Long v. Atlanta & West Point R. Co.
| Decision Date | 06 September 1984 |
| Docket Number | No. 40878,40878 |
| Citation | 320 S.E.2d 530,253 Ga. 257 |
| Court | Georgia Supreme Court |
| Parties | LONG et al. v. ATLANTA & WEST POINT RAILROAD COMPANY et al. |
Thomas R. Burnside, Jr., James B. Wall, Burnside & Wall, Augusta, for Hugh C. Long, II, et al.
William H. Major, Terry P. McKenna, Joseph M. Fluer, Hyman & Sizemore, Atlanta, for Atlanta & West Point Railroad Company et al.
The first issue in this case is not unlike that raised in an 1899 case involving this same railroad. There it was asked: "Were the provisions of the general railroad law lawfully added to the charter of the West Point company?" Alexander v. Atlanta and West Point R Co., 108 Ga. 151, 156, 33 S.E. 866 (1899). Today, although the facts differ, the question is substantially the same. The trial court here said they were; the minority shareholders appeal.
The Atlanta & West Point Railroad Co. (A & WP) was chartered as the Atlanta & LaGrange Railroad Company by the General Assembly in 1847, Ga.L.1847, p. 178, and was given its present name in 1857. Ga.L.1857, p. 66. The Seaboard System Railroad, Inc., now owns 65% of its stock. Seaboard owns all of the stock of Blue Berry Corporation, a general business (nonrailroad) corporation. In August, 1983, the A & WP notified its stockholders that a meeting would be held on September 27, 1983, to consider a proposed merger of A & WP with the Blue Berry Corporation, whereby A & WP's minority shareholders would be paid $210 per share for their stock. 1 Minority shareholders then brought this suit to enjoin the September 27, 1983, meeting and the proposed merger. The trial court denied the minority shareholders' application for interlocutory injunction and this appeal followed.
Prior to 1881, railroad corporations were chartered by separate legislative acts creating each railroad and specifying its route(s). In 1881, the General Assembly enacted a general law providing for the incorporation of railroads by the Governor and Secretary of State. Ga.L.1880-81, "81, p. 156 (now OCGA § 46-8-40 et seq.). Having been created by an act in 1847, the A & WP lacked the power to amend its charter without the approval of the legislature. However, Ga.L.1892, pp. 37, 50, and Ga.L.1893, p. 89, authorized railroad corporations created by legislative act to amend their charters by application to the Secretary of State. 2 In Alexander v. A & WP, supra, 108 Ga. at 156-157, 33 S.E. 866, the court held that fundamental, radical or vital charter amendments could only be adopted by unanimous consent of the railroad's stockholders and that absent such unanimous consent the A & WP could not amend its charter by application to the Secretary of State.
Two primary issues are presented by this appeal: (a) the meaning of the unanimous consent requirement, and (b) the validity of the proposed merger. The two issues are separate and distinct from each other.
1. The minority shareholders first argue that a 1970 charter amendment authorizing A & WP to amend its charter by a vote of the majority of its stockholders is invalid. At the stockholders' meeting in 1970, two matters were presented: (1) to amend the charter to renew it for a thirty year period and to adopt "the provisions of the general corporate laws which require the approval of a majority of the corporate stock to authorize corporate action on which stockholders are permitted to vote;" 3 and (2) to authorize the sale of the railroad's interest in a depot known as the Atlanta Joint Terminal for $1,415,000. Both parties here agree that pursuant to Alexander v. A & WP, supra, unanimous consent was required to effect these changes. The question is whether "unanimous consent" requires approval of all of the shareholders, or of all of the shareholders present, in person or by proxy, at a duly called meeting. At the 1970 meeting, 21,205 of the 24,636 shares were so voted and there were no dissents. 4 Is this "unanimous consent"? We find that it is.
