923 F.2d 898
Elizabeth V. BOGOSIAN, Plaintiff, Appellee,v.WOLOOHOJIAN REALTY CORP., Defendant, Appellant.
No. 90-1696.
United States Court of Appeals,First Circuit.
Heard Nov. 9, 1990.Decided Jan. 15, 1991.

William R. Grimm with whom Robert M. Duffy and Hinckley, Allen, Snyder & Comen, Providence, R.I., were on brief, for defendant, appellant.
Matthew F. Medeiros with whom Jeffrey C. Schreck, Robert Karmen and Flanders & Medeiros Inc., Providence, R.I., were on brief, for plaintiff, appellee.
Before BREYER, Chief Judge, BROWN,* Senior Circuit Judge, and CAFFREY,** Senior District Judge.
BREYER, Chief Judge.


1
This case requires us to interpret two provisions of Rhode Island's Corporations' statute related to corporate buyouts of shareholders petitioning for corporate dissolution.  It also raises a question about appealability.  A brief description of procedural background will help the reader understand the legal issues.


2
Elizabeth Bogosian, a one-third owner of the Woloohojian Realty Corporation ("WRC") brought this diversity action seeking dissolution of WRC.  The relevant law, Rhode Island Gen.Laws Sec. 7-1.1-90 et seq.  (see Appendix), gives a court "full power to liquidate the assets and business of a corporation" under certain specified circumstances, where, for example, shareholders are in serious conflict, or a majority acts oppressively towards a minority.  The statutory provisions also permit a corporation, faced with a petition for dissolution, to "avoid ... a dissolution" by offering instead to "buy out" a petitioning minority shareholder.  They require the corporation wishing to avoid dissolution to make "an election to purchase the shares owned by the petitioner at a price equal to their fair value."    Rhode Island Gen.Laws Sec. 7-1.1-90.1.  They foresee the parties negotiating about that value.  They then specify what will occur in the event of a deadlock:


3
If the parties are unable to reach an agreement as to the fair value of such shares, the court shall, upon the giving of a bond or other security sufficient to assure to the petitioner payment of the value of such shares, stay the [liquidation or dissolution] proceeding and determine the value ... as of the close of business on the day on which the petition for dissolution was filed.


4
Id. (emphasis added).


5
After Mrs. Bogosian filed her dissolution petition, WRC sought to avoid dissolution by electing a "buyout."    On February 16, 1989, it filed with the court "an election to purchase" Mrs. Bogosian's shares at their fair value.  It negotiated with her about the value of her shares.  The parties could not reach agreement.  Consequently, on May 15, 1989, WRC asked the court to appoint a special master to value the shares.


6
Sometime during the course of the next year, however, WRC apparently changed its mind about the desirability of the buyout.  Although the statute says that, as a precondition for the court's valuing the minority shares, the corporation must "giv[e] ... a bond or other security sufficient" to guarantee payment of the shares' fair value, WRC refused to do so.  Mrs. Bogosian asked the court to require it to put up this security.


7
On July 13, 1990, fourteen months after WRC elected to pay Mrs. Bogosian the fair market value of her shares, the court, over WRC's objection, entered two orders that are the subject of this appeal.  First, it ordered WRC to provide Mrs. Bogosian with a $10 million mortgage on WRC's "Jamestown Apartments" as security to guarantee payment of the shares' value.  Second, the court ordered WRC to provide Mrs. Bogosian with an "interim distribution" of $100,000 plus $10,000 per month "to continue until the entry of a final judgment determining the fair value of" her shares.


8
Subsequently, the court and the parties took various other actions, which do not directly concern us.  On July 31, the court appointed the special master that WRC had requested.  On August 10, WRC asked the court to permit it to revoke its "buyout election," and on October 5 the court denied WRC's request.


9
As we have mentioned, this appeal involves only the district court's two July 13 orders.  WRC asks us to find the district court's order to post a mortgage as security and its order to make an "interim distribution" unlawful.  Mrs. Bogosian replies that the court's July 13 orders are not now appealable;  and, she adds, in any event, they are lawful.  We agree with WRC that the two orders are appealable, but we also agree with Mrs. Bogosian that they are lawful.


