Title: WYNN L. CHRISTENSEN, RENEE C. HUNTER, and REX E. CHRISTENSEN V. C. BURKE CHRISTENSEN, individually and in his capacity as President of 7-C Industries, Inc., and PEGGY C. MILLER, individually and in her capacity as Secretary of 7-C Industries, Inc. and JOAN S. HAMBLIN and DIANE C. BUXTON

State: wyoming

Issuer: Wyoming Supreme Court

Document:

WYNN L. CHRISTENSEN, RENEE C. HUNTER, and REX E. CHRISTENSEN V. C. BURKE CHRISTENSEN, individually and in his capacity as President of 7-C Industries, Inc., and PEGGY C. MILLER, individually and in her capacity as Secretary of 7-C Industries, Inc. and JOAN S. HAMBLIN and DIANE C. BUXTON2008 WY 10176 P.3d 626Case Number: S-07-0061Decided: 02/01/2008
OCTOBER 
TERM, A.D. 2007

 
 
WYNN 
L. CHRISTENSEN, RENEE C. HUNTER, and REX E. 
CHRISTENSEN,Appellants(Plaintiffs),v.C. BURKE 
CHRISTENSEN, individually and in his capacity as President of 7-C Industries, 
Inc., and PEGGY C. MILLER, individually and in her capacity as Secretary of 7-C 
Industries, Inc.,Appellees(Defendants),andJOAN S. 
HAMBLIN and DIANE C. 
BUXTON,Appellees(Defendant-Intervenors).

 
 

Appeal 
from the District Court of Teton County

The 
Honorable Nancy J. Guthrie, Judge

 
 
Representing 
Appellants:

David 
G. Lewis, Jackson, Wyoming.

 
 
Representing 
Appellees:

Franklin 
J. Falen, Brandon L. Jensen, Kathryn Brack Morrow of Budd-Falen Law Offices, 
LLC, Cheyenne, Wyoming.  Argument by 
Ms. Morrow.         

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

 
 

KITE, 
Justice.

 
 
[¶1]  Wynn L. Christensen, Renee C. Hunter and 
Rex E. Christensen (Buyers) brought an action against their siblings, C. Burke 
Christensen, Peggy C. Miller, Joan S. Hamblin and Diane C. Buxton (Sellers), 
seeking interpretation of a stock purchase agreement and enforcement of a 
provision of their mother's will.  
On cross motions for summary judgment, the district court granted Sellers 
summary judgment on all of the claims.  
The district court concluded that Sellers had acted in accordance with 
the terms of the stock purchase agreement in attempting to sell their shares of 
stock to a non-family buyer and the will provision at issue was inconsistent 
with the agreement and invalid.  We 
affirm the summary judgment order as it pertains to the stock purchase 
agreement.  We decline to consider 
the will provision.       

 
 
ISSUES

 
 
[¶2]  Buyers present the following issues for 
this Court's determination: 

 
 
            
A.        
Whether the defendants' proposal to sell their shares of stock in 7C 
Industries, Inc. to the plaintiff shareholders in either January or February, 
2006, was performed consistent with the requirements of the Mutual Stock 
Purchase Agreement executed by all the plaintiffs and defendants on February 28, 
1972.

 
 
            
B.        
Whether the Mutual Stock Purchase Agreement authorized the sale of 7C 
shares of stock to third parties under any circumstances.

 
 
            
C.        
Whether the shares of stock received by the plaintiffs and defendants 
from the probate of their Mother Nola's Last Will and Testament were lawfully 
burdened with the transfer restrictions required by the Last 
Will.

 
 
FACTS

 
 
[¶3]  The parties to this appeal are seven 
brothers and sisters who are the sole stockholders of 7-C Industries, Inc. 
(7-C).  The primary asset of the 
corporation is approximately 103 acres of land located in Teton County, 
Wyoming.  Their parents, Irvin and 
Nola Christensen (Irvin and Nola), now deceased, established 7-C in 1972 and 
jointly held a large majority of the corporate stock. 

