Meade v. Pacific Gamble Robinson Co.

• Decision Date: 25 March 1948
• Citation: 58 A.2d 415,30 Del.Ch. 509
• Court: Supreme Court of Delaware
• Parties: JOHN A. MEADE, Complainant Below, Appellant, v. PACIFIC GAMBLE ROBINSON CO., Respondent Below, Appellee. PACIFIC GAMBLE ROBINSON CO., Respondent Below, Appellant, v. JOHN A. MEADE, Complainant Below, Appellee

58 A.2d 415

30 Del.Ch. 509

JOHN A. MEADE, Complainant Below, Appellant, v. PACIFIC GAMBLE ROBINSON CO., Respondent Below, Appellee.

PACIFIC GAMBLE ROBINSON CO., Respondent Below, Appellant, v. JOHN A. MEADE, Complainant Below, Appellee

Supreme Court of Delaware

March 25, 1948

APPEALS by John A. Meade and by Pacific Gamble Robinson Co. from different parts of a decree of the Court of Chancery. See opinion of the Vice-Chancellor, 29 Del.Ch. 406, 51 A.2d 313. The parties will be referred to as they were in the Court of Chancery.

William S. Potter and Richard F. Corroon, of the firm of Southerland Berl & Potter, and W. G. McLaren, of Seattle, Wash., for John A. Meade.

Hugh M Morris and Alexander L. Nichols, of the firm of Morris Steel, Nichols & Arsht, for Pacific Gamble Robinson Co.

RICHARDS C. J., and TERRY, CAREY and PEARSON, JJ., sitting.

OPINION

PEARSON, J.

The complainant, Meade, was a shareholder of a corporation which was merged with another. The defendant, Pacific Gamble Robinson Co., is the surviving corporation. Complainant obtained an appraisal of his shares pursuant to Section 61 of the Delaware Corporation Law, Rev.Code of Del. (1935) § 2093, as amended by 43 Laws of Del. c. 132, § 16, p. 468 (under the provisions existing prior to the 1943 amendment of the act [44 Del.Laws, c. 125, § 5]). The main question is whether defendant must pay interest from the date of the merger on the value of the shares fixed by the appraisers.

The case began in Chancery by a petition of complainant for the appointment of a third appraiser under Section 61. The court appointed an appraiser who, together with the two appraisers designated by the parties, fixed a value of the shares. Later, defendant filed a petition in the original proceeding to compel complainant to assign to it his certificates for shares held in the merging company, upon payment to him of the amount of the appraisers' award; and to obtain the taxing of costs. Complainant took the position that he was entitled to the appraised value plus interest from the date of the merger. Upon motion of complainant, pending a hearing on defendant's petition, the Vice-Chancellor ordered defendant to pay the full amount of the appraisers' award so that complainant might at once receive all of it except $ 10,000, which sum was to be held in the registry of the court subject to further order; and likewise ordered complainant to deposit the certificates for his shares in the registry. After a hearing, the Vice-Chancellor held that interest on the award should not begin to run until sixty days after the decision of the appraisers and notice to defendant. Complainant assigns this part of the decree as error. The Vice-Chancellor taxed the costs against defendant. In its appeal, defendant assigns as error the taxing of all costs against it, and also the exclusion from costs of certain of its expenses in connection with the appraisal. The decree entered recites that the court was advised that complainant intended to prosecute an appeal. It then provides that the certificates for complainant's shares and the $ 10,000 deposited under the previous order be retained in the registry of the court pending the outcome of the appeal.

Section 61 of the Corporation Law, prior to the 1943 amendment, provided as follows:

"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 ofthe 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. In case the value of such stock as so fixed by the appraisers is not paid to such stockholders within sixty days from the date of such decision and of notice thereof given to the corporation, the decision of the appraisers shall be evidence of the amount due from the corporation, and such amount may be collected as other debts are by law collectible from the resulting or surviving corporation. Upon receipt of payment in full of the value of such stock, such stockholders shall transfer his stock to the said resulting or surviving corporation, to be disposed of by the directors thereof, or to be retained for the benefit of the remaining stockholders.

"The cost of any such appraisal, including a reasonable fee to each of the appraisers, may on application of any party in interest be determined by the Chancellor and taxed upon the parties to such appraisal, or either or both of them, as may appear to be equitable."

Complainant elected to avail himself of the benefits of the statute to obtain a payment in money for his shares instead of accepting whatever would have been his rights under the merger agreement. Complainant claims as a benefit the right to interest from the date of the merger, or at least, from a date three months after the merger. This latter is based on the statutory direction that a surviving corporation shall within three months after...