The HONORABLE RICHARD H. KYLE, United States District Judge *

for the District of Minnesota, sitting by designation.

 

No. 95-2955

 

Sligo, Inc., *

*

Plaintiff/Appellee, * Appeal from the United States

* District Court for the

v. * Eastern District of Missouri

*

Cynthia R. Nevois and *

Michelle A. Vlahek, Trustees *

of the Raymond H. Cornell *

Revocable Trust, *

*

Defendants/Appellants. *

 

Submitted: April 12, 1996

 Filed: May 21, 1996

 

Before WOLLMAN and HANSEN, Circuit Judges, and KYLE, District Judge. *

KYLE, District Judge.

Plaintiff/Appellee Sligo, Inc. (“Sligo”), a closely held corporation,

commenced this diversity action against Defendants/Appellants Cynthia

Nevois and Michelle Vlahek (“Trustees”) seeking a declaration that it

properly exercised an option to purchase shares of Sligo stock held by the

Trustees, or alternatively, an order of specific performance requiring the

Trustees to accept Sligo’s tender offer for the shares. The district court

found for Sligo and ordered the Trustees to convey the stock certificates.

The Trustees appeal, claiming the district
2

court’s order is contrary to the express language of Sligo’s option and

contesting the proper purchase price for the shares. Sligo subsequently

filed a motion to dismiss the appeal as moot on the grounds the Trustees

complied with the district court Order and conveyed the stock during the

pendency of this appeal. For the reasons set forth below, we deny Sligo’s

motion to dismiss this appeal, and we reverse the decision of the district

court.

I. BACKGROUND

The parties dispute the proper method for calculating the purchase

price of Sligo stock under the terms of Sligo’s option. The Trustees claim

the purchase price should be based on the book value of Sligo shares on

December 31, 1989. Sligo maintains the purchase price should be based on

the book value of the shares on January 31, 1994. The following facts

underlying this conflict are undisputed.

A. Acquisition of Sligo and the Restrictive Stock Transfer

Agreement

In July, 1988, Raymond H. Cornell (“Cornell”), and J. Richard Hauser

(“Hauser”) engineered a leveraged buyout of Sligo, a St. Louis-based

industrial supply distributor. (J.A. at 4-5, 37, 96-97.) Cornell and

Hauser each owned fifty percent of Sligo’s outstanding shares under the

terms of the acquisition, and each served as an officer and director of

Sligo. As a condition of financing this acquisition, Sligo’s lenders

required it to purchase and maintain life insurance policies in the amount

of $1 million on the lives of Cornell and Hauser and required that the life

insurance proceeds be applied toward repayment of the financing loans if

either Hauser or Cornell died before the loans were repaid. Sligo later

purchased additional life insurance policies on the lives of Cornell and

Hauser in the amount of $500,000.00 each. Sligo was the beneficiary of

these life insurance policies.
 The Agreement defined the term “transfer” as follows: 2

(e) Transfer. All references herein to “Transfer”

shall mean and shall include any sale, exchange, gift,

assignment, transfer in trust or otherwise, . . . . In

addition, if for any reason any Present Shareholder

ceases to be at least an officer, a director or an

employee of the Corporation, a “Transfer” subject to

the provisions of Section 3.4 hereof shall be deemed to

have occurred with respect to the Shares of such

Present Shareholder on the first Business Day on which

such Present Shareholder is not an officer, director or

employee of the Corporation.

(J.A. at 10.)

3

In December, 1988, Hauser and Cornell entered into a Restrictive

Stock Transfer Agreement (“Agreement”) to restrict each owner’s ability to

transfer his shares of Sligo stock. (J.A. at 969.) This Agreement

provided Sligo with an option to purchase an owner’s share upon certain

events and under certain conditions, as more fully set forth below. After

executing the Agreement and pursuant to its terms, Cornell transferred his

shares of Sligo stock to an inter vivos revocable trust (the “Trust”), of

which he was the sole trustee.

Under the Agreement, Sligo’s option was triggered when a specified

“transfer” occurred. Its option read in pertinent part: 2

3.4 Purchase Options Upon Death of a Shareholder or Other

Involuntary Transfers.

