Pittston Co. v. O'Hara
| Citation | 191 Va. 886,63 S.E.2d 34 |
| Decision Date | 15 January 1951 |
| Docket Number | No. 3718,3718 |
| Parties | THE PITTSTON COMPANY v. E. FRANK O'HARA, ET ALS. Record |
| Court | Supreme Court of Virginia |
Robert T. Barton, Jr., William W. Crump, A. C. Epps and David Teitelbaum, for the appellant.
John J. Wicker, Jr., Harris J. Griston, Seymour M. Heilbron, George M. Jaffin and Charles Winkelman, for the appellees.
For the third time we are here called upon to decide important rights of certain persons holding preferred stock in the United States Distributing Corporation, a Virginia corporation, who dissented from the merger of that corporation with The Pittston Company, a Delaware corporation, under the name of the latter. The merger became effective on December 31, 1942.
On June 2, 1943, Maurice D. Adams, E. Frank O'Hara, and certain other dissenters, whom we shall refer to as the 'Adams-O'Hara group,' having notified The Pittston Company, the merged corporation, that they elected to dissent from the merger, filed in the Law and Equity Court of the city of Richmond a bill in equity under the style of Adams v. United States Distributing Corp., for the determination and recovery of the fair cash value of their stock.
On the first appeal, taken from a decree entered in that cause, we held that the appraisal proceeding under Code, section 3822, as amended, was the exclusive remedy which must be pursued by all of the dissenting stockholders in order to have their stock valued and paid for, and that an independent suit in equity could not be maintained for that purpose. Adams v. United States Distributing Corp., 184 Va. 134, 34 S.E. (2d) 244, 162 A.L.R. 1227 (cert. denied, 327 U.S. 788, 66 S.Ct. 807, 90 L.ed. 1014).
In the meantime The Pittston Company had instituted in the Chancery Court of the city of Richmond, hereinafter referred to as the lower court, a proceeding under the statute and under the style of The Pittston Co. v. Ungerleider & Co., et al., for an appraisal of the fair cash value of the stock of the dissenters. All of the dissenters except the members of the Adams-O'Hara group, were made parties defendant to this proceeding. This statutory proceeding culminated in a decree entered on December 6, 1944, fixing the fair cash value of the stock of those defendant dissenters at $55 per share. For convenience we shall refer to that as the first appraisal. By the further terms of this decree The Pittston Company was directed to pay to those defendant dissenters such ascertained cash value, plus interest from the effective date of the merger to October 22, 1944, the latter date having been fixed by stipulation of counsel.
After our decision on the first appeal the lower court, on the motion of The Pittston Company and over the objection of members of the Adams-O'Hara group, entered a decree on April 16, 1946, holding that the members of this group should receive for their stock the same value which had been fixed in the first appraisal, namely, $55 per share. In this latter decree interest was allowed to the members of the Adams-O'Hara group on the value of their stock from the effective date of the merger until paid. The Pittston Company was unsuccessful in its contention that such interest should cease on October 22, 1944, as had been decreed in the case of the other dissenters.
Some of the members of the Adams-O'Hara group abided by the terms of this decree of April 16, 1946, surrendered their certificates and accepted the sum of $55 per share with interest. However, nine members of the group appealed and at their instance we reversed and annulled the decree, on the ground that inasmuch as these dissenters were not parties to the first appraisal proceeding and had taken no part therein, the decree of December 6, 1944, fixing the value of the other dissenters' stock at $55 per share, was not res judicata as to or binding on the members of the Adams-O'Hara group. Hence, we held, the lower court erred in imposing upon this group of dissenters, by the decree of April 16, 1946, the same valuation of the stock which had been fixed for the other dissenters in the decree of December 6, 1944. The dissenting members of the Adams-O'Hara group were, we said, entitled to a new and independent appraisal, and the cause was remanded for that purpose. O'Hara v. The Pittston Co., 186 Va. 325, 42 S.E. (2d) 269, 174 A.L.R. 945.
In their petition for the appointment of new and independent appraisers the members of the Adams-O'Hara group demanded interest on the ascertained fair value of their stock from the effective date of the merger until they were paid.
