Winfree v. Riverside Cotton Miles Co
| Decision Date | 13 June 1912 |
| Citation | 113 Va. 717,75 S.E. 309 |
| Parties | WINFREE . v. RIVERSIDE COTTON MILES CO. et al. |
| Court | Virginia Supreme Court |
Under Code 1904, § 1105e, subsecs. 40, 41, providing that domestic corporations engaged in the same or similar business may consolidate, when authorized to do so by majority vote at a properly called meeting of the stockholders of each corporation, a corporation had a right, by a majority vote of its stockholders, to consolidate with another corporation engaged in the same business, though one stockholder objected, and though the corporation was organized in 1882, and prior to the enactment of this statute; Code 1873, c. 57, §§ 59, 60, which was the statute then controlling, expressly reserving to the state the right to change the powers granted to corporations, and the power exercised and conferred by the consolidation statute not, therefore, operating to impair the obligation of contracts.
[Ed. Note.—For other cases, see Constitutional Law, Cent. Dig. §§ 325, 3G6-369; Dec. Dig. * 126.*]
Under Const. § 158 (Code 1904, p. cclviii), and Code 1904, § 1105a, subsec. 8, providing that every corporation which shall amend its charter shall be deemed thereby to have accepted and become subject to the Constitution and any laws passed in pursuance thereof, the act of a corporation in passing a resolution amending its charter brought such corporation under the general laws of the state, including the statute authorizing the consolidation of corporations , though the resolution declared that the amendment was not to affect the charter in any other respect or particular than that mentioned in the amendment; such declaration being in derogation of such constitutional and statutory provision, and wholly ineffectual.
[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 119, 120, 125-127; Dec. Dig. § 38.*]
The provision of Const. § 158 (Code 1904, p. cclviii), and Code 1904, § 1105a, subsec. 8 that after the amendment of the charter of a corporation the corporation shall be subject to the Constitution and general laws of the state passed in pursuance thereof, so far as applicable, is not limited to the relations between the state and the corporation, but applies also to the relations between the state and the stockholders, between the corporation and the stockholders, and between the stockholders themselves.
[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 119, 120, 125-127; Dec. Dig. § 38.*]
A stockholder, dissenting to a consolidation, is not limited to the summary remedy given him under Code 1904, § 1105e, subsec. 41, to secure payment for his stock.
[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 2343-2347; Dec. Dig. § 584.*]
Code 1904, § 1105e, subsec. 40, authorizing the consolidation of corporations, does not deprive a dissenting stockholder of his right to refuse to surrender his stock for stock in the new corporation, or to refuse to take anything for it less than its actual value at the date of the consolidation.
[Ed Note.—For other cases, see Corporations, Cent. Dig. §§ 2343-2347; Dec. Dig. § 584.*]
Where the ascertainment of such value requires investigations into the condition of the corporation and accounts to be taken, the stockholder may resort to a court of equity.
[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 2343-2347; Dec. Dig. § 584.*]
Const. § 156, subsec. "a" (Code 1904, p. eeli), provides that the State Corporation Commission shall have the power to put into effect the provisions of the Constitution and statutes relative to domestic corporations; and Code, § 1105e, subsec. 41, provides that the Commission shall determine when corporations desiring to consolidate have complied with the requirements'of law, and shall issue a certificate upon finding that there has been a proper compliance, and that the filing of such certificate shall complete the consolidation. Held that, under Const. § 156, subd. "d" (Code 1904, p. ccliv), providing that no court shall have jurisdiction to correct or annul any action of the Commission within the scope of its authority, the court had no jurisdiction to set aside a consolidation which had been effected between two corporations according to law, and for which the Commission's approval and certificate had been given.
[Ed. Note.—For other cases, see Corporations, Cent. Dig. § 1576; Dec. Dig. § 394.*]
The consolidation of two corporations in accordance with Code, § 1105e, subsecs. 40, 41, authorizing the consolidation of corporations engaged in the same or similar business, is not in violation of the commerce clause of the federal Constitution (article 1, § 8), or of the Sherman Anti-Trust Act (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]).
