Columbus Mills, Inc. v. Kahn

• Decision Date: 15 March 1989
• Docket Number: No. 46146,46146
• Parties: COLUMBUS MILLS, INC. et al. v. KAHN, et al.
• Court: Georgia Supreme Court

Page 153

377 S.E.2d 153

259 Ga. 80

COLUMBUS MILLS, INC. et al. v. KAHN, et al.

No. 46146.

Supreme Court of Georgia.

March 15, 1989.

Frank C. Jones, Nolan C. Leake, David F. Guldenschuh, King & Spalding, Atlanta, for Columbus Mills, Inc. et al.

Thomas R. Burnside, Burnside, Wall & Daniel, Augusta, for Kahn et al.

Powell, Goldstein, Frazer & Murphy, Elliott Goldstein, John T. Marshall, David S. Baker, Thomas S. Rickey, amicus curia.

SMITH, Justice.

This case involves a challenge to the merger of Columbus Mills, Inc., with and into Carpet Mill Store, Inc. Appellees, minority shareholders in Columbus Mills, sought to enjoin the merger and recover damages from appellants, officers and majority shareholders in both Columbus Mills and Carpet Mill Store, claiming that the offer by Carpet Mill Store to purchase all outstanding shares of Columbus Mills for $43 in effectuation of the merger was "coercive, wrongful, ... unfair and harmful." The trial court denied appellees' motion to enjoin, and the merger was concluded. After the time for exercising statutory appraisal rights had ended, appellees voluntarily surrendered their shares of stock to the surviving corporation and accepted the $43 per share offered pursuant to the plan of merger. The trial court granted appellants' subsequent motion for summary judgment on the remaining issue of damages, holding that since appellees had voluntarily surrendered their shares for the amount offered by appellants, they could not thereafter attack the merger in an attempt to get more money. The Court of Appeals reversed the trial court, holding that the appellees had neither ratified nor acquiesced in the plan of merger when they accepted the benefits of the merger, but had rather only mitigated their damages. Kahn v. Columbus Mills, 188 Ga.App. 90, 371 S.E.2d 908 (1988). We reverse.

1. Appellees claim that appellants wrongly used positions of control over company assets to force the merger and that the price offered for the shares was "grossly inadequate." This case is controlled by OCGA § 14-2-251, which sets out in great detail the procedure to be followed by dissenting shareholders in presenting demands for payment. OCGA § 14-2-251 offers the remedy in this case.

In pursuing their claim, appellees had three choices under Georgia's dissenting shareholders statute: to follow the procedure outlined in OCGA § 14-2-251 for exercising dissenting shareholders' rights; to bring a separate action for relief if fraud or misrepresentation was involved, OCGA § 14-2-251(j); or to accept the offered price.

We need not address the question of whether a separate action must be primarily an action at equity since appellees' action is not an equity action. Any such claim by appellees was abandoned when appellees failed to appeal the denial of their motion to enjoin the merger. Appellees had every opportunity to exercise their appraisal rights under OCGA § 14-2-251, but instead they chose to tender their shares at the offered price and accept the benefit of the merger, thereby abandoning their statutory rights and ratifying and acquiescing in the plan of merger. Bloodworth v. Bloodworth, 225 Ga. 379, 169 S.E.2d 150 (1969).

2. We agree with the trial court's reliance on the long-established doctrine in Georgia law that a party who has voluntarily accepted the benefits of a corporate act is estopped from thereafter attacking that act. Bloodworth, supra. Appellees were minority shareholders who were initially dissatisfied with the price offered for their shares. They sought to enjoin the merger, but when they were unsuccessful, they voluntarily...