Ginter v. Palmer and Co., C-1257

• Citation: 196 Colo. 203,585 P.2d 583
• Decision Date: 21 August 1978
• Docket Number: No. C-1257,C-1257
• Parties: Carl M. GINTER, Jr., Petitioner, v. PALMER AND COMPANY, a Colorado Corporation, Respondent,
• Court: Supreme Court of Colorado

Page 583

585 P.2d 583

196 Colo. 203

Carl M. GINTER, Jr., Petitioner, v. PALMER AND COMPANY, a Colorado Corporation, Respondent,

No. C-1257.

Supreme Court of Colorado, En Banc.

Aug. 21, 1978.

Rehearing Denied Sept. 11, 1978.

McCamant & Johnston, David C. Johnston, Paonia, for petitioner.

Brown & Brown, James D. Brown, Delta, for respondent.

ERICKSON, Justice.

Carl M. Ginter, Jr., plaintiff, brought this action against Palmer and Company, defendant, seeking a declaratory judgment adjudicating the respective rights of the parties in certain shares of the defendant corporation's stock. After the complaint and answer were filed, the defendant, pursuant to C.R.C.P. 56, moved for a summary judgment on the grounds that no genuine issue of any material fact existed and that the defendant was entitled to judgment as a matter of law. The district court granted the motion. The court of appeals affirmed on appeal. Ginter v. Palmer and Company, Colo.App., 566 P.2d 1358 (1977). We granted certiorari and now reverse and return the matter to the court of appeals for remand to the district court with directions for trial on the merits.

The articles of incorporation of the defendant corporation provide, in pertinent part:

"In the event of the death of a stockholder the corporation shall have the option to purchase his stock . . . on the basis of the book value as of the date of death."

Dolorosa Ginter, a stockholder of the corporation, died and bequeathed two-thirds of her stock, or the proceeds thereof should the corporation exercise its option, to the plaintiff. The defendant corporation decided to exercise its option and determined that the book value of the stock was $1.91 per share. The plaintiff refused to convey the stock to the corporation and initiated this action.

In his complaint, the plaintiff alleged, in part, that: (1) the true book value of the stock exceeded $1.91 per share and was believed to be in excess of $20.00 per share; (2) the $1.91 per share book value was determined on the basis of arbitrary and capricious figures and was based upon the management's decision to fix low book value to unjustly enrich themselves; and (3) the intent of the incorporators was that book value bear some relationship to actual asset value.

In support of its motion for summary judgment, the defendant corporation submitted an affidavit of its manager and executive officer. The affidavit declared:

"4. That the books of the company have been kept in a uniform manner since the formation of the corporation in 1956 without significant change in accounting methods; that all depreciation has been taken on a straightline basis using reasonable estimated useful lifetimes; that all federal and state income tax returns have been filed for the corporation using the figures shown by said books of account and have been accepted by the Internal Revenue Service and the Colorado Department of Revenue as so prepared; that said books of account have been used and accepted for federal estate tax and state inheritance tax purposes in the estates of deceased stockholders.

"5. That said books have not been manipulated in any way for the purpose of lowering the book value of the shares of the corporation to an unreasonable value to the end that management and majority shareholders of the corporation might be unjustly enriched."

A copy of the corporation's balance sheet which indicated that the book value was $1.91 per share was attached to the affidavit.

The summary judgment procedure provided in C.R.C.P. 56 permits prompt disposition of actions which lack a genuine issue of material fact. The rule is designed to permit the parties to pierce the formal allegations of the pleadings and save the time and expense connected with a trial when, as a matter of law, based on undisputed facts, one party could not prevail. Abrahamsen v. Mountain States Telephone & Telegraph Corp., 177 Colo. 422, 494 P.2d 1287 (1972); Terrell v. Heller & Co., 165 Colo. 463, 439 P.2d 989 (1968); O. C. Kinney, Inc. v. Paul Hardeman, Inc., 151 Colo. 571, 379 P.2d 628 (1963).

Summary judgment, however, is a drastic remedy which denies litigants their right to trial and is never warranted except on a clear showing that there is no genuine issue as to any material fact. Abrahamsen v. Mountain States Telephone & Telegraph Corp., supra; Primock v. Hamilton, 168 Colo. 524, 452 P.2d 375 (1969); Credit Investment & Loan Co. v. Guaranty Bank & Trust Co., 143 Colo. 393, 353 P.2d 1098 (1960). The action must proceed to trial if a genuine issue of material fact exists. The burden of establishing the lack of a triable issue, therefore, is upon the moving party, and all doubts must be resolved against him. Primock v. Hamilton, supra; O'Herron v. State Farm Mutual Auto Ins. Co., 156 Colo. 164, 397 P.2d 227 (1964).

The trial court relied upon the following portion of C.R.C.P. 56(e) in reaching its decision:

"When a motion for summary judgment is made and supported as provided in this Rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response by affidavits or otherwise provided in this Rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not respond, summary judgment, If appropriate, shall be entered against him."

(Emphasis added.)

The trial court found that "no Affidavits or other response was provided by the Plaintiff in accordance with Rule 56," and concluded that no genuine issue of any material fact existed.

Once a movant makes a convincing showing that genuine...