[Ed. Note.—For other cases, see Commerce, Cent. Dig. §§ 36-44, 46; Dec. Dig. § 48;* Monopolies, Dec. Dig. § 20.*] Appeal from Corporation Court of Danville.
Bill by one Winfree against the Riverside Cotton Mills Company and others. Prom a decree overruling a demurrer to the bill, plaintiff appeals. Affirmed in part, and remanded.
Coleman, Easley & Coleman, Harrison & Long, and A. B. Percy, for appellant.
R. W. Peatross, Harris & Harris, and A. A. Phlegar, for appellees.
BUCHANAN, J. [1] The first question to be determined in this case is whether or not the Riverside Cotton Mills, in which the appellant, who was complainant in the court below, was a stockholder, had the right by a majority vote of all of its stockholders to consolidate with the Dan River Power & Manufacturing Company, under the provisions of an act entitled "An act concerning corporations, " approved May 21, 1903 (Acts of Assembly 1902-04, pp. 437, 476-480), and found in the Code of 1904 as chapter 46A.
By subsection 40 of section 1105e of that Code it is provided, with certain exceptions which do not affect this case; that any corporation organized or to be organized under any law or laws of this state may merge or consolidate into a single corporation with any other corporation organized for carrying on the same or a similar business under the laws of this or any other state of the United States.
By the following subsection (41) it is provided how such merger or consolidation may be effected. One of the provisions of that subsection is that such merger may be authorized by a majority vote at a meeting of the stockholders of each of the corporations proposing to consolidate, called and held in the manner prescribed by that subsection.
Separate meetings of the stockholders of the two companies were called to consider the proposed consolidation agreement entered into between the directors of the two companies. The appellant, who, as before stated, was a stockholder in the Riverside Cotton Mills, protested and voted against the consolidation at the meeting of his company; but the vote of the stockholders at the meeting of each company was, by a large majority, in favor of the consolidation, and the consolidation was subsequently completed or perfected in the manner prescribed by the statute.
The contention of the appellant is that, since the Riverside Cotton Mills was incorporated prior to the enactment of the statute in question authorizing the consolidation of corporations doing the same or a similar business by a majority of its stockholders, the consolidation could only be effected by the unanimous vote of the stockholders, notwithstanding the provision of the act that such consolidation might be effected by a majority vote.
The appellees, on the other hand, insist that in the year 1882, when the Riverside Cotton Mills was incorporated under the provisions of chapter 57 of the Code of 1873 (sections 59 and 60), the power to alter or amend the charter was expressly reserved by the state, and under that reserved power and section 158 of the Constitution (Code 1904, p. cclviii) and subsection 8 of section 1105a of Pollard's Code, passed pursuant thereto, the state had the right to authorize the consolidation in question, even against a stockholder who does not consent to it.
Section 59 provided that, after a charter was certified to the secretary of the commonwealth, the court granting it, "or the judge thereof, in vacation, may, upon the motion of said company * * * or on reasonable notice to said company, alter or amend said charter, or change the corporate name of said company; and such alteration, amendment or change shall be recorded by said clerk and in the office of the secretary of the commonwealth * * * and shall be as effectual and legal from that time as if originally a part of the charter."
Section 60 provided that, as soon as the charter of the corporation was lodged in the office of the secretary of the commonwealth, the persons signing and acknowledging the certificate, their successors, and other persons associated with them, should be a body corporate, "and shall have all the general powers, and be subject to all the general restrictions provided by this edition of the Code of Virginia, or that may have been heretofore, or may hereafter be enacted by the General Assembly, in regard to such bodies politic and corporate."
It seems that such a reservation of power to the state prescribed by the laws in force when the charter is granted whether written in the Constitution, in general laws, or in the charter itself, qualifies the grant, and that the subsequent exercise of that power cannot be regarded as an act...
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