 
 
[¶4]  Shortly after forming 7-C, Irvin and 
Nola had their attorney draft the stock purchase agreement at issue in this 
case.  They and their seven children 
signed the agreement in 1972.  It 
was intended to provide for the purchase by the surviving shareholders of a 
shareholder's interest upon his or her death; the purchase by other shareholders 
of a shareholder's interest during his or her lifetime if he or she chose to 
sell; and a method for obtaining funds to carry out the above purchases.    

 
 
[¶5]  Over the years, Irvin and Nola gifted 
shares of the corporate stock to each of their children.  In 1985, Nola died.  Pursuant to her will, a substantial 
number of her shares passed to Irvin and 134 shares passed to each of her 
children.   Before his death in 
1998, Irvin gifted all of his shares to the seven children with the result that 
each of them owns a nearly equal number of shares.1

 
 
[¶6]  After their father's death, relations 
between the siblings deteriorated.  
Sellers, who owned a majority of the stock, sought to resolve the 
problems in various ways, including dissolving the corporation, selling the 
land, or dividing the land among the stockholders.  In 2006, they began discussions about 
selling their stock to an outside buyer.  
Each of the Sellers notified the corporate secretary and other 
stockholders of their desire to sell.  
Buyers did not respond.  Six 
weeks later, Sellers re-extended to Buyers their offer to sell all of their 
2,856.54 shares for $3.1 million.  
Buyers responded with a counteroffer to purchase a portion of Sellers' 
shares.  Sellers rejected the offer, 
stating that they were willing to sell all, but not a portion, of their 
stock.  

 
 
[¶7]  Following this exchange, Buyers Wynn 
Christensen and Renee Hunter filed a complaint against Sellers Burke Christensen 
and Peggy Miller for declaratory judgment, breach of contract and specific 
performance.  They sought a ruling 
that they had complied with the stock purchase agreement and that Sellers 
breached the stock purchase agreement when they rejected Buyers' counter-offer 
to purchase a portion of Sellers' stock, thus requiring Sellers to transfer the 
stock to them.  They subsequently 
moved to amend their complaint to add Rex Christensen as an additional 
plaintiff, Joan Hamblin and Diane Buxton as additional defendants and a new 
cause of action to enforce a provision of Nola's will restricting the sale of 
7-C stock.  Sellers answered the 
amended complaint and then filed a summary judgment motion as to all of Buyers' 
claims.  

 
 
[¶8]  In their motion, Sellers claimed the 
facts were undisputed that they had complied with the stock purchase agreement 
requirements by providing notice of their intent to sell.  Buyers did not respond to the notice 
within the 30 days provided in the agreement, and Sellers re-extended the offer. 
 Buyers rejected the second offer 
and made a counteroffer, leaving Sellers free to sell to a third party.  Sellers also claimed it was undisputed 
that the provision of Nola's will purporting to restrict the sale of 7-C stock 
contradicted the stock purchase agreement and was, therefore, invalid.  On this basis, they argued that they were 
entitled to judgment as a matter of law on all of Buyers' claims.  

 
 
[¶9]  In response to Sellers' motion, Buyers 
argued that the stock purchase agreement was ambiguous. They also claimed they 
did not have notice of the stock purchase agreement or Sellers' desire to sell 
and they exercised their option to purchase under the agreement within the 30 
day time period.  Buyers also filed 
a cross-motion for partial summary judgment, claiming the restrictions in Nola's 
will precluded Sellers as a matter of law from transferring their stock to a 
third party without all of the stockholders' consent.

