Opinion
December 14, 1961
Order entered on October 17, 1961, unanimously affirmed upon the law and the facts, with costs to abide the event. It may very well be that the appellant's offering price of $29 per share, exceeding as it did the market price on the New York Stock Exchange of the stock at the time of the merger, fully represented the value thereof. It is clear that the market price of an actively traded listed stock is a material and potent factor in the determination of the value of the stock in the appraisal proceeding, but it is not the controlling factor ( Matter of Marcus [ Macy Co.], 273 App. Div. 725; Matter of Deutschmann [ Amer. Tel. Tel. Co.], 281 App. Div. 14; Matter of Silverman [ Hoe Co.], 282 App. Div. 252; Matter of Dynamics Corp. of Amer. v. Abraham Co., 5 Misc.2d 652, mod. 6 A.D.2d 683; Blumenthal v. Roosevelt Hotel, 202 Misc. 988; Matter of Wood, 103 N.Y.S.2d 110). The statute contemplates that dissenting stockholders are to receive proper value ( Matter of Silverman [ Hoe Co.], 305 N.Y. 13, 18). Therefore, circumstances having a direct bearing on the market price are always relevant, and furthermore, investment value and asset value of the stock are to be considered ( Matter of Standard Coated Prods. Corp. [ Behrens], 183 Misc. 736, affd. 271 App. Div. 100 7; and decisions, supra). Clearly, however, the appraisal proceeding is to be kept within reasonable bounds with the view of "avoiding all unnecessary expense and burden upon the parties"; and thus, the petitioners are not entitled as a matter of course to "the production at the appraisal proceedings of all the company's books, records and working papers to have the appraisers make what would amount to a revaluation of the company's assets." ( Matter of Marcus [ Macy Co.], supra, p. 728, 729.) The appraiser having "the same powers with respect to all proceedings before him as are conferred upon a person authorized by law to hear, try and determine a matter in relation to which proof may be taken" (Stock Corporation Law, § 21, subd. 4) is charged with keeping the proceedings within reasonable bounds. Furthermore, the appellant has its remedies against any subpoena, too broad in its terms, which may be served in the proceeding ( Matter of Marcus, supra). Finally, if the appellant's contentions as to value of its stock and the alleged bad faith of the petitioners are supportable, the petitioners will be denied interest, and may be charged with the costs and expenses of the appraisal proceeding (see Stock Corporation Law, § 21, subds. 4, 5). In Matter of Deutschmann (Amer. Tel. Tel. Co.) ( supra, pp. 23-24) we denied interest to petitioning stockholders and we said "we think that hereafter, where the conduct of dissenting stockholders has been arbitrary and vexatious or in bad faith, the discretion of the court should be exercised in favor of imposing allowable items of costs and expenses upon such stockholders personally, even without a showing of more aggravated conduct than the institution of appraisal proceedings without reasonable cause to believe that a larger sum can be obtained". This may very well be a case for adherence to this declared policy, but determination with respect thereto is to be reserved until the coming in of the appraiser's report.
Concur — Botein, P.J., Breitel, Valente, Stevens and Eager, JJ.