amount was furnished. SOBI, through its president John Holtsinger agreed to the payment of the consideration for the option to Centar. As a part of a settlement reached between Holtsinger, Centar, and SOBI, Holtsinger and Centar confessed to judgment, admitting that they obtained the consideration in the amount of $250,000 paid for an option granted by [SOBI] on stock owned by it.... We conclude [2] that the trial court erred in finding the option invalid. II. SOBI's amended petition sought damages from First Interstate on theories of breach of fiduciary duties and fraud. These claims focus on conduct of SOBI's promoters in bringing pressure on First Interstate so as to advance the promoters personaland conflictingself interests. SOBI points especially to threats (to acquire controlling interest in and then to liquidate First Interstate) that led to granting the option. The trial court, ruling on First Interstate's motion for summary judgment, rejected these claims. The rejection is the subject of SOBI's cross-appeal. The claims derive from SOBI's twin assertions that (1) First Interstate participated in this conduct, and (2) any resulting damages should inure to SOBI, rather than SOBI's shareholders (or perhaps First Interstate's shareholders). The assertions, on this record, will not support the claimed tort. Although SOBI contends its factual allegations implicate First Interstate, we think the misconduct it alleges against its own promoters falls short of doing so. At most, First Interstate is accused of capitulating to Holtsinger's untoward pressure. It is alleged that First Interstate participated by acceding to the promoter's demand that the option be granted as camouflaged so as to deter shareholders from discovering that an inappropriate premium was being paid Centar for the 625,000 shares of common stock. Assuming these factual assertions to be true, we cannot see how SOBI, the corporate entity established only to hold stock in Savings Bank as a part of the transaction, [3] could claim any resulting tort damages. We suggest no opinion whether First Interstate's shareholders or SOBI's shareholders could urge such a claim. SOBI seeks to take advantage of a claim shareholders might pursue under the theory we explained in Rowen v. LeMars Mutual Insurance Co., 282 N.W.2d 639 (Iowa 1979). No authorities are cited which suggest SOBI can do so. Although it did so for different reasons, the trial court was correct in dismissing SOBI's tort claims. III. We therefore reverse on First Interstate's appeal from the judgment finding the option invalid and remand the case for an order directing that the $250,000 payment, plus interest, be retained as costs to avoid the right to exercise it. We affirm the trial court's dismissal of SOBI's claim for damages. REVERSED AND REMANDED ON THE APPEAL; AFFIRMED ON THE CROSS-APPEAL.