Fisher v. Steelville Community Banc-Shares, Inc.

• Decision Date: 18 July 1986
• Docket Number: INC,No. 14175,BANC-SHARE,14175
• Citation: 713 S.W.2d 850
• Parties: Paul FISHER, Plaintiff-Appellant, v. STEELVILLE COMMUNITY, and First Community National Bank of Crawford County, Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 850

713 S.W.2d 850

Paul FISHER, Plaintiff-Appellant, v. STEELVILLE COMMUNITY BANC-SHARES, INC., and First Community

National Bank of Crawford County, Defendants-Respondents.

No. 14175.

Missouri Court of Appeals,

Southern District,

Division Two.

July 18, 1986.

Rehearing Denied Aug. 11, 1986.

Donald S. Hilleary, Clayton, for plaintiff-appellant.

R. Brooks Kenagy, Beckham, Hale, Howald & Kenagy, Steelville, John H. Quinn, III, Armstrong, Teasdale, Kramer & Vaughan, St. Louis, for defendants-respondents.

MAUS, Judge.

In this action a minority shareholder in a state bank seeks to recover actual and punitive damages from the majority shareholder. The state bank was merged with a national "phantom bank" in which a bank holding company is the sole shareholder. The bank holding company was also the majority shareholder in the state bank and is the principal defendant. The national bank is an added defendant. The trial court sustained the defendants' motion to dismiss the first amended petition. The plaintiff minority shareholder appeals.

The first amended petition is not a paragon of pleading. It does not contain "a short and plain statement of the facts" as required by Rule 55.05 (emphasis added). Allegations of fact that are found in the first amended petition are not set forth in a fashion or sequence to emphasize the elements of the cause of action stated. Those elements are further obfuscated by the allegation of facts that do not establish those elements and by interspersed repetitious conclusory allegations. Nonetheless, when attacked by a motion to dismiss, that petition "is to be construed most favorably to the pleader giving him the benefit of every reasonable and fair intendment in view of the facts alleged and, if the allegations invoke principles of substantive law which may entitle the pleader to relief, the petition is not to be dismissed." Moore v. Moore, 657 S.W.2d 37, 39 (Mo.App.1983).

So construed, the following is a summary of the allegations of the first amended petition. Community Bank (Community) was a bank organized and existing under the laws of Missouri. The plaintiff was a minority shareholder in Community. Steelville Community Banc-shares, Inc. (Banc-shares) was incorporated in 1979. Banc-shares became the majority shareholder of Community. The same persons were directors of Community and directors of Banc-shares. Banc-shares controlled Community. Banc-shares determined to eliminate minority shareholders in Community and to acquire their stock at an unfairly low price. Banc-shares determined to facilitate that plan by causing Community not to pay dividends to its shareholders. Banc-shares did cause plaintiff to suffer a loss of dividends during 1979 through 1983. As a result of such action, the plaintiff was damaged by the loss of dividends and a reduction in the value of his shares in Community. First Community National Bank of Steelville, Mo. (National) was formed in 1982 or 1983. In February, 1983, Community was merged into National. As a result, the plaintiff was eliminated as a shareholder in Community. The actions of Banc-shares served no good faith business purpose. Such actions were a breach of Banc-shares' fiduciary duty to the plaintiff as a minority shareholder. Further, it was alleged such breach of defendants' fiduciary duty was willful and malicious and without just cause or excuse. The petition then prayed for actual and punitive damages. A second count was a restatement of the first, except the defendants' conduct was characterized as being in reckless disregard of the rights of the plaintiff.

The defendants filed a "Motion to Dismiss Plaintiff's Amended Petition, or in the Alternative, Motion for Summary Judgment." The first motion asserted the first amended petition should be dismissed because it failed to state facts upon which relief could be granted for reasons which included the following. The plaintiff did not exhaust his administrative remedies provided by statute and regulation, which administrative remedies were exclusive. The petition failed to allege plaintiff had made demand that dividends be paid. The relief sought could not be granted subsequent to the consummation of the merger set forth in the first amended petition. The first motion also added that the plaintiff's claim was finally determined under administrative procedures provided in 12 U.S.C. § 215a and 12 C.F.R. § 5.1 et seq. (1986).

The second motion sought a summary judgment for those same reasons. The motion for summary judgment added, "The pleadings and affidavits on file demonstrate there was an actual and bona fide business purpose for the merger and that the merger was fundamentally fair to minority shareholders."