. . .

(b) First Option of Corporation. Within thirty (30) days

of the Corporation’s receipt of actual notice of a Transfer .

. . the Corporation may exercise an option hereby granted to

the Corporation to purchase all, but not less than all, of the

Shares so Transferred . . . for the price and upon the other

terms provided in Article V hereof. . . .

(J.A. at 13.) The Agreement treated the death of a shareholder as a

“transfer” which accordingly triggered Sligo’s option to purchase
4

the deceased shareholder’s shares.

The Agreement also established two mechanisms for setting the value

of the shares in the event of a transfer. The first was a “fail-safe”

provision which read:

5.2 Market Value. Unless otherwise specified in a certificate

of agreed value then in effect pursuant to Section 5.3 hereof,

the “Market Value” of Shares as used herein shall mean:

. . . 

(b) Death and Insurance. In the case of a sale and purchase

of Shares by the Corporation under [the terms of its option] as

a result of the death of a Shareholder if the Corporation

receives life insurance proceeds upon the death of such

Shareholder, the Market Value shall mean the book value of said

Shares for the period ending December 31, 1989, and One and

one-half (1 1⁄2) times said book value thereafter. Book value

shall conclusively be determined by the accountant or

accounting firm then servicing the Corporation.

(Id. at 16 (emphasis added).) As an alternative, the Agreement provided

that the shareholders could change the Market Value as determined under

Section 5.2(b) by executing a “Certificate of Agreed Market Value.” The

amount agreed upon in such a certificate superseded the Market Value as set

out in Section 5.2(b). Specifically, Section 5.3 of the Agreement

provided:

5.3 Certificate of Agreed Market Value. The Shareholders and

the Corporation may, at any time and from time to time,

determine “Market Value” as used in Section 5.2 hereof by

executing and filing with the Corporation a written instrument

wherein such determination is set forth, whereupon, for the

period of time stated in such instrument, “Market Value” so

determined shall supersede “Market Value” as determined in

Section 5.2. . . .

(Id. at 16-17.) Cornell and Hauser executed a Certificate of Agreed Market

Value effective for the period August 1, 1988 through December 31, 1988.

They did not execute a subsequent Certificate of Agreed Market Value.
 A third individual, Michael A. Lazaroff, was also 3

named as a successor and co-trustee of the Trust; he resigned as

a co-trustee on February 16, 1994. (J.A. at 38.)

 In calculating this value, Deloitte & Touche did not include the $1.5 million 4

due Sligo from the life insurance policies payable upon Cornell’s death. Sligo did not

receive payment on these policies until approximately March, 1994, at which time

it received $504,247.38 from Kentucky Central Life Insurance Company and

$1,000,638.58 from Allianz Life Insurance Company. (J.A. at 715, 716.)

5

B. Sligo’s Attempt to Exercise its Option

Cornell committed suicide on January 31, 1994, and the Trustees

succeeded him as successor co-trustees of the Trust. Under the Agreement, 3

his death constituted a “transfer” which triggered Sligo’s option to

purchase the shares held in the Trust. On February 18, 1994, Sligo

exercised its option and notified the Trustees of its intention to purchase

the shares of Sligo stock held in the Trust.

In order to determine the purchase price of these shares, Sligo

contacted “the accounting firm then servicing the Corporation,” Deloitte

& Touche, and requested that it calculate the book value of Sligo as of the

date of Cornell’s death, January 31, 1994.

That book value was calculated using Sligo’s financial statements for

1993 and information obtained from Sligo regarding income for the period

January 1-31, 1994. Deloitte & Touche determined the book value of all

Sligo shares on January 31, 1994 to be $546,523.00. Cornell’s fifty

percent interest was $273,261.50, and Sligo tendered one and one-half times

this amount, $409,892.25, to the Trustees.4

Although Deloitte & Touche did not calculate the book value of Sligo

shares as of December 31, 1989 -- the date referred to in 
6

Section 5.2(b)of the Agreement -- the parties do not dispute that the book

value on that date was $879,724.00. The book value of Cornell’s fiftypercent interest in Sligo at that time was $439,862.00. (J.A. at 724.)

