Cubalevic v. Superior Court

In Cubalevic v. Superior Court (1966) 240 Cal.App.2d 557, the plaintiff shareholder filed a lawsuit that included an involuntary dissolution cause of action against a corporate defendant. A shareholder defendant moved for a stay of the dissolution proceeding and an order appointing appraisers. (Id. at pp. 559-560.) But before the argument on the motion, the plaintiff dismissed with prejudice the involuntary dissolution cause of action. (Id. at p. 560.) The trial court treated the buyout motion as a cross-complaint; granted the buyout motion; and appointed an appraiser to fix the value of the plaintiff's shares. (Id. at pp. 560-561.) The shareholder defendant filed a petition for writ of prohibition seeking to set aside the foregoing orders. (Id. at pp. 558-561.) The Court of Appeal granted the defendant's prohibition petition. Construing former section 4658,5 the Court of Appeal held: "There is no independent right on the part of one or more stockholders in a corporation to compel the sale to them of the shares of stock of another. There being no such independent right it must follow that there could be no cause of action stated to compel such a sale whether by way of a cross-complaint or counterclaim which would survive after dismissal of the action for involuntary dissolution of the corporation in which the remedy of purchase is given. It is apparent that the real parties in interest here could not bring or maintain a separate action against petitioner the purpose of which would be to compel him to sell his stock to them. Under these circumstances, the remedy provided the real parties in interest under the provisions of section 4658 and section 4659 of the Corporations Code is ancillary to and is dependent upon the existence of the action to compel the involuntary dissolution of the corporation, and upon the dismissal of such action there is nothing left against which the ancillary remedy may be asserted or upon which it may be applied. In the case at bench, the action for involuntary dissolution having been dismissed with prejudice prior to a decision confirming an award as provided in section 4659 of the Corporations Code, there was left no basis upon which the trial court could make its order, the purpose of which was to ascertain the fair cash value of petitioner's shares and to permit the real parties in interest to purchase them in order to avoid the involuntary dissolution of the corporation. The making of such an order constituted an act in excess of the jurisdiction of the respondent court." (Cubalevic, supra, 240 Cal.App.2d at p. 562.)