The opinion
SHENK, J., Dissenting.
The judgment is reversed principally on the ground that the agreement to sell was merely an agreement to sell property in the ordinary course of business by a corporation whose only function was to sell the assets of the Brockman estate. There is thus projected an exception to the rule established by section 3901 of the Corporations Code which requires that a transfer of all corporate assets be authorized by resolution of the board and by written consent of shareholders.
It is undisputed that the purported agreement was intended to convey substantially all of the assets of the corporation. The statute makes no fine distinction between transfers of all the assets in the ordinary course of business and other transfers of the entire assets. On its face the statute would apply without exception wherever all assets are transferred. This was not an ordinary sale. It was an attempted complete disposal of the corporate property and required to be properly authorized. The evidence on which the opinion relies as showing that this was not a wind-up sale proves the opposite. On May 1, 1944, a resolution was adopted that “the property of Brockman Holding Company be sold in order to close up the company as soon as possible.” Just a year later plaintiff and defendant’s president entered into an agreement whereby all of the property of the corporation was to be transferred to the plaintiff.
The aim of the statute is “to give some protection to the shareholders by affording them a chance to have a vote in making a transfer.” (Ballantine and Sterling, California Corporations Laws, [1949] 398.) More pointedly, the purpose of the statute is to prevent directors or officers from selling the corporation out from underneath the shareholders if they object to the terms of sale. Here the directors owned *20 29,000 of the 42,000 shares. All of the directors did not authorize Mrs. Spalding to sell the remaining property of the corporation. Only a majority of the directors, who for all that appears constituted less than a majority in stock ownership, orally sanctioned the sale. I am unable to conclude that this was not a ease where the statutory protection was appropriate.
I would affirm the judgment in accordance with the opinion of the District Court of Appeal of the Fourth District ( 191 P.2d 534 ).
Traynor, J., and Sehauer, J., concurred.