The Pittston Company, in its answer to this petition, again asserted that these dissenters were not entitled to interest beyond October 22, 1944, that being the date on which interest had stopped running in the case of the other dissenters, under the terms of the decree of December 6, 1944.
New appraisers were appointed, and on April 11, 1949, they filed their report fixing the fair cash value of the stock held by the nine members of the Adams-O'Hara group at $57.75 per share as of the effective date of the merger.
Both The Pittston Company and the dissenters filed written exceptions to this report. However, The Pittston Company withdrew its exceptions and by leave of court and over the objection of the dissenters filed an amended answer, in which it took the position that these dissenters were 'entitled to no interest whatsoever' on the ascertained fair cash value of their stock.
On November 17, 1949, the lower court entered a decree confirming the appraisers' report as to the fair cash value of the stock of the members of the Adams-O'Hara group. Over the objection of The Pittston Company it decreed that the dissenters were entitled to interest at the rate of six per cent. per annum upon such ascertained value from the effective date of the merger until paid, and entered judgment in favor of each of the nine dissenters against The Pittston Company accordingly. 1
From this decree The Pittston Company has appealed. It does not question the adjudication of the fair cash value of the dissenters' stock. Its sole contention is that the dissenters are entitled to interest, not from the effective date of the merger, but from November 17, 1949, the date of the entry of the decree fixing the value of their stock.
Whether the appellee dissenters are entitled to interest on the fair cash value of their stock, as they claim and as the lower court held, from the effective date of the merger, depends upon a proper interpretation of the statute. 2
Section 3822-a, paragraph (a), provides that any stockholder of a corporation who has not given his assent to the lawful merger of his corporation with another, may by following the prescribed procedure, receive from the consolidated or merged corporation 'the fair cash value of his stock as of the day before the vote for the agreement of consolidation or merger of his corporation was so cast.' (Code, sec. 13-47.)
Paragraph (b) of the section provides that if the dissenting stockholder and the merged or consolidated corporation are unable to agree upon 'the fair cash value of his stock, as of the day' aforesaid, either he or the merged corporation, upon reasonable notice to the other, may apply to a specified court, or to the judge thereof in vacation, to have 'the fair cash value of his stock, as of the date aforesaid,' determined by three disinterested appraisers appointed by the court. (Code, sec. 13-48.)
Paragraph (c) provides that the appraisers so appointed, after investigation, shall report to the court, or the judge thereof in vacation, as promptly as possible, 'the fair cash value of the stock of the dissenting stockholder as of the day' aforesaid. (Code, sec. 13-49.)
Paragraph (d) provides that if such stockholder or the consolidated or merged corporation be dissatisfied with 'the fair cash value as determined by the appraisers,' he or it may apply to the court, or to the judge thereof in vacation, to set aside the finding of the appraisers. If the court or judge be of opinion that the 'valuation is just,' it or he shall deny the application and 'shall confirm' 'the report of the appraisers' 'and the amount thereof.' In case of such confirmation the amount fixed by the appraisers 'shall immediately become and be a final judgment of the court against the consolidated or merged corporation and may be collected as other judgments of a court of competent jurisdiction are by law collectible.' (Code, sec. 13-50.)
If the court or judge be of opinion that the valuation is not just, the report of the appraisers shall be set aside and the court or judge 'shall proceed to ascertain the fair cash value of the stock of such stockholder, as of the day aforesaid, and shall enter judgment against the consolidated or merged corporation accordingly, which judgment may be collected as other judgments of a court of competent jurisdiction are collectible.' (Code, sec. 13-50.)
Paragraph (e) of the section provides that, 'Upon payment or tender of payment by the consolidated or merged corporation of the value of the stock so ascertained, the dissenting stockholder shall deliver up his certificate of stock * * * and shall mark the judgment satisfied.' If the dissenting stockholder refuses to deliver the stock and mark the judgment satisfied upon such tender, then the corporation may deposit to the credit of the court in which the proceeding is pending 'the value of the stock so ascertained and determined,' and the court or judge 'shall enter an order reciting the deposit and declaring the judgment satisfied.' (Code, sec. 13-51.)
This paragraph further provides that, 'Thereafter the rights of the stockholder under his stock in the consolidating or merging corporation shall cease and determine and his sole right shall be to receive the cash so deposited upon surrender' of his certificate or...
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