Ferrando v. U.S. National Building & Loan Association

• Decision Date: 14 March 1932
• Docket Number: 113
• Citation: 160 A. 716,307 Pa. 25
• Parties: Ferrando v. U.S. National Building & Loan Association, Appellant
• Court: Pennsylvania Supreme Court

160 A. 716

307 Pa. 25

Ferrando v. U.S. National Building & Loan Association, Appellant

No. 113

Supreme Court of Pennsylvania

March 14, 1932

Argued January 15, 1932

Appeal, No. 113, Jan. T., 1932, by defendant, from decree of C.P. No. 1, Phila. Co., Sept. T., 1930, No. 6870, awarding decree on bill in equity, in case of Manuel Ferrando v. U.S National Building & Loan Association. Decree modified and confirmed.

Bill in equity to account for value of stock. Before KUN, J.

The facts are stated in opinion of Supreme Court.

Decree for accounting awarded. Defendant appealed.

Error assigned, inter alia, was decree, quoting record.

The decree of the court below should be modified to conform to this opinion, and, when so modified, it will be affirmed at the cost of appellant.

William A. Gray, with him Roy Martin Boyd, for appellant. -- Plaintiff failed to prove the value of his stock at the time of the transfer.

The learned chancellor erred in refusing to permit defendant to prove the actual value of plaintiff's stock.

Abraham L. Freedman, with him Max Walls, for appellee. -- The burden is on appellant: Belmont Laboratories v. Heist, 300 Pa. 542, 546-7; First Regular Baptist Church v. Allison, 304 Pa. 1, 8.

Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY and DREW, JJ.

OPINION

MR. JUSTICE KEPHART:

A majority of the stockholders of the U.S. National Building and Loan Association approved a resolution transferring all its assets to a new corporation for second preferred stock. Bishop Ferrando, who had paid into the association $10,000 as dues on 200 shares, voted against the proposed transfer, and by this bill sought to restrain it until he had been paid the value of his stock. The value having been secured by a bond the assets were transferred, and the court below thereafter awarded appellee the sum of $8,308, as of December 4, 1930, the date of transfer.

When a corporation, against the protest of one of its stockholders, transfers all its assets either through sale or merger to another corporation, a dissenting stockholder is entitled to demand and recive in cash the value of his stock at the time of such transfer: Koehler v. St. Mary's Brewing Co., 228 Pa. 648; Maxler v. Freeport Bank, 275 Pa. 510; Ringler v. The Atlas Portland Cement Co., 301 Pa. 176; Cook on Corporations, 8th edition, volume 3, section 671; Savidge on Corporations in Pennsylvania, volume 1, section 207. In an action to secure the worth of the stock, the burden rests on the protesting shareholder to prove the recoverable value of his stock as of the date of transfer. No particular method is necessary to determine value, but the evidence should be such as would fairly satisfy the chancellor as to what the actual value was. Appellee met this burden by showing a report of certified accountants for the period commencing March 11, 1930, and extending to May 19, 1930, the latter date being the day on which a statement was sent by appellant to its shareholders showing the value of the building and loan in the transfer. On November 13, 1930, appellant's directors passed a resolution fixing this same value for the purpose of transfer on December 4th; and a letter of January 5, 1931, from an officer of the company, shows that the value then existing was the same as that of March 11, 1930. This evidence was sufficiently clear and comprehensive to establish a value for the shares of stock as of December 4th.

Appellant attacks this evidence by contending it is too indefinite, and that the certified report should be as of December 4th. While value should be fixed as of the date of transfer, it does not follow that a certified report or examination or balancing of accounts must be made as of the date of transfer to ascertain value. See Petry v. Harwood Electric Co., 280 Pa 142, 151. If a report made at a prior time reasonably close to the date of transfer is available and there is other evidence to prove that the value of the assets or the net value of the company as thus shown has not diminished from that time to the date of transfer or thereafter, this...