Court Opinion

ID: 6820929
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:07:07.183866+00
Date Added: 2024-06-11T08:46:25.934751
License: Public Domain

Gregory, J.,
dissenting.
The majority concede the validity of Code, section 3820a, which by express language incorporates section 3822, but refuse to apply its provisions. It is not denied that 3820a is binding on Craddock-Terry Company and on all classes of its stockholders. Under Section 158 of the Constitution of 1902, the Craddock-Terry Company, having accepted amendments to its charter from time to time, is conclusively considered to have agreed to hold its charter and franchise subject to all the terms and conditions of the Constitution and of any laws passed in pursuance thereof, so far as same may be applicable.
*469At common law, in Virginia, it was thought that a corporation could not sell all of its assets without the unanimous consent of the stockholders. This brought about the enactment of 3820a, which provides a comprehensive plan for the sale of all assets of a corporation. Under Code, section 3841, applicable statutes are a part of every charter and a part of the contract of every stockholder. Code, section 3852, carries into effect that part of Section 158 of the Constitution which makes all charters of corporations subject to the laws of the State if those corporations have accepted amendments to their charters as is the case here. The inevitable result is clearly stated in the brief of appellees filed on re-hearing:
“The result is therefore inevitable that, in consequence of those constitutional' and statutory provisions, after the amendments by the Corporation Commission of the charter of the corporation, even though said charter had been granted prior to the effective date of the present Constitution, the corporation became subject to the Constitution and general laws of the State passed in pursuance thereof, so far as applicable, and that this result is not limited to the relation between the State and the corporation, but applies also to the relations between the State and the. stockholders, between the corporation and its stockholders and between the stockholders themselves. It further follows that this reservation of the power to amend, alter or repeal the charters of corporations, whether written in the Constitution, in general laws, or in the charter itself, qualifies the grant, and the subsequent exercise of that power cannot be regarded as an act impairing the obligations of the contract.”
It having been conceded that Sections 3820a and 3822 are valid, our only inquiry should be whether they have been followed. It must be admitted that they have been followed to the letter. It so appears from the record.
The dissenting stockholders’ rights must be appraised not only by those rights which were expressed in the charter and in their certificates but also in the light of those qualifications which are expressed in the applicable constitutional *470and statutory provisions. They knew of the provisions of 3820a and 3822 and that they were a part of their contract. They knew that a sale under 3820a would result in their getting the fair cash value for their stock (unless they consented) to be computed under the elaborate provisions of Section 3822.
The majority say that no distribution of the proceeds of sale is provided for in Section 3820a, therefore the new stock must be held by the old company and that it must not be distributed except in accordance with the sole provisions of the old charter and old certificates. Section 3822 is a part of 3820a and it provides for distribution to dissenting stockholders in express terms. They are to be paid the fair cash value for their stock. No clearer provision for distribution could have been written into the statute. Distribution here is of two kinds:, first, that which has been agreed to by the consenting stockholders which is not important here, and, second: that which is expressly provided for the dissenting stockholders. Distribution as to the latter is only of importance here and it has been expressly provided for in plain statutory language. Of course, if we are to ignore the applicable statutes, the sale would have to take place only according to the rule at common law; that is, by consent of 100% of the stockholders. In effect that result is accomplished by the opinion of the majority.
If that be true the legislature has done a vain thing. It has enacted a statute for the express purpose of eliminating the common law rule, but in them eagerness to prevent a fancied wrong the majority refuse to abide by the statute.
I use the phrase “fancied wrong” because, in fact, the dissenters are deprived of no right or property by the sale. They get exactly what their contents call for: to wit, the value of their stock which they hold subject to their rights under the charter and under the applicable statutes. Obviously, the conclusion of the majority is reached by reason of its absolute refusal to recognize that the dissenting stockholders’ rights are affected by the statute.