 
 
[¶10]  After a hearing, the district court 
granted Sellers' motion and denied Buyers' motion.  The district court concluded that the 
pertinent provisions of the stock purchase agreement were not ambiguous and 
required Sellers to notify the corporate secretary and fellow stockholders of 
their desire to sell and to give the other stockholders 30 days to respond. 
 On the basis of the undisputed 
evidence, the district court concluded Sellers complied with these requirements 
and Buyers did not respond within 30 days.  Pursuant to the terms of the agreement, 
the court concluded that upon expiration of the 30 days, Sellers were permitted 
to sell their stock to a third party.  
On the basis of these findings, the district court held that Sellers were 
entitled to summary judgment in their favor on Buyers' claims for declaratory 
relief, breach of contract and specific performance.  The district court further concluded 
that the stock transfer restriction contained in Nola's will was invalid because 
it conflicted with the stock purchase agreement.  The district court held that Sellers 
were entitled to summary judgment on Buyers' claim to enforce the stock transfer 
restriction in the will.  The 
district court entered an order to that effect from which Buyers timely 
appealed.          

 
 
STANDARD 
OF REVIEW

 
 
[¶11]  When reviewing an order granting summary 
judgment, we consider the record de 
novo.  Hincks v. Walton Ranch Co., 2007 WY 12, 
¶ 7, 150 P.3d 669, 670 (Wyo. 2007).  
Our review of orders granting summary judgment is governed by W.R.C.P. 
56(c), which provides in pertinent part:

 
 
The 
judgment sought shall be rendered forthwith if the pleadings, depositions, 
answers to interrogatories, and admissions on file, together with the 
affidavits, if any, show that there is no genuine issue as to any material fact 
and that the moving party is entitled to a judgment as a matter of law.  

 
 
 
 
We 
view the evidence in the light most favorable to the party opposing the motion 
and give that party the benefit of all favorable inferences which may be fairly 
drawn from the record.  Id., ¶ 8, 150 P.3d  at 670.   A genuine issue of material fact 
exists when a disputed fact, if proven, would have the effect of establishing or 
refuting an essential element of an asserted cause of action or defense.  Gillett v. White, 2007 WY 44, ¶ 9, 153 P.3d 911, 914 (Wyo. 2007).  We 
interpret unambiguous contracts as a matter of law.  Hincks, ¶ 8, 150 P.3d  at 
670.

 
 
DISCUSSION

 
 
1.         
The Stock Purchase Agreement

 
 
[¶12]  Buyers contend the district court 
misinterpreted the stock purchase agreement when it concluded that it permitted 
Sellers to sell their stock to a third party.  Buyers assert that Article 5 of the 
agreement unambiguously limits the sale or transfer of stock to the seven 
siblings and prohibits transfer to anyone else.  Sellers claim the district court 
correctly concluded that, as a matter of law, the stock purchase agreement 
permitted them to transfer their stock to a third party if Buyers did not 
exercise their right to purchase the stock within 30 days of receiving notice of 
Sellers' desire to sell.

 
 
[¶13]  In considering the meaning of a 
contract, we focus on the parties' intent.  
Cathcart v. State Farm Mut. Auto. 
Ins. Co., 2005 WY 154, ¶ 18, 123 P.3d 579, 587 (Wyo. 2005).  If possible, we determine their intent 
from the language used in the agreement.  Id.  Where the language is clear and 
unambiguous, we limit our inquiry to the four corners of the document, giving 
the words contained therein their ordinary meaning.  Id.  The parties are free to incorporate 
within their agreement whatever lawful terms they desire, and we are not at 
liberty, under the guise of judicial construction, to rewrite the agreement.  
Id.  It is only when a 
contract is ambiguous that we construe the document by resorting to rules of 
construction.  Id.  A contract is ambiguous if 
indefiniteness of expression or double meaning obscures the parties' 
intent.  Id., ¶ 18, 123 P.3d  at 
588.

