Ramsey Financial Corp. v. Haugland, 20050375.

• Court: United States State Supreme Court of North Dakota
• Citation: 719 N.W.2d 346,2006 ND 167
• Docket Number: No. 20050375.,20050375.
• Parties: The RAMSEY FINANCIAL CORPORATION, Plaintiff and Appellee v. John C. HAUGLAND, Ruth S. Haugland, Oscar Dammen and Lenora Dammen, Defendants and Appellants.
• Decision Date: 26 July 2006

719 N.W.2d 346 2006 ND 167 The RAMSEY FINANCIAL CORPORATION, Plaintiff and Appellee
v.
John C. HAUGLAND, Ruth S. Haugland, Oscar Dammen and Lenora Dammen, Defendants and Appellants. No. 20050375. Supreme Court of North Dakota. July 26, 2006.

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Joseph A. Turman (argued), DeMars & Turman, Fargo, N.D., and Evan F. Heustis (on brief), Ramsey National Bank & Trust Company, Devils Lake, N.D., for plaintiff and appellee.

James P. Wang, Minnewaukan, N.D., for defendants and appellants.

KAPSNER, Justice.

[¶ 1] John C. Haugland, Ruth S. Haugland, Oscar Dammen, and Lenora Dammen appealed from a summary judgment ordering them to tender their shares of preferred stock in The Ramsey Financial Corporation ("Ramsey") to Ramsey for $134.25 per share and dismissing their counterclaims against Ramsey. We dismiss the Dammens' appeal because it is moot, and we affirm the judgment against the Hauglands because they failed to follow the procedures for asserting dissenting shareholder rights under the Business Corporation Act, N.D.C.C. ch. 10-19.1.

I

[¶ 2] Incorporated in August 1981, Ramsey is a bank holding company located in Devils Lake. Ramsey was authorized to issue 18,000 shares of cumulative non-voting preferred shares of stock and to issue common shares of stock. Through the years, the Hauglands acquired 521 shares of preferred stock and the Dammens acquired 8,377 shares of preferred stock.

[¶ 3] In June 2003, Ramsey's board of directors informed the shareholders that a special meeting would be held on July 1, 2003, to allow them to discuss and vote on a proposed resolution which would amend the articles of incorporation to allow for the redemption of preferred stock. The proposed resolution stated redemption of the preferred stock would be in the best interests of the corporation because "the elimination of a second class of stock would enhance the corporation's ability to elect Sub-chapter S status under the Internal Revenue Code, which is a long term goal of the corporation." The notice of the special meeting further provided that "[a]lthough preferred shares are non-voting shares, holders of such shares will be permitted to vote on this issue since the proposed resolution affects their rights as stockholders." A proposed resolution, which authorized the board of directors to amend the articles of incorporation to allow redemption of the preferred shares, was passed at the July 1, 2003, meeting. On October 8, 2003, the board of directors voted to pass a resolution to amend the articles of incorporation to permit Ramsey to purchase the outstanding shares of the preferred stock.

[¶ 4] On October 9, 2003, the board of directors gave notice of a second meeting of common and preferred shareholders on October 21, 2003, to permit the shareholders to vote on the resolution under N.D.C.C. § 10-19.1-19. The notice further provided:

In the event of a consenting vote on this Resolution, preferred shareholders who do not agree with the adoption of the Amendment have certain rights as dissenting shareholders set out in North Dakota Century Code 10-19.1-87 and 10-19.1-88, copies of which are enclosed for your information.

The notice stated the directors would announce at the meeting the price that would be paid for the preferred shares and the method used to establish the price, and the resolution provided that Ramsey would

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pay a dividend on all outstanding preferred shares on December 31, 2003, and that the redemption would occur on January 2, 2004.

[¶ 5] Although the Hauglands and Dammens voted against the resolution at the October 21, 2003, meeting, the vast majority of shareholders voted for the resolution. On December 4, 2003, Ramsey notified its preferred shareholders that the redemption price per share on January 2, 2004, would be $134.25, as "determined by an independent appraisal." On January 2, 2004, a notice of dissenting shareholders' rights was sent to dissenting shareholders informing them that "[a]ny demand for payment under the shareholders' rights set out by law and the accompanying stock certificates, must be sent [to Ramsey] by February 3, 2004." This notice again informed the dissenting shareholders of their rights under N.D.C.C. §§ 10-19.1-87 and 10-19.1-88.