10
* The "Mortgage/Security" Order


11
* Appealability


12
The particular order in question says that WRC


13
shall forthwith execute a mortgage in favor of Elizabeth V. Bogosian against the real property known as Jamestown Apartments, in the amount of ten million dollars ($10,000,000), in a form to be submitted for the court's approval....


14
The purpose of the order is to provide Mrs. Bogosian with security for the payment for her shares to which she may become entitled.  The order, in our view, is a mandatory injunction.  It is therefore appealable under 28 U.S.C. Sec. 1292(a)(1) (authorizing appeals of "interlocutory orders of district courts granting, continuing, modifying, refusing or dissolving injunctions....").


15
The order at issue here is directed to a party.  It requires that party to take action.  It is more than minimally coercive.  It has serious consequences.  It is enforceable through contempt.  And, it is not simply related to court procedures.  Its subject matter (the property) either itself consists of, or acts as a substitute for, in whole or in part, the substantive relief petitioner seeks in this case.  Relevant authority suggests that these characteristics make it a mandatory injunction for purposes of appeal.  See I.A.M. Nat. Pension Fund Ben. Plan v. Cooper Industries, Inc., 789 F.2d 21, 24 (D.C.Cir.), cert. denied, 479 U.S. 971, 107 S.Ct. 473, 93 L.Ed.2d 417 (1986) (an injunction, for Sec. 1292(a)(1) purposes is "any order directed to a party, enforceable by contempt, and designed to accord or protect, some or all of the substantive relief sought" in the action) (citations omitted) (quotations omitted);  16 Wright, Miller, Cooper & Gressman, Federal Practice and Procedure Sec. 3922 (1990 Supp.) at 10, 26 (same);  cf. International Products Corp. v. Koons, 325 F.2d 403, 406 (2d Cir.1963) (Sec. 1292(a)(1) relates "to injunctions which give or aid in giving some or all of the substantive relief sought") (emphasis added);  but cf. Chronicle Pub. Co. v. Hantzis, 902 F.2d 1028, 1030-31 (1st Cir.1990) (same, but omits concept of protecting or helping to secure the final relief sought, which omission seems inadvertent in context of the case).


16
We recognize one possible argument to the contrary.  For historical reasons, court ordered "attachments," even where coercive and designed to protect ultimate relief, are typically considered to be "legal," not "equitable," in nature, and therefore are not "injunctions" for Sec. 1292(a)(1) purposes.  One might argue that the order before us is not an injunction, but a kind of attachment of property.


17
We are not persuaded by this argument, however, because, technically speaking, the order before us is not an "attachment" under Rhode Island law.  Under Rhode Island law "attachment" refers to a specific, detailed statutory procedure, through which a judge, after a hearing, issues a specific writ that a court officer leaves with a town clerk or recorder of deeds, which writ "creates a lien on the property attached which is held in the custody of the law."    Everett v. Cutler Mills, 52 R.I. 330, 333, 160 A. 924 (1932);  In re Gibbons, 459 A.2d 938, 939 (R.I.1983);  Rhode Island Gen.Laws Sec. 10-5-1 et seq.    The order here has issued against a party, not a piece of property, the court's officers did not serve it on a town clerk or recorder, and it does not have the effect of placing the property in the court's custody.


