Barnett v. D. O. Martin Co.

• Decision Date: 15 October 1940
• Docket Number: 13501.
• Citation: 11 S.E.2d 210,191 Ga. 11
• Parties: BARNETT v. D. O. MARTIN CO. et al.
• Court: Georgia Supreme Court

11 S.E.2d 210

191 Ga. 11

BARNETT v. D. O. MARTIN CO. et al.

No. 13501.

Supreme Court of Georgia

October 15, 1940

Syllabus by the Court.

1. The provisions of sections 18 to 23, inclusive, of the act approved January 28, 1938, Ga.L.Ex.Sess.1937-1938, pp. 214 230-236, authorizing corporations to merge or consolidate apply to corporations chartered before the date of the approval of the act.

2. So construed, there is nothing in the sections above referred to which violates the provisions of the United States and State Constitutions prohibiting the State from enacting legislation impairing the obligation of contracts.

3. The court did not err in dismissing the action on general demurrer.

Under the allegations of the petition in this case, D. O. Martin Company was incorporated under the laws of Georgia in the year 1927. The charter provided for a capitalization of $10,000 and 100 shares of common stock having a par value of $100 each, with the privilege of increasing the capital stock to an amount not exceeding $50,000 by a majority vote of its stockholders. Central Trading Company was another corporation chartered in Georgia in 1926, with a capitalization of $12,000, and 120 shares of common stock of the par value of $100 each. On June 29, 1940, the two corporations, by its directors, entered into an agreement to merge into one corporation to be known thereafter as D. O. Martin Company with a total of 220 shares of common stock. By this agreement each holder of stock of the two original corporations was to receive the same number of shares of the newly merged corporation that he held in his original corporation. At a meeting of the stockholders of the original D. O. Martin Company, all the stockholders being present, the holders of 90 shares of the common stock voted in favor of the merger, but Joe M. Barnett, the holder of 10 shares of that stock, voted against such merger.

Upon the conclusion of the agreement between the two corporations to merge, the majority stockholders of the original D. O. Martin Company caused an application to be addressed to the superior court of Fulton County, seeking to comply with the statutory provisions applicable in this State where mergers of corporations have been duly authorized by the stockholders and directors of the corporation filing the petition therefor. The provisions here referred to are contained in sections 18 to 23, inclusive, of the act of the General Assembly at the special session of 1937-38 Ga.L.Ex.Sess. 1937-38, p. 214 et seq., approved January 28, 1938, which was several years after the charter of the original D. O. Martin Company was granted. Before the filing of such application, Joe M. Barnett, the holder of 10 shares of the common stock of the original D. O. Martin Company, filed his petition against the corporation and the two remaining stockholders, and protested against the merger, on the charges, first, that the statutory provisions of said act of 1938 do not apply to corporations chartered before the date of its approval; and second, that if such provisions be held to so apply, then the same are violative of and repugnant to the provisions of art. 1, sec. 10, par. 1, of the Constitution of the United States (Code, § 1-134), and art. 1, sec. 3, par. 2, of the Constitution of Georgia (§ 2-302), wherein it is provided that no law shall be passed impairing the obligation of contracts. Barnett prayed for injunction to restrain the defendants from carrying out the proposed merger. A general demurrer by the defendants was sustained, and Barnett excepted.

Powell, Goldstein, Frazer & Murphy, of Atlanta, for plaintiff in error.

Alston, Foster, Moise & Sibley and James L. Alston, all of Atlanta, for defendants in error.

GRICE Justice.

