The opinion of the court was delivered by: Stanton, District Judge.
Defendants move for summary judgment dismissing all of
plaintiff's claims. Defendant Monsanto Company ("Monsanto") is a
Delaware corporation headquartered in Missouri, as is defendant
Solutia, Inc. ("Solutia"), a corporation Monsanto spun off in
1997. Plaintiff is an individual resident of New York.
Mr. Satterfield claims that the defendants tortiously converted
his property by refusing to turn over stock in the defendant
companies to which he is entitled because of his ancestors'
ownership of stock in a predecessor company which became, by
mergers, part of defendant corporations. He claims that this
refusal constitutes a breach of defendants' fiduciary duties and
of the covenant of good faith and fair dealing, that defendants
made fraudulent representations to him regarding his present
right to their stock, and that they conspired to deprive him of
his stock interest. Finally, he demands punitive damages, as well
as attorney's fees and costs.
In 1924 plaintiff's great-grandfather, Daniel Oldroyd
("Oldroyd"), purchased 50 shares of $1 par value stock in the
E.L. Smith Oil Company ("Smith Oil"). Def.'s Ex. B-1. In 1928,
the par value of Smith Oil stock was changed from $1 to $10
(Def.'s Ex. B-2), changing Oldroyd's holding in Smith Oil to five
shares of $10 par value stock, although there is no evidence that
he ever exchanged his 50 $1 par value shares for five $10 par
value shares.
In 1938 Smith Oil merged with the Lion Oil Refining Company
("Lion Oil"). For every 10 shares of $10 par value Smith Oil
stock surrendered, Lion Oil issued one share of its own stock:
Immediately upon this Merger Agreement becoming
effective, each holder of capital stock of E.L. Smith
Oil Company, Inc., other than Lion Oil Refining
Company, upon surrender of certificates representing
shares of stock of E.L. Smith Oil Company, Inc., in
transferrable form, shall receive in exchange
therefor one share of common capital stock of Lion
Oil Refining Company, of no par value, for each ten
shares of common capital stock of E.L. Smith Oil
Company, Inc., of the par value $10.00 each, so
surrendered for exchange for the common capital stock
of Lion Oil Refining Company . . .
Pl.'s Ex. 1 at Bates No. 0110.
Accordingly, the five Smith Oil shares to which Oldroyd was
entitled amounted to one-half a share of Lion Oil common stock
after the merger.
For those Smith Oil stockholders who had not converted their $1
par stock to $10 par stock, the merger agreement provided:
It is understood that there are outstanding certain
shares of the common capital stock of E.L. Smith Oil
Company, Inc., which are of the par value of One
Dollar per share, issued prior to April 9, 1928, and
that the holders thereof have heretofore been
entitled to exchange ten shares of such common
capital stock of E.L. Smith Oil Company, Inc., of the
par value of $1.00 per share, for one share of the
common capital stock of E.L. Smith Oil Company, Inc.,
of the par value of $10.00 per share, and upon
presentation of any such common capital stock of E.L.
Smith Oil Company, Inc., of the par value of One
Dollar per share, in exchange for common capital
stock of Lion Oil Refining Company, the holder
thereof shall be entitled to one share of common
capital stock of Lion Oil Refining Company for each
one hundred shares of such common capital stock of
E.L. Smith Oil Company, Inc., of the par value of
$1.00 . . .
Pl.'s Ex. 1 at Bates Nos. 0111-12.
Under the provision the same result obtained: since Oldroyd had
kept his 50 $1 par shares of Smith Oil, they were worth one-half
a share of Lion Oil common stock after the merger.*fn1 In either
event, Lion Oil would not issue such a fractional share of its
own stock, but only scrip which could be aggregated with enough
other scrip to be exchanged for full Lion Oil shares. As the
merger agreement stated:
The Corporation shall not issue fractional shares
of its common capital stock in exchange for the
common capital stock of E.L. Smith Oil Company, Inc.,
under any circumstance, but if the holder of any
common capital stock of E.L. Smith Oil Company, Inc.,
shall be entitled to a fractional part of a share of
common stock in the Lion Oil Refining Company, in
lieu of issuing the same, the Corporation will issue
to such holder a Bearer Scrip Certificate for such
fraction, which shall entitle the holder thereof,
upon the surrender of the same with other Scrip
Certificates, together aggregating one or more full
shares, to exchange the same for a certificate
representing the same number of full shares of common
stock of Lion Oil Refining Company. Such Scrip
Certificates shall not entitle the holder thereof to
vote on any question, or to receive dividends upon
the fraction of a share to which the holder is
entitled by virtue thereof, and the holder of any
such Scrip Certificate shall not be entitled, by
virtue thereof, to the preemptive right to purchase
any of the common capital stock of Lion Oil Refining
Company, or Securities of that Company convertible
into common stock of that Company, issued by that
Company
subsequent to the issuance of such Script
Certificates.
Pl.'s Ex. 1 at Bates No. 0111.
Thus the Smith Oil holders of Lion Oil scrip did not have
rights as Lion Oil shareholders until (if ever) they assembled
enough scrip to obtain one or more full Lion Oil shares. The face
of the Lion scrip certificates bore the following notation:
This Scrip Certificate is not a Stock Certificate
and the holder hereof is not a shareholder of Lion
Oil Refining Company, is not entitled to vote at any
meeting of the stockholders of that Company or to
receive any dividends upon the fraction of a share to
which the holder is entitled by virtue hereof; nor is
the holder of this Scrip Certificate entitled to the
preemptive right to purchase any of the Common
Capital Stock of Lion Oil Refining Company, or
securities of that Company convertible into Common
Capital Stock of that Company, issued by the Company
subsequent to the issuance of this Script
Certificate.
Def.'s Ex. C at Bates No. 0006.
There is no evidence that Oldroyd's heirs ever attempted to
assemble enough scrip to obtain one or more shares of Lion Oil
stock, or made any tender to Lion Oil for such an exchange.
Satterfield Depo. at 50-52. At the time of the Smith Oil/Lion Oil
merger, Lion Oil thrice offered to buy "the old [Smith Oil] $1
par" at 85ยข per share, and the $10 par at $8.50 per share (the
price at which the merger was consummated), without requiring
conversion into the new Lion Oil shares. Thus, ...