Meade v. Pacific Gamble Robinson Co.

• Decision Date: 28 November 1944
• Docket Number: 29265.
• Citation: 153 P.2d 686,21 Wn.2d 866
• Parties: MEAND v. PACIFIC GAMBLE ROBINSON CO.
• Court: Washington Supreme Court

153 P.2d 686

21 Wn.2d 866

MEAND v. PACIFIC GAMBLE ROBINSON CO.

No. 29265.

Supreme Court of Washington, En Banc.

November 28, 1944

Action by John A. Meade against Pacific Gamble Robinson Company for the appointment of an appraiser to join with others previously appointed to determine value of plaintiff's stock in the Pacific Fruit & Produce Company which was merged with another company to form defendant corporation. From a judgment appointing an appraiser, defendant appeals.

Reversed with directions.

BLAKE STEINERT, BEALS, and MALLERY, JJ., dissenting.

Appeal from Superior Court, King County; Clay Allen, Judge.

Ryan Askren & Mathewson, of Seattle, for appellant.

Evans McLaren & Lane, of Seattle, for respondent.

MILLARD Justice.

Plaintiff, who owns 8,845 shares of stock in Pacific Fruit and Produce Company, brought this action under the provisions of section 61 of the Delaware Corporation statute, § 2093, p. 480, Revised Code of Delaware 1935, for the appointment by the King county superior court of a third appraiser, who, together with two others previously appointed by the respective parties to the action, should determine the value of plaintiff's shares of stock. The provision reads as follows:

'Sec. 61. Consolidation or Merger; Payment for Stock of Dissatisfied Stockholder:--If any stockholder in any corporation of this State consolidating or merging as aforesaid, who objected thereto in writing, shall within twenty days after the date on which the agreement of consolidation or merger has been filed and recorded, as aforesaid, demand in writing from the corporation resulting from or surviving such consolidation or merger, payment of his stock, such resulting or surviving corporation shall, within three months thereafter, pay to him the value of his stock at said date, exclusive of any element of value arising from the expectation or accomplishment of such consolidation or merger. If within thirty days after the date of such written demand the corporation and such stockholder fail to come to an agreement as to such value of such stock, such stockholder may demand an appraisal of his stock by three disinterested persons, one of whom shall be designated by the stockholder, one by the directors of the resulting or surviving corporation and the other by the two designated as aforesaid and may serve written notice on such corporation designating therein one appraiser and requiring the corporation to designate a second appraiser within thirty days from the date of service of such notice. If within thirty days from the date of service of such notice the corporation shall have failed to designate a second appraiser or if the two appraisers first designated shall fail to designate a third appraiser within thirty days from the designation of the second appraiser, such stockholder may apply to the Chancellor to designate a second and a third appraiser, or a third appraiser, as the case may be. The decision of the appraisers as to such value of such stock shall be final and binding upon the corporation and such stockholder. * * *'

Defendant demurred on the ground that the superior courts of this state do not have jurisdiction of the subject-matter and the power to appoint an appraiser to appraise the stock of a Delaware corporation, which appointment must be made pursuant to the terms of the Delaware statute giving the right to make such appointment to 'the chancellor.' The demurrer was overruled. Defendant answered admitting each of the twelve paragraphs of plaintiff's petition for appointment of a third appraiser and pleaded affirmatively:

'That a merger of the Pacific Fruit & Produce Company, Inc., a corporation, and Gamble-Robinson Company, a corporation, was occasioned by virtue of the laws of the State of Delaware and that all matters pertinent to and in connection with the said merger are subject to the State of Delaware and any interpretation of the Delaware law or remedies to participants is subject to the sound discretion of the Delaware courts and that the courts of the State of Washington are without jurisdiction of the subject matter or of the parties.'

Plaintiff's demurrer to the affirmative defense was sustained. Defendant stood upon its answer, whereupon the court entered an order appointing George E. Maine of Seattle as the third appraiser. Defendant appealed.

