Stoneman v. United Nebraska Bank, No. S-96-941

CourtSupreme Court of Nebraska
Writing for the CourtWHITE, C.J., and CONNOLLY, GERRARD, and McCORMACK, JJ., and ENDACOTT; CONNOLLY
Citation254 Neb. 477,577 N.W.2d 271
Docket NumberNo. S-96-941
Decision Date17 April 1998
PartiesLyle STONEMAN et al., Appellees, v. UNITED NEBRASKA BANK et al., Appellants, and Department of Banking and Finance of the State of Nebraska et al., Appellees.

Page 271

577 N.W.2d 271
254 Neb. 477
Lyle STONEMAN et al., Appellees,
v.
UNITED NEBRASKA BANK et al., Appellants,
and
Department of Banking and Finance of the State of Nebraska et al., Appellees.
No. S-96-941.
Supreme Court of Nebraska.
April 17, 1998.

Page 273

Syllabus by the Court

1. Jurisdiction: Appeal and Error. When the court from which an appeal was taken lacks jurisdiction, the appellate court acquires no jurisdiction.

2. Judgments: Jurisdiction: Appeal and Error. The question of jurisdiction is a question of law, upon which an appellate court reaches a conclusion independent of the trial court; however, findings of the lower court as to underlying factual disputes, if [254 Neb. 478] any, in regard to the jurisdictional issue will be upheld unless they are clearly erroneous.

3. Judgments: Appeal and Error. On questions of law, an appellate court has an obligation to reach its own independent conclusions.

4. Administrative Law: Jurisdiction: Courts. Jurisdiction in the district courts is proper pursuant to the Administrative Procedure Act when a case is contested and the party bringing the action is aggrieved.

5. Administrative Law: Words and Phrases. Under the Administrative Procedure Act, a proceeding becomes a contested case when a hearing is required.

6. Administrative Law: Due Process: Notice. When an administrative body acts in a quasi-judicial manner, due process requires notice and an opportunity for a full and fair hearing at some stage of the agency proceedings.

7. Administrative Law: Jurisdiction: Words and Phrases. If an agency acts in a quasi-judicial manner, the case is contested

Page 274

for purposes of jurisdiction under the Administrative Procedure Act.

8. Administrative Law: Licenses and Permits. Generally, the exercise of discretion to grant or deny a license, permit, or other type of application is a quasi-judicial function.

9. Administrative Law: Jurisdiction: Standing: Words and Phrases. If a person has standing, then that person is aggrieved for purposes of jurisdiction under the Administrative Procedure Act.

10. Statutes: Intent. Statutes which effect a change in common law or take away a common-law right should be strictly construed, and a construction which restricts or removes a common-law right should not be adopted unless the plain words of the statute compel it.

11. Words and Phrases: Equity. Common-law rights include both those rights sounding in law and those sounding in equity.

12. Constitutional Law: Jurisdiction: Equity. The equity jurisdiction of the district court is granted by the Constitution and cannot be legislatively limited or controlled.

13. Equity: Banks and Banking: Merger: Stock. Bank shareholders possess an equitable right to receive fair value for their shares in the event that they are canceled by a cash-out merger.

14. Administrative Law: Appeal and Error. Under the Administrative Procedure Act, the district court has the authority to review an administrative agency's decision without a jury, de novo on the record of the agency.

15. Administrative Law: Legislature. An administrative agency has only that power which has been granted to it by the Legislature.

16. Courts: Administrative Law. As a general rule, administrative agencies have no general judicial powers, notwithstanding that they may perform some quasi-judicial duties. Only a judicial tribunal, and not an administrative agency acting as a quasi-judicial tribunal, can provide relief that is within the general power of the court to provide.

17. Banks and Banking: Merger: Stock. The Nebraska Department of Banking and Finance has the authority to consider the fairness of a merger to minority shareholders. Nevertheless, that authority does not require the department to deny a merger application merely because the minority shareholders will receive less than fair value for their shares, nor does it empower the department to compel payment of fair value to the shareholders.

[254 Neb. 479] Gerald P. Laughlin and Tiffany L. Seevers, of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim, Omaha, for appellants.

Terry R. Wittler, Larry A. Holle, and Jill Gossin Jensen, of Cline, Williams, Wright, Johnson & Oldfather, Lincoln, for appellees Stoneman et al.

WHITE, C.J., and CONNOLLY, GERRARD, and McCORMACK, JJ., and ENDACOTT, District Judge, and GRANT and FAHRNBRUCH, JJ., Retired.

CONNOLLY, Justice.