In support of its motion for summary judgment, the defendants filed an affidavit of the person who was the president of National and of Banc-shares and was the former president of Community. The plaintiff had previously filed his affidavit in opposition to a motion for summary judgment directed to the original petition. The plaintiff filed a motion to stay hearing, pending discovery, upon the defendants' second motion for summary judgment. In addition, the plaintiff filed a motion to file a second amended petition.

A docket entry dated August 16, 1984, recites, "Motions argued and taken under advisement." On January 29, 1985, the trial court entered the following:

Court finds that plaintiff made an election of remedies when he chose to procede [sic] under 12 USC 215a and 12 CFR 5.01-5.13. That having made such election, he must now follow that trail to its end and therefore this court is without jurisdiction to consider plaintiff's case. Defendant's motion to dismiss sustained at plaintiff's costs. All other pending motions moot.

An appeal lies from a final judgment. § 512.020, RSMo 1978. As the term is so used, a final judgment is customarily embodied in a more formal entry. That is often necessary to establish a basis for appeal. It is desirable to carefully articulate the action of the court. However, the order of dismissal did dispose of all issues and all parties. The parties treated the entry as a final judgment and it will be so accepted by this court. See Smith v. Consolidated School District No. 2, 408 S.W.2d 50 (Mo. banc 1966).

By his initial brief, the plaintiff contended the trial court erred in dismissing his first amended petition for failure to state a cause of action. By their brief, the defendants took issue with this contention. In that brief the defendants also contended the judgment of the trial court should be affirmed because the evidentiary material established they were entitled to a summary judgment. By his extensive reply brief, the plaintiff answered the latter contention.

The latter contention deals with an issue not before this court. The entry of January 29, 1985, is cryptic. That portion finding that the plaintiff made an election of remedies could be construed as a finding made upon the motion for summary judgment. However, it is possible that finding was made by the trial court from a construction of the face of the petition. It is clear the action of the trial court was to sustain the defendants' motion to dismiss. In similar circumstances, it has been stated:

In Feinstein v. Edward Livingston & Sons, Inc., 457 S.W.2d 789 (Mo.1970), a motion to dismiss for failure to state a claim upon which relief can be granted was accompanied by an alternative motion for summary judgment. The trial court sustained the motion to dismiss but the motion for summary judgment 'was not passed upon by the trial court, but, instead, was merely declared by the trial court as being moot.' The supreme court held that the motion for summary judgment was not before it for review and the court reviewed only the ruling on the motion to dismiss, the review being confined to the face of the petition.

American Drilling Service Co. v. City of Springfield, 614 S.W.2d 266, 270 (Mo.App.1981). That decision is particularly applicable to this case in view of the pending motion to stay a hearing upon the motion for summary judgment. That motion was declared moot. The issue before this court is whether or not the trial court erred in sustaining the defendants' motion to dismiss under Rule 55.27(a)(6).

The plaintiff contends the petition states a cause of action for a breach of fiduciary duty by a majority shareholder. That a duty of that character exists is well established. Bayne v. Jenkins, 593 S.W.2d 519 (Mo. banc 1980); Jackson v. St. Regis Apartments, Inc., 565 S.W.2d 178 (Mo.App.1978); Fix v. Fix Material Co., Inc., 538 S.W.2d 351 (Mo.App.1976). The scope of that duty has not been fully defined by application to categorized factual patterns. Forinash v. Daugherty, 697 S.W.2d 294 (Mo.App.1985). It is often defined in general terms such as "fairness" or "good faith." Lebold v. Inland Steel Co., 125 F.2d 369 (7th Cir.1941). However, allegations that a majority shareholder, who controlled the corporate directors, caused dividends to be withheld and depressed the value of the stock of a minority shareholder for the purpose of acquiring that stock state a cause of action against the majority shareholder. Cf. Twenty Seven Trust v. Realty Growth Investors, 533 F.Supp. 1028 (D.Md.1982).

The trial court did not find otherwise. The finding of the trial court and the defendants' primary contention is based upon a different position. The defendants' position is that the plaintiff is barred from seeking damages because the petition pleads facts constituting a defense to the cause of action stated. See Household Finance Corporation v. Avery, 476 S.W.2d 165 (Mo.App.1972). That position is based upon a construction that the petition pleads the following facts. Community merged into a national banking association (National) under the provisions of 12 U.S.C.S. § 215a and 12 C.F.R. § 5.1 et seq. The plaintiff was a dissenting shareholder to that merger within the meaning of 12...