1. Securities--purchase of shares in merger--tender of payment--required information
A purchasing bank's tender of payment for shares in the purchased bank was incomplete
where it lacked required information as to how the fair value of the stocks was calculated. The
clear legislative intent of N.C.G.S. § 55-13-25 is to adequately inform shareholders of their
rights and provide sufficient information for shareholders to assess the necessity of a judicial
appraisal of the shares.
2. Securities--purchase of shares in merger--dissenter's demand for appraisal--statute
of limitations
The trial court erred by dismissing an action for judicial appraisal of stock for being
outside the required time period under N.C.G.S. § 55-13-30(a) where defendants did not include
the required information with their tendered payment, so that the payment was not complete.
The proper time for determination of plaintiff's filing date was the date of her dissenter's demand
for payment, and plaintiff began this action within sixty days of that date, as required.
Clement Law Office, by Charles E. Clement, for plaintiff-
appellant.
Ward and Smith, P.A., by Gary J. Rickner and Donalt J.
Eglinton, for defendant-appellees.
Attorney General Roy A. Cooper, III, by Assistant Attorney
General P. Bly Hall, for the State, amicus curiae.
HUNTER, Judge.
Anne Carson Foard (“plaintiff”) appeals from an order dated 1
April 2004 dismissing her action for judicial appraisal of shares
of stock in Avery County Bank prior to its merger with FirstCitizens Bank & Trust (collectively “defendants”). For the reasons
stated herein, we reverse the dismissal.
In 2003, First Citizens Bank & Trust (“FCB”) purchased and
merged with Avery County Bank (“ACB”). As required by N.C. Gen.
Stat. § 55-13-20 (2003), ACB sent a notice on 27 June 2003 to all
shareholders, including plaintiff, regarding a special meeting on
5 August 2003 to consider and vote on the Agreement and Plan of
Share Exchange between ACB and FCB (“the Merger”). Included in the
notice were the statutory rights of dissenters to the Merger, the
proposed amount to be paid for shares, and the recent financial
history of ACB.
Plaintiff timely exercised her right to dissent within the
thirty days required by N.C. Gen. Stat. § 55-13-21 (2003) on 29
July 2003. Upon completion of the required forms and surrender of
her shares, plaintiff received notification, dated 5 November 2003,
that her payment demand had been received. Enclosed with the
notification was a check for $78,144.40, calculated at a rate of
$2,604.00 for each of plaintiff's thirty shares, plus interest. In
an attempt to comply with N.C. Gen. Stat. § 55-13-25(b) (2003), the
check was accompanied by a copy of ACB's financial statements, an
explanation of how interest was calculated, a statement of
dissenter's right to demand payment, a brief statement regarding
the fair value of the stock, and a copy of Article 13 of the North
Carolina Business Corporation Act.
On 5 December 2003, plaintiff notified defendants of her
dissent as to the fair value of the shares, and requested anaccounting of defendants' computation as to the fair value.
Plaintiff then applied for an extension of time to file a complaint
for judicial appraisal of her shares on 20 January 2004, which was
granted, and filed her complaint in this matter on 9 February 2004.
On 3 March 2004, defendants filed a motion to dismiss, on the
grounds that plaintiff had not brought her action for judicial
appraisal within the required time limit of N.C. Gen. Stat. § 55-
13-30 (2003). The trial court granted the motion and dismissed the
action on 1 April 2004. Plaintiff appeals.
The related assignments of error in this case are whether the
trial court erred in its interpretation of “payment,” as defined in
§ 55-13-25, and as a result improperly applied the time limitations
of § 55-13-30(a) in determining whether plaintiff's claim was
timely filed. Plaintiff withdrew her additional assignment of
error at oral argument before this Court, and we therefore do not
address that issue.
Plaintiff first contends the trial court erred in granting the
motion to dismiss due to its erroneous interpretation of payment as
prescribed by § 55-13-25 of the North Carolina General Statutes.
Plaintiff contends that the use of “shall” in § 55-13-25(b) makes
the inclusion of the required information in that subsection
mandatory for a payment to be complete. We agree.
Section 55-13-25 of the North Carolina Business Corporation
Act, entitled Payment, is a subsection of Article 13, which
provides statutory rights for dissenters to a corporate action.
The statute provides that: (a) As soon as the proposed corporate
action is taken, or within 30 days after
receipt of a payment demand, the corporation
shall pay each dissenter who complied with
G.S. 55-13-23 the amount the corporation
estimates to be the fair value of his shares,
plus interest accrued to the date of payment.
N.C. Gen. Stat. § 55-13-25(a). The statute contains a second
subsection which requires the payment to be accompanied by certain
items of information:
(b) The payment shall be accompanied by:
(1) The corporation's most recent available
balance sheet as of the end of a fiscal
year ending not more than 16 months
before the date of payment, an income
statement for that year, a statement of
cash flows for that year, and the latest
available interim financial statements,
if any;
(2) An explanation of how the corporation
estimated the fair value of the shares;
(3) An explanation of how the interest was
calculated;
(4) A statement of the dissenter's right to
demand payment under G.S. 55-13-28; and
(5) A copy of this Article.
N.C. Gen. Stat. § 55-13-25(b).
