Opdyke v. Security Sav. & Loan Co.

• Decision Date: 08 August 1949
• Docket Number: No. 32631,32631
• Citation: 105 N.E.2d 9,157 Ohio St. 121
• Parties: , 47 O.O. 97 OPDYKE et al. v. SECURITY SAVINGS & LOAN CO. et al. . March, 12, 1952. Syllabus by the Court. 1. The rights of stockholders of a building and loan association against such corporation and of its stockholders inter se may be legally altered by the corporation's exercise of the power to convert into a federal association, pursuant to Sections 9660-1 and 9660-2, General Code, where those statutes were adopted after the incorporation of such corporation but were in full force and effect and in the same form at the time said corporation made, adopted and filed with the Secretary of State a merger agreement which, under the statutes then in force, was effective as an amendment of the articles of incorporation of such corporation. 2. In the absence of some agreement between the stockholders or between the stockholders and the corporation, either in the articles of incorporation, corporate constitution or elsewhere, requiring additional stockholder approval, such an Ohio building and loan association may be converted into a federal savings and loan association pursuant to a plan of conversion requiring holders of permanent stock of the converting corporation to accept share accounts of the federal association, where (a) pursuant to federal statutes and rules and regulations thereunder referred to in Section 9660-2, General Code, such conversion and the plan of conversion are approved by a vote of 51 per cent or more of the votes lawfully cast at a legal meeting duly called to consider such action, (b) it is not established that those who voted to approve such conversion and the plan acted unreasonably or in bad faith and (c) each stockholder will receive under such plan the same amount per share for his shares as each other stockholder. 3. Section 693-1, General Code, relating to reorganization of a building and loan association, Section 9665, General Code, relating to dissolution of a building and loan association, Section 8623-15a, General Code, relating to r
• Court: Ohio Supreme Court

Page 121

157 Ohio St. 121

105 N.E.2d 9, 47 O.O. 97

OPDYKE et al. v. SECURITY SAVINGS & LOAN CO. et al.

No. 32631.

Supreme Court of Ohio.

March, 12, 1952.

Syllabus by the Court.

1. The rights of stockholders of a building and loan association against such corporation and of its stockholders inter se may be legally altered by the corporation's exercise of the power to convert into a federal association, pursuant to Sections 9660-1 and 9660-2, General Code, where those statutes were adopted after the incorporation of such corporation but were in full force and effect and in the same form at the time said corporation made, adopted and filed with the Secretary of State a merger agreement which, under the statutes then in force, was effective as an amendment of the articles of incorporation of such corporation.

2. In the absence of some agreement between the stockholders or between the stockholders and the corporation, either in the articles of incorporation, corporate constitution or elsewhere, requiring additional stockholder approval, such an Ohio building and loan association may be converted into a federal savings and loan association pursuant to a plan of conversion requiring holders of permanent stock of the converting corporation to accept share accounts of the federal association, where (a) pursuant to federal statutes and rules and regulations thereunder referred to in Section 9660-2, General Code, such conversion and the plan of conversion are approved by a vote of 51 per cent or more of the votes lawfully cast at a legal meeting duly called to consider such action, (b) it is not established that those who voted to approve such conversion and the plan acted unreasonably or in bad faith and (c) each stockholder will receive under such plan the same amount per share for his shares as each other stockholder.

3. Section 693-1, General Code, relating to reorganization of a building and loan association, Section 9665, General Code, relating to dissolution of a building and loan association, Section 8623-15a, General Code, relating to reorganization of Ohio corporations, Section 8623-15, General Code, relating to the amendment of articles of incorporation, and Section 8623-65, General Code, relating to the sale of the entire assets of a corporation, do not constitute limitatations on the right of an Ohio building and loan association to convert into a federal savings and loan association pursuant to the provisions of Section 9660-2 General Code.

4. Where provisions in the constitution of an Ohio building and loan association limiting the right of dissolution clearly indicate that they relate to the statutory power to dissolve described in Section 9665, General Code, and there is nothing in such provisions or in the statutes to indicate that such provisions should be construed as a limitation on the power of the corporation to convert into a federal savings and loan association pursuant to Section 9660-2, General Code, such provisions for dissolution will not constitute a limitation on such power to convert.

5. The right of a dissenting stockholder to receive the fair cash value of his shares is a statutory right which the General Assembly has frequently provided to protect minority stockholders in the event of certain major corporate changes. Unless the General Assembly has provided for such a right where a particular corporate change is made, a dissenting stockholder does not have that right. The General Assembly has not provided for such a right where an Ohio building and loan association is converted into a federal savings and loan association pursuant to the provisions of Section 9660-2, General Code.

