Declaratory action on the validity of a share transfer agreement; failure to substantiate the challenge for mistake, appeal dismissed

Facts

Parties and lower courts: The appellant (defendant, mother) is represented by lawyer Peter Ruggle. The three respondents (Plaintiff 1, Plaintiff 2 and Plaintiff 3, children of the appellant) are represented by lawyer Balthasar Wicki and lawyer Dr. Cheyenne Durrer. The lower court is the Cantonal Court of St. Gallen, III. Civil Chamber, judgment of 5 May 2021 (BO.2020.41-43-K3). The court of first instance was the District Court of St. Gallen.

Facts: [X. AG] holds shareholdings and finances the [X.] Group; it is family-owned. The spouses [E.A.] and [A.A.] have eleven children. On 2 March 2001 they concluded an inheritance contract with ten descendants. The descendants waived inheritance claims in favour of the surviving parent; for the second succession, all were to inherit in equal shares. The shareholder descendants (plaintiffs, [F.A.] , [G.A.] ) received purchase rights to shares of [X. AG] and inheritance advances of 742 shares each as of 1 April 2001. The non-shareholder descendants received cash payments totalling CHF 300'000.-- per person. On the same day, a shareholders' agreement limited to 20 years, with pre-emption, right of first refusal and purchase rights, was concluded.

Share transfer agreement: On 5 March 2004 [E.A.] died; his 2'365 shares passed to the appellant. At the end of 2011 the appellant concluded a share transfer agreement with the shareholder descendants, which was apparently entered into with a view to the later rejected popular initiative on inheritance tax. The shares were transferred as inheritance advances (678 to Plaintiff 1, 573 to Plaintiff 2, 323 to Plaintiff 3, 347 to [F.A.] , 444 to [G.A.] ), so that each shareholder descendant received 1'420 shares, or 20%. The appellant reserved a lifelong usufruct right with all assets and voting rights.

Challenge and procedural history: By letter of 8 March 2018 the appellant declared the contract void on grounds of error and defect of consent; in support she argued that [X. AG] had been systematically hollowed out and that inheritance advances had been paid out to non-shareholder descendants. The respondents brought a declaratory action on 11 September 2018 for a finding that the contract was valid. The District Court upheld the action on 14 May 2020. The Cantonal Court dismissed the appeal on 5 May 2021, while also addressing the appellant's objections in an alternative line of reasoning.

Before the Federal Supreme Court: The appellant requests that the cantonal judgment be set aside and the action dismissed. The respondents request that the appeal be dismissed. The lower court waived a response; the appellant filed an unsolicited reply.

Points at issue: (1) The respondents' interest in a declaratory finding; (2) necessary joinder (Art. 70 para. 1 CPC) with [F.A.] and [G.A.] ; (3) the existence of a defect of consent (fundamental mistake, intentional deception) and compliance with the time limit for challenge.

Considerations

Standard of review and principle of complaints: The Federal Supreme Court applies the law of its own motion (Art. 106 para. 1 FSCA), but examines only adequately substantiated complaints (Art. 42 paras. 1 and 2 FSCA). The establishment of facts can only be corrected in case of arbitrariness (Art. 105 para. 2 FSCA); for complaints concerning facts the strict principle of complaints applies (Art. 106 para. 2 FSCA). Deviations from the facts established by the lower court remain unconsidered, and the reply may not supplement the appeal (Art. 42 FSCA; reference to ATF 140 III 86, 140 III 16, 140 III 264).

Interest in a declaratory finding: A declaratory action requires a protectable interest (Art. 88 CPC; Art. 59 para. 2 lit. a CPC). A substantial interest suffices, which may also be of a factual nature, where legal relationships are uncertain and the uncertainty can no longer reasonably be borne (ATF 141 III 68). A declaratory action is subsidiary to performance or constitutive actions (ATF 135 III 378). The Federal Supreme Court confirms the lower court: the challenge leads to invalidity ex tunc with consequences for the ownership position, the respondents would be hindered in their decisions without clarification, and no performance or constitutive action was available. The expectancy is not equivalent to ownership, since it lapses if the holder predeceases. The appellant's complaints are appellatory.

Necessary joinder: Under Art. 70 para. 1 CPC, persons participating in a legal relationship that can only be decided uniformly must sue or be sued jointly. This follows from substantive law (ATF 138 III 737; 136 III 123; 140 III 598). However, the share transfer agreement did not establish a single legal relationship but five separate legal relationships between the appellant and each shareholder descendant, which could also have been concluded individually. The validity must therefore be assessed separately for each entitled person. The expediency of a joint assessment does not create a necessary joinder.

Fundamental mistake and deception: A fundamental mistake under Art. 24 para. 1 no. 4…