Based on the accountant’s calculation of the January 31, 1994 book

value, Sligo offered the Trustees $409,892.25 for the Trust’s shares of

Sligo stock. The Trustees refused the offer, claiming that Sligo had

improperly calculated the book value and asserting the following: First,

because the shareholders and Sligo never determined “Market Value” under

the procedure established in Section 5.3, the “fail safe” provision in

Section 5.2(b) applies, and the “Market Value” of the shares was one and

one-half times their “book value” as of December 31, 1989, not January 31,

1994. They accordingly assert that Sligo must pay $659,793.00 for the

shares -- the agreed upon December 31, 1989 book value of $439,862.00

multiplied by 1.5.

Second, and alternatively, if the book value is to be calculated as

of the date of Cornell’s death, the $1.5 million due to Sligo from

Cornell’s life insurance policies should have been included in the

determination of book value.

Third, and also based on the calculation of book value as of the date

of Cornell’s death, the accountants “did not make an independent review of

the records of Sligo in order to calculate book value” and instead relied

on unreviewed information Sligo supplied. (Appellant’s Br. at 13.) They

accordingly claim the accountants did not “determine” the book value of the

shares as required by Section 5.2(b) of the Agreement.

C. District Court Proceedings
7

The parties submitted their claims to the district court on a

stipulated record. In its Findings of Fact, Conclusions of Law and Final

Order, the district court concluded Sligo had timely and validly executed

its option. It held that the purchase price of the shares to be purchased

under Section 5.2(b) should be based on their book value as of January 31,

1994, the date of Cornell’s death. The district court further concluded

that Deloitte & Touche properly excluded the $1.5 million in life insurance

proceeds payable to Sligo from the calculation of the shares’ book value

as of January 31, 1994. Finally, the district court concluded that

Deloitte & Touche complied with the Agreement’s term that it “determine”

the shares’ book value, notwithstanding its failure to independently review

financial records, because: (1) the Agreement did not explicitly require

the accountants to conduct an audit and (2) the Trustees failed to show the

book value was determined in an arbitrary or capricious manner. Based on

these determinations, the district court entered judgment in Sligo’s favor

and ordered the Trustees to accept Sligo’s tender of $409,892.25 and convey

the shares.

D. Post-Trial Proceedings

The Trustees filed a notice of appeal to this Court on July 25, 1995.

They simultaneously filed a motion with the district court seeking to stay

execution of its Order pending resolution of their appeal; this motion was

denied. On August 14, 1995, Sligo informed the district court that it

intended to execute on the Order pursuant to Rules 69 and 70 of the Federal

Rules of Civil Procedure. (Wunderlich Aff. ¶ 7.) Sligo also informed

counsel for the Trustees that unless they tendered the shares, Sligo would

deem such inaction as refusing to comply with the terms of the Order.

(Id., Ex. E.)

The Trustees subsequently advised Sligo that they would accept

Sligo’s tender of $409,892.25 for the shares to avoid risk of a 
8

contempt citation, but without waiving or prejudicing their appeal rights.

(Id. ¶ 15 & id., Exhs. H, J.) Accordingly, the certificate conveyed to

Sligo contained the following reservation of rights clause:

Without waiving any issue or right on appeal, Trustees of the

Raymond H. Cornell Trust dated 10-3-90 hereby deliver to Sligo,

Inc. the 50 shares of common stock of Sligo, Inc. as directed

in the Final Order of Judge Shaw signed on June 29, 1995 in

Sligo, Inc. v. Cynthia R. Nevois, et al., Cause No., 4:94-cv670CAS, in the United States District Court for the Eastern

District of Missouri.

(Id., Ex. K.) Sligo tendered a check for $409,892.25, which the Trustees

deposited in a separate account pending resolution of this appeal. (Nevois

Aff. ¶ 7 & id., Ex. A; Vlahek Aff. ¶ 7 & id., Ex. A.)

Sligo currently claims the Trustees abandoned their appeal because

they “accepted” payment for the shares.

