Graham v. Cocherell

733 P.2d 370, 105 N.M. 401
CourtNew Mexico Court of Appeals
DecidedJanuary 27, 1987
Docket8325
StatusPublished
Cited by15 cases

This text of 733 P.2d 370 (Graham v. Cocherell) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Graham v. Cocherell, 733 P.2d 370, 105 N.M. 401 (N.M. Ct. App. 1987).

Opinion

OPINION

MINZNER, Judge.

This case has been submitted for decision by this court following its submission to an advisory committee pursuant to an experimental plan. See Patterson v. Environmental Improvement Division, 105 N.M. 320, 731 P.2d 1364 (1986); Boucher v. Fox-worth-Galbraith Lumber Co., 105 N.M. 442, 733 P.2d 1325 (Ct.App.1986); Stoll v. Dow, 105 N.M. 316, 731 P.2d 1360 (1986). The committee rendered a unanimous decision, proposing affirmance in part and dismissal in part, and the parties were so notified. Appellants opposed the proposed disposition while appellees supported it. This court began considering the record and briefs in this case, together with the opinion of the advisory committee. Before determining whether to set the case for oral argument or to adopt any or all of the opinion of the advisory committee, this court was met with a question concerning its jurisdiction. It is an appellate court’s first duty to determine whether it has jurisdiction. See Rice v. Gonzales, 79 N.M. 377, 444 P.2d 288 (1968).

This case involves a struggle for voting power among the stockholders of a closely-held corporation. The district court granted partial summary judgment, holding that the corporate president had no authority to issue a key block of disputed voting stock to his son. Although the trial court’s order included the appropriate language to render a partial summary judgment final and appealable, see NMSA 1978, SCRA 1986, 1-054(C)(1), the partial summary judgment was not a final judgment as to any one claim for relief. Accordingly, we must dismiss this appeal as premature.

In order to appreciate why the partial summary judgment was not final, a recitation of the facts and procedural history is in order. The corporation was incorporated in 1976. Plaintiff Davis and defendants Robert Cocherell, Jr. and Poyer were the original directors. The directors voted to accept offers from themselves and also from Robert’s son, defendant John R. Cocherell, to subscribe for common stock in the corporation.

The elder Cocherell, Poyer, and Davis paid for their stock soon thereafter, but John Cocherell did not. Thus, in the spring of 1976, each of the three directors owned one-third of the corporation’s outstanding stock. Then, a new investor, plaintiff Graham, joined the group. According to the count in the complaint alleging fraud, Graham was told that he would be a one-fourth owner. A memorandum was signed by the three prior directors reciting that Graham was an equal shareholder and, by unanimous consent of the board, Graham was made a director.

By July of 1977, John Cocherell still had not paid for his stock. The directors voted unanimously to rescind the 1976 authorization and offer the younger Cocherell an option to buy shares of non-voting stock. The minutes of this meeting reflect that the basis of the motion was to preserve plaintiff Graham’s one-fourth ownership interest. John accepted the offer and bought the non-voting stock.

In 1983, John wanted to exercise his rescinded subscription rights. Corporate counsel, the Sutin firm, was asked to research the matter. Counsel opined that John was entitled to exercise his subscription rights. Defendant Poyer made a motion, seconded by defendant Robert Cocherell, to authorize the president to issue the stock. The motion failed on a tie vote, with plaintiffs opposing it. Notwithstanding the failure of the motion and the prior rescission, the corporate president, Robert Cocherell, issued his son the stock, and this suit followed.

The complaint was in four counts. Count I was a derivative action, alleging that the issuance of the stock was contrary to the directives of the board of directors and in violation of preemptive rights; it sought cancellation of the shares. Count II sought damages for conspiracy to control the corporation without authority. Count III sought a declaratory judgment that the issuance of the shares was void and without effect. Count IV sought damages on behalf of plaintiff Graham for fraud.

The Sutin firm initially appeared on behalf of all defendants, including the corporation. The individual defendants then retained separate counsel.

The record on appeal reflects that defendants filed a motion to dismiss Counts I, II, and III, based on NMSA 1978, Section 53-11-17 (Repl.Pamp.1983). It was and is their contention that defendant John Cocherell’s subscription was still valid because there had been no call for payment. The record reflects that this motion was denied. Defendants answered, alleging that John’s shares were properly issued because of the absence of a call, and that the board’s rescission of the subscription was ineffective.

Following the denial of the motion, plaintiffs filed a motion for partial summary judgment, based on the undisputed facts of the board’s rescission of the subscription and its failure to approve the motion to issue John his shares. The ground for the motion was that defendant Robert Cocherell issued shares to his son without the authority of the board of directors. The motion requested partial summary judgment “with respect to the lack of authority of Robert Cocherell” and sought a cancellation of the shares. The order on this motion states that Robert Cocherell did not have the authority of the board to issue the shares, that there is no issue of material fact as to this lack of authority, and that there is no just reason for delay in the entry of a final partial summary judgment. It was therefore ordered that John’s shares would be placed in escrow until further order of the court, that monies attributable to the shares would also be placed in escrow until further order of the court, and that John would not have voting or other rights on this stock until final disposition of the case or until further order of the court. It is from this order that defendants appeal.

Both counsel for the individual defendants and the Sutin firm on behalf of the corporation joined in one notice of appeal. The Sutin firm did the preliminary work of ordering the record. A joint brief-in-chief was filed. It argues the point that the shares were properly issued because of the lack of a call and it argues that the court erred in enjoining the corporation from paying dividends to John because the order does not purport to cancel his shares.

Plaintiffs filed a motion to disqualify the Sutin firm from representing the corporation because of its conflict of interest. We remanded the case to the trial court for hearing on the motion. The trial court entered findings of fact and conclusions of law, ordering that the Sutin firm be disqualified in the trial court and deferring decision on the matter of appellate representation to this court. Plaintiffs have not called the matter to our attention again and the Sutin firm has continued to represent the corporation in this case. Because of our disposition, we find it unnecessary to determine whether the Sutin firm can continue to represent the corporation on appeal.

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Bluebook (online)
733 P.2d 370, 105 N.M. 401, Counsel Stack Legal Research, https://law.counselstack.com/opinion/graham-v-cocherell-nmctapp-1987.