Whiton v. Batchelder & Lincoln Corp.

Barker, J. The demurrer alleges that the “ declaration and the matters therein contained in manner and form as the same are set forth, are not sufficient in law for the plaintiff to have his action against the defendant.” The plaintiff contends that it brings nothing before the court. But it points out that the declaration does not state a legal cause of action, which, where the question is one of substance and not of the form of allegation, is one of the causes of demurrer mentioned in Pub. Sts. c. 167, § 12, cl. 2. It brings that question before the court. The words of the clause cited, “ substantially in accordance with the rules contained in this chapter,” need not be used if the party demurring relies upon no question of form. Proctor v. Stone, 1 Allen, 193, 196. Chenery v. Holden, 16 Gray, 125. The substance of the declaration is that the plaintiff was a stockholder, and that the defendant was bound to him in the terms of the agreement, by which, as the declaration puts it, the corporation promised him that upon request it would cause his shares to be appraised by its board of directors in accordance with the agreement; that being desirous of selling his shares he applied to the defendant to cause the same to be appraised in accordance with the agreement, and that the defendant, disregarding its promise, refused to appraise the shares or to cause [173] them to he appraised in accordance with the agreement, by reason of which refusal he has lost the difference between the real value of the shares and a lower price at which, for lack of the appraisal, the shares were sold at public auction at the Stock Exchange. Omitting the words relating to executors, etc., the agreement, so far as is now material, is that, should the person to whom the certificate of stock is issued desire to sell any of his shares he shall cause them to be appraised by the directors, “ which it shall be their duty to do on request,” and shall thereupon offer the same to the directors for the use of the company at such appraised value, and that upon payment or tender to him thereof and of the dividends due, if the directors choose to take the shares for the use of the company, "if the appraised value is not less than the book value as defined, he shall transfer the shares to the company; with a further proviso that the directors shall not be obliged to take the shares at the appraisal unless they shall think it for the interests of the company ; and if they shall not within fifteen days after the shares are offered to them in writing take and pay for the same, the shareholder shall be at liberty to sell them to any person. While the declaration alleges that the corporation promised the plaintiff that upon request it would cause his shares to be appraised by its board of directors, such is not the language of the agreement. It provides, on the contrary, that the plaintiff “ shall cause such his shares respectively to be appraised by the directors.” Assuming that the words “ which it shall be their duty to do on request ” make it the duty of the directors to make the appraisal, the agreement does not say that the company shall cause them to perform that duty, and does say that the plaintiff shall cause them so to do ; nor does the agreement say that the company shall be responsible for the breach of this duty by the directors, in the performance of which, if they act, they are not mere agents of the company, but referees or arbitrators standing between it and the stockholder and acting for one party as much as the other. Reading the agreement as a part of the declaration there is no allegation of a failure by the corporation to perform what the agreement says the corporation shall do. The substance of the allegation is that what the plaintiff agreed to cause to be done has not been done. [174] Aside from this, it is plain that the object of the agreement taken as a whole, in view of the circumstances and relations of the parties to it when it was entered into, was to enable the company to keep its stock in the ownership of stockholders of its own choosing, and that the office of the appraisal was simply to fix the price at which the stock should be paid for, if the company should elect to take it. It would serve no useful purpose to have an appraisal if the directors should tiot choose to take the stock for the company, while their refusal to appraise upon request of the stockholder would give him the right to sell to any purchaser. The fair construction of the whole agreement is that the stockholder had no right to an appraisal unless the stock was to be taken for the company. Order sustaining demurrer affirmed; judgment for defendant affirmed.