II. DISCUSSION

A. Motion to Dismiss the Appeal

Sligo’s motion to dismiss this appeal is premised on the “acceptance

of benefits” doctrine, which provides that an appeal from a court judgment

may be barred where the appealing party has voluntarily and intentionally

accepted the benefits of that judgment. See Commercial Union Ins. v.

Walbrook Ins., 41 F.3d 764, 769 (1st Cir. 1994); Wynfield Inns v. Edward

LeRoux Group, Inc., 896 F.2d 483, 489 (11th Cir. 1990); International

Harvester Credit Corp. v. East Coast Truck, 547 F.2d 888, 889 (5th Cir.

1977). The application of this doctrine requires a party to accept the

benefits of a judgment under circumstances which “indicate an intention to

finally settle and compromise a disputed claim.” In re Tudor Assoc., Ltd.

II, 20 F.3d 115, 118 (4th Cir. 1994) 
9

(quotation omitted).

In the present case, the circumstances clearly indicate that the

Trustees did not intend to finally settle their dispute with Sligo when

they conveyed the shares. The conveyance was made pursuant to an adverse

court order and under a threat of contempt. Moreover, the Trustees

repeatedly and consistently informed Sligo that they did not intend to

waive their appeal by conveying the shares; the certificate itself

specifically memorializes this position. The Trustees did not seek to take

“advantage” of the court order compelling them to transfer the shares.

This was precisely the result the Trustees litigated to avoid. We

accordingly deny Sligo’s motion to dismiss this appeal.

B. Merits of the Appeal

The Trustees raise three issues on appeal: (1) whether the district

court properly interpreted Section 5.2(b) of the Agreement in determining

the date for establishing the book value of the shares; (2) whether the

insurance proceeds payable to Sligo upon Cornell’s death should have been

included in the “Market Value” of the shares if the date for determining

book value is January 31, 1994; and (3) whether the accountant “determined”

the book value as required under the Agreement. We need only reach the

first issue.

1. Section 5.2(b)

Sligo and its shareholders did not execute a Certificate of Agreed

Market Value pursuant to Section 5.3 for the period following December 31,

1988. As a result, the “Market Value” determination is governed by the

fail-safe clause found in Section 5.2(b), which provides that if a

shareholder dies and Sligo receives life insurance proceeds, and if there

is not a Certificate of Agreed Market Value covering the date of such a

shareholder’s death:
10

the Market Value shall mean the book value of said Shares for the

period ending December 31, 1989, and One and one-half times said book

value thereafter. (Emphasis added.)

The Trustees argue that the words “said book value” refer to the previously

stated book value, and thus expressly require the market value of the

Shares to be determined as of December 31, 1989. Sligo argues that the

phrase “for the period ending December 31, 1989” qualifies the reference

to “Market Value” in this clause, and does not modify the term “book

value.” Sligo maintains the book value to be used in this section is the

book value as of the date of the shareholder’s death, January 31, 1994.

Both parties rely on the alleged plain meaning of Section 5.2(b) to support

their conflicting interpretations.

The district court did not find Section 5.2(b) ambiguous, found the

Trustee’s construction of Section 5.2(b) “without merit,” and concluded as

follows:

December 31, 1989, is clearly not the only date on which book

value is to be calculated. Due to the use of the word

‘thereafter,’ the Court concludes that the Agreement provides

for the purchase price to be calculated on dates after December

31, 1989. Said date is used by the Agreement as a line of

demarcation between when the purchase price is straight book

value and when it is one and one-half times book value.

(J.A. at 971-72.)
 Section 8.9 of the Agreement provides that “[t]his 5

agreement shall be subject to and governed by the laws of the

State of Missouri.” (J.A. at 22.)

 In its Brief, Sligo claims that the district court 6

relied on extrinsic evidence in “resolving the issues in this

case,” and that as a result, its conclusions must be reviewed

under the clearly erroneous standard. (Appellee’s Br. at 14.) 

This is clearly not the law with respect to the district court’s

interpretation of the language of the Agreement.

