Court Opinion

ID: 9698074
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:41:09.905893+00
Date Added: 2024-06-11T18:20:38.099491
License: Public Domain

SABERS, Justice
(dissenting).
[¶ 35.] On October 12, 1993, Brett and Angel Hamm delivered their Notice of Intent to sell their 400 shares of stock for $236,831.63. Pursuant to the Preemptive Rights clause within the Articles of Incorporation, the corporation had thirty days, from the date of the Notice of Intent, to accept the offer while the stockholders had forty days to accept the terms of the offer. Thus, the corporation had until November 11, 1993 to exercise its right to purchase the Hamm stock.
[¶36.] On November 9, 1993, the directors held a meeting and discussed the purchase of the Hamm stock. Gary Case made a motion that the corporation not purchase the stock. After Maxine Case seconded the motion, he amended his motion to extend nine more days to allow the directors to submit proposals to the corporation concerning the method of purchasing the stock. The corporation’s attorney, Joe Butler, stated that the decision whether to purchase the Hamm stock had to be made by November 25, 1993. Maxine Case then seconded the motion. Judy Sides-Case, Sandra McCroden, and Nancy Murdock agreed and voted to extend the time for the corporation to consider alternative proposals to purchase the stock. Brett Hamm was present at this meeting and did not object, but remained silent on the issue of these extensions.
[¶ 37.] A proposal was submitted to the corporation on November 16 by McCroden and Murdock.
[¶ 38.] On November 23, 1993, the directors met again to discuss the proposal for the purchase of the Hamm stock. At this meeting, Maxine Case stated that she would accept a proposal that would require her to carry $164,000 of the purchase price for two years. Sandra McCroden made a motion that the corporation accept that proposal and purchase the stock. Nancy Murdock seconded the motion. Gary Case and Judy Sides-Case voted against the proposal and Maxine Case abstained from voting. Since the Gary Case vote is null and void as later determined by the trial court and affirmed by this court, the corporate vote to purchase passed by a 2-1 vote. Brett Hamm was not present at this meeting.
[¶ 39.] Despite the affirmative 2-1 corporate vote to purchase, Maxine Case proceeded to purchase the Hamm stock for herself for $236,831.63 after the November 23 meeting. This purchase was null and void because the corporation voted to purchase the stock.
[¶40.] On June 6, 1997, the trial court entered an Order Granting Partial Summary Judgment in favor of Sandra McCro-den, Craig Murdock and Nancy Murdock. The trial court found that all decisive votes of Gary Case “as a ‘director and/or shareholder’ ” are null and void; specifically his votes during the November 9, 1993 and the November 23, 1993 meetings. This court summarily affirmed this Order on February 23,1998.
*747[¶ 41.] After applying this Order, it appears that the corporation, in a 2-1 vote, did vote to purchase the Hamm stock on November 23, two days before its “closing” date. However, the trial court subsequently (and incorrectly) found that the corporation did not vote to purchase the Hamm stock at the November 9, 1993 meeting and the right to purchase the stock expired on November 21. It granted summary judgment to Maxine Case and found that she owned the Hamm stock. Summary judgment was clearly improper because, at the very least, genuine issues of material fact exist. The corporation appeals and we should reverse and remand for trial.
[¶42.] Genuine issues of material fact exist concerning what the shareholders actually voted on during the November 9, 1993 meeting. The majority opinion points out that Gary Case made a motion that “the corporation ... not exercise its right to purchase the [Hamm] stock... But Gary Case amended this motion before the other directors voted. The subsequent discussion involved extending nine days to the directors to submit proposals and extending the corporation’s time to November 25 to consider the proposal:
MR. CASE: I’d like to also amend [the motion] that if somebody can come up with a proposal that — which it may include the corporation issuing some kind of dividend that might help towards the purchase, that type of thing, that they do so within the next four or five days and—
MR. BUTLER: Well, let’s give them— let’s make it — give them nine days.
MR. CASE: Okay, nine days. And if we don’t hear anything by then—
MR. LAFLEUR: Well, if the proposal — I think what you’re going to say is if there is a proposal that the corporation wants to consider, then there may be an extension time to consider the proposal to a new date.
MR. CASE: But isn’t there also some kind of promise that we need to close this to Brett?
MR. BUTLER: We got to close this by November 25th.
MS. MCCRODEN: Oh, is that in this?
MR. BUTLER: Yeah.
MS. MCCRODEN: I didn’t see that.
MS. CASE: Do we also need to propose this to Brett?
MR. BUTLER: No, no, no. He’s not involved. All he’s involved is for money.
MR. LAFLEUR: Now there needs to be a second.
MS. CASE: I’ll second that motion, if I’m in order to second it. Okay. It’s been moved and seconded that we will give—
MR. LAFLEUR: You don’t need to restate it.
MR. CASE: Yeah, it’s been moved and seconded.
Judy Sides-Case, Sandra McCroden, Nancy Murdock and Gary Case all voted affirmatively. Brett Hamm was present and did not object, but remained silent throughout this discussion.