 
 
[¶14]  One of the stated purposes of the mutual 
stock purchase agreement was to provide a mechanism by which the stockholders 
could purchase the shares of any stockholder who during his or her lifetime 
wished to withdraw from the company.  
In order to carry out that purpose, the parties agreed to the following 
provision:

 
 
            
ARTICLE 5.  If a stockholder 
desires to sell his stock during his lifetime, he shall give his associate 
stockholders and the Secretary of this corporation written notice of such 
desire, and the associate stockholders shall have the right to purchase such 
stock at any time within thirty days after such notice at the price determined 
by Article 7.  Each such associate 
stockholder shall have the right to purchase a proportion of such stock equal to 
the ratio of the number of shares owned by him to the total shares owned by the 
remaining associate stockholders excluding the seller, and if a stockholder is 
unable or unwilling to buy the proportion of stock allotted to him, the other 
stockholders shall have the right to buy the balance in similar ratio.  Upon the consummation of purchase and 
payment therefore, the Secretary of the corporation shall make the transfer and 
issue the new certificate and retain possession of the new certificates in case 
of further sales.

 
 
[¶15]  Considering Article 5 in the context of 
the entire agreement and giving the words used their plain and ordinary meaning 
in light of the stated purpose of the agreement, we conclude the agreement required any stockholder wishing to sell 
his stock during his lifetime to give written notice of that desire to the other 
stockholders and the corporate secretary.  
We further conclude that the other stockholders had the right to purchase the stock, or 
a proportionate share of it equal to the ratio of the number of shares they 
owned to the total shares owned by the other stockholders excluding the seller, 
within 30 days of such notice.  If a 
particular stockholder was unable or unwilling to buy the stock or his 
proportionate share, the other stockholders had the right to purchase the 
balance.  Contrary to Buyers' 
assertions, the agreement did not require the other stockholders to purchase 
another stockholder's shares nor did it prohibit a stockholder from selling his 
stock during his lifetime to a third party if, upon receipt of written notice of 
the desire to sell, none of the other stockholders exercised their right to 
purchase the stock or their proportionate share.  

 
 
[¶16]  We reiterate:  "The parties to [a contract] are free to 
incorporate within [their agreement] whatever lawful terms they desire, and the 
courts are not at liberty, under the guise of judicial construction, to rewrite 
the [contract]."  Cathcart, ¶ 18, 123 P.2d  at 587.  The parties to the stock purchase 
agreement incorporated a provision requiring a stockholder to give written 
notice of his desire to sell and giving the other stockholders the right to 
purchase the stock.  The parties to 
the stock purchase agreement did not incorporate a provision prohibiting a 
stockholder from selling his stock to a third party if none of the other 
stockholders exercised their right of purchase within 30 days after written 
notice of the desired sale. Construing the stock purchase agreement as 
incorporating such a prohibition would constitute re-writing the contract to add 
language not included by the parties.  
We limit our review to the four corners of the agreement as a whole, in 
light of all the language used and the intent of the parties at the time they 
entered into the agreement, and conclude the agreement gave the other 
stockholders a right of first refusal in the event one stockholder decided to 
sell.  Nowhere, however, did the 
agreement prohibit a stockholder from selling to a third party or provide that a 
stockholder could only sell to one of 
the other stockholders.

 
 
[¶17]  Our conclusion in this regard is 
supported not only by the plain language of Article 5 but also by Article 2, 
which provided:

 
 
            
ARTICLE 2.  Upon the death of 
each stockholder the survivor and ultimately the sole survivor shall purchase and the estate of the 
decedent shall sell the stock 
interest now owned or hereafter acquired by the stockholder who dies.  The purchase or sale price of such stock 
shall be determined in accordance with the provisions of Article 7 of this 
agreement.  A surviving stockholder 
shall purchase that portion of stock owned by the deceased represented by the 
ratio of the number of shares owned by such survivor to those owned by all the 
survivors.  (emphasis 
added)

 
 
In 
contrast to the language of Article 5, Article 2 clearly requires the other 
stockholders to purchase the stock of any stockholder who dies.  The use of the word "shall" is 
mandatory.  Metropolitan Mortgage & Securities Co., 
Inc. v. Belgrade, 816 P.2d 868, 878 n. 2 (Wyo. 1991).  Had the parties to the agreement 
intended similarly to require the other stockholders to purchase the shares of a 
stockholder wishing to sell during his lifetime, they could have used the word 
"shall" in Article 5, just as it was used in Article 2.  Instead, the agreement gives 
stockholders "the right" to purchase the shares of a stockholder wishing to sell 
during his lifetime.  This 
difference in language suggests the parties' intent was different with respect 
to the sale of stock after the death of a stockholder and sales during the 
lifetime of a stockholder.  

