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Anagnost v. Hammond Corp.

OPINION FILED JULY 9, 1979.

THEMIS ANAGNOST ET AL., PLAINTIFFS-APPELLANTS,

v.

HAMMOND CORPORATION, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. REGINALD J. HOLZER, Judge, presiding.

MR. JUSTICE CAMPBELL DELIVERED THE OPINION OF THE COURT:

Rehearing denied August 6, 1979.

This is an appeal from the order of the trial court granting defendant's motion to dismiss plaintiffs' complaint for discovery.

Appellants' contentions on appeal may be summarized as follows:

(1) The right of plaintiffs as objecting shareholders to maintain a complaint for discovery against the survivor corporation of two merged Delaware corporations to determine the value of their shares of stock;

(2) The jurisdiction over plaintiffs in a prior Delaware statutory proceeding for valuation of the shares of objecting shareholders; and

(3) The jurisdiction over plaintiffs in a prior class action filed in the United States District Court of Delaware, and subsequently transferred to the United States District Court in Chicago, Illinois, on behalf of objecting shareholders.

We affirm.

On March 31, 1977, a class action was filed by another common shareholder and styled Barnett Stepak v. Hammond Corporation, et al., in the United States District Court of Delaware, and subsequently transferred to the United States District Court in Chicago, Illinois, seeking money damages resulting from alleged violations of Federal securities laws and Delaware law in connection with the merger.

On April 1, 1977, an action styled Barnett Stepak v. Hammond Corporation was filed in the Court of Chancery in Wilmington, Delaware. This action was filed pursuant to section 262 of the General Corporate Laws of Delaware (Del. Code Ann. tit. 8, § 262 (1975)), and sought appraisal of the value of the common shares of Old Hammond on behalf of Stepak and all of the stockholders similarly situated.

On December 30, 1977, plaintiffs filed the instant equitable bill for discovery in Chicago, Illinois, alleging that as common shareholders of Old Hammond who had demanded appraisal of their shares pursuant to section 262 of the General Corporate Laws of Delaware, they were entitled to access to Old Hammond's books and records. The complaint alleges that:

"Said information is necessary for plaintiffs to intelligently determine whether or not they wish to accept the tendered price of $7.75 per share or to have their shares appraised in the Court of Chancery of the State of Delaware or to participate in the class action presently pending in the U.S. District Court for the District of Delaware."

On January 20, 1978, the defendant filed a motion to dismiss plaintiffs' lawsuit pursuant to section 48(1)(c) of the Illinois Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 48(1)(c)), alleging, inter alia, that the pendency of both the Federal class action and the appraisal action in the Delaware Chancery Court precluded the plaintiffs from maintaining a complaint for discovery. The trial court, after hearing arguments of counsel, granted defendant's motion to dismiss.

On appeal plaintiffs have asserted that the order of dismissal was improper and plaintiffs have a right to maintain said complaint for discovery; that there is a question as to whether jurisdiction in the Delaware statutory proceedings for appraisal and valuation of the shares of dissenting shareholders attached prior to the service of the requisite notice of the pendency of the valuation proceedings; that the question of whether jurisdiction in the Federal action attached over members of the purported class before the trial court has made the determination as to the maintenance of the action as a ...


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