[¶ 6] On January 16, 2004, the Hauglands sent Ramsey a letter refusing to convey their preferred shares of stock to the corporation. On February 3, 2004, the Dammens also sent Ramsey a letter stating that they refused to convey their preferred shares back to the corporation. The amendment to Ramsey's articles of incorporation was filed with the Secretary of State on February 11, 2004. In September 2004, after the Hauglands and Dammens had failed to surrender their preferred shares to the corporation, Ramsey brought this declaratory judgment action against them seeking a declaration of "the respective duties and obligations of the parties." The district court granted Ramsey's motion for summary judgment, concluding the Hauglands and the Dammens "failed to exercise their dissenting shareholders rights as required by statute," and as a result, they were entitled to the $134.25 per share determined to be the "fair value" of the shares by an independent third party appraiser. The court ordered the Hauglands and Dammens to tender their preferred shares to Ramsey, and dismissed their counterclaims against Ramsey.

II

[¶ 7] Under N.D.R.App.P. 42(c), Ramsey has informed this Court that approximately one month after the Dammens filed their notice of appeal, they presented their preferred shares to the corporation and received $134.25 per share as ordered by the district court. Ramsey argues the Dammens' tender of shares and receipt of payment renders the controversy between the corporation and the Dammens moot. We agree.

[¶ 8] We will dismiss an appeal if the issues become moot or academic and no actual controversy is left to be determined. DeCoteau v. Nodak Mut. Ins. Co., 2001 ND 182, ¶ 10, 636 N.W.2d 432. An actual controversy no longer exists when the issue has been rendered moot by a lapse of time, or the occurrence of related events which make it impossible for a court to grant effective relief. Mr. G's Turtle Mountain Lodge, Inc. v. Roland Township, 2002 ND 140, ¶ 9, 651 N.W.2d 625. In re E.T., 2000 ND 174, ¶ 5, 617 N.W.2d 470.

[¶ 9] In Lyon v. Ford Motor Co., 2000 ND 12, ¶ 13, 604 N.W.2d 453, this Court held that a party who voluntarily pays a judgment against him waives the right to appeal from the judgment. In doing so, we overruled a line of older North Dakota cases holding that voluntary payment or satisfaction of a judgment does not waive the right to appeal, if repayment may be enforced or the effect of compliance may be otherwise undone in case of reversal, and unless the payment was intended as a compromise or there was an

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express agreement to not pursue an appeal. Id. at ¶¶ 7, 9, 10. One of the cases we overruled was Workman v. Salzer Lumber Co., 51 N.D. 280, 199 N.W. 769 (1924), in which this Court held the defendant's voluntary return of property to the plaintiff after the lower court ordered the return of property did not constitute a waiver of the right to appeal. In this case, the Dammens returned the stock certificates to Ramsey and received payment for those shares, precisely what the district court ordered. Although the Dammens made no payment, voluntary acquiescence in a judgment also constitutes a waiver of the right to appeal, see, e.g., Messer v. Henlein, 72 N.D. 63, 66, 4 N.W.2d 587, 588-89 (1942); In re McKee's Estate, 69 N.D. 203, 208, 285 N.W. 72, 74 (1939), and formal execution of a satisfaction of judgment is not a prerequisite for this principle to apply. See, e.g., McKee's Estate; Grady v. Hansel, 57 N.D. 722, 725, 223 N.W. 937 (1929).

[¶ 10] While voluntary payment of or acquiescence in a judgment waives the right to appeal, payment or acquiescence under coercion or duress does not constitute a waiver. See Roland Township, 2002 ND 140, ¶ 13, 651 N.W.2d 625; Twogood v. Wentz, 2001 ND 167, ¶ 5, 634 N.W.2d 514; Lyon, 2000 ND 12, ¶ 14, 604 N.W.2d 453. When there is no showing other than that there was acquiescence in or payment of a judgment, a presumption arises that the acquiescence or payment was voluntary. Lyon, at ¶ 14. Here, there is no indication the Dammens' compliance with the judgment was anything other than voluntary. Their tender of shares and receipt of...