Van Schaack v. Phipps, 75--573

• Decision Date: 22 July 1976
• Docket Number: No. 75--573,75--573
• Citation: 558 P.2d 581,38 Colo.App. 140
• Parties: Beth Ellen VAN SCHAACK, special Administratrix of the Estate of Henry C. Van Schaack (by substitution for Henry C. Van Schaack, Deceased), Plaintiff-Appellant, and Beth Ellen Van Schaack, Individually, Intervenor-Appellant, v. Allan R. PHIPPS and Van Schaack Corporation, Defendants-Appellees. . II
• Court: Colorado Court of Appeals

Page 581

558 P.2d 581

38 Colo.App. 140

Beth Ellen VAN SCHAACK, special Administratrix of the Estate of Henry C. Van Schaack (by substitution for Henry C. Van Schaack, Deceased), Plaintiff-Appellant and Beth Ellen Van Schaack, Individually, Intervenor-Appellant, v. Allan R. PHIPPS and Van Schaack Corporation, Defendants-Appellees.

No. 75--573.

Colorado Court of Appeals, Div. II.

July 22, 1976.

As Modified on Denial of Rehearing Nov. 4, 1976.

Clark, Martin & Pringle, Bruce D. Pringle, Warren O. Martin, Denver, for plaintiff-appellant.

Neef, Swanson & Myer, Fred E. Neef, David C. Miller, Denver, for defendants-appellees.

COYTE, Judge.

Plaintiff, Beth Ellen Van Schaack, (Beth Ellen) as special administratrix of the Estate of Henry C. Van Schaack, Jr., (Henry) and in her individual capacity as intervenor, appeals from the dismissal of a purported shareholder's derivative action originally brought pursuant to C.R.C.P. 23.1 by her husband Henry against defendants Allan R. Phipps and the Van Schaack Corporation on January 29, 1973. We reverse.

The suit was based on an alleged oral agreement between defendants by the terms of which Phipps agreed to advance to the corporation $87,500 in exchange for 350 shares of its capital stock, which were to be transferred back to the corporation upon repayment to him of the amount advanced, plus any interest and costs. The initial complaint alleged that Henry was a shareholder at the time of the transaction complained of and that, subsequent thereto, he urged the board of directors and separate members thereof to pursue a claim against Phipps seeking retransfer of the stock, but that on November 15, 1972, the board by a split vote formally decided not to pursue that claim. The complaint further asserted that Henry would fairly and adequately represent the interests of similarly situated shareholders. Plaintiff therefore prayed for an order of court directing Phipps to retransfer the 350 shares of stock to the defendant corporation upon tender of the amount he had advanced plus interest and costs.

Phipps' answer admitted that Henry 'is a shareholder of the Van Schaack Corporation' but denied any agreement to retransfer the stock, and asserted various affirmative defenses to the action.

Thereafter, on August 19, 1974, Phipps filed a statement of death of plaintiff pursuant to C.R.C.P. 25(a) noting the death of Henry on August 6, 1974. He alleged that Beth Ellen had been appointed special administratrix of Henry's estate, that she had filed an inventory certifying under oath that at the time of Henry's death he owned no corporate stock of any kind, and that she had not inventoried any shares of the Van Schaack Corporation as an asset of Henry's estate and that therefore no party plaintiff existed with standing to bring the within suit.

Subsequently, on September 3, 1974, Beth Ellen, individually and as special administratrix filed a motion requesting that she be substituted as a party plaintiff and that she be allowed to intervene as a party plaintiff since she was 'at all times pertinent hereto an owner of stock in the Van Schaack Corporation and has, therefore, the same interest in pursuing the claim on behalf of the corporation as did the decedent.' The motion was granted and pre-trial discovery commenced.

Then, on May 14, 1975, the court granted defendant's motion to dismiss without prejudice, on the ground that Henry's complaint had not been verified pursuant to C.R.C.P. 23.1 and that it did not allege any demand upon the shareholders for relief prior to the institution of suit, or, in the alternative, state with particularity why the complainant could not seek such relief from the shareholders.

Beth Ellen thereupon filed a motion to amend the original complaint, which amended complaint as submitted to the court supplied the allegations lacking in the original complaint. The amended complaint was personally verified by Beth Ellen, both in her individual capacity and as special administratrix of Henry's estate. The caption of the complaint shows Henry to be plaintiff. However, the order allowing her to be substituted as plaintiff and intervenor had been entered and we will therefore consider the complaint as though the correct caption were used. The court denied the motion to amend and it is from both the order of dismissal and the denial of the motion to amend that plaintiff Beth Ellen in her individual and representative capacity appeals.

On appeal, she initially alleges that the court erred in basing its dismissal of the original complaint on the lack of verification. We agree. While the original complaint, as filed, had not been verified, a notarized verification of the complaint which had been signed and verified by plaintiff Henry on November 21, 1972, was filed with the court on May 16, 1975. Furthermore, Phipps failed to raise the issue until some two and one-half years after the complaint was filed and therefore waived the defect. Hence, the trial court erred in dismissing plaintiff's complaint on the ground that the verification required by C.R.C.P. 23.1 was lacking.

Beth Ellen next contends that, in the posture of the instant case, the order of the court dismissing the complaint must be considered as an order granting summary judgment to defendant, and that therefore our review must be directed to whether the depositions and other discovery documents on file with the court raised any genuine issue of material facts sufficient to preclude entry of summary judgment. As the basis for her position, she notes that, in the order of dismissal, the court stated that its determination was based on arguments of counsel, Depositions and exhibits presented at the hearing, and legal authorities cited in support thereof. She therefore argues that, under C.R.C.P. 12(c), the dismissal must be considered as a ruling on a motion for summary judgment. We agree.

C.R.C.P. 12(c) provides that:

'After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.'

Here, while Phipps' motion was denominated a 'motion to dismiss complaint for noncompliance by either substitute plaintiff or original plaintiff with Rule 23.1, Colorado Rules of Civil Procedure,' the thrust of the motion was that plaintiff's complaint failed to state a claim for which relief could be granted, since Henry had neglected to raise the statutorily required allegations in his original complaint and therefore lacked standing to bring the suit. Furthermore, Phipps' motion was filed after the filing of the initial responsible pleading and the completion of intensive pre-trial discovery.

The record before the trial court, which it considered in ruling on the motion to dismiss, contained substantial material in the form of depositions and deposition exhibits. In argument on the motion, counsel quoted from the said depositions and deposition exhibits, and the court considered all relevant material contained in the exhibits or depositions. Hence, the action taken by the court must be considered a ruling on a motion for summary judgment under C.R.C.P. 12(c), which can be made 'at any time.' Welp v. Crews, 149 Colo. 109, 368 P.2d 426. And, accordingly, whether the court committed reversible error in granting the motion for dismissal must be tested against the legal criteria for granting a ...