6. Even though proceedings to adjust the rights of those having claims against or interests in a corporation may appear to be valid on their face, their operative effect upon a particular state of facts may invade constitutional rights.

7. The question, whether a certain amount represents full compensation for shares of stock, is a question of fact.

8. Purchases of shares of stock having an inactive market at $160 per share, for the purpose of acquiring voting power to block certain corporate action, and a conditional offer to purchase shares at that price, if the prospective buyer is able to purchase a very substantial percentage of the outstanding shares, do not tend to show that $135 was not a fair price for and did not represent the value of such shares.

9. The book value of an asset at any given time may be more or less than its value; and the book value of shares of stock may therefore be more or less than the value of such shares.

The parties will be referred to herein as they appeared in the Common Pleas Court.

The plaintiffs, stockholders of the defendant corporation, in their amended petition set forth three causes of action. In the first cause of action they seek to enjoin the conversion of the defendant corporation into a federal savings and loan association on the grounds that (a) the proposed plan of conversion is inequitable to stockholders, (b) the actions of defendants in their promotion of the plan were both actually and constructively fraudulent and (c) the corporate action taken by the defendant corporation in adopting the plan was illegal. In their second cause of action, they ask as alternative relief for a fair cash value of $455.19 a share for their shares in the defendant corporation. In their third cause of action they assert that, if they are denied the relief demanded in their first and second causes of action, then the plan of conversion and Section 9660-2, General Code, are unconstitutional in authorizing and permitting the taking of their property without due process of law and are violative of the Fifth Amendment of the Constitution of the United States and of Section 16, Article I, Ohio Constitution.

The defendant Security Savings & Loan Company was organized in 1916 as a building and loan association under the laws of Ohio. The other defendants, excepting the state Superintendent of Building and Loan Associations, are directors and officers of the defendant corporation.

On August 8, 1949, at a special meeting duly called for the purpose, resolutions were adopted by the stockholders to convert the Security Savings & Loan Company into a federal savings and loan association pursuant to and in accordance with the provisions of Sections 9660-1 and 9660-2, General Code, and approving a plan of conversion.

Sections 9643 to 9674-3, inclusive, General Code, deal with the organization and powers of building and loan associations.

Section 9647, General Code, provides: 'Such corporation shall have all the powers set forth in the following sections of this chapter.'

Section 9660-1, General Code, provides: 'To become a member of, acquire stock in and deposit money with a federal home loan bank created by act of congress of the United States, entitled 'An act to create federal home loan banks, to provide for supervision thereof, and for other purposes,' approved July 22, 1932, and amendments thereto, including the home owners' loan act of 1933, or by supplements to said acts and laws of the United States enacted in substitution therefor, and to do everything required of or authorized or permitted by the provisions of said acts and laws to members of a federal home loan bank created therein, including among other things, conversion into a federal savings and loan association, as authorized thereby and pursuant to any rules and regulations prescribed or which may hereafter be prescribed by virtue of and in accordance with said acts and laws; but such conversion shall be made only in the manner and subject to the conditions provided in section 9660-2 of the General Code.' (Emphasis added.)

Section 9660-2, General Code, provides so far as material:

'To convert itself into a federal savings and loan association as authorized by the acts of congress mentioned and described in section 9660 1 of the General Code, and pursuant to the rules and regulations prescribed by and in accordance with said acts and laws, by proceeding as follows, and not otherwise:

'1. The board of directors shall adopt a resolution fixing the time and place of holding a special meeting of all the stockholders of every class, and shall cause not less than twenty days' written notice of such time and place and of the purpose of such meeting to be given to each such stockholder, either personally or by mail directed to him at his last known post office address as appears upon the records of the corporation.

'2. At such meeting a resolution to convert as aforesaid shall be adopted as provided in the home owner's loan act of 1933 and amendments thereto.

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'4. Within eight months after the date of such stockholders' meeting, there shall be filed in the office of the superintendent:

'(a) Two copies of the federal savings and loan association charter issued to the federal savings and loan association into which the conversion is to be made, each of which shall be duly certified by the authority issuing the same; together with a payment of five dollars; and, unless such charter shall itself provide therefor,

'(b) A copy of a resolution of the board of directors, or other duly authorized agency, of such federal savings and loan association, verified by affidavit of the proper custodian of its records, showing the assumption by such federal savings and loan association of all debts and liabilities of the converting domestic associations as of the date on which conversion shall be completed, and the manner in which each class of the same will be discharged or adjusted by such federal savings and loan association.

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'When the foregoing requirements have been fully complied with the superintendent shall within ten days thereafter cause one copy of the federal savings and loan association charter, so filed with him, with his approval endorsed thereon, to be filed in the office of...