Beutelspacher v. Spokane Savings Bank, 164 Wash. 227,

      BEUTELSPACHER v. SPOKANE SAVINGS BANK.           229
 Sept. 1931          Opinion Per MAIN, J.

from which the plaintiffs and intervener appeal,
and the defendants cross-appeal.

The facts which will present the questions here to be
determined may be summarized as follows: The Spokane
Savings & Loan Society (which will be referred
to as the Society) was organized in the year 1897, the
term of its existence being fixed at fifty years. It was
a prosperous institution, and had acquired deposits
amounting to approximately fifteen million dollars.
In January, 1929, the legislature of this state passed
what is known as the corporation excise tax law (Laws
1929, p. 380, ch. 151). It was estimated that, under
this law, the tax which the Society would be required
to pay per annum would be from thirty-five to forty
thousand dollars.

For many years prior to this time, the Society had
paid its shareholders interest at five per cent per
annum, payable semi-annually. The officers of the Society,
believing that, if it was required to pay the
amount of tax exacted by the law, its income would not
be sufficient to maintain the five per cent dividend,
formulated the plan of dissolving the Society and
transferring its assets to the Spokane Savings Bank
(which will be referred to as the Bank). The plan was
by the president of the Society and its attorney presented
to the state supervisor of savings and loan societies
and an assistant attorney general, and was by
them informally approved. The capital of the Bank
was increased to one million dollars, which was divided
into fifty thousand shares of the par value of
twenty dollars per share. The board of directors of
the Society and that of the Bank consisted, with one
or two exceptions, of the same persons.

On Friday, October 11, 1929, the directors of the
society made and passed a resolution approving the
change and transferring the assets of the Society to

 230    BEUTELSPACHER v. SPOKANE SAVINGS BANK.
                Opinion Per MAIN, J.           164 Wash.

the Bank, and thereafter it was announced through the
press that, beginning the following Monday, the intervening
Saturday being a holiday, the business of the
Society would be conducted by the Bank. When the
Bank opened Monday, as shareholders came in they
were tendered a new pass book and a card to sign,
transferring their accounts from the Society to the
Bank. Sometime during the month of November, the
present action was begun, which, as stated, sought to
set aside the transfer of the assets of the Society to
the Bank.

After this action was begun, and on December 14,
1929, a meeting of the shareholders of the Society was
held, and a resolution to dissolve the Society, liquidate
its affairs, and make distribution among the shareholders
in accordance with the law, was passed. At
this meeting, the total number of shares voting for the
resolution was 54,006, and the total number against
was 342; the total number of ballots was 90, the number
for the resolution being 71, and against, 19.

The book value of the Society's assets October 11,
1929, when the transfer was made, was $14,695,200.32;
there being approximately fifty thousand shareholders.
At the time of the trial, out of deposits of $14,113,610
on October 11, accounts representing $12,682,297 had
been transferred by express authority of the shareholders.
The accounts which had not been transferred
numbered 4,954, of which 3,669 were inactive accounts
of less than one hundred dollars each. The shareholders
in the Society were given the right either to withdraw
their entire accounts, with interest thereon up to
the time of withdrawal, or to transfer the accounts to
the Bank. The shareholders of the Society were also
given an opportunity to take stock in the Bank, which
seven hundred fifty did. The parties bringing the action,
the appellants, are a small proportion of the number

      BEUTELSPACHER v. SPOKANE SAVINGS BANK.           231
 Sept. 1931          Opinion Per MAIN, J.

of shareholders, and their deposits bore about the
same relation to the total deposits as the number of
shareholders bringing this action bore to the total
number of shareholders.

The principal and important question, as stated in
the appellants' brief, is whether

". . . the conversion and transfer of the business
and assets of the Spokane Savings & Loan Society
to the Spokane Savings Bank, under the circumstances
of this case, was unauthorized and is illegal and void."

