Court Opinion

ID: 8793452
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:00:25.303668+00
Date Added: 2024-06-11T17:03:29.490609
License: Public Domain

PUTNAM, Circuit Judge
(dissenting). The opinion of the court necessarily plants itself for its support solely on the action of the stockholders of the Jackson Company, at a meeting where they voted to exchange the stock of the Jackson Company for shares of stock in the other corporation. No other corporate action was taken. This, in the prior opinion of the court in this same case, was held to be ultra vires, and therefore void, and so goes for nothing. The report of the masters, which subsequently followed the prior opinion of this court, fixed alternative values for the shares of stock of the Jackson Company, at alternative dates. It was strictly in accordance with the prior action of this court that one of those amounts should be accepted as the value the dissenting stockholders should receive. On the other hand, two judges of the court having changed since the first hearing, the views expressed by the court in the first opinion, though not formally thus ruled, have been repudiated, and the action of the majority of the stockholders, which we then held to be invalid, has been made the basis of the present final judgment.
As all the facts upon which the court now relies appeared by the record when the'case was first heard, the judges who united in the first judgment thus became chargeable with the useless and vain and expensive and troublesome prolongation of the litigation. The judgment now entered might just as well have been entered as the result of the earlier hearing, if the court, as then constituted, had deemed it proper.
‘ The rule which the court now applies is a wholesome rule when applied to proper circumstances; but it involves a lawful action of the corporation at a meeting, duly held, when everybody, including the minority„and majority, may have a proper hearing, and a consequent action, of a quasi judicial character, on the specific proposition offered for adoption. Such a meeting was had; but no proposition for sale of shares of stock in the corporation for cash was offered or adopted. Subsequently an offer was made by the American Trust Company of a price per share which the court now fixes, which, under the circumstances, was an unreasonable amount to obtain for it. As a result, what happened was a force-put, by which the minority stockholders *355were forced to fix a price for stock which is helow any admitted value for it, and far helow that which the minority shareholders claim. At any rate, the price now fixed is an artificial and arbitrary one, admittedly varying from the real value, although claimed to be but little less than the real value. This comes about bj? the force of the power of the majority, instead as the result of a deliberate consultation after a conference among all shareholders where all might be heard.
Notwithstanding the fact that the rule referred to would be binding in reference to a reasonable proposition where all are consulted, followed by a formal vote of sale for cash, even though a minority did protest it; the rule sought to he applied here has no relation to proceedings of the character which in fact occurred; but it can apply only as a result of regular proceedings with reference to a vote for a sale for cash at a lawful meeting,'as to which there might be full, consultation, even though no complete concurrence. Under the circumstances, the position is an open one for a Sale to he fixed by the court at a reasonable price, of the kind indicated by the prior opinion at several points, namely, the “intrinsic value.”