The petition alleges that appellant Pacific Gamble Robinson Company is the surviving corporation resulting from a merger of Pacific Fruit and Produce Company, a corporation, and Gamble Robinson Company, a corporation, each of which was organized and existed under the laws of the state of Delaware. Pursuant to notice November 24, 1942 a special meeting of the stockholders of Pacific Fruit and Produce Company was held at that corporation's principal office and place of conducting its business (city of Seattle) to consider a proposed merger with Gamble Robinson Company. The proposed merger was duly approved by the affirmative votes of the requisite number of shares of the capital stock of Pacific Fruit and Produce Company. Respondent who owns 8,845 shares of stock of Pacific Fruit and Produce Company voted against the merger at the stockholders' meeting November 24, 1942. Thereafter, pursuant to a similar call, a special meeting of the stockholders of Gamble Robinson Company was duly held and the merger was approved by the affirmative votes by the requisite number of shares of capital stock of that corporation. After approval by the requisite number of stockholders of both corporations the agreement of merger was authorized and approved by each of the constituent corporations and filed in the office of the secretary of state of the state of Delaware. The name of the surviving corporation is Pacific Gamble Robinson Company.

Pursuant to section 61, Corporation Laws of Delaware, § 2093, p. 480, Revised Code of Delaware 1935 (quoted above), respondent demanded, within twenty days after the agreement of merger was recorded, of appellant corporation payment of the value of his shares of stock. Respondent and appellant failed to come to an agreement as to such value of respondent's stock within thirty days after the date of the written demand, whereupon respondent demanded an appraisal of his stock by three disinterested persons as provided by the above quoted provisions of the Delaware corporation statute, and designated John P. Garvin of Seattle as one of the appraisers. Thereafter appellant designated Stanley Minor of Seattle as a second appraiser. The two appraisers so designated could not agree upon the designation of a third appraiser. Alleging 'That under the laws and constitution of the State of Delaware the Chancellor is a Judicial officer possessing and exercising original equity jurisdiction,' respondent prayed that the superior court for King county appoint a third appraiser to act in conjunction with the two appraisers already appointed in the matter of ascertaining and determining the value of respondent's shares of stock in the manner provided by law.

Respondent moves for dismissal of the appeal and affirmance of the order of the trial court upon the grounds: (1) Appellant is not 'aggrieved' by the order appointing the third appraiser. (2) The appeal was taken merely for delay. (3) No notice of appeal was served upon George E. Maine who was appointed as an appraiser by the court and who thereafter filed his written acceptance of the appointment.

Inasmuch as appellant has a legitimate interest in the litigation it is 'aggrieved' by the order of the trial court. Implicit in the contract of respondent shareholder with the corporation is the agreement of respondent that in the event of the consolidation or merger of the corporation in which he owned shares of stock with another corporation that the question of payment to the dissatisfied stockholder of the value of his shares of stock was one for determination under the laws of the state of Delaware in which the corporation was organized. That being so only the courts of the state of Delaware have the power to make the appointment of the third appraiser, which is shown in respondent's petition. Appellant has a right to have an appraiser appointed by the proper tribunal and we agree with counsel for appellant that appellant is certainly aggrieved if it is forced to have the matter of appraisers of respondent's shares of stock determined by appraiser whose appointment was void.

There is no showing that the appeal was taken merely for delay.

The contention that the named appraiser was a party to the litigation who must be served with notice of appeal is without substantial merit. The third appraiser appointed by the superior court is not within the purview of statutory requirement. (Rem.Rev.Stat. § 1719) that written notice of appeal shall be served on the prevailing party or his attorney. The appraiser appointed by the trial court was not a party to the action and he is not entitled to notice of an appeal. Norbom Engineering Co. v. A. H. Cox & Co., 120 Wash. 675, 208 P. 87; Deno v. Standard Furniture Corp.,

190 Wash. 1, 66 P.2d 1158. The motion to dismiss the appeal is denied.

It is respondent's position that statutes of the character of the above quoted Delaware statute are designed to afford relief to a stockholder who does not desire to participate in a merger and that such statutes are to be liberally construed in favor of the dissenting stockholder. Fletcher Cyclopedia Corporations, permanent edition, Vol. 15, § 7165.

It is insisted that under this principle no stockholder residing in this state should be required to go to Delaware and invoke the equity powers of its chancellor when, as in the case at bar, the principal office of the corporation is situated in this state.

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