Gallois v. Stauffer Chemical Co.

DEVINE, J.

Appellant was a holder of preferred shares of West End Chemical Company when that company was merged with defendant Stauffer Chemical Company by vote

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of the shareholders on September 25, 1956, and appellant dissented from the merger. On January 28, 1957, appellant brought an action against West End Chemical Company to have the fair market value of his shares determined. The court set the value at $76,325 and awarded interest at 7 per cent from date of judgment, which was July 2, 1959. Appellant appealed from that judgment on the ground that the court had not allowed him to show that the preferred shares, although legally callable, were noneallable de facto. The judgment was affirmed (Gallois v.

West End Chemical Co.,

185 Cal.App.2d 765 [8 Cal.Rptr. 596]), the Supreme Court denied hearing, and on January 3, 1961, the litigation came to an end. The judgment for the fair market value has been paid by respondent, with interest at 7 per ceht from date of judgment.

Appellant has brought this second action—but this one against Stauffer Chemical Company, not against West End—asking that the court declare that he is entitled to stock dividends declared by Stauffer during the litigation, which would give him some 1,177 shares of Stauffer Chemical Company stock, and also cash dividends of $9,369.40 which had been declared by Stauffer during that period. The court sustained without leave to amend defendant’s demurrer to the amended complaint, and appellant- appeals from the ensuing judgment.

The* problem is one Of statutory construction. Appellant presents two forms of argument: first, analysis and comparison of statutes; and se'eorid, ’contention that, in justice, appellant should be compensated ’ while his funds were unavailable to him and that, therefore, the court should favor such interpretation of the statutes as will effect what he asserts to be the. just result.

The -principal statutes are section 4314 of Corporations Code,-which reads: “Cash dividends paid by the corporation upon the dissenting shares after the day on which the vote was taken and prior to payment for the shares by the corporation shall be credited upon the total amount to be paid by the corporation therefor. Any share dividends declared after the-shares become dissenting shares shall be treated as part of the dissenting shares”; and section 4315 of Corporations Code, which reads: “Except as expressly limited in this article, holders of dissenting shares continue to have all the rights and privileges incident to their shares, until the fair market value of their shares is agreed upon or determined. A