[¶ 43.] Pursuant to the trial court’s June 6, 1997 Order, which we summarily affirmed on February 23, 1998, all decisive votes of Gary Case “as a ‘director and/or shareholder’ ” are null and void; specifically his votes during the November 9, 1993 and the November 23, 1993 meetings. After disregarding Gary Cases’ vote and viewing the facts in McCroden’s favor, genuine issues of material fact exist whether the corporation voted to extend the time to consider any proposals until November 25.
[¶ 44.] The majority opinion states “[i]n order for the time requirements pertaining to the exercise of preemptive rights to be excused, the Hamms must have made a waiver, because it was their right to sell to Case that was being contested.” This is so, even though the corporation’s attorney, Butler, submitted that the Hamms were *748only interested in the money. The opinion goes on to conclude that a waiver did not occur and therefore, there could be no extension of time granted to the corporation.
[¶ 45.] Waiver applies when “one in possession of any right, whether conferred by law or by contract, and with full knowledge of the material facts, does or forbears the doing of something inconsistent with the exercise of the right.” Norwest Bank South Dakota v. Venners, 440 N.W.2d 774, 775 (S.D.1989) (quoting Subsurfco, Inc. v. B-Y Water Dist., 337 N.W.2d 448, 456 (S.D.1983)). Waiver can be express or implied. “If implied, it arises from an act or acts which clearly are inconsistent with the right to be exercised.” Id. We are limited to evaluating Hamm’s objective conduct to ascertain the legal effect:
The most rudimentary essential of a waiver is that the waiving party shall in some manner publish his intention to relinquish his rights, either by words or by conduct; and the intention which is essential to establish a waiver is not the secret intention of the party, rather, it is the intention which is manifested by conduct or words in relation to the matter involved, and thus the secret understanding or intent of the parties is immaterial on the question of waiver.
Id. at 776 (citation omitted).
[¶ 46.] Brett Hamm was present during the November 9 meeting and had full knowledge of the substance of the voting. He did not object, but remained silent on the issue of extending the corporation’s time to consider new proposals until November 25. His silence, an act of refraining from speaking, was a publication of his intention and was clearly inconsistent with his right to insist on strict adherence to the thirty day time limitation. In construing the facts most favorably to McCroden, genuine issues of material fact do exist whether there was a waiver.
[¶ 47.] A proposal to purchase the Hamm stock was submitted on November 16, within the nine-day extension, by the McCroden faction. It was discussed at the November 23 meeting and voted on:
MR. BUTLER: What they’re saying is if they would — if the corporation would pay the $72,600 by the first, $40,000 due at time of closing and $32,600 on March 1st that would you — you would then consider dealing on the balance, as I understand?
MS. CASE: Well, does that come up with the purchase price?
MR. BUTLER: Yes.
MS. CASE: I guess I would have to say yes, I would consider it. I won’t make a commitment right now until I see what the proposal would be.
MR. CASE: The proposal is over two years.
MS. CASE: How much would that—
MR. BUTLER: Well, I don’t know. That — how much that comes to. It comes to about $14,000 a quarter, wouldn’t it Dick? Or more than that?
MR. PLUIMER: A little bit more than that if we did it over two years.
MS. CASE: Well, yes, I would do that.
MR. PLUIMER: It would be a little over $80,000 plus interest per year.
MS. CASE: All right, okay. That would be — that could be acceptable.
MR. BUTLER: Okay. So you come back to the basic question as to whether or not the corporation is going to accept it on that basis, and I don’t know, somebody want to make a motion either way?
MR. PLUIMER: Sandy, why don’t you go ahead.
MS. MCCRODEN: Okay, I’d like to make a motion that the corporation accept those — accept the proposal and pay the $40,000 now to Brett Hamm, and Maxine has agreed to carry the corporation, and so I would propose that we accept that and I’ll make a motion to that effect.
MR. BUTLER: And do you want to add and also pay the $32,000 on March 1?
MS. MCCRODEN: Yes, and also pay the $32,000 on March 1.
*749MS. MURDOCK: This is Nancy Mur-dock, I’ll second it.
Sandy McCroden and Nancy Murdock voted in favor of the motion. Gary Case and Judy Sides-Case voted against the motion. Maxine Case abstained from voting.
[¶ 48.] We must again apply the trial court’s June 6, 1997 Order, which we summarily affirmed on February 23, 1998. This Order stated that all decisive votes of Gary Case “as a ‘director and/or shareholder’ ” are null and void; specifically his votes during the November 9,1993 and the November 23, 1993 meetings. After disregarding Gary Case’s vote, it is clear that genuine issues of material fact exist whether Maxine Case agreed to the proposal submitted to her and whether the corporation voted 2-1 to purchase the Hamm stock.
[¶49.] This court shall not decide an issue of fact, but “shall determine only whether one exists.” Wilson v. Great Northern Railway Co., 83 S.D. 207, 157 N.W.2d 19, 21 (S.D.1968) (citation omitted). Therefore, I would reverse and remand this case for trial.