[1] To determine the answer to this general question,
a number of more specific or particular questions
must be considered; the first of which is whether the
Society could be dissolved by a two-thirds vote of the
shareholders present at the meeting on December 14,
1929. This depends upon whether the statute under
which the. Society was organized authorizes such a
dissolution. Central Transportation Co. v. Pullman Co.,
139 U. S. 24; Geddes v. Anaconda Copper Mining Co.,
254 U. S. 590. Section 3742, Rem. Comp. Stat., provides
that,

"Any savings and loan association incorporated
under the laws of the State of Washington may dissolve
itself voluntarily in the following manner:

"A majority of the board of directors shall publish
a notice in some newspaper of general circulation in
the county wherein is the principal place of business
of the association once each week for eight consecutive
weeks calling a meeting of the shareholders to determine
whether said savings and loan association shall
voluntarily dissolve. If at such meeting two-thirds of
the shareholders then present and voting shall vote to
dissolve; and the state auditor [director of efficiency]
shall approve of such dissolution, the officers of the
association, under the direction of the directors of the
association, shall thereupon proceed to liquidate the
affairs of the association and reduce the assets thereof
to cash, and, after paying all indebtedness and

 232    BEUTELSPACHER v. SPOKANE SAVINGS BANK.
                Opinion Per MAIN, J.           164 Wash.

expenses, distribute the same among the shareholders in
proportion to the withdrawal value of the holdings of
each shareholder at the time of the passage of the
resolution to dissolve."

It is there expressly provided that two-thirds of the
shareholders present and voting are sufficient to authorize
a dissolution, providing the action is approved
by the director of efficiency.

This case differs from that of Theis v. Spokane Falls
Gas Light Co., 34 Wash. 23, 74 Pac. 1004, where it was
held that an attempted dissolution of a prosperous
corporation and the transfer of its assets to a new
corporation, for the sole purpose of getting rid of a
disagreeable stockholder who refused to sell his stock,
could not be sustained. In this case, the evidence
shows clearly that the officers and directors of the
Spokane Savings & Loan Society, in taking the action
that they did with reference to the Society and with
reference to the Bank, were actuated by an honest and
sincere desire to promote the interests of the shareholders
of the Society. The trial court, in a memorandum
opinion filed after the trial, said:

"I am convinced from the evidence that the officers
and directors of the Spokane Savings & Loan Society,
in taking the action that they did with reference to said
Society and with reference to the Spokane Savings
Bank, were actuated by an earnest desire and sincere
motive to advance and promote the best interests of
the shareholders of the savings and loan institution
. . . "

The same thought was carried into the formal findings
made by the court, and, after a consideration of
the entire record, we are in accord with the view of the
trial court thus expressed.

Where the statute gives authority to dissolve a corporation,
and the requisite number of shareholders

      BEUTELSPACHER v. SPOKANE SAVINGS BANK.          233
 Sept. 1931          Opinion Per MAIN, J.

support the resolution for dissolution and liquidation,
the courts will not examine into the affairs of the
corporation for the purpose of determining whether the
action was expedient or wise. Thompson on Corporations
(3d ed.), vol. 8, page 629; Rossing v. State Bank
of Bode, 181 Iowa 1013, 165 N. W. 254; White v. Kincaid,
149 N. C. 415, 63 S. E. 109, 23 L. R. A. (N. S.)
1177, 128 Am. St. 663.

[2] The statute giving the authority to dissolve, and
there being no evidence of fraud or bad faith, the next
question is whether the statute was complied with. In
this connection, it is said, (a) that the published notice
of the stockholders' meeting was not made in a newspaper
of general circulation; and (b) that illegal votes
were cast at the stockholders' meeting, and there was
a wrongful denial to others of the right to vote.

As to the notice, the statute above quoted provides
that it shall be published in a newspaper of "general
circulation." It is also provided in the same section
that if, at the meeting of the shareholders, the requisite
number vote to dissolve, and the director of
efficiency shall approve of such dissolution, then the
officers of the association shall proceed to liquidate. In
this case, the trial court found that a record of the
proceedings of the meeting of the members or shareholders,

". . . together with all proofs, documents and
records, were submitted to and filed with the director
of efficiency of the state of Washington on the 17th day
of December, 1929, the same and such dissolution were
approved, and said Spokane Savings & Loan Society
legally dissolved."

In this connection, it is said by the cross-appellants
that one of the necessary facts for the director of
efficiency to find, before making the approval, was that
a notice had been published in accordance with the

 234    BEUTELSPACHER v. SPOKANE SAVINGS BANK.
                Opinion Per MAIN, J.           164 Wash.

statutory requirement, and that, such officer having
found in effect that fact, the question is not open for
the court to determine. Without so deciding, it may
be assumed, for the purposes of this case, that the
effect of the finding of the director of efficiency is as
claimed.

