American National Bank & Trust Co. v. Weyerhaeuser Co.

692 F.2d 455 (7th Cir. 1982)

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Nature of the Case

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Facts

On August 9, 1978, Weyerhaeuser (D) issued a written offer to purchase up to 3,500,000 shares of its common stock at $32.00 per share, provided that the stock was tendered by August 22, 1978. If more than 3,500,000 shares were tendered, D would purchase shares on a pro rata basis from shareholders tendering 100 or more shares each. A shareholder could conditionally tender his shares simply by writing the minimum number of shares that D must accept in a box captioned 'Conditional Tender' appearing on the letter of transmittal which accompanied the tendered share certificates. First Jersey (D1), pursuant to a contract with D, was designated as the depositary for the tender offer. D reserved the right of 'determination of all questions as to validity, form, eligibility, time and acceptance of shares tendered, as well as to the proper completion or execution of Letters of Transmittal and documents. . . .' On August 18, 1978, American (P) was authorized to tender its 40,000 shares of D common stock registered in the name of Bivest. D1 received the letter and certificates before the expiration of D's tender offer. Several days after the August 22 expiration date, D announced that more than 3,500,000 shares had been tendered. D invoked the proration provisions of the offer to purchase, agreeing to buy 61% of the shares tendered by any tenderor. The offer, however, precluded acceptance of those shares that were defectively tendered and those shares that were conditionally tendered by any tenderor where the minimum number entered in the 'Conditional Tender' box exceeded 61% of the total shares tendered by that tenderor. D1 then returned to P all of the shares with a rejection letter. P contends that it desired to tender the 40,000 shares unconditionally (without requiring D to accept all 40,000) and, thus, none of its employees wrote that figure in the box. D1, on the other hand, contends that none of its employees entered the '40,000' figure in the box and that the letter of transmittal it received from P contained the '40,000' figure entered in the 'Conditional Tender' box. Eventually on September 21, 1978, P sold on the open market the 24,400 shares of D stock it had purchased at a price that was more than two dollars per share lower than the tender offer price of $32.00 per share. P received only $710,887.75 for its shares, compared to the $780,000.00 it paid the Board for these shares. P sued for breach of contract seeking to recover $69,912.25. D filed a third-party complaint against D1, claiming that D1 was obligated to indemnify D for any liability it might incur. D then moved for summary judgment, joined by D1, asserting that under the undisputed facts, P could not state any claim for alleged breach of the offer to purchase the tendered shares since P was not the real party in interest. P moved for partial summary judgment on its damage claim, to establish that the correct measure of damages was instead the difference between the price it paid the Board on September 7 and the price it received when it sold the stock on the open market on September 21. In response to D's assertion that it lacked standing as the real party in interest, P argued that it might maintain this action as (1) the assignee of Bivest's claims; (2) as the assignee of the Board's claims; (3) as the principal of its agent, Bivest; (4) as the agent of its undisclosed principal, the Board; and (5) as the subrogee of the Board. The court ruled that the assignments were, in effect, legal nullities since neither Bivest nor the Board possessed any assignable rights when the purported assignments were made. Since P had made Bivest whole, P could not derivatively assert their rights. The court rejected P's claim that it was subrogated to the rights of the Board because P acted as a 'volunteer' when it paid the Board for its 24,400 shares at the tender offer price, and such a volunteer cannot claim rights to subrogation. Summary judgment was Ds and First Jersey, and P appealed.