Robbins v. Beatty, 48602

Citation246 Iowa 80,67 N.W.2d 12
Decision Date16 November 1954
Docket NumberNo. 48602,48602
PartiesE. D. ROBBINS, Elsie E. Robbins, and A. C. Shipley, Appellees, v. Everett BEATTY, Earl Beatty, Frank Beatty, J. C. Penney, Oscar E. Trego, A. J. Anderson, Nettie Dickinson, Eva Barton, Eva Bowden, Delia Beatty, Mrs. A. C. Donnals, Anna Files, Arnold Hagan, Laura Harbert, Mrs. Chas. Inman, J. C. Knupp, John Lippert, E. J. H. Wagner, Ethel Tumilty, C. Little and Opal Beatty, Appellants.
CourtUnited States State Supreme Court of Iowa

Tobin, Bordewick & Fischer, Vinton, and Simmons, Perrine, Albright, Ellwood & Neff, Cedar Rapids, for appellants.

Edward F. O'Connor, Atlantic, Edward L. O'Connor, and Hamilton & Cahill, Iowa City, for appellees.

GARFIELD, Chief Justice.

This is an equity action brought under section 491.25, Code 1946, I.C.A., by three owners of corporate stock (79 shares in all) in Shellsburg Grain & Lbr. Co. to recover the real value of their stock from owners of 428 shares which, it is alleged, were voted in favor of renewing the corporation to exist perpetually. There was trial to the court and decree for plaintiffs from which defendants have appealed.

Another action growing out of the same controversy was before us in State ex rel. Robbins v. Shellsburg Grain & Lumber Co., 243 Iowa 734, 53 N.W.2d 143.

I. Defendants first contend there was no renewal of the corporation such as requires them to purchase plaintiffs' stock under section 491.25, the only action taken was by amendment to the articles of incorporation and 491.25 is not applicable. The trial court held against this contention and found there was a renewal which rendered defendants liable to plaintiffs under section 491.25 for the real value of their stock.

The corporation was formed in 1909 to exist 20 years. Its articles were renewed in 1929 by the adoption of amended and substituted articles to provide for continued existence until September 15, 1949. The total capital stock was $15,000 divided into 600 shares each of the par value of $25. The amended and substituted articles provided indebtedness should not exceed two thirds the capital stock. At the stockholders' regular annual meeting on January 23, 1948, it was moved, seconded and carried that amended articles of incorporation be 'accepted' which continued the corporate existence perpetually until dissolved and authorized indebtedness to the extent deemed advisable or necessary by the board of directors and manager, subject only to limitation imposed by holders of a majority of the stock.

Plaintiffs' 79 shares were voted against the above motion. Defendants' 428 shares were voted in favor of it. Plaintiffs claim and the trial court held this action taken January 23, 1948, was a renewal of the corporation under section 491.25 which also requires defendants to purchase plaintiffs' stock at its real value.

Section 491.25, Code 1946, I.C.A., provides: 'Corporations existing for a period of years may be renewed * * * for the same or shorter periods, or * * * to exist perpetually, if a majority of the votes cast at any regular election, * * * at any time during the corporate life or within three months after the termination thereof, be in favor of such renewal, and if those voting for such renewal will purchase at its real value the stock voted against such renewal. Stockholders voting for renewal shall have three years from the date such action for renewal was taken in which to purchase the stock voted against such renewal, which purchase price shall bear interest at eight percent per annum from the date of such renewal action until paid'.

The general substance of the first sentence of section 491.25, including the provision for purchase of stock voted against renewal, has been the law of Iowa since the Code of 1851, section 681. The second sentence was added in 1933 by chapter 143, section 1, Acts 45th General Assembly. See State ex rel. Robbins v. Shellsburg Grain & Lumber Co., supra, 243 Iowa 734, 738, 739, 53 N.W.2d 143, 145; Terrell v. Ringgold Tel. Co., 225 Iowa 994, 996, 997, 282 N.W. 702.

Before 1943 there was no Iowa statute authorizing perpetual existence of a corporation. In that year chapter 225, Acts 50th General Assembly, amended several sections of chapter 384, Code 1939, chapter 491, Code 1946, including section 491.25 thereof, I.C.A., 'to authorize perpetual existence, and fix the fees of corporations having such existence.' The language just quoted is the substance of the title to chapter 225. Defendants contend chapter 225 so changed the law as to render inapplicable the provision of section 491.25 for purchase of stock voted against renewal of corporate existence, where such renewal is accomplished by amendment to the articles of incorporation.