The notice in question was published for the requisite
time in the Spokane Weekly Chronicle. This paper
had been continuously published in the city of Spokane
and circulated in Spokane county and surrounding territory
for many years. At the time of the publication
of the notice in question, the total subscription to the
paper was approximately four hundred fifty. There
was evidence that the majority of legal notices in
probate and civil actions in Spokane county for many
years had been published in this newspaper. The Spokane
Weekly Chronicle was a newspaper of general
circulation, within the meaning of the cases of Puget
Sound Publishing Co. v. Times Printing Co., 33 Wash. 551,
74 Pac. 802; and Times Printing Co. v. Star Publishing
Co., 51 Wash. 667, 99 Pac. 1040.

[3] Assuming that the published notice was insufficient,
the appellants, who were present at the meeting,
are not in a position to complain, either on behalf
of themselves or on behalf of other shareholders who
were not present or represented by proxy. Kearneysville
Creamery Co. v. American Creamery Co., 103 W.
Va. 259, 137 S. E. 217, 51 A. L. R. 938; Handley v.
Stutz, 139 U. S. 417.

[4] As to the receipt of illegal votes and rejection
of legal votes, little need be said, because if all the
votes which are claimed to have been cast illegally are
disregarded, and all the votes which are claimed to
have been wrongfully rejected are counted, there still
would be voting for the resolution two-thirds of the
shareholders present at the meeting. An election or

      BEUTELSPACHER v. SPOKANE SAVINGS BANK.           235
 Sept. 1931          Opinion Per MAIN, J.

other action at a corporate meeting is not rendered
invalid because of the receipt of illegal votes, or the
rejection of legal votes, if the result would have been
the same had they been rejected or received, as the
case may be. Fletcher Cyc. Corporations, vol. 3, sec,
1677.

[5] The next question is whether the stockholders
of the Bank, who were directors of the Society, had a
right to vote for the resolution for the dissolution of
the Society and transfer of the assets to the Bank. It
will be admitted that the directors of the Society act in
a trust capacity, and are the custodian of trust funds
of the shareholders. As directors of the Society, they
would not be qualified to authorize the transfer of the
assets to the Bank of which they were stockholders and
directors; but the rule that a director may not act
where his interest is adverse to the corporation does
not apply in the case of the stockholder, because he
may vote his stock as he pleases for the purpose of his
own interest. Windmuller v. Standard Distilling Co.,
114 Fed. 491; Green v. Bennett, 110 S. W. (Tex. Civ.
App.) 108; Rossing v. State Bank of Bode, 181 Iowa
1013, 165 N. W. 254. The meeting of the stockholders
was carried on in accordance with the statutory requirements.

The next question is whether the assets of the Society
were transferred to the Bank for a consideration
which represented a fair price and was the full value
thereof. Upon this question the evidence is in conflict;
that offered by the appellants, if accepted, would
indicate that the consideration was less than the value;
on the other hand, the testimony offered by the cross-appellants
would sustain the value at which the assets
were taken over. This presents a question of fact.
The trial court found that

 236    BEUTELSPACHER v. SPOKANE SAVINGS BANK.
                Opinion Per MAIN, J.           164 Wash.

"The consideration received by the Society, and the
purchase price paid by the Spokane Savings Bank
therefor, was a full and fair consideration and in all
respects adequate and sufficient."

It would serve no useful purpose and would extend
this opinion, which is already overlong, to attempt to
review the evidence upon this question. It is sufficient
to say that, after considering the evidence, we think
the trial court reached the correct conclusion.

The appellants make two other contentions which
are of minor importance, and which it is unnecessary
here to consider in detail, because if the court was in
error (and we do not think it was ) in either one or both
of the matters complained of, a reversal of the judgment
would not be required.

[6] Upon the cross-appeal, little need be said. Section
3731, Rem. Comp. Stat., in part provides for the
enforcing of withdrawal of shares, and provides that
the holders thereof shall be paid the full value of the
shares, including, in such case, their proportionate
value of the contingent fund. That was what the trial
court allowed the parties to this action and to all
persons who were minors at the date of the meeting, which
was held on December 14, 1929, and we are of the
opinion that the holding should be approved.

The judgment will be affirmed.

TOLMAN, C. J., PARKER, MITCHELL, and HOLCOMB, JJ.,
concur.