The issue in this appeal presents the question of whether the minority shareholders of a banking corporation who are "cashed out" via merger have a right to receive fair value for their shares, notwithstanding bank minority shareholders' exclusion from Neb.Rev.Stat. § 21-20,138 (Reissue 1997). We conclude that bank shareholders do indeed have such a right, and we affirm.

I. BACKGROUND

Lexington State Bank & Trust Co. (LSB & T), then a Nebraska banking corporation, was a subsidiary of Lexington Bancshares, Inc. (LBI), then a Nebraska holding company, which owned 88.5 percent of LSB & T's issued and outstanding shares. United Nebraska Bank (UNB), also a Nebraska banking corporation, was a wholly owned subsidiary of United Nebraska Financial Company (UNFC), another Nebraska holding company. UNB, LBI, UNFC, and LSB & T are the appellants in the instant case. Harold P. Stuckey, acting as president of both LSB & T and LBI, contacted UNB regarding the sale of LBI. UNB's parent corporation, UNFC, submitted an offer to LBI, which

Page 275

resulted in two stock purchase agreements, an "Agreement for Purchase of Preferred Shares of Lexington Bancshares, Inc." (preferred share agreement) and an "Agreement for Purchase of Common Shares of Lexington Bancshares, Inc." (common share agreement).
254 Neb. 480

1. STOCK PURCHASE AGREEMENTS

The preferred share agreement was between UNFC and the holders of LSB & T's preferred shares. UNFC's purchase of LBI's preferred shares was to occur contemporaneously with UNFC's purchase of LBI's common shares, and all conditions precedent under the common share agreement were to be met or waived by LBI prior to closing.

The common share agreement was between UNFC and certain individuals, including Lexington Bank and Trust Co., trustee of LSB & T's employee stock ownership plan. In the common share agreement, UNFC agreed to purchase all of LBI's common shares, conditioned upon the closing of the purchase of LBI's preferred shares and the "obtaining [of] all necessary regulatory approvals including approval for [UNFC] to merge [LSB & T] into its [sic] subsidiary bank."

In addition, UNFC agreed to purchase 439.01 shares of LSB & T's common stock owned by Stuckey for $470,713, payable at closing, which would yield $1,072 a share. Stuckey was also to be paid "an amount equal to any cash recoveries by [LSB & T] of the principal amount of and interest on a loan by [LSB & T] ... in the principal amount of $156,000, which loan was charged off in full by [LSB & T]." Finally, the common share agreement required Stuckey to execute an agreement not to compete, for which Stuckey would be compensated in the amount of $450,000.

Upon the closing of the sale of LBI's common shares and Stuckey's 439.01 shares in LSB & T, UNFC would control all but 8.4 percent of LSB & T's issued and outstanding shares. Although the common share agreement clearly contemplated a merger and provided for the purchase of Stuckey's minority shares in LSB & T, it made no provisions concerning LSB & T's remaining minority shareholders.

The purchase price of LBI's shares provided for in the common share agreement was based upon LSB & T's equity capital.

The value of [LSB & T] shall be determined by adding to the amount of [LSB & T's] equity capital ... the amount of $8,250,000, provided that [LSB & T's] equity capital ... is not less than $8,800,000. The value of [LSB & T] as thus computed shall be divided by the total number of shares of [254 Neb. 481] [LSB & T] common stock issued and outstanding, which shall then be multiplied by the number of [LSB & T] shares owned by [LBI] to determine the value of the [LSB & T] shares owned by [LBI].

(Emphasis supplied.) Application of the above formula resulted in a value of approximately $1,217.86 per LSB & T share.

2. MERGER AGREEMENT

In yet another separate agreement, LSB & T agreed to merge with UNB, which merger was to occur contemporaneously with the consummation of the stock purchase agreements. The merger was to proceed in three steps. First, the stock purchase agreements would be executed. Second, LBI would merge with UNFC with LBI surviving, resulting in LBI acquiring all of UNB's outstanding voting shares. Third, UNB and LSB & T would merge, with UNB as the survivor, and LBI would change its name to UNFC. Upon completion of the third step, all outstanding voting shares of LSB & T were to be canceled, with the minority shareholders receiving $700 per share in cash, and each share of common stock owned by LBI was to be converted into 1.91 shares of UNFC's common stock. The above transactions would result in UNFC's being a one-bank holding company, with UNB as its wholly owned subsidiary.

These transactions effected a "cash-out" merger, which left the minority shareholders with no equity in the resultant corporation. A cash-out merger may be accomplished without regard to the wishes of the minority shareholders and forces them to accept cash for their shares rather than stock in the newly merged business, thus giving the majority

Page 276

100-percent control. Such mergers are variously referred to as "cash-outs," "take-outs," "squeeze-outs," and "freeze-outs."

