State ex rel. Robbins v. Shellsburg Grain & Lumber Co., 48034

• Decision Date: 06 May 1952
• Docket Number: No. 48034,48034
• Citation: 53 N.W.2d 143,243 Iowa 734
• Parties: STATE ex rel. ROBBINS et al. v. SHELLSBURG GRAIN & LUMBER CO. et al.
• Court: Iowa Supreme Court

Page 143

53 N.W.2d 143

243 Iowa 734

STATE ex rel. ROBBINS et al. v. SHELLSBURG GRAIN & LUMBER CO. et al.

No. 48034.

Supreme Court of Iowa.

May 6, 1952.

Edward F. O'Connor, Vinton, Edward L. O'Connor, Iowa City, for intervenors-appellants.

Tobin & Bordewick, Vinton, Simmons, Perrine, Albright, Ellwood & Neff, Cedar Rapids, Robert L. Larson, Atty. Gen., for defendants-appellees.

HAYS, Justice.

This is an appeal from a judgment dismissing Intervenors' petition of intervention, upon motion of all defendants, except Melvin D. Synhorst, as Secretary of State, State of Iowa. The proceedings is an action in the nature of quo warranto. The trial court held nothing of a public interest was alleged in the petition, such as to sustain such a proceeding. Intervenors have appealed from a judgment entered under Rule 86, R. C. P.

The pleadings are rather lengthy and present many questions which are not of concern here. So far as material, the following matters are alleged: The Defendant Shellsburg Grain & Lumber Co., is an Iowa Corporation, organized for pecuniary profit on September 15, 1909. Its charter was renewed in 1929 and would expire September 15, 1949. All other Defendants, except Melvin D. Synhorst, as Secretary of State, are stockholders in, and some directors of, the Corporation. They are hereinafter designated as majority stockholders. Plaintiffs and Intervenors are likewise stockholders and will be referred to as minority stockholders. On January 23, 1948, at the annual meeting of the Corporation a resolution to amend the articles of incorporation to give it perpetual existence was adopted by a vote of 428 to 79. 600 shares of stock were outstanding. Plaintiffs' shares were represented and voted against renewal. Intervenors' shares were not represented or voted at the annual meeting but it was submitted in the trial court on the theory that they were voted against the renewal and we adopt the same theory. The majority shareholders voted for the renewal. A certificate of renewal was issued to the Corporation on January 26, 1948 and it has continued to function as a Corporation. Although demand has been made upon the majority shareholders that they pay to the minority shareholders the real value of the stock, such has been ignored and in April, 1951, this action was commenced. The prayer of this petition is that the corporate charter be declared forfeited and that trustees be appointed to liquidate the assets. Judgment against the majority stockholders for the real value of the Intervenors' shares of stock is also asked together with other equitable relief. The issue presented by this appeal goes only to the prayer that the corporate charter be declared forfeited.

I. Quo warranto or an action in the nature of quo warranto is a special proceedings and strictly statutory in character. It is available only where the act complained of is of a public interest and may not be invoked for the redress of a private right or grievance. State ex rel. Higby v. Higby Co., 130 Iowa 69, 106 N.W. 382; State ex rel. Maley v. Civic Action Committee, 238 Iowa 851, 28 N.W.2d 467, 74 C.J.S., Quo Warranto, §§ 6 and 14.

II. Rule 299, R. C. P., provides: 'A civil action in the nature of quo warranto, triable by equitable proceedings, may be brought in the name of the state against any defendant who is: * * * (c) acting as a corporation in Iowa without being authorized by law so to act; or (d) a corporation exercising powers not conferred by law, or doing or omitting acts, which work a forfeiture of its corporate rights or privileges; * * *.' If Appellants are to maintain this action it must be done under either (c) or (d) above quoted.

The action is predicated upon Section 491.25, Code of 1946, I.C.A., which states: 'Corporations * * * may be renewed * * * if a majority of the votes cast * * * 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, * * *.' (Italics ours.)

Appellants assert that a failure to comply with that provision of the statute which we have italicized brings the corporation within the provisions of Rule 299(c) or (d), above quoted.

This statute has been before this court at least once and while the exact question presented here appears to be of a first impression, one phase thereof has been definitely determined, and against Appellants' contention.

In Terrell v. Ringgold County Mut. Tel. Co., 225 Iowa 994, 282 N.W. 702, which was an action in equity asking for a judgment in favor of the minority against the majority stockholders and for a receiver under Section 491.25, we held the statute created no duty upon the part of the corporation, as such, to purchase the dissenters' shares of stock. See also Melsha v. Tribune Pub. Co., Iowa, 51 N.W.2d 425. Furthermore the act or failure to act, complained of by Appellants is not a statutory ground for the forfeiture of a corporate charter under Section 491.42, Code of 1946. I.C.A. The action may not be based upon Rule 299(d).

III. The real question presented is whether the statutes creates a condition the performance of...