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Jaquith & Co. v. Island Creek Coal Co.

Decided: June 23, 1965.

JAQUITH & CO., A NEW YORK PARTNERSHIP, F. P. RISTINE & CO., A NEW YORK PARTNERSHIP, FRANK H. BLAIR, THE MAGUIRE FOUNDATION, INC., A CONNECTICUT CHARITABLE CORPORATION, THE FIRST PRESBYTERIAN CHURCH, A CONNECTICUT CHARITABLE CORPORATION, AND ESTELLE B. WRONKER, PLAINTIFFS,
v.
ISLAND CREEK COAL COMPANY, A DELAWARE CORPORATION, DEFENDANT



Matthews, J.s.c.

Matthews

This action was commenced by five stockholders of West Kentucky Coal Company, a New Jersey corporation, now merged into Island Creek Coal Company, a Delaware corporation, to secure the appointment of appraisers to fix the full market value of their stock and for the payment to them of the amount fixed by the appraisers. The action was commenced pursuant to the terms of N.J.S.A. 14:12-6 and 7. It is now before the court on a motion of each party for a summary judgment in its favor.

The facts are not in dispute. The plaintiffs are all stockholders of the West Kentucky Coal Company, a New Jersey corporation. Defendant Island Creek Coal Company is a Delaware corporation. West Kentucky Coal Company and Island Creek Coal Company, a Maine corporation, and Island Creek Coal Company, a Delaware corporation, entered into an agreement on November 5, 1964 for the merger of the first two corporations into the last-named corporation, defendant herein. The agreement was approved by the boards of directors of the three corporations.

On November 10, 1964 West Kentucky Coal Company sent to all of its stockholders, including plaintiffs, a notice of a special meeting of said corporation to be held on December 15, 1964, at which the agreement of merger would be considered and submitted to a vote of the stockholders. Terms of the merger were set forth in detail in the notice of the meeting and the proxy statement attached thereto, and the provisions of N.J.S.A. 14:12-7 and the pertinent provisions of N.J.S.A. 14:12-6 were reproduced and attached as Exhibit D. In the proxy statement, under the heading "Dissenting Stockholders," it was explained that a dissenting stockholder could obtain the value of his shares if he gave to West Kentucky Coal Company "written notice of his dissent" at any time prior to the vote on the merger. This section of the proxy statement read as follows:

"Stockholders of West Kentucky

As provided in Section 12-7 of the General Corporation Law of New Jersey, any stockholder of West Kentucky dissenting from the

Joint Agreement of Merger who shall give to West Kentucky written notice of his dissent at any time prior to the vote on the Joint Agreement of Merger and shall not vote in favor of the Joint Agreement of Merger may, at any time within 30 days after the adoption and filing of the Joint Agreement of Merger, by an action in the Superior Court against Island Creek-Delaware, apply for the appointment of three disinterested appraisers to appraise the full market value of his stock without regard to any depreciation or appreciation thereof in consequence of the merger. As provided in Section 12-6 of the General Corporation Law of New Jersey, the award of the appraisers, or that of a majority of them, when confirmed by the court, shall be final and conclusive on all parties, and Island Creek-Delaware shall pay to such stockholder the value of his stock as aforesaid. A copy of said Section 12-7 and the pertinent provisions of Section 12-6 is attached hereto as Exhibit D.

All stockholders of West Kentucky at the time the merger becomes effective will be promptly notified that the merger has become effective."

Plaintiffs Jaquith & Co., F.P. Ristine & Co., Frank H. Blair, The Maguire Foundation, Inc., and The First Presbyterian Church, each returned a proxy form to West Kentucky Coal Company prior to the stockholders' meeting on December 15, 1964, in which each directed that its or his shares be voted against the merger. No other communication was sent by any of the plaintiffs to West Kentucky Coal Company prior to December 15, 1964. The merger was approved by the requisite number of shareholders of the three corporations and became effective December 31, 1964.

Plaintiffs contend and defendant denies that the proxies they furnished to defendant satisfy the statutory requirement for an appraisal of their stock -- that prior to the vote on the merger a stockholder "give to the corporation [of which he is a member] written notice of his dissent" from such merger.

The statute on which plaintiffs base their action, N.J.S.A. 14:12-7, reads:

"Upon the merger or consolidation of any two or more corporations, which do not have the right to exercise any franchise for public use, into a single corporation, as provided by this title, if any stockholder in any of such merging or consolidating corporations not voting in favor of such agreement of merger or consolidation, shall dissent therefrom and shall refuse or neglect to ...


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