18
We recognize that some circuits have considered orders that have much the same effect as "attachments" as if they were attachments, thereby restricting appeals of orders requiring security.  See Rosenfeldt v. Comprehensive Accounting Service Corp., 514 F.2d 607, 609-10 (7th Cir.1975) (order to deliver accounts receivable and clients is unappealable attachment);  Hitachi Zosen Clearing, Inc. v. Tek-Matik, Inc., 846 F.2d 27, 28 (6th Cir.1988) (order to post a letter of credit as security for preliminary injunction was not appealable).  This circuit, however, perhaps recognizing the historical, nonfunctional, roots of the "attachment" exception, has not limited appeals.  Rather, where, as here, an order that is not, technically speaking, an attachment operates against a party, requires that party to do more than simply deliver property to the court, concerns property that constitutes or protects part of the final relief sought, and threatens harm if appeal is delayed, the court has considered the order an appealable injunction, not a nonappealable attachment.  See Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 45-47 (1st Cir.1986) (order not to dispose of $4,000,000 and to place it in interest bearing account is appealable injunction);  but cf. Trustees of Hospital v. Compania Aseguradora, 672 F.2d 250, 251 (1st Cir.1982) (bond producing only "minimal" harm if appeal delayed not appealable injunction) (emphasis added).  The Second Circuit has taken a similar approach.  See Inter-Regional Financial Group, Inc. v. Hashemi, 562 F.2d 152, 154 (2d Cir.1977), cert. denied, 434 U.S. 1046, 98 S.Ct. 892, 54 L.Ed.2d 798 (1978) (order directing delivery of stock certificates to clerk as security for judgment is appealable injunction);  In re Feit & Drexler, Inc., 760 F.2d 406, 412 (2d Cir.1985) (order directing defendant to place property in custody of her attorney as security for judgment is appealable injunction);  cf. Centurion Reinsurance Co. v. Singer, 810 F.2d 140, 144-45 (7th Cir.1987) (order denying defendant's request to restrain plaintiff from disposing of funds is appealable denial of injunction).


19
We conclude that, if an order is, in all other relevant respects an appealable injunction, the fact that it resembles, but is not, technically speaking, an attachment will not normally make a critical difference.  In light of the weight of legal authority taking this approach, we find the order at issue here appealable.

B
The Merits

20
WRC argues the merits as follows:  First, it correctly says that the statute leaves it perfectly free to decide whether or not to buy out a shareholder petitioning for dissolution.  See Rhode Island Gen.Laws Sec. 7-1.1-90.1.  Second, it follows (says WRC) that, with equal freedom, it can revoke a previous buyout decision.  Third, it follows further (says WRC) that it can, in effect, revoke a previous buyout election simply by refusing to put up security during the court-controlled "buyout valuation" proceeding, thereby ending the proceeding, and requiring the court to act upon the original petition for dissolution instead.


21
The problems with this argument lie at steps two and three.  It does not follow at all from the fact that a corporation can freely elect to buy out a minority shareholder that the corporation can freely revoke the election once made.  To the contrary, the Rhode Island statute makes certain critical legal events--the termination of the petitioner's rights in the corporation, the valuation date for her shares--turn upon election.    Given these legal facts, to permit totally free revocation would permit the corporation to manipulate the amount it will eventually owe by electing buyout and subsequently revoking its election in order to secure unfair financial advantages.  (It could, for example, elect to buy out shares where the market has risen, delay the proceedings in order to see if the corporate's assets decline in value, and then revoke its election if they do so but not otherwise.)    Thus, commentators have urged, and two courts (in other states with somewhat different statutes) have held, that a corporation can revoke a buyout election, only with the court's permission.  See Davidian, Corporate Dissolution in New York:  Liberalizing the Rights of Minority Shareholders, 56 St. John's L.Rev. 25, 71 (1981) ("Once made the election should remain irrevocable so as to avoid any benefit to the majority by virtue of delay tactics.");    Brodsky v. Seaboard Realty Co., 206 Cal.App.2d 504, 24 Cal.Rptr. 61 (1962) (statute resembling Rhode Island statute interpreted to require court's permission for revocation);  cf. Rey v. Pan American Cash and Carry Corp., 152 A.D.2d 246, 548 N.Y.S.2d 524, 527 (1989) (revocation requires court's permission;  but New York statute expressly limits revocation and dicta in case suggests different result without such a limitation).  If Rhode Island's statute (which does not expressly mention revocation) does not permit a corporation to revoke its election at will, a fortiori it cannot permit the corporation to accomplish the same result by simply refusing to put up valuation-proceeding security.


