MAURICE A. HARTNETT, III, Vice-Chancellor.
Gentlemen:
Seven actions for appraisal of stock of Enstar Corporation ("Enstar") have been filed with the Court. Counsel for all parties have sought consolidation of the actions and the approval of an Order establishing the procedures whereby the Court will determine which stockholders have fully complied with 8 Del. C. § 262 and are therefore entitled to seek appraisal.
As previously directed, the suits will be consolidated under the name: "In the Matter of the Appraisal of ENSTAR CORPORATION".
Respondents submitted a proposed Order for a procedure to determine which shareholders are entitled to appraisal. Petitioner Thomas C. Thompson objected to the form of Order and submitted an alternative form. Petitioner Lucie Senouf also objected to the form of Order and made suggestions for alternations. Both of the forms submitted, in my opinion, can be improved. This is, therefore, my suggestion outlining the form the Order should take.
I
Respondent has put forward a form of Order which has been used many times in the past. Petitioner Thompson's suggested form of Order is relatively new and has been used in only one case which is now before the Court.
The older form of Order contemplates stockholders filing their proofs of claim and then appearing at a hearing before their Court so that the respondent may raise any objections to their seeking appraisal. The new form of Order requires that respondent raise any objection it knows of prior to the proof of claim forms being sent out to shareholders, so that the shareholders may respond to the objections when filing the proof of claim.
Mr. Thompson's form of Order and accompanying Stockholder Information Form, Notices of Pendency of Action and Hearing to Determine Right to Appraisal, and Notice of Entitlement to Appraisal seem best to insure the least wasting of this Court's time while giving the shareholder a good understanding of his rights and the proceedings to determine them. Mr. Thompson's form should therefore serve as the starting point but certain changes should be made to it.
The decision in Weinberger v. UOP, Inc., Del. Supr., 457 A.2d 701 (1983) undoubtedly means that there will be more appraisal actions commenced than there have been in the recent past. This overburdened Court therefore has an interest in making sure that an appraisal proceeding is conducted with as little Court involvement in its procedural aspects as is possible. It is also the Court's desire that a beleaguered stockholder who has been forced to lose his ownership of his stock can obtain an appraisal at the least cost.
Since there are often no objections to the right of a stockholder to obtain an appraisal, it is a waste of time and a burden to the stockholder to require that all shareholders seeking an appraisal appear — personally or through a representative — at a hearing only to be told that the respondent has no objection to their right to obtain an appraisal. Even where there are objections to a particular stockholder's right to obtain an appraisal, the objections are often resolved by the parties without Court intervention. If there is a real factual dispute as to a stockholder's right to an appraisal, two hearings often are necessary. The first establishes that an evidentiary hearing is required and the second is the actual hearing on the evidence. It would, therefore, be time saving to all if possible objections can be resolved by the parties without a hearing. This can occur by requiring that the respondent state its objection and the shareholder responding to the objection in his proof of claim. It, furthermore, seems wasteful to set a time for an evidentiary hearing on objections before it is known whether any objections actually exist.
A better procedure would, therefore, seem to be to require the respondent to first file an Information Form for each shareholder on the verified list. Then the registered or certified mailing to the shareholders on the verified list and the publication of notice of this action in the Wilmington Morning News should take place. The proposed form of published notice attached to Mr. Thompson's form of Order makes provision for shareholders not on the verified list to also obtain Information Forms. Both the notice sent to the shareholders on the verified list and the published notice should state that all proofs of claim must be filed by a certain date and that a short perfunctory non-evidentiary hearing will be held on a certain time and date at which time the Court will merely ascertain if any objections exist and that it is unnecessary for a stockholder to appear at that hearing if he has filed his proof of claim. Thereafter a date will be set for an evidentiary hearing on any objections not resolved. It would seem to me that it should only be necessary to send notice of this evidentiary hearing only to those shareholders whose right to an appraisal is disputed by the respondent.
II
Ms. Senouf has objected to both of the forms of Order insofar as they require submission of shares to the Register in Chancery for stamping as "Not Negotiable".
These shares no longer represent a claim on the equity of the corporation — instead they represent the former shareholder's status as a creditor of the corporation. Braasch v. Goldschmidt, Del. Ch., 199 A.2d 760 (1964). A cause of action is generally assignable. 6A C.J.S., Assignments § 35. Thus, the cause of action in appraisal may be transferred even though the shares themselves are non-negotiable. The stamping of "Not Negotiable" on the shares is desirable to protect possible subsequent purchasers who otherwise would have no notice of this proceeding. The provision for submitting the shares to be stamped by the Register should, therefore, be in the Order.
Ms. Senouf also objects to the requirement that her signature on her proof of claim be notarized. Because our Rules relating to discovery require affidavits to be notarized, I see no reason to require that the proofs of claim also not be notarized.
Counsel are to confer and attempt to submit a proposed Order in accordance with my suggestions herein. If any substantial disagreement cannot be resolved, each side should submit a proposed order, indicating the areas of disagreement.