3. DEPARTMENT'S APPROVAL

The stock purchase agreements and the merger agreement required the approval of the Nebraska Department of Banking and Finance (Department) prior to their consummation, pursuant to Neb.Rev.Stat. §§ 8-157(3) (Supp.1995) and 8-1502 (Reissue 1997). UNFC submitted a notice of acquisition and control to the Department, pursuant to § 8-1502, to obtain approval for...

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31 practice notes
  • Vanhorn v. Nebraska State Racing Com'n, No. 4:03 CV 3336.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Nebraska
    • 27 Enero 2004
    ...a de facto denial resulting from a delay in conducting the hearing — would be a quasi-judicial act. See Stoneman v. United Nebraska Bank, 254 Neb. 477, 577 N.W.2d 271, 277 (1998) (the exercise of discretion to grant or deny a license, permit or other type of application generally is a quasi......
  • Slansky v. Nebraska State Patrol, No. S-03-747.
    • United States
    • Supreme Court of Nebraska
    • 16 Julio 2004
    ...agencies have no general judicial powers, notwithstanding that they may perform some quasi-judicial duties. Stoneman v. United Neb. Bank, 254 Neb. 477, 577 N.W.2d 271 (1998). Here, under the rules and regulations adopted pursuant to SORA, registrants such as Slansky are granted a limited re......
  • Nebraska Public Service Com'n v. Nebraska Public Power Dist., No. S-97-1367
    • United States
    • Supreme Court of Nebraska
    • 19 Marzo 1999
    ...authority, an administrative agency has only that power which has been granted to it by the Legislature. Stoneman v. United Neb. Bank, 254 Neb. 477, 577 N.W.2d 271 (1998). When the Legislature grants the PSC jurisdiction over non-common carriers, the PSC must exercise such authority complet......
  • Transcanada Keystone Pipeline, LP v. Dunavan (In re Application No. Op-0003), No. S-17-1331.
    • United States
    • Supreme Court of Nebraska
    • 23 Agosto 2019
    ...Duxbury , 216 Neb. 99, 342 N.W.2d 656 (1983) ; Jonas v. Willman , 27 Neb. App. 251, 930 N.W.2d 60 (2019).69 Stoneman v. United Neb. Bank , 254 Neb. 477, 577 N.W.2d 271 (1998).70 § 57-1402(2).71 § 57-1403(1).72 § 57-1407(3).73 § 57-1407(4)(e).74 Reply brief for appellee Ponca on cross-appeal......
  • Request a trial to view additional results
31 cases
  • Vanhorn v. Nebraska State Racing Com'n, No. 4:03 CV 3336.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Nebraska
    • 27 Enero 2004
    ...a de facto denial resulting from a delay in conducting the hearing — would be a quasi-judicial act. See Stoneman v. United Nebraska Bank, 254 Neb. 477, 577 N.W.2d 271, 277 (1998) (the exercise of discretion to grant or deny a license, permit or other type of application generally is a quasi......
  • Slansky v. Nebraska State Patrol, No. S-03-747.
    • United States
    • Supreme Court of Nebraska
    • 16 Julio 2004
    ...agencies have no general judicial powers, notwithstanding that they may perform some quasi-judicial duties. Stoneman v. United Neb. Bank, 254 Neb. 477, 577 N.W.2d 271 (1998). Here, under the rules and regulations adopted pursuant to SORA, registrants such as Slansky are granted a limited re......
  • Nebraska Public Service Com'n v. Nebraska Public Power Dist., No. S-97-1367
    • United States
    • Supreme Court of Nebraska
    • 19 Marzo 1999
    ...authority, an administrative agency has only that power which has been granted to it by the Legislature. Stoneman v. United Neb. Bank, 254 Neb. 477, 577 N.W.2d 271 (1998). When the Legislature grants the PSC jurisdiction over non-common carriers, the PSC must exercise such authority complet......
  • Transcanada Keystone Pipeline, LP v. Dunavan (In re Application No. Op-0003), No. S-17-1331.
    • United States
    • Supreme Court of Nebraska
    • 23 Agosto 2019
    ...Duxbury , 216 Neb. 99, 342 N.W.2d 656 (1983) ; Jonas v. Willman , 27 Neb. App. 251, 930 N.W.2d 60 (2019).69 Stoneman v. United Neb. Bank , 254 Neb. 477, 577 N.W.2d 271 (1998).70 § 57-1402(2).71 § 57-1403(1).72 § 57-1407(3).73 § 57-1407(4)(e).74 Reply brief for appellee Ponca on cross-appeal......
  • Request a trial to view additional results

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