22
We need not decide the "free revocation" issue definitively, however, for, even assuming (purely for the sake of argument) that Rhode Island courts would interpret Rhode Island's statute as providing a free right to revoke a buyout election, we should not interpret the "security" language as giving a corporation total freedom to decide not to put up security.  It would make virtually no sense to interpret the "security" language as if a corporation, after asking for a valuation, could decide not to post the requisite security before it explicitly revokes its buyout election.  The statute certainly does not say the corporation can do this, and we fail to see what purpose such a reading could serve.  Why would Rhode Island adopt a statute that permitted a corporation total freedom--after having elected to buy out a minority shareholder, after having reached a valuation impasse, and after having asked the court to resolve the impasse, but before revoking its election--to withhold the security for which the statute calls?    To read the statute in this way would simply promote confusion and add one, additional, obfuscatory weapon to the arsenal of a corporation seeking to delay valuation proceedings while it decided (in light of changing property values) whether or not to revoke a prior election.  The more straightforward interpretation of the statute (granting, for the moment and purely for argument's sake, WRC's doubtful underlying "free revocability" assumption) is (1) the corporation may freely elect to buy the petitioning dissenters' shares, and (2) it may later freely revoke that election, but (3) unless and until it explicitly makes such a revocation, the judge, in the case of a valuation impasse, has the legal power to require it to satisfy the statutory "security" requirements.


23
For these reasons, we conclude that, whether or not the Rhode Island statute means to provide a corporation with total freedom to change its mind and revoke a previous buyout election, the Rhode Island statute gives the court, faced with a buyout election and a valuation impasse, the legal power to require the corporation to post security.


24
WRC makes one additional argument.  It says that, even if the court has the power to require security, the amount of security that the court required, namely a mortgage for $10 million, was excessive.  The record shows, however, that Mrs. Bogosian, in an affidavit, swore her shares were worth $9 million.  See Robinson v. Watts Detective Agency, Inc., 685 F.2d 729, 739 (1st Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 728, 74 L.Ed.2d 953 (1983) ("an owner of a business is competent to give his opinion as to the value of his property").  It also indicates that in a different case, her brother's executors posted a $10 million bond as security for a one-third ownership interest in WRC.  Moreover, Mrs. Bogosian is entitled to statutory interest on her shares which is accumulating at a rate of 12%.  We cannot say that the court required security in excess of what the Rhode Island statute permits, namely an amount "sufficient to assure to the petitioner payment of the value of such shares."    Rhode Island Gen.Laws Sec. 7-1.1-90.1.

II
The "Interim Distribution" Order

25
* Appealability


26
The order requiring WRC to pay Mrs. Bogosian $100,000 plus $10,000 per month during the pendency of the suit, with all payments credited against her final award, is appealable under 28 U.S.C. Sec. 1292(a)(1) for the same reasons as the security order;  it is a mandatory injunction.  It is directed to a party (WRC), it orders that party to take a set of particular actions (sending money each month), it is more than minimally coercive, it has serious consequences, it is enforceable through contempt, and it provides at least part of the relief sought by the suit.  See Chronicle Publishing Co. v. Hantzis, 902 F.2d at 1030-31;  Carson v. American Brands, Inc., 450 U.S. 79, 84, 101 S.Ct. 993, 996, 67 L.Ed.2d 59 (1981);  Baltimore Contractors Inc., v. Bodinger, 348 U.S. 176, 181, 75 S.Ct. 249, 252, 99 L.Ed. 233 (1955);  cf. discussion at pp. 900-902, supra.    Other courts have held similar kinds of payment orders appealable as "mandatory injunctions."    See Friends for All Children, Inc. v. Lockheed Aircraft Corp., 746 F.2d 816, 828 (D.C.Cir.1984) (allowing without discussion appeal of mandatory preliminary injunction);  United States v. Price, 688 F.2d 204, 215 (3d Cir.1982).  We are aware of no authority to the contrary.

