Escondido Mutual Water Co. v. George A. Hillebrecht, Inc.
Opinion
Lead Opinion
Stone, J.
Respondent, Escondido Mutual Water Company, brought this action for declaratory relief, seeking court approval of a proposed contract for the sale of its water rights and water distribution facilities to the City of Escondido. The contract, although apparently approved by the directors of Mutual and by the city council, has never been executed. Nor has the contract been approved by the shareholders of Mutual, as required by Corporations Code section 3901, governing a sale of all or substantially all of a corporation’s assets.
The articles of incorporation of Mutual provide that upon dissolution the water and water rights are to be distributed in kind according to whether shareholders own Class A or Class B stock. A proposed amendment to the articles providing for distribution in cash, $5.25 per share for Class A stock and $2.30 per share for Class B stock, was also presented to the court for approval although the amendment has not been approved by the shareholders.
All stockholders were notified of the pending declaratory relief action, and certain stockholders from each class were made defendants, one of them being the appellant herein.