11

2. Legal Standard

We review the district court’s interpretation of Missouri law de

5

novo. Bell Lumber & Pole Co. v. United States Fire Ins., 60 F.3d 437, 441

(8th Cir. 1995).

The construction and interpretation of a contract is a matter of law,

and no deference is paid to the trial court’s interpretation. See Central

City Ltd. v. United Postal Sav. Ass’n, 903 S.W.2d 179, 182 (Mo. Ct. App.

1995). Whether the language of a contract is ambiguous is also a question

of law. CIT Group/Sales Fin., Inc. v. Lark, 906 S.W.2d 865, 868 (Mo. Ct.

App. 1995); see also Maurice Sunderland Architecture, Inc. v. Simon, 5 F.3d

334, 337 (8th Cir. 1993) (explaining that “[t]he determination that a

contract is or is not ambiguous is a legal determination, and no deference

is paid to the trial court’s determination on that issue” and “[i]f the

contract is unambiguous, the interpretation is a question of law and

determined de novo”) (applying Minnesota law). A contract is not

6

ambiguous simply because the parties disagree as to its meaning. Young

Dental Mfg. Co. v. Engineered Prod., Inc., 838 S.W.2d 154, 155-56 (Mo. Ct.

App. 1992). Rather, to determine whether a contract is ambiguous, the

court must “consider the whole instrument and give the words their ordinary

and natural meaning.” Angoff v. Mersman, 917 S.W.2d 207, 210 (Mo. Ct. App.

1996) (quotation omitted).

Accordingly, a contract is ambiguous only if “its terms are 
12

susceptible of more than one meaning so that reasonable persons may fairly

and honestly differ in their construction.” CIT Group Sales, 906 S.W.2d

at 868; see also Central City, 903 S.W.2d at 182 (“[w]here a contract is

not ambiguous, we ascertain the intent of the parties by giving the

language used its natural, ordinary and common sense meaning”). A court

may not use “forced or strained meanings” and “cannot use extrinsic or

parol evidence to create an ambiguity.” Young Dental, 838 S.W.2d at 156.

If no ambiguity exists, the court must construe and enforce the contract

according to its plain meaning. Schuster v. Shelter Mut. Ins., 857 S.W.2d

381, 383 (Mo. Ct. App. 1993); see also Lake Cable, Inc. v. Trittler, 914

S.W.2d 431, 435-36 (Mo. Ct. App. 1996)(“[w]hen a contract uses plain and

unequivocal language, it must be enforced as written”).

3. Application

We agree with the district court that Section 5.2(b) is not

ambiguous, but disagree with its interpretation of the plain language used

in this section.

The crux of the parties’ dispute, and the claimed district court

error, centers upon the meaning of the word “said” as it is used in Section

5.2(b). Missouri courts have explained that the plain meaning of the word

“said” is “before mentioned,” “already spoken of” or “aforesaid” and that

it “refers to an appropriate antecedent.” York Pharmacal Co. v. Henry C.

Beekmann Realty & Inv. Co., 304 S.W.2d 40, 42 (Mo. Ct. App. 1957)

(quotation omitted); accord Smith v. Stowell, 125 N.W.2d 795, 797 (Iowa

1964) (quotation omitted); see also Barilaro v. Consolidated Rail Corp.,

876 F.2d 260, 265 (1st Cir. 1989) (noting that “[i]n usual parlance, when

the word ‘said’ precedes another term it is so used in order to call the

reader’s attention to an antecedent meaning or designation for the term”);

Black’s Law Dictionary 1336 (6th ed. 1990) (defining “said” as “[b]efore

mentioned” and noting that “[t]his 
 For example, rather than providing the purchase price 7

to be the book value of the shares for the period ending December 31, 1989, “and

One and one-half times said book value thereafter,” the Agreement, if the

parties wanted to use the current book value, could simply have provided the purchase

price to be the book value of the shares for the period ending December 31, 1989, “and

One and one-half times the current book value thereafter,” or “and One and one-half

times their book value thereafter.”

13

word is frequently used in contracts, pleadings, and other legal papers

with the same force as ‘aforesaid’”). We agree with this construction. 