Chapter 225, Acts 50th General Assembly, is too long to set out in full herein. Defendants rely principally upon two provisions thereof which they say authorize an entirely separate and distinct method of renewing a corporation to exist perpetually--by amendment to the articles--and where such method is followed there is no liability to purchase stock voted against renewal. The first of these provisions is the last sentence of section 4, chapter 225, which became the last sentence in the first paragraph of section 491.20, Codes 1946, 1950, and 1954, I.C.A.: 'Corporations providing for perpetual existence by amendment to its articles shall, at the time of filing such amendment, pay to the secretary of state a fee of one hundred dollars together with a recording fee of twenty-five cents per page, and, for all authorized capital stock in excess of ten thousand dollars, an additional fee of one dollar ten cents per thousand.'

The second provision of chapter 225, Acts 50th General Assembly, on which defendants rely is section 5 thereof which adds this to section 8364, Code 1939, section 491.24, Codes 1946, 1950, and 1954, I.C.A.: 'provided however, that in addition to the power herein granted to incorporate for a period of years, corporations * * * may have perpetual existence by so providing in the articles of incorporation or by amendment thereto pursuant to section 8360.'

Although chapter 225 may have left the law somewhat in doubt we are not persuaded, as defendants would have us believe, there is no liability, under Code section 491.25, I.C.A., of those voting for renewal of corporate existence to purchase the stock voted against renewal where such action is accomplished by amendment to the articles.

These are some of the considerations that lead us to conclude, as the trial court did, stockholders voting for renewal of corporate existence are required by section 491.25 to purchase the stock voted against such renewal although such action is effected by amendment to the articles. As we have indicated, the general substance of this statutory requirement has been in effect since the Code of 1851. There is little doubt that before 1943, when chapter 225, Acts 50th General Assembly, took effect, this purchase requirement applied where renewal was accomplished by amendment to the articles. This is the clear effect of our decision in Lamb & Sons v. Dobson, 1902, 117 Iowa 124, 127, 128, 90 N.W. 607. See also Morris v. The Broadview, 328 Ill.App. 267, 65 N.E.2d 605, 608, which says: 'Extension of the existence or life of a corporation is construed as an amendment of its charter. (Citing cases.)'

If the 50th General Assembly had intended chapter 225 to change the long-existing law requiring the purchase of minority stock where extension of corporate life is effected by amendment to the articles, it could easily have expressed such intent. We find no such expression in chapter 225. The effect of defendants' argument is that chapter 225 repeals by implication the purchase requirement of what is now Code section 491.25, I.C.A., where the renewal is accomplished by amendment to the articles. Certainly to adopt defendants' contention would nullify such requirement for all practical purposes. Obviously substantially all renewals would be accomplished by amending the articles if liability to purchase stock voted against renewal would thereby be avoided.

Courts do not favor and will not uphold repeals by implication unless the intent to repeal clearly and unmistakably appears from the language used and such a holding is absolutely necessary. The rule has special application to important public statutes of long standing. Yarn v. City of Des Moines, 243 Iowa 991, 997, 54 N.W.2d 439, 442 and citations; Smaha v. Simmons, 245 Iowa ----, 60 N.W.2d 100, 103.

It cannot be said an intent to repeal or abrogate the purchase requirement of Code section 491.25, I.C.A., clearly and unmistakably appears from chapter 225, Acts 50th General Assembly. The act expressly states it is one to amend certain designated code sections including as we have said, what is now section 491.25. The first sentence of that section, heretofore quoted, containing the purchase requirement, as now worded, was first enacted as section 6 of chapter 225. The legislature would hardly have restated a sentence to include a provision it intended to abrogate. See citations last above and authorities therein cited.

We think the purpose of chapter 225 was, as its title states, to authorize corporations to provide for perpetual existence and to fix the fees of corporations having such existence rather than to establish a new method of extending or renewing corporate existence to which the purchase requirement of Code section 491.25, I.C.A., does not apply.

Section 491.25 does not provide the precise method for effecting a renewal of corporate existence. Certainly a common method--probably much the most common--is by amendment to the articles. See Lamb & Sons v. Dobson, supra, 117 Iowa 124, 127, 90 N.W. 607. See also Keetch v. Cordner, 90 Utah 423, 62 P.2d 273, 108 A.L.R. 52, 58, and Annotations 59, 70. It would seem the only proper methods of renewing corporate existence are by the adoption of new articles or by amendment...

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