Santee Oil Co., Inc. v. Cox., 20089
Citation | 265 S.C. 270,217 S.E.2d 789 |
Decision Date | 02 September 1975 |
Docket Number | No. 20089,20089 |
Court | United States State Supreme Court of South Carolina |
Parties | SANTEE OIL COMPANY, INC., Respondent, v. Marsden H. COX, Jr., Appellant. |
Turnipseed & Rothwell, Columbia, for appellant.
D. Laurence McIntosh, Wright, Scott, Blackwell & Powers, Florence, for respondent.
Pursuant to the provisions of the South Carolina Business Corporation Act of 1962, S.C.C.A. 12--11.1 et seq. (1974 Supp.), Services, Incorporated, a South Carolina corporation, was merged with the plaintiff, Santee Oil Company, Incorporated, another South Carolina corporation, on September 30, 1971. When appellant, a minority stockholder in both companies, duly objected to the merger, respondent, the surviving corporation, instituted this statutory proceeding, to have the 'fair value' of the dissenter's shares determined 'as of the day prior to the date on which the vote was taken approving the proposed corporate action,' September 17, 1971, and paid by the surviving corporation, the plaintiff-respondent. S.C.C.A. 12--16.27(a), (i)(1) (1974 Supp.). See 15 S.C.L.Rev. 275, Symposium of South Carolina Corporation Law.
The circuit court found the value of the assets of the respondent, after merger, to be the sum of $1,032.214. The circuit court found the fair value of appellant's 37.5% Of the shares of stock to have a fair value of $387,080. Interest thereon at the rate of 6% Per annum was awarded with the question of attorneys' fees and expenses left open for future determination. Appellant's exceptions are three in number, but in essence they raise only a single contention, to wit: that the valuation of appellant's shares of stock by the circuit court was manifestly against the greater weight and clear preponderance of the evidence.
The stated contention presupposes that this is an equitable proceeding wherein this Court is empowered, upon appeal, to review the evidence and make its own findings of fact. If it be an action of law the circuit court's findings of fact would be binding upon this Court if supported by any competent evidence. We are inclined to agree with the appellant's contention that the proceeding is essentially equitable in nature, but under the circumstances of the case we need not, we think, pursue the issue at length or decide whether or not this statutory proceeding is purely and exclusively an equitable one as, in our view, upon a review of the record, the appellant is not in either event entitled to prevail.
As a necessary step to resolving whether the circuit court correctly determined the fair value of appellant's shares we must consider the meaning of 'fair value' as the statute itself does not define that term. No prior decision of this Court has come to our attention which is at all helpful, but courts of other states, particularly the courts of Delaware, the home of so many corporations, have had fairly frequent occasion to define and apply such term under corporation law similar to ours.
The act's explicit reference to value of shares indicates that fair value means 'intrinsic value.' Application of Delaware Racing Assoc., 213 A.2d 203, 211 (Del.1965). But 'fair value' does not restrict the appraising court to the use of any one method of valuation. Chicago Corp. v. Munds, 20 Del.Ch. 142, 172 A. 452, 457 (1934).
Application of Delaware Racing Assoc., supra (citations omitted).
In essence the trial court must undertake to compute the fair value by establishing 'the fair market value of the corporate property as an established and going business.' Phelps v. Watson-Stillman Co., 365 Mo. 1124, 293 S.W.2d 429, 432 (1956) citing Ahlenius v. Bunn & Humphreys, 358 Ill. 155, 192 N.E. 824, 829 (1934). When attempting such an evaluation each case must be decided upon its own facts and circumstances. 1 'Every relevant fact and circumstance which enters into the value of the corporate property and which reflects itself in the worth of the corporate stock * * *,' (Emphasis added), Phelps v. Watson-Stillman Co., supra, 293 S.E.2d at 433, citing 45 Har.L.Rev. 233, 262, must be considered. See Annot. 48 A.L.R. (2d) 430 (1973) for an extensive treatment of the problem. Under the weight of authority the three major factors to be considered are: (1) net asset value; (2) market value; and (3) the earnings or investment value of the dissenting stock. There are, of course, sub-factors involved in each of the major factors, the variety thereof being indicated by the following quote. '* * * (V)arious factors which all agree should be considered in valuing the common stock * * * were: The nature of the enterprise, i.e., a regulated closed-end investment company; leverage; discount; net asset value; market value; management; earnings and dividends; expenses of operation; particular stockholdings in * * * portfolio; and * * * tax situation.' Tri-Continental Corporation v. Battye, 31 Del.Ch. 523, 74 A.2d 71, 73 (1950).
After these various factors have been considered and determined in a given case they should then be weighed as to their relative bearing upon the ultimate question of the fair value of the dissenting stock, Application of Delaware Racing Assoc., supra; Francis I. Du Pont & Co. v. Universal City Studios, Inc., 312 A.2d 344, 346, 352 (Del.Ch.1973); and a final determination of value made.
Before proceeding to consideration of the evidence we think it important to comment on a matter which was responsible for the extensive evidentiary hearings and some resultant confusion of the issues. Instead of itself appointing an appraiser or appraisers, S.C.C.A. 12--16.27(i)(4), the circuit court, apparently by consent, permitted each party to appoint an appraiser upon the stipulation that the appointed appraisers would appoint a third. As a result of such proceedings no final, unitary recommendation on the question of value was made, because the appraisers could not...
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