Magner v. One Securities Corporation
Georgia Court of Appeals
574 S.E.2d 555 (2002)

- Written by Douglas Halasz, JD
Facts
Richard Magner (plaintiff) owned one-third of One Securities Corporation and Benefit Plan Services, Inc. (the corporations) (defendants). The corporations removed Magner from their boards of directors in 1997. At a joint meeting on March 22, 1999, the boards of directors initiated a plan to cash out Magner’s interests in the corporations by approving the mergers of the corporations into shell corporations. The directors set a record date of March 25 and agreed to pay Magner the fair value of his interest in the corporations. On April 9, with the goal of creating tax disincentives for the corporations, Magner instructed the corporations to cancel his shares in the corporations and to reissue the shares to Richard Magner, LLC (the LLC) (plaintiff) effective April 14. The corporations did not immediately honor the instruction. On April 26, the shareholders approved the mergers. In a dissenters’ notice dated May 4, the corporations directed Magner to demand payment and tender his shares to the corporations by June 7 to perfect his appraisal rights. On May 12, Magner again instructed the corporations to reissue the shares to the LLC effective April 14, and the corporations honored the instruction. On June 7, both Magner and the LLC demanded payment from the corporations and tendered the LLC’s stock certificates. However, the corporations refused to pay Magner and the LLC on the grounds that Magner had canceled his shares and forfeited his appraisal rights and that the LLC was not a record shareholder on the record date. The corporations filed suit and sought a declaratory judgment as to whether Magner or the LLC had appraisal rights. Magner and the LLC filed a counterclaim regarding the validity of the mergers. The parties filed cross motions for summary judgment. The trial court ruled in the corporations’ favor. Magner and the LLC appealed.
Rule of Law
Issue
Holding and Reasoning (Ellington, J.)
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