Kahn v. Columbus Mills, Inc.

Carley, Judge,

dissenting.

This case is ultimately premised upon the alleged inadequacy of the $43 per share tender offer which was extended to the minority shareholders of stock in Columbus Mills, Inc. Under the undisputed evidence of record, appellants voluntarily accepted this allegedly inadequate offer and tendered their stock. It is my opinion that appellants’ acceptance of the amount which was offered to them for the tender of their shares resulted in the loss of whatever legal right, if any, they may otherwise have had to pursue this litigation against appellees. Accordingly, I believe that the trial court correctly granted appellees’ motion for summary judgment and, therefore, I respectfully dissent.

It is the established rule in Georgia that those stockholders in a corporation who have participated in the performance of an act, or who have acquiesced in and ratified an act, are thereafter estopped to complain thereof. See generally Bloodworth v. Bloodworth, 225 Ga. 379, 387 (1) (169 SE2d 150) (1969). None of the Georgia cases cited by the majority authorizes a holding that the principle of estoppel is not applicable under the facts of this case. In my opinion, the evidence of record establishes that, because appellants acquiesced in and ratified the $43 per share tender offer as the price which they would *96accept for their stock, they should be estopped to assert that the tender offer was inadequate. Under the undisputed evidence of record, appellants did, in fact, make a post-merger tender of their shares, and they thereby accepted the original tender offer of $43 per share. Appellants were certainly not required to do so. After the merger, appellants were entirely free to continue to refuse to part with their shares for a price they considered inadequate and to seek an adequate price by pursuing the suit they had originally filed. In the alternative, they were also free to tender their stock and receive the price of $43 per share which had originally been offered to them. Accordingly, the tender of appellants’ post-merger shares was determinative as to their status as former shareholders who had signified their acquiescence in the terms of the merger, which terms they had previously considered to be unfair to minority shareholders. “The acceptance of the benefit flowing from an unauthorized act amounts to an implied ratification of such act, whether the principal intends to ratify it or not. [Cits.] Warner v. Hill, 153 Ga. 510, 513 (112 SE 478) (1922).

The majority holds that appellants, by tendering their stock and receiving the price of $43 per share for doing so, were merely mitigating their damages. However, appellants were seeking to recover as damages the amount by which the alleged actual value of their stock exceeded the tender offer price of $43 per share. Accordingly, only by their receipt of a sum in excess of $43 per share could appellants’ post-merger relinquishment of their shares be deemed to be in mitigation of the damages which they had allegedly sustained. The acceptance of the $43 tender offer represents, instead, an acquiescence in and ratification of the very merger terms which, according to appellants, appellees had wrongfully approved as a fair offer to minority shareholders. Thus, the act which the majority cites as evidence of appellants’ mere mitigation of their damages shows, instead, appellants’ estoppel to assert that they suffered any recoverable damages at all. See Warner v. Hill, supra.

The majority is correct insofar as it holds that appellants, as dissenting shareholders to the terms of the merger, were not required to invoke the provisions of OCGA § 14-2-251 to determine the fair value of their stock. “If a shareholder does not enforce his dissenter’s rights pursuant to this Code section . . . , nothing in this Code section shall be construed as barring him from bringing or maintaining an appropriate action to obtain relief on the ground that the corporate action in question will be or is unlawful or fraudulent as to him.” (Emphasis supplied.) OCGA § 14-2-251 (j). However, the majority’s determination that the principle of estoppel is not applicable here and that the case at bar constitutes appellants’ maintenance of an “appropriate action” is a holding which will render OCGA § 14-2-251 no more than a statutory relic.

*97If the majority were correct, then no shareholder who dissented to the terms of a tender offer would ever elect to invoke the provisions of OCGA § 14-2-251. Under that provision, the possibility exists that the value of a dissenting shareholder’s stock could be determined to be less than the amount of the tender offer. The effect of the majority opinion is, however, to endorse a shareholder’s right to accept the tender offer from which he purportedly dissents, without losing his right as a litigant to continue to contest the adequacy of that previously accepted offer. Under the majority’s opinion, a dissenting shareholder could be assured of the immediate receipt and use of the amount of the tender offer as an established minimum value for his shares, and also thereby preserve the possibility of his receipt of additional compensation in the form of a settlement or a judgment. Therefore, the majority’s failure to recognize the applicability of the principle of estoppel in this case will render the enactment of OCGA § 14-2-251 no more than an academic legislative exercise and encourage litigation by the former dissenting shareholders of a merged corporation.

The majority’s holding is contrary to the general principle of estoppel which is recognized in this state. “No one can maintain an action for a wrong done, where he has consented or contributed to the act which occasions the loss.” Peacock v. Terry, 9 Ga. 137 (3) (1850). The majority’s conclusion is also inconsistent with the express decisions which have been rendered by the courts of other jurisdictions. “[W]hen an informed minority shareholder either votes in favor of the merger, or . . . accepts the benefits of the transaction, he or she cannot thereafter attack its fairness. [Cit.] Since [the plaintiff] tendered his shares and accepted the merger consideration, he acquiesced in the transaction and cannot now attack it.” Bershad v. Curtiss-Wright Corp., 535 A2d 840, 848 (13) (S.C. Del. 1987). Although the Bershad decision is not controlling authority, the majority’s efforts to discount its persuasiveness are unavailing. Contrary to the majority’s opinion, the above-quoted holding in Bershad was certainly not “dicta.” It specifically addressed the alleged inadequacy of the price for which the plaintiff in that case had tendered his shares, which was one of several grounds upon which the merger had been attacked.

The majority’s failure to distinguish either those existing Georgia decisions which relate to the general principle of estoppel or those persuasive decisions of other jurisdictions which relate to the exact issue raised in this case demonstrates the error of its holding that appellants are entitled to pursue this legal action against appellees. Accordingly, I must respectfully dissent from the majority’s reversal of the grant of summary judgment in favor of appellees.

I am authorized to state that Chief Judge Birdsong and Judge *98Beasley join in this dissent.

Decided July 13, 1988 Rehearing denied July 28, 1988 Thomas R. Burnside, Jr., James B. Wall, for appellants. Frank C. Jones, Nolan C. Leake, David F. Guldenschuh, for appellees.