Pearson v. Clam Falls Coop. Dairy Ass'n
| Decision Date | 16 June 1943 |
| Parties | PEARSON et al. v. CLAM FALLS COOPERATIVE DAIRY ASS'N et al. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
Appeal from a judgment of the County Court of Polk County; Howard D. Blanding, Judge.
Affirmed.
Action commenced January 12, 1940, by Axel Pearson, Theodore Rud, John Bengtson and Alvah Serier against the Clam Falls Cooperative Dairy Association, a Wisconsin cooperative association, and Nels Simonsen, Allen Fahland, John Ahlgren, Otto Johnson and John G. Chell and the Dawn Dairy Cooperative. From a judgment dismissing the plaintiffs' complaint, the plaintiffs appeal.
Charles D. Madsen, of Luck, for appellants.
Morris E. Yager, of Frederic, for respondents.
The Clam Falls Cooperative Dairy Association (hereafter referred to as the Clam Falls Association) and the Frederic Cooperative Creamery Association (hereafter referred to as the Frederic Association) were both organized in 1916 and did business in Polk county from that time until 1938. On October 29, 1938, the creamery building and most of the equipment of the Clam Falls Association were destroyed by fire. Shortly thereafter negotiations were begun between the two associations which ultimately resulted in the forming of a new cooperative to take over the business and property of the two old associations. Accordingly each association by a vote of a majority of its members resolved to sell its business to the new cooperative on certain conditions and in consideration of the new cooperative issuing stock to the members and patrons of the old associations in proportion to their interests. At the time the resolution was adopted by the Clam Falls Association it had on hand a cash surplus of $5,970 and the resolution provided that the surplus be distributed to the patrons in proportion to their business and that this credit be included in the interest of each member and patron when the amount of stock in the new association to which each was entitled was computed.
The plaintiffs are minority members of the Clam Falls Association who have refused to approve or take part in the formation of the new association. When the new association was formed under the name of Dawn Dairy Cooperative, it took over the assets and liabilities of both of the old associations and issued stock to those members who signed subscriptions. The stock to which the plaintiffs and other members of the Clam Falls Association who had taken the same position were entitled was issued to the Clam Falls Association and was subsequently left with the court pending the outcome of the present suit. The plaintiffs' interest in the fund is chiefly as patrons, though they were also members of the association.
The parties agreed upon the facts, and on the basis of these facts the trial judge ruled that the plaintiffs had no cause of action. He found that the proceedings leading to the organization of the Dawn Dairy Cooperative were in accordance with sec. 185.12, Stats., and that the stock in this association which had been issued was in full payment of all rights, title and interest of the plaintiffs. The clerk of the court was appointed trustee of the certificates to hold them for the plaintiffs until they demanded delivery of them. The plaintiffs appeal from the judgment alleging: (1) that sec. 185.12, Stats., authorizes only merger as distinguished from consolidation; (2) that this section has not been complied with since by its last sentence “* * * the directors of the purchasing association are authorized to hold the shares in trust for the vendor and to dispose of the same to such persons and within such time as may be mutually satisfactory to the parties in interest, and to pay the proceeds thereof as currently received to the vendor.” (3) that if this section requires minority stockholders to accept stock in the new association, it is unconstitutional; (4) that there is no statutory authority allowing the association to pay patronage dividends in the stock of another association; (5) that the Clam Falls Association had been liquidated and so could not be merged or consolidated.
Sec. 185.12, Stats., by implication permits a cooperative to accept stock in a new association as payment for its assets in the course of a consolidation. This statute was in force at the time the two associations in question were organized and at the time that the plaintiffs became members. The last sentence of the section which was added in 1921...
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...Inc. v. Thomas (Wis.App.1984), 118 Wis.2d 99, 345 N.W.2d 516 (shares exchanged for cash); Pearson v. Clam Falls Cooperative Dairy Association (1943), 243 Wis. 369, 10 N.W.2d 132 (shares exchanged for stock in the newly formed corporation).) Thus, CMCREC was expressly authorized to eliminate......
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...go to the patrons rested in the discretion of the board of directors or a majority of the stockholders. Pearson v. Clam Falls Co-op. Dairy Ass'n, 243 Wis. 369, 374, 10 N.W.2d 132, 134. Until distributed, it all belonged to the Since the taxpayer had at the beginning of 1943 accumulated a su......
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