B
The Merits

27
WRC makes two arguments designed to show the order is unlawful.  First, WRC argues that, in issuing this order the court must find authorization in Rhode Island, not in federal, law.  See Friends for All Children v. Lockheed Aircraft Co., 746 F.2d at 828 n. 18 (looking to state law to determine if equitable relief is available);  Sims Snowboards, Inc. v. Kelly, 863 F.2d 643, 647 (9th Cir.1988) (state law governs availability of equitable remedies);  but see Perfect Fit Industries, Inc. v. Acme Quilting Co., 646 F.2d 800, 806 (2d Cir.1981) ("State law does not govern the scope of the equity powers of the federal court;  and this is so even when state law supplies the rule of decision.").  And, it says that Rhode Island law does not provide the legal power to order equitable relief in a "buyout."    Accepting for the sake of argument WRC's premise about the relevant source of law, we nonetheless disagree with its conclusion.  We believe it fairly obvious that Rhode Island law authorizes equitable relief.


28
For one thing, the language and the structure of Rhode Island's corporate statute indicates that courts have authority to issue equitable orders in dissolution-related buyout proceedings.  In Sec. 7-1.1-91(a), that statute specifically says that


29
in proceedings to liquidate the assets and business of a corporation the court shall have general equity jurisdiction and power to issue such orders, injunctions, and decrees as justice and equity may require....


30
Rhode Island Gen.Laws Sec. 7-1.1-91(a).  Just two sections earlier, the statute refers to "an action by a shareholder" brought to obtain "dissolution" of a corporation as one of several instances in which the court has "full power to liquidate the assets and business of a corporation."    The statute's "buyout" language is contained in a section sandwiched in between.  The placement of the section suggests that the later "equity power" provision applies to a "buyout," which takes place within the context of the larger "liquidation" proceeding.  Nothing in the statute's language suggests the contrary.  Indeed, the procedure outlined in the statute supports this view, for it refers to a "buyout" as triggered by "filing with the court ... an election to purchase" either before the court has scheduled a hearing on a dissolution petition, or after a hearing on a dissolution petition "in the discretion of the court."


31
For another thing, traditionally corporate liquidation and reorganization proceedings are proceedings in equity.  See Davidian, Corporate Dissolution in New York:  Liberalizing the Rights of Minority Shareholders, 56 St. John's L.Rev. at 37-43.  Court supervised buyouts are simply one method of restructuring a corporation intended to avoid the more drastic dissolution remedy.  See generally Thompson, Corporate Dissolution and Shareholders' Reasonable Expectations, 66 Wash.U.L.Q. 193, 231-36 (1988).  WRC provides us with no reason, nor can we think of any, why a legislature would want a court to lose its equity powers when a corporation, in the midst of a dissolution proceeding, elects the buyout alternative.


32
Second, WRC apparently concedes that a court of equity may, in an appropriate case, order interim money payments.  Compare Corbin v. Corbin, 429 F.Supp. 276, 283 (M.D.Ga.1977) (district court ordered corporation in dissolution proceedings to make interim payments to shareholder) with Sims v. Stuart, 291 F. 707, 707-08 (D.C.N.Y.1922) (L. Hand, J.)  (noting that a court of law, in a legal, not an equitable, action, lacks the power to "give" money payments as "final relief in advance of answer and trial").  But, WRC argues that the particular circumstances of the present case do not justify the order.  In particular, if WRC wins other lawsuits it has brought against Mrs. Bogosian, WRC believes it possible that she might end up owing WRC more than the interim payments, and WRC might find it difficult to retrieve its money.


33
On the other hand, neither the district court nor this court knows who will win the various lawsuits WRC has brought elsewhere.  The district court, and this court, do know that WRC will likely have to pay Mrs. Bogosian a considerable share of its assets (or value of its shares) as a result of this litigation.  It is also clear that, as of the date WRC elected to buy out Mrs. Bogosian, she lost all rights in her shares.  See Rhode Island Gen.Laws Sec. 7-1.1-90.1 ("all ... rights of the petitioner as owner of the shares shall terminate" at the date of the election).  WRC has paid her no dividends at least since June 1988.  And, the record suggests that Mrs. Bogosian needs money for support now.  The money paid on an interim basis will be subtracted from the ultimate sum owed her as a consequence of this suit.  Given all these circumstances, we can find no abuse of the court's broad equity powers.

The orders of the district court are

34
Affirmed.


35
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE



*
 Of the Fifth Circuit, sitting by designation


**
 Of the District of Massachusetts, sitting by designation