While we recognize that changing from unanimous consent to majority vote is such a fundamental change as requires unanimous consent to make the change, we also are aware that where unanimous consent is required, a single dissenter can thwart the will of all remaining shareholders. To allow that lone dissenter to be a lost, missing, uncaring or negligent shareholder who has not appeared at a duly called meeting, in person or by proxy, is to carry the unanimous consent requirement too far. 5 We therefore hold that the unanimous consent of the shareholders is obtained at a duly called meeting where all shares represented at such meeting vote in favor of the action contained in the notice of meeting and none dissent.
Such a rule is in keeping with the spirit of the Business Corporation Code, OCGA Ch. 14-2, which provides that, absent specific provision to the contrary, the vote of the majority of the shares represented at a meeting at which a majority (quorum) is present is valid shareholder action. OCGA § 14-2-116; Kaplan, Georgia Corp. Law § 11-9 (1979 Ed.) See also Missouri Pacific R. Co. v. State of Kansas, 248 U.S. 276, 39 S.Ct. 93, 63 L.Ed. 239 (1919). In addition, other courts which have considered this question have held, for example, that where the unanimous vote of a public body is required, it means that all of the members who were present voted and none dissented. Stewart v. City of De Land, 75 So.2d 584, 586 (Fla.1954); Gumm v. City of Lexington, 247 Ky. 139, 56 S.W.2d 703, 705 (1933); Coxon v. Inhabitants of City of Trenton, 78 N.J.L. 26, 73 A. 253, 254 (1909); Atkins v. Philips, 26 Fla. 281, 8 So. 429, 431 (1890). Anno., 43 A.L.R.2d 698, § 8(b) (1955).
Because all 21,205 shares present at the 1970 meeting voted to approve the majority vote amendment and none dissented, the A & WP may do business in accordance therewith. (To hold otherwise could mean the railroad's charter was not legally renewed in 1970.) Therefore, the trial court was correct in finding that A & WP shareholder action is now governed by majority vote, and the court properly refused to enjoin the stockholders' meeting on this ground.
2. Because we have held that a merger could properly be approved by a majority of the stockholders, we need not reach enumeration of error 3 contending that the trial court erred in its secondary holding that the minority shareholders are estopped to contest the adoption of the 1970 charter amendments by reason of their accepting $23 per share as the result of the sale of the Joint Terminal which sale was approved at the 1970 meeting.
3. The minority shareholders next argue that even if the majority vote amendment was properly adopted at the 1970 meeting, this particular merger is nevertheless not authorized by law. They rely on OCGA §§ 46-8-80, 46-8-81(a), which allow railroads incorporated under OCGA Title 46 to merge with other railroads and conclude that therefore a railroad cannot merge with a nonrailroad company such as Blue Berry Corp. A & WP relies upon OCGA § 14-2-215(a) which generally provides that railroad corporations may merge with corporations chartered under the Business Corporations Code.
At this point, some further analysis of our Corporations, Partnerships, and Associations Code, enacted in 1968, now OCGA Title 14, is required. Chapter 2 thereof, OCGA Ch. 14-2, is the Georgia Business Corporation Code and A & WP relies upon OCGA § 14-2-215, supra. (Chapter 3 relates to nonprofit corporations.) Chapter 4 relates primarily to corporations chartered by the Secretary of State but it contains some provisions relating to corporations, including railroads, created by acts of the General Assembly. E.g., OCGA §§ 14-4-40, 14-4-80, 14-4-81, 14-4-100, 14-4-120. Bowman, An Introduction to the New Georgia Corporation Law, 4 Ga.St.B.J. 419 at 453 (1968).
Certain provisions of the 1968 law allow these Secretary of State corporations as well as corporations chartered by the General Assembly, like A & WP, to amend their charters to adopt the general laws. As pointed out in the Bowman article, supra at p. 454, the ultimate goal is to have all corporations subject to the provisions of the general corporations law (the Business Corporation Code). 6 With this goal in mind, we look to the provisions of the Business Corporations Code and those relating to Secretary of State chartered corporations to see whether the A & WP may lawfully merge with the Blue Berry Corporation.
In OCGA § 14-4-100 we find the following: ...
To continue reading
Request your trial