Breen v. Wollaston Golf Club

368 Mass. 776 (1975)

335 N.E.2d 913

GEORGE I. BREEN vs. WOLLASTON GOLF CLUB.

Supreme Judicial Court of Massachusetts, Norfolk.

September 18, 1975.

October 16, 1975.

Present: TAURO, C.J., REARDON, BRAUCHER, HENNESSEY, KAPLAN, & WILKINS, JJ.

*777 Mark A. Breen for the plaintiff.

John G. Fabiano for the defendant.

KAPLAN, J.

In his complaint in the Superior Court the plaintiff alleged the following in substance. He is a member of the defendant golf club, a corporation. At a meeting called for the purpose, the members voted approval of a sale of the golf course (including the land and other property).[1] The sale was subsequently carried out.[2] The call to the meeting did not comply with G.L.c. 156B, § 87, which requires that notice be given of the right of individual stockholders, who object to a proposal "to sell, lease or exchange all or substantially all ... [of the corporation's] property and assets" (§ 76),[3] to pursue statutory procedures looking to a judicial appraisal of the fair value of their interests and payment by the corporation of the sum established. See §§ 86-98. The plaintiff notified the corporation of its noncompliance with c. 156B, § 87, and demanded appraisal of the value of his certificate of ownership, and payment, but the corporation refused relief. Wherefore the plaintiff prays that the court determine the value of his certificate of ownership and award damages.

On the defendant's motion under Mass. R. Civ. P. 12 (b) (6) (1974), 365 Mass. 754 (1974), to dismiss the complaint for failure to state a claim, the defendant offered and the judge received a copy of the defendant's certificate of organization. This showed that the corporation *778 was organized in 1899 under Pub. Sts. c. 115, the predecessor of G.L.c. 180. The plaintiff did not offer any opposing material. The judge treated the motion as one for summary judgment,[4] and entered judgment for the defendant. This court took the case for direct appellate review under G.L.c. 211A, § 10 (A).

The answer to this appeal is that the appraisal provisions of G.L.c. 156B, §§ 86-98, on which the plaintiff bases his complaint, do not apply to c. 180 corporations. Chapter 156B, entitled "Certain Business Corporations," governs generally (with particular exceptions) corporations having capital stock which are established "for the purpose of carrying on business for profit." See G.L.c. 156B, § 3 (a). Chapter 180, entitled "Corporations for Charitable and Certain Other Purposes," is directed, on the other hand, to corporations having civic, educational, charitable, benevolent, religious, or stated cognate purposes, including specifically the purpose of "fostering, encouraging or engaging in athletic exercises or yachting." G.L.c. 180, § 4 (f); see § 2 (c). Chapter 180 does not by itself provide for appraisal of the interests of objecting members. But it is argued that the appraisal sections of G.L.c. 156B, or some of them, should be read as attaching to c. 180 corporations also. It is true that c. 180 at various places refers expressly to and imports and adopts sundry provisions of c. 156B. See c. 180, §§ 3, 6, 6A, 7, 10, 10A. But it does not so treat any of the appraisal provisions of c. 156B. The significance of this omission is emphasized by c. 156B, § 3 (b), which after the direct statement in § 3 (a) of the corporations to which that chapter applies, goes on to include "all other corporations to which this chapter is made applicable by *779 the express provisions of any other general or special law to the extent provided thereby."

A suggestion appeared in argument that if the statutory appraisal provisions do not cover the present case, then the plaintiff might still fall back on an equivalent or comparable common law right of appraisal. It is, however, very dubious whether such a right ever existed in the absence of statute even with respect to ordinary business corporations (see Bozenhard, Massachusetts Appraisal Statute and Minority Stockholders, 45 Mass. L.Q., No. 3, p. 27 [1960]), and in any event the whole legislative pattern here considered seems comprehensive enough to repel a common law adjunct regarding such a subject as appraisal. The plaintiff has laid no predicate for a claim on any other theory.

We add that we do not think it can be seriously maintained that there is arbitrary discrimination in providing for dissenters' appraisal rights against c. 156B corporations while denying them as to c. 180 corporations. The weakness of such a contention is brought out by considering what grounds are conventionally given, or exist in reason, for allowing appraisal in the case of ordinary business corporations. See Manning, The Shareholder's Appraisal Remedy: An Essay for Frank Coker, 72 Yale L.J. 223 (1962); Eisenberg, The Legal Roles of Shareholders and Management in Modern Corporate Decisionmaking, 57 Cal. L. Rev. 1, 71-86 (1969).[5]

Judgment affirmed.

[1] At oral argument it was indicated that the club is now at a different location.

[2] From Walsh v. Wollaston Golf Club, 353 Mass. 247 (1967), it appears that there was a prior proposal to sell the golf course. The question of the right of objecting members to an appraisal was sought to be raised, but this court did not reach it; the action failed because there was no allegation that the sale had in fact been consummated.

[3] Certain other transactions also give rise to rights of appraisal on the part of objecting stockholders under c. 156B. See §§ 76, 77, 82(e), 83(f), 85.

[4] Massachusetts Rule of Civil Procedure 12 (b), 365 Mass. 754 (1974), provides: "If, on any motion asserting the defense numbered (6) ... matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment...."

[5] The A.B.A.'s Model Nonprofit Corporation Act contains no appraisal provisions. (The 1964 revised edition of this model act is published by the Joint Committee on Continuing Legal Education of the A.L.I. and A.B.A. as Practice Handbook D of the Model Corporation Acts.)