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SCHULTZ ET AL. v. MOUNTAIN TELEPHONE COMPANY (03/20/50)

March 20, 1950

SCHULTZ ET AL.
v.
MOUNTAIN TELEPHONE COMPANY, APPELLANT



Appeal, No. 8, Jan. T., 1950, from order of Court of Common Pleas of Berks County, Aug. T., 1945, No. 224, in case of Henry H. Schultz, Jr., et al. v. The Mountain Telephone Company. Order reversed.

COUNSEL

Mark McQuillan, with him Leon Ehrlich, for appellant.

John E. Walsh, Jr., Edward Rexler and Edwin L. DeLong did not appear or file a brief for appellee.

Before Maxey, C.j., Drew, Linn, Stern, Patterson, Stearne and Jones, JJ.

Author: Linn

[ 364 Pa. Page 267]

OPINION BY MR. JUSTICE LINN

Dissenting shareholders of The Mountain Telephone Company, who were opposed to the sale of its assets to Conestoga Telephone and Telegraph Company, applied, pursuant to Section 5 of the Act*fn1 of May 20, 1921, P.L. 949, 15 PS 2415, for the appointment of "three disinterested persons to estimate and appraise the damage, if any, which such... stockholders have suffered or

[ 364 Pa. Page 268]

    sustained by reason of" such sale. Three appraisers were appointed; after hearing and investigation, a majority of them reported (1) that the dissenting shareholders "have suffered or sustained no damage by reason" of the transaction and (2) that the market value of the common stock of The Mountain Telephone Company at the pertinent date was $250 a share. The third appraiser filed a separate report fixing a higher market value. Exceptions to the report were filed and, after argument, the court dismissed them and confirmed the report. The court then conducted a hearing "to receive further testimony relating to the allowance of fees and expenses," and made an order taxing as costs, payable by the corporation, certain items amounting to $3,524.10 of which $1,800.00 constituted fees for the three appraisers and $1,200.00 for fees of their counsel. The Mountain Telephone Company then presented in the court below a petition for re-argument of the issue of costs which the court declined to grant. In their petition for the reargument they stated four objections which may be summarized briefly: (1) the Act authorizing the proceeding does not authorize the imposition of costs; (2) the court had no inherent power by the common law to impose costs; (3) this proceeding is statutory and not within the equity jurisdiction in which the court has control of costs; (4) the fourth objection is stated as follows: "The action of the dissenting stockholders was unfounded, insincere and vexatious, for even though their bad faith need not be shown, it is strongly suggested, in view of the Public Utility Commission's approval of the transaction and the failure of the dissenting stockholders to exercise other available remedies for the benefit of all the stockholders; in other words, they were trying to enrich themselves at the expense of the assenting stockholders who had in sincere good faith approved the transaction."

The Mountain Telephone Company appealed and the question now is whether the court had the power to

[ 364 Pa. Page 269]

    impose these costs on the corporation or whether costs followed the losing parties, the dissenting shareholders, who, as the appraisers reported, sustained no damage.

In reaching its conclusion the learned court below referred to no decisions by our appellate courts but relied on a Delaware case*fn2 which we must lay aside because the Delaware statute*fn3 ...


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