Applying this construction to Section 5.2(b), its meaning, we

believe, becomes clear and not reasonably susceptible to conflicting

interpretations. Section 5.2(b) creates two distinct periods for

calculating the purchase price of the shares, depending upon the date this

provision is triggered. The first period is “for the period ending

December 31, 1989.” The second period is for any time “thereafter.” With

respect to calculating the book value before December 31, 1989 -- the first

period -- this section provides that the Market Value shall mean the “book

value of the shares” for the period ending on that date. With respect to

calculating the Market Value anytime after the first period, the Market

Value is one and one-half times “said book value.” In other words, the

Market Value is one and one-half times the previously mentioned or

aforesaid book value. In this section, the previously mentioned book value

is the book value of the shares on December 31, 1989. This language is

plain and unequivocal.

To hold otherwise would be to ignore the use of the word “said” in

this section, or to give it a strained or unnatural meaning. This we may

not do. See Liberty Storage Co. v. Kansas City Terminal Warehouse Co., 340

S.W.2d 189, 192 (Mo. Ct. App. 1960) (explaining “[w]e are not at liberty

to ignore the presence of [a word in a contract], but must attach meaning

and significance to it, because every part of the contract must be given

effect, if fairly and reasonably possible”). If the paries had wanted the

fail-safe clause to use the current book value of the shares, they could

have easily provided language to this effect. They did not. 7
14

They specified the book value on December 31, 1989.

With respect to the district court’s construction, we note its focus

was on the term “thereafter.” The district court found that, because of

this term, the date December 31, 1989 marked a “line of demarcation”

between when the purchase price was straight book value and when it was one

and one-half times book value. It concluded that Section 5.2(b) did not

provide a fixed date to be used to determine the book value, but merely

provided that the book value at the time the purchase price was calculated

would be multiplied by 1.5.

The district court read too much into Section 5.2(b). We agree that

Section 5.2(b)contemplates that the purchase price may be calculated on

different dates, and that December 31, 1989 marks a line of demarcation

between when the purchase price will be straight book value and when it

will be 1.5 times the book value. It does not follow, however, that the

book value used in the calculation must change merely because the

multiplier applied to that book value changed. This additional condition

is found nowhere in the Agreement. To the contrary, as stated above, the

book value specified by the Agreement is the previously mentioned book

value of the shares on December 31, 1989.

Moreover, this construction is consistent with the remaining

provisions of the Agreement. The Agreement establishes a fixed purchase

price for the shares for the period August 1, 1988 to December 31, 1988.

Section 5.2(b) is a fail-safe provision which establishes two alternative

fixed purchase prices for the shares for the period following December 31,

1988. This provided a 
 The Court also notes that calculating the book value at 8

the end of an accounting period rather than the purchase date is

reasonable. See 1 O’Neal, Close Corporations § 7.30 at 141 (3d

ed. 1994) (“Ordinarily, in order to avoid closing books, making

an audit and taking inventory, it is preferable to provide that

book value will be calculated as of the end of the last preceding

fiscal or calendar year or some other designated accounting

period”).

 The Trustees concede that the remaining issues 9

regarding life insurance proceeds or the accountants’ actions

need be addressed only if it is determined that the book value is

determined as of a date other than December 31, 1989.

15

predictable basis from which the parties could determine whether to

supersede the purchase price pursuant to Section 5.3 with a current

valuation of the shares. If the parties had intended to deviate from the

values established by the fail-safe provision, they could have easily done

so.8

Based on the foregoing, we find the language of Section 5.2(b) is not

ambiguous. The purchase price for the Trust’s shares is one and one-half

times the book value of those shares on December 31, 1989, not their

January 31, 1994 book value -- the date of Cornell’s death. The parties

do not dispute that the book value of Cornell’s shares on December 31,

1989, was $439,862.00. The purchase price of the Trust’s shares is

accordingly one and one-half times that amount, or $659,793.00. As a

result of this conclusion, we need not address the remainder of the

Trustees’ claims.9

III. CONCLUSION

The decision below is reversed and this action is remanded to the

district court with directions to enter judgment in favor of the Trustees

in an amount consistent with this Opinion.
16

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.