Court Opinion

ID: 9550448
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:35:18.225982+00
Date Added: 2024-06-11T15:21:33.016359
License: Public Domain

URBIGKIT, Justice,
dissenting.
In addition to agreement with the practical and clear analysis of the statutes detailed in dissent by Justice Macy, I further write to reject the unfortunate standard for corporate authority created by this court. This case is to be seen as a result-oriented conclusion creating a standard that is singularly dangerous to shareholders as consequently unprotected from future unwise, improvident or fraudulent director action. O’Neal’s Oppression of Minority Shareholders, Second Edition § 5:20, p. 118.
What this court will have done is to rewrite limitations on director action which in the past required a two-thirds shareholder vote to sell, lease, or exchange substantially all of the corporate assets if not within the usual and regular course of business, and a majority vote for a similarly emplaced mortgage. We now eliminate that shareholder protection for the dives-tive mortgage. See Commerce Trust Co. v. Chandler, 284 F. 737 (1st Cir.1922). For the legislature to make such a change is discretional, albeit perhaps thoughtless in context of the Wyoming small-business corporate climate, but for this court to do this by overconstructive definition is singularly inappropriate. “The difference between legislative and judicial choice lies rather in the range of criteria that are available to the decisionmaker for the making of his choices.” Christie, An Essay on Discretion, 1986 Duke L.J. 747 (1986).
The 1957 version of the Model Business Corporation Act existent when the Wyoming law was adopted as H.B. 3 and passed as Ch. 85, S.L. of Wyoming 1961 was revised in 1969, and now is rewritten to be the Revised Model Business Corporation Act of 1984. In the 1969 edition, § 78 (earlier § 71 in the 1957 edition), the reference to mortgages as still found in Wyoming law was removed. Additionally, in 1984 an explicit provision was included in a comparable section, 12.01, that a mortgage, whether or not in the regular course of business, did not require shareholder approval. 3 Model Business Corporation Act Annotated Third Edition § 12:01, p. 1318.
I would find it noteworthy that the Wyoming legislature has not made statutory changes to address shareholder approval of mortgages in the same fashion as did the Model Business Corporation Act of 1969 or as now does the revised act of 1984. What the legislature has not enacted this court now promulgates.
A recognized authority on corporate law, 8 Cavitch, Business Organizations, critiqued Wyoming law at § 163.03[1], p. 163-20:
“[Fn. 4] Wyoming: Wyo Stat §§ 17-1-501, 17-1-502. § 17-1-501: treats sales and mortgages alike.”
and further lists Wyoming as a jurisdiction that has “declined explicitly to follow the Model Act”:
“Their statutes treat mortgages and pledges in the same way as sales, leases, and exchanges; thus, in these jurisdictions, the relevant rules on shareholder approval apply alike to sales and mortgages.” Id. at 163-21.
In concurrence with Justice Macy in his dissent, I would leave for the legislature any decision to set the Wyoming corporate law standard which would authorize director mortgage approval even if involving essentially all of the assets of the corporation and when not even in the usual and regular course of business.