 
 
[¶18]  Generally, the law favors the free 
alienability of property interests.  
Box L Corp. v. Teton County ex 
rel. Board of County Comm'rs of Teton County, 2004 WY 75, ¶ 11, 92 P.3d 811, 
815 (Wyo. 2004).  Absent language 
clearly reflecting the parties' intent to restrict the transfer of a property 
interest, we are not inclined to conclude that was the parties' intent.  There simply is no indication in the 
stock purchase agreement that the parties intended to leave each other no way 
out if one desired to sell his or her shares and none of the others had the 
ability to buy them.  We affirm the 
district court's ruling that upon written notice to the other stockholders and 
corporate secretary of their desire to sell and the passage of 30 days, Sellers 
had the right to sell their shares to a third party   

 
 
            
2.         
The Will Provision

 
 
[¶19]  Nola's will, executed in 1982, ten years 
after the stock purchase agreement, provided in pertinent 
part:

 
 
            
None of the property devised and bequeathed by my will, and particularly 
the capital stock in 7-C INDUSTRIES, INC., a Wyoming Corporation, may be sold, 
conveyed in any manner, or encumbered in any way, directly or indirectly during 
the lifetime of my husband without his specific written consent; and after the death of my husband, said 
property or interests therein, may, 
during the lifetime of my children, or any of them, only be sold, or conveyed or encumbered in 
any manner, to my other children, unless all agree otherwise, with 
preference given to that person or those persons who will stay on the property, 
including the property owned by 7-C INDUSTRIES, INC., and keep it intact 
(emphasis added).  

 
 
After 
Nola's death in 1985, her will was submitted for probate in an Idaho district 
court.  From documents submitted 
with the parties' summary judgment motions in this case, it appears that 134 
shares of corporate stock were transferred to each of the seven children 
pursuant to the will in December of 1986.  
A copy of the transfer restriction contained in the will was attached to 
the stock transfers.  An order 
approving the final accounting and distribution and formally closing Nola's 
estate was entered by the Idaho district court in January of 1987.  The order was final and conclusive upon 
entry and subject to challenge only as provided in the Idaho Uniform Probate 
Code, § 15-1-101, et seq.  Any claim that the provision of Nora's 
will restricting the transfer of 7-C stock was invalid was properly a matter for 
the Idaho district court.  It is not 
an issue for this Court to decide nor was it an issue for the district court2 to decide in this action seeking a 
declaration of the parties' rights under a stock purchase agreement executed ten 
years prior to the will.     

 
 
[¶20]  In deciding the issue presented, it 
would be appropriate for this Court to consider evidence of circumstances 
surrounding execution of the stock purchase agreement in determining the 
parties' intent.  Mullinnix LLC v. HKB Royalty Trust, 2006 
WY 14, ¶ 26, 126 P.3d 909, 921 (Wyo. 2006).  It would not be appropriate, however, to 
consider the will.  "Extrinsic 
evidence," as used in the context of contract construction, "refers to the 
commercial or other setting in which the contract was negotiated and other 
objectively determinable factors that give a context to the transaction between 
the parties."  Hickman v. Groves, 2003 WY 76, ¶ 12, 71 P.3d 256, 260 (Wyo. 2003).  Nola's 
will, executed in 1982, provides no context to the setting in which the stock 
purchase agreement was negotiated and signed ten years earlier.  Simply put, the will provision at issue 
is irrelevant to our interpretation of the agreement.        

 
 
3.          Sellers' Offer    

 
 
[¶21]  Buyers' final claim is that the district 
court incorrectly concluded that Sellers' offer was a valid offer under the 
terms of the stock purchase agreement, triggering the 30 day response 
period.  Buyers assert, "at most, it 
was an expression of a desire to bring to an end the stockholders' conflict by 
selling off property or stock ownership."  
They further claim the offer did not comply with the agreement because it 
did not contain a precise sale price in accordance with Article 
7.