1. The first question presented is whether or not the provisions of sections 18 to 23 of the act approved January 28, 1938, Ga.L.Ex.Sess.1937-38, pp. 214-247, authorizing corporations to merge or consolidate, apply to corporations chartered before the date of the approval of the act. The general rule is that laws prescribe only for the future, and usually will not be given a retrospective operation. Code, § 102-104; Walker County Fertilizer Co. v. Napier, 184 Ga. 861, 193 S.E. 770, and cit. They will be given a retrospective effect, however, when the language imperatively requires it, or when an examination of the act as a whole leads clearly to the conclusion that such was the legislative purpose. It is at last and always a question of legislative intent. The act of 1856 changed the law as to who were qualified to serve as jurors in criminal cases. It was contended that the new act did not apply to pending cases, although its language described those who 'shall be qualified and liable to serve as jurors upon the trial of all criminal cases.' Another section began, 'When any person stands indicted,' etc. The court held that the new provisions applied as well to cases happening before its passage as to those thereafter. Bailey v. State, 20 Ga. 742. The act of November 12, 1889, Ga.L.1889, p. 73, so amended section 2967 of the then Code of Georgia as to prevent the abatement of actions ex delicto in certain cases. The language of the act was: 'Nor shall any action for the recovery of damage,' etc., 'abate by the death of either party.' It was ruled that an action pending on the date of the passage of the act was not abated by the death of the plaintiff, because the words, 'any action,' said this court, 'may as well mean any action now in existence as any action hereafter commenced, and it is not straining to give them this interpretation.' Pritchard v. Savannah Street & Rural R. Co., 87 Ga. 294, 13 S.E. 493, 494, 14 L.R.A. 721. In Mills v. Geer, 111 Ga. 275, 36 S.E. 673, 675, 52 L.R.A. 934, the court had before it the act of December 21, 1897 (Acts 1897, pp. 79-81), providing that in a suit to recover land the defendant, under certain circumstances, might set off the value of permanent improvements placed thereon by himself. The first section of the act referred in express words to 'all cases where an action has been brought for the recovery of land.' It was there said: 'Its terms, therefore, were applicable not only to suits for the recovery of land thereafter brought, but also to such suits as were pending in court at the time of the passage of the act, and necessarily referred to past as well as future improvements.' There is one provision, sec. 7, of the rather comprehensive statute here involved (the act of 1938, supra) which is made expressly applicable to 'any corporation, whether incorporated under prior existing laws or under this law.' Section 44 begins, 'Any corporation in existence at the time of the passage of this Act.' Still another, sec. 40, commences with the words, 'If any corporation created under any law of this or any other State.' There are other provisions which expressly name 'any corporation incorporated or reincorporated under this Act.' Sections 39, 33, 24, 10(j). Various other sections, dealing with power conferred, and limitations, refer merely to 'the corporation,' 'every corporation,' 'any corporation,' 'corporations.' Section 44a is in this language: 'None of the terms of this Act shall apply to corporations excepted from the provisions of this Act under the terms of section 1 hereof, nor to electric membership corporations as defined in an Act approved March 30, 1937, Georgia Laws 1937, pages 644 et seq.'

Turning to section 1 of the act, we find only banking, insurance, railroad, trust, canal, navigation, express, and telegraph companies excepted thereunder. The character of the corporations involved in the instant case was not such as was included in the foregoing exceptions. The language of section 44a is broad enough to include both corporations as being embraced within the terms of the act, including the right to merge without the unanimous consent of the stockholders; and when exceptions are mentioned, they do not come within any of those stated. The words of the section under which these two corporations claim the right to merge are as follows: 'Section 18. Any two or more corporations, incorporated under the laws of this State or under the laws of any other State or country, except banks and trust companies, may merge or consolidate into a single corporation,' etc. Here again is the language broad enough to include both corporations, with an express exception to the power granted, the exception not covering them. 'It is well established that an exception in a statute amounts to an affirmation of the application of its provisions to all other cases not excepted, and excludes all other exceptions.' 25 R.C.L. 983, § 230. See Washington v. Atlantic C. L. R. Co., 136 Ga. 638, 644, 71 S.E. 1066, 38 L.R.A.,N.S., 867. One other section of the act remains to be noticed. It is section 22, which reads as follows: 'The right and power in this Act provided to merge or consolidate is cumulative, and in addition to any power or right to merge or consolidate vested in corporations heretofore created or provided by or under terms of other Statutes or provisions of the Code of the State of Georgia.' Here it seems to us is a clear recognition of the legislative purpose to make the provision concerning merger applicable to corporations created before the passage of the act. Keeping in view the rule laid down in the authorities above cited, and the language employed by the lawmakers, we can not escape the conclusion that the legislative intent was to make applicable to corporations created before, as well as after, the passage of the act, the provision as to merger.

2. Is there anything in section 18 et seq. of the act approved January 28, 1938, above referred to, giving to certain corporations created before its...