Voeller v. Neilston Warehouse Co

• Decision Date: 06 January 1941
• Docket Number: No. 97,97
• Citation: 61 S.Ct. 376,311 U.S. 531,85 L.Ed. 322
• Parties: VOELLER et al. v. NEILSTON WAREHOUSE CO. et al
• Court: U.S. Supreme Court

311 U.S. 531

61 S.Ct. 376

85 L.Ed. 322

VOELLER et al.

v NEILSTON WAREHOUSE CO. et al.

No. 97.

Submitted Dec. 18, 1940.

Decided Jan. 6, 1941.

Messrs. Carrington T. Marshall and Orland R. Crawfis, both of Columbus, Ohio, for petitioners.

Mr. Francis J. Wright, of Columbus, Ohio, for respondents.

[Argument of Counsel from pages 531-533 intentionally omitted] Mr. Justice BLACK delivered the opinion of the Court.

We granted certiorari in this case, 311 U.S. 624, 61 S.Ct. 11, 85 L.Ed. —-, to review a decision of the Supreme Court of Ohio invalidating a state statute on the ground that it constituted a denial of procedural due process guaranteed by the Fourteenth Amendment.¹ The statute in question provided that the value placed upon his stock by a dissenting shareholder should, after six months and under certain circumstances, 'conclusively be deemed to be equal to' the fair cash value.² The state court held that since the statute required that the demands of the dissenters be made known only to the corporation, the majority shareholders were unconstitutionally deprived of property without notice and an opportunity to be heard.

Concretely, the question was raised here in the following manner: Petitioners, holders of stock in respondent corporation, were among those who dissented when a vote was called on a sale of substantially all the corporate assets. Two-thirds of the shareholders voted for the sale, which was thereupon consummated. Petitioners gave written notice to the corporation of their objection, the number of shares they held, and the claimed fair cash value of their stock. The corporation refused in writing to pay the amount asked, but made no counter- offer. Neither party filed a petition for appraisal. After six months had elapsed, petitioners filed suit in the Court of Common Pleas, asking that judgment be rendered in their favor for the amounts originally claimed.

All of these proceedings were in accordance with the applicable Ohio law.³ In their suit, petitioners relied on a section of that law which provided that the value claimed by the dissenting shareholders should 'conclusively be deemed to be equal to' fair cash value if the corporation had neither made a counter-offer nor requested an appraisal.⁴ One of the majority shareholders filed an intervening petition on behalf of herself and all other shareholders similarly situated, alleging that the section of the state involved was unconstitutional. A judge of the Court of Common Pleas struck out this intervention at the request of petitioners, saying that the statute was constitutional, the petition for intervention irrelevant, and the majority shareholders without standing to intervene.⁵ No appeal was taken from this ruling. When the case came on for trial on the merits, a different judge sat, and it was his opinion that the statute was unconstitutional. The Court of Appeals, one judge dissenting, reversed the trial court, and was itself reversed, two judges dissenting, by the Supreme Court of Ohio.

It was the opinion of the Supreme Court that the statute had 'an unconstitutional operation against the majority stockholders, as being violative of the due process section of the 14th Amendment to the federal Constitution.' And the correctness of that conclusion is the only question properly before this Court. All other questions presented involve state law, for the conditions under which corporations shall organize and operate are matters within the exclusive province of the state, so long as those conditions do not clash with the national Constitution.

We agree with petitioner's position that notice to the corporation of the demand for payment constituted notice to the majority stockholders, and that such notice was an adequate compliance with the constitutional requirement of due process. The objective of the Ohio statute permitting the right of appraisal to dissenting shareholders was the elimination of abuses that had long been a fixture in the field of corporate finance.⁶ To assure that the right to appraisal would be promptly resorted to and to provide for the contingency that in some cases no such resort would be taken, the Ohio legislature thought it advisable to provide that under some circumstances the original offer or counter-offer should conclusively be deemed equal to the fair cash value. The corporation was given the right to avoid the effect of being compelled to pay the claimed value either by making a counter-offer or by requesting an appraisal. In addition, it was given the right to avoid both appraisal and payment of the claimed value by abandoning its original purpose to sell its assents. The dissenting shareholders could, by requesting an appraisal, likewise avoid accepting the corporation's counter-offer. Thus the corporation is compelled to pay or the dissenting shareholder to accept payment of the amount of the offer or counter-offer only if none of the many available alternatives are pursued before the expiration of a six-month period. The provisions in effect operate as statutes of limitations. After the lapse of a period of time, given defenses—attacks on value—can...