 
 
[¶22]  Article 5 of the stock purchase 
agreement provided:

 
 
            
If a stockholder desires to sell his stock during his lifetime, he shall 
give his associate stockholders and the Secretary of this corporation written 
notice of such desire, and the associate stockholders shall have the right to 
purchase such stock at any time within thirty days after such notice at the 
price determined by Article 7.    

 
 
In 
accordance with this provision, a stockholder who desired to sell his shares was 
required to give written notice of his desire to the corporate secretary and his 
fellow stockholders and wait 30 days for their response.  

 
 
[¶23] 
The evidence was undisputed that between January 10 and 16, 2006, each of the 
Sellers gave separate written notice to the corporate secretary of their desire 
to sell all of their shares.  It 
also was undisputed that by e-mail dated January 14, 2006, Burke Christensen 
notified Buyers that "The Four of us are definitely willing to sell our 
shares."  There was no dispute that 
Buyers received the e-mail on or about January 15, 2006, and understood that 
Burke was speaking on behalf of himself and the three other Sellers when he said 
they were willing to sell their shares.  
We agree with the district court that Sellers complied with the notice 
requirements of the stock purchase agreement.    

 
 
[¶24]  Buyers claim that Sellers' "offer" was 
not a "valid offer" under the stock purchase agreement triggering the 30 day 
response time.  This assertion 
ignores the plain language of the agreement.  The agreement did not require Sellers to 
make an offer, valid or otherwise, in order to commence the 30 days.  Rather, the agreement very clearly 
required Sellers to give written notice of their desire to sell their 
stock.  That is precisely what the 
Sellers did; therefore, as a matter of law, they complied with the notice 
provision. 

 
 
[¶25]  Buyers further claim that Sellers' offer 
did not comply with the agreement because it did not state a precise sale price 
in accordance with Article 7.  This 
argument also ignores the plain language of the agreement.  As stated above, the agreement required 
only that Sellers give notice of their desire to sell.  Nowhere is there language requiring them 
to state a sale price.  To the 
contrary, the agreement itself establishes the sale price by expressly giving 
the remaining stockholders the right to purchase the stock at the price 
determined by Article 7.  We agree 
with the district court's conclusion that when the 30 days passed with no 
response to Sellers' notice from Buyers, Sellers were free to sell their shares 
to an outside party.   

 
 
[¶26]  Although they were not required to do so 
by the agreement, Sellers sent Buyers a second notice of their desire to sell 
dated February 25, 2006.  Buyers 
argue this second notice also failed to satisfy the requirements of the stock 
purchase agreement because it did not state a sale price in accordance with 
Article 7.  Our conclusion that 
Sellers fulfilled the requirements of the agreement by giving notice in January 
and waiting 30 days makes discussion of the February notice unnecessary.  Having fulfilled the requirements, 
Sellers were free to sell to a third party and had no obligation to give Buyers 
a second opportunity to purchase their shares.  Having no such obligation, they likewise 
were not required to state a sale price in accordance with Article 7.   

 
 
[¶27]  We affirm the district court's order 
granting summary judgment to Sellers on the claims brought under the stock 
purchase agreement.  We hold the 
will is not relevant to the issues presented and any challenge to the will 
should have been made in accordance with the Idaho Probate Code.   

 
 
[¶28]   Affirmed.

 
 
FOOTNOTES

 
 

1Five of the children own 716.8 shares.  Ms. Hamblin and Rex Christensen own 708 
shares, 8.8 shares less than the other children because the two traded stock for 
1.5 acres of land upon which they each built a home. 

 
 

2From our review of the record, we conclude the district court ruled only 
that the will provision had no effect on or validity as to the meaning of the 
stock purchase agreement.  It did 
not intend its ruling in this action to affect the Idaho probate 
proceeding.