Court Opinion

ID: 9528913
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:45:12.11899+00
Date Added: 2024-06-11T13:27:27.995614
License: Public Domain

Thompson, C. J.,
dissenting:
The cross-appellants contend that the district court erred in denying prejudgment interest on the appraisal award of $7,439,650. They claim entitlement to such interest from November 19, 1970, the date of the merger of CLI into South-down, to May 8, 1972, the date of court confirmation of the ■appraisal.
The appraisal and court confirmation statute is silent as to interest. The cross-appellants urge that the statute should be construed to allow prejudgment interest in order to accommodate its underlying purpose. Moreover, they suggest that NRS 99.040(1) providing for interest “upon contracts” upon “all money from the time it becomes due” covers the issue before •us. Finally, they argue that constitutional due process commands such allowance.
1. Shareholders dissenting to the merger lose ownership rights in the corporation and become creditors.1 They may not thereafter vote, nor may they receive dividends. By reason of *195this circumstance, the cross-appellants argue that it would be unfair to allow the corporation to enjoy interest-free use of the dissenters’ money pending appraisal and court action thereon.. This, they suggest, would encourage the corporation to offer a low price for the dissenters’ shares and thereby frustrate reaching an agreement upon fair cash value.
A New York court, considering a Delaware statute which did not provide for interest, ruled that “simple justice” requires the payment of interest on the value of the dissenters’ stock, from the time they are deprived of it. Skipwith v. Federal Water and Gas Corporation, 56 N.Y.S.2d 804, 807 (Sup.Ct. N.Y. 1945). And, in Jones v. Missouri-Edison Electric Co., 233 F. 49, 53 (8th Cir. 1916), the court allowed interest from the date of the merger. The Skipwith “simple justice” approach has been flatly rejected by other courts. Meade v. Pacific Gamble Robinson Co., 51 A.2d 313, 317, 320 (Del. Ch. 1947); In re Erlanger, 142 N.E. 571, 573 (N.Y. 1923); In re Janssen Dairy Corporation, 64 A.2d 652, 665 (Sup.Ct.N.J. 1949). See also: Pittston Co. v. O’Hara, 62 S.E.2d 34, 39 (Va. 1951); American General Corp. v. Camp, 190 A. 225, 231 (Md. 1937). Those courts would not read into the merger and appraisal statutes, rights and obligations not fairly expressed therein.
Nevada permits an award of interest only when authorized by statute. Paradise Homes v. Central Surety, 84 Nev. 109, 116, 437 P.2d 78, 83 (1968).2 That authorization cannot be found in our merger and appraisal statutes, and it would be inappropriate to assume its presence under the guise of “construction.”
2. Subordinate^, the cross-appellants suggest that we may consider NRS 99.040(1) as statutory authorization for prejudgment interest. Briefly stated, their contention is that the stock certificates of the dissenters are “contracts” and carry interest at the rate of seven percent per annum “upon all money from the time it becomes due.”
We have sometimes construed that statute to allow prejudgment interest. Paradise Homes v. Central Surety, supra; Dodd *196v. Cowgill, 85 Nev. 705, 717, 463 P.2d 482, 490 (1969); Close v. Isbell Construction Co., 86 Nev. 524, 529, 471 P.2d 257, 265 (1970); Brandon v. Travitsky, 86 Nev. 613, 616, 472 P.2d 353, 355 (1970); State Farm Mutual Auto. Ins. Co. v. Christensen, 88 Nev. 160, 494 P.2d 552, 553, 554 (1972). In each instance, however, a legal wrong was visited upon the prevailing party to whom prejudgment interest was awarded. Here, the merger did not constitute a legal wrong to the dissenting shareholders. There was full statutory authority to do precisely what was done. Meade v. Pacific Gamble Robinson Co., 58 A.2d 415 (Del. 1948). The cited Nevada cases, therefore, are inapposite. Moreover, the stock certificates or “contracts” include the statutes governing corporations, Seaborn v. Wingfield, 56 Nev. 260, 48 P.2d 881 (1935), and our merger and appraisal statutes do not provide for prejudgment interest. For these reasons, I would reject the cross-appellants’ argument that NRS 99.040(1) provides for prejudgment interest in this case.
3. The final argument offered for the allowance of prejudgment interest rests upon constitutional due process. It is suggested that the eminent domain requirement of just compensation should apply, by analogy, to a private corporate merger.
When private property is taken for public use through an exercise of the power of eminent domain, the requirement that the condemnor pay just compensation for the taking includes prejudgment interest where the taking occurs before judgment. Seaboard Air Line Ry. v. U.S., 261 U.S. 299, 306 (1923); Saunders v. State, 70 Nev. 480, 485, 273 P.2d 970, 972; Fibreboard Paper Products Corporation v. United States, 355 F.2d 752, 754 (9th Cir. 1966). In this circumstance, interest is a matter of constitutional right, since the requirement that just compensation be paid is written in the Constitutions, federal and state. U.S. Const, amend. V; Nev. Const, art. 1, § 8. Petersen v. School District of Bellevue, 196 N.W.2d 511, 512 (Neb. 1972). Statutory authorization is not necessary. Seaboard Air Line Ry. v. U.S., supra. I am not aware of any case, however, requiring the payment of interest in private actions as a matter of constitutional due process.
A private corporate merger is dissimilar to condemnation. A dissenter is not required to seek a fair cash value appraisal, but may elect to go along with the merger. In eminent domain, the taking is at the election of the condemnor. In a merger, the stockholder has agreed to be governed by the controlling *197statutes. There is no contractual relationship between the condemnor and the property owner. Neither are the standards of fair cash value and just compensation necessarily synonymous. These substantial dissimilarities caused the court in Meade v. Pacific Gamble Robinson Co., 51 A.2d 313, 320 (Del. Ch. 1947), to reject the dissenters’ contention that they were entitled to prejudgment interest as a matter of constitutional right. I would affirm the denial of prejudgment interest.
Mowbray, J., concurs.

NRS 78.515(1): “On the making of the demand in writing as provided in NRS 78.505, or 78.507, any such stockholder shall cease to be a stockholder in the surviving or consolidated corporation and shall *195have no rights with respect to such shares, except as hereinafter provided in this section and except the right as a creditor to receive payment therefor as aforesaid, and upon payment of the agreed fair cash value of the shares or of the value of the shares under final judgment the stockholder shall transfer his shares to the surviving or consolidated corporation.”

Legislatures elsewhere have provided for prejudgment interest. Note: 50 B.U.L. Rev. 57, 76 (1970).