In interpreting our state statutes, “the primary function of
this Court is to 'ensure that the purpose of the Legislature in
enacting the law, sometimes referred to as legislative intent, is
accomplished.' To determine legislative intent, we examine the
language and purpose of the statute.” Albemarle Mental Health Ctr.
v. N.C. Dep't of Health & Human Servs., 159 N.C. App. 66, 68, 582
S.E.2d 651, 653 (2003) (citations omitted). “'Statutory interpretation properly begins with an examination
of the plain words of the statute.' Correll v. Division of Social
Servc., 332 N.C. 141, 144, 418 S.E.2d 232, 235 (1992). 'If the
language of the statute is clear and is not ambiguous, we must
conclude that the legislature intended the statute to be
implemented according to the plain meaning of its terms.'” Three
Guys Real Estate v. Harnett County, 345 N.C. 468, 472, 480 S.E.2d
681, 683 (1997) (citations omitted). Our Courts have previously
held that the use of the term “shall” in a statute makes the
provision mandatory. In Bailey v. Western Staff Servs., 151 N.C.
App. 356, 566 S.E.2d 509 (2002), this Court, in interpreting a
portion of the workers' compensation statute, found that when a
statute stated that payment “shall be accompanied by” specific
forms, use of those forms was mandatory. Id. at 360, 566 S.E.2d at
512.
Similarly, § 55-13-25 requires more than a mere tender of
monetary compensation for the shares. The statute specifies that
such a tender “shall be accompanied by” specific information. As
the clear legislative intent in this statute is to adequately
inform the shareholder as to their rights and provide sufficient
information for the shareholder to assess the necessity of a
judicial appraisal of the shares, such a requirement must be read
as mandatory, rather than permissive.
Here, plaintiff submitted written notice of her dissent to the
Merger on 29 July 2003 and submitted a payment demand to defendants
following the Merger. Plaintiff received the sum of $78,144.40from defendants in a letter dated 5 November 2003. The letter
contained the required explanation as to the calculation of
interest, and plaintiff's right to demand payment as a dissenter
under § 55-13-28. Accompanying the letter and checks was a copy of
the financial information required by § 55-13-25(b)(1), as well as
a copy of Article 13 of the North Carolina Business Corporation
Act. However, the letter failed to offer an explanation as to how
the fair value of the stocks was calculated, stating only:
We actually estimated the “fair value” of your
shares at less than $78,120. We paid a
substantial premium to acquire majority
ownership of ACB in the Acquisition, and we
estimate that the “fair value” to which you
are entitled under Section 55-13-01(3) of the
North Carolina General Statutes is
substantially less than $78,120. The reason
is that under Section 55-13-01(3) “fair value”
is based on the value of your shares before
the Share Exchange, without appreciation in
anticipation of the Share Exchange unless that
exclusion would be inequitable. Nevertheless,
we did not want to pay you less per share than
other ACB shareholders are receiving in the
Acquisition, so we include the full amount per
share provided for in the agreement governing
the Acquisition.
Defendants conceded at oral argument that they essentially offered
only a statement that they believed they were offering more than
fair value. A dissenter cannot properly assess whether a judicial
appraisal of shares is necessary without an explanation as to how
the fair value offered was reached, and the failure to include such
information undercuts the clear legislative intent of the statute.
As § 55-13-25 requires the tender of both a monetary sum and
required information to be rendered complete, defendants' profferedpayment which lacked essential information failed to comply with
the statute, and thus was incomplete.
In her related second assignment of error, plaintiff contends
that as a result of the trial court's erroneous interpretation of
payment under § 55-13-25, plaintiff's claim was improperly
dismissed under § 55-13-30. We agree.
Section 55-13-30 requires a dissenter seeking judicial
appraisal of shares to “commence a proceeding within 60 days after
the earlier of (i) the date payment is made under G.S. 55-13-25, or
(ii) the date of the dissenter's payment demand under G.S. 55-13-
28[.]” N.C. Gen. Stat. § 55-13-30(a). The statute further states
that “[a] dissenter who takes no action within the 60-day period
shall be deemed to have withdrawn his dissent and demand for
payment.” Id.
“It is well established that '[w]hen multiple statutes address
a single matter or subject, they must be construed together, in
pari materia, to determine the legislature's intent.'” Wright v.
Blue Ridge Area Auth., 134 N.C. App. 668, 672, 518 S.E.2d 772, 775
(1999) (citation omitted). “'“[W]here one statute deals with
certain subject matter in particular terms and another deals with
the same subject matter in more general terms, the particular
statute will be viewed as controlling in the particular
circumstances absent clear legislative intent to the contrary.”'”
Woodburn v. N.C. State Univ., 156 N.C. App. 549, 553, 577 S.E.2d
154, 157 (2003) (citations omitted). Section 55-13-30's specific reference to payment as made under
§ 55-13-25 indicates that the latter is the particular statute, and
therefore its meaning of payment is controlling for determination
of the sixty day period. Thus a dissenter must commence an action
within sixty days after the earlier of the date of a completed
payment made under § 55-13-25, including both the actual monetary
sum and all required accompanying information, or the date of the
dissenter's payment demand under § 55-13-28. See N.C. Gen. Stat.
§ 55-13-30(a).
Here, as discussed supra, defendants failed to make a
completed payment under § 55-13-25. Thus the proper date for
determination of the sixty day filing period is the date of the
dissenter's payment demand made under § 55-13-28. Plaintiff made
such a demand on 5 December 2003, and properly filed for an
extension of time to file a complaint for judicial appraisal on 20
January 2004. As plaintiff commenced the action within sixty days
of the dissenter's payment demand, the trial court erred in
dismissing the action for failure to file within the required time
period under § 55-13-30(a).
For the reasons stated herein, we reverse the decision of the
lower court.
Reversed.
Judges BRYANT and JACKSON concur.
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