298 N.W.2d 318 (Iowa 1980), 64746, Shidler v. All American Life & Financial Corp.
|Citation:||298 N.W.2d 318|
|Party Name:||William F. SHIDLER, et al., Plaintiffs, v. ALL AMERICAN LIFE & FINANCIAL CORPORATION, A Corporation, et al., Defendants.|
|Case Date:||November 12, 1980|
|Court:||Supreme Court of Iowa|
Albert L. Harvey, Kenneth L. Butters, and Bruce H. Stoltze of Heartney, Harvey, Butters & Ottoson, Des Moines, Robert L. Ulstad, Fort Dodge, and J. Vernon Patrick, Jr. and Thomas Gallo of Berkowitz, Lefkovits & Patrick, Birmingham, Ala., for plaintiffs.
C. Carleton Frederici of Davis, Hockenberg, Wine, Brown & Koehn, Des Moines, and Aaron J. Kramer, Alfred Elliott, Walter C. Greenough, and Reinette Morin of Schiff, Hardin & Waite, Chicago, Ill., for defendants.
Considered by LeGRAND, P. J., and UHLENHOPP, HARRIS, McCORMICK, and McGIVERIN, JJ.
This proceeding involves construction of Iowa statutory law relating to corporate mergers. The United States District Court for the Southern District of Iowa, Central Division, certified to us a legal question on that subject under the Uniform Certification of Questions of Law Act, 1979 Sess., 68 G.A., ch. 144. Involved is an issue of separate voting by different classes of corporate stock. See also Berger v. General United Group, Inc., 268 N.W.2d 630 (Iowa 1978).
Reduced to the basics, the facts certified to us are as follows. In May 1973 an attempt was made to merge General United Group, Incorporated (GUG), a domestic corporation (and its subsidiary, United Security Life Company (USL), which need not be separately considered), into All American Delaware Corporation, a foreign corporation, which would be the surviving entity. At that time GUG had outstanding 105,000 shares of preferred stock, 2,959,650 shares of common stock, and 10,623,150 shares of class B common stock. The preferred and class B common stock had specified conversion rights into common stock. All of the preferred and class B common stock and 67,043 shares of the common stock were owned by another corporation, All American Life & Casualty Company (Casualty), and 2,892,607 shares of the common stock were owned by the public. Casualty also owned all of the stock of All American Delaware, into which GUG was to merge.
The agreement relating to the GUG-All American Delaware merger contained these clauses:
4.1 Cancellation of Certain Shares. Each share of the GUG Preferred Stock, GUG Common Stock and GUG Class B Common Stock which immediately prior to the Effective Date of the Merger is outstanding and owned by Casualty, shall be cancelled and retired upon the Effective Date of the Merger and by virtue thereof, without any action on the part of the holder or issuer thereof, and all certificates which theretofore evidenced such shares shall be cancelled and no cash or securities or other property shall be issued in the Merger in respect thereof ....
4.3 Conversion of Certain Shares. (a) Except for those shares which are owned by Casualty and therefore subject to Section 4.1, each share of GUG Common Stock, which is outstanding immediately prior to the Effective Date of the Merger, shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and exchanged for $3.25 cash ....
4.5 Surrender of Certificates. After the Effective Date of the Merger, each certificate which evidenced ownership of a share or shares of the capital stock of either GUG or USL converted by virtue of the Merger into cash (an " 'Old Certificate' "), shall be surrendered by the holder thereof to O'Hare International Bank, Chicago, Illinois (the " 'Disbursing Agent' "), or such other disbursing agent as shall be designated by the Board of Directors of the Surviving Corporation, as agent for such holders, to effect the surrender of certificates on their behalf, and each such holder shall upon such surrender
receive in exchange therefor the amount to which he is entitled under Section 4.3 as a result of the conversion of the shares of the capital stock of either GUG or USL, as the case may be, into cash. Adoption of this Agreement by the respective stockholders of GUG and USL shall constitute ratification of the appointment of the Disbursing Agent. After the Effective Date of the Merger, the shares of Common Stock of GUG and USL outstanding immediately prior thereto shall cease to be shares of stock of such corporations regardless of whether or not surrendered and the stock transfer books of GUG and USL, shall be closed and there shall be no further transfer or issuance of certificates for the capital stock thereof; provided, however, that a new certificate will be issued in place of any certificate theretofore issued which has been lost or destroyed in accordance with the By-laws of GUG and USL, as the case may be.
Notice of a meeting was given to GUG stockholders. The notice stated that one of the purposes of the meeting was
(t)o consider and vote upon the approval and adoption of an Agreement of Merger dated as of April 20, 1973, pursuant to which GUG will be merged into All American Delaware Corporation ("The New Corporation"), a wholly-owned subsidiary of All American Life and Casualty Company ("All American"). As a result...
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