Title: Roth v. Opiela
Citation: N/A
Docket Number: 96862
State: Illinois
Issuer: Illinois Supreme Court
Date: June 17, 2004

Docket No. 96862-Agenda 8-March 2004.
MARTIN ROTH et al., Appellees, v. GERALD J. OPIELA et al., 							
Appellants.
Opinion filed June 17, 2004. 
	CHIEF JUSTICE McMORROW delivered the opinion of the court:
	This case concerns the proper interpretation of a stock purchase
agreement between a closely held corporation and its shareholders. The
stock purchase agreement at issue contains a mandatory buy-sell provision
which provides that, upon the death of a shareholder in the corporation,
the shareholder's estate must sell the shareholder's stock back to the
corporation. An amendment to the agreement further provides, however,
that if the shareholder has "specifically bequeathed or otherwise given" the
stock to a direct descendant or descendants, then the mandatory buy-sell
provision will not apply. The question regarding the stock purchase
agreement which we must decide is this: When a shareholder of the
corporation dies without a will, and his descendants inherit by intestate
succession, can it be said that the shareholder "gave" his descendants their
inheritance so as to fall within the exception to the mandatory buy-sell
provision of the stock purchase agreement? The appellate court concluded
that the answer to this question is "yes," if it is proven that the shareholder
was aware of the laws of intestacy. No. 5-02-0492 (unpublished order
under Supreme Court Rule 23). We conclude that the correct answer to
the question is "no" and, for that reason, reverse the judgment of the
appellate court.

BACKGROUND
	The following facts, which are not in dispute, are taken from the
pleadings and other materials of record. Great Southwest Oil &amp; Gas
Corporation (Great Southwest) is a Nebraska corporation doing business
in Illinois. At the time of its incorporation, Great Southwest had three
shareholders, Richard Roth, Gerald J. Opiela and Frank J. Weber. Each
shareholder owned 1,000 shares of stock.
	On May 9, 1989, the three shareholders entered into a stock
purchase agreement with Great Southwest. In this agreement, the
shareholders and the corporation expressed a desire to have the stock of
Great Southwest "remain closely held in order to promote harmonious
management of the Corporation's affairs." To this end, the agreement
included a mandatory buy-sell provision which provides that, "[u]pon the
death of a shareholder, his estate shall sell and the Corporation shall
purchase the shares which were owned by the deceased Shareholder at
his death."
	On March 18, 1997, Gerald J. Opiela conveyed his shares of Great
Southwest stock to a qualified terminable interest property trust.
	On December 22, 1997, Great Southwest and the three shareholders
adopted a five-paragraph amendment to the stock purchase agreement.
The majority of this amendment relates to the creation of a right on the
behalf of the original stockholders to transfer stock to a direct descendant
without the approval of the other shareholders. Paragraph one of the
amendment expressly authorizes the original shareholders to "make a
transfer, by gift or otherwise,"of Great Southwest stock to a direct
descendant, provided that the aggregate number of shares so given does
not exceed 249. Paragraphs two and three of the amendment set forth
optional buy-sell provisions which, in the event of certain triggering events,
give an original shareholder the first option to buy back stock that has
been given to a direct descendant.
	The fourth paragraph of the amendment to the stock purchase
agreement, which is the provision at issue in this case, sets forth an
exception to the mandatory buy-sell provision of the stock purchase
agreement. Paragraph four states that the buy-sell provision will not take
effect if an original shareholder dies "having specifically bequeathed or
otherwise given" his shares of Great Southwest stock to a direct
descendant or descendants. Paragraph five of the amendment states that
no transfer made pursuant to the amendment will be effective until the
transferee agrees, in writing, to be bound by the terms of the stock
purchase agreement.
	On December 24, 1997, Frank Weber transferred 100 shares of
Great Southwest stock to each of his two sons. That same day, Richard
Roth also transferred 100 shares of Great Southwest stock to each of his
two children, Martin Roth and Kerry Roth Zerla. All the children signed
statements indicating their agreement to be bound by the terms of the
stock purchase agreement.
	Richard Roth died intestate on February 4, 2001. Under Illinois'
statute of descent (755 ILCS 5/2-1(a) (West 2000)), 50% of Richard's
estate was inherited by his widow, Rebecca Roth. The remaining 50% of
Richard's estate went to his children, with each child receiving 25%. On
April 7, 2001, Rebecca executed a disclaimer to any interest in her
husband's Great Southwest stock, pursuant to section 2-7 of the Probate
Act of 1975 (755 ILCS 5/2-7 (West 2000)). Because of the disclaimer,
the 400 shares of Great Southwest stock that would have passed by
intestate succession to Rebecca went, instead, to the children, with each
child receiving 50%. Thus, in total, each child was to inherit 400 shares of
the 800 shares of stock owned by Richard at the time of his death.
Together with the previous 100 shares of Great Southwest stock which
they had received, the children were to own 500 shares of stock each, or
a combined one-third of the corporation's outstanding shares.
	On April 18, 2001, Richard Roth's children, the plaintiffs in this case,
filed a complaint for declaratory judgment in the circuit court of Crawford
County. Plaintiffs sought a declaration that they had the right to inherit the
800 shares of Great Southwest stock which were owned by Richard at
the time of his death. The complaint named as defendants Gerald J.
Opiela, both individually and as trustee of the qualified terminable interest
property trust dated March 18, 1997, Frank J. Weber and Great
Southwest.
	Plaintiffs and defendants filed cross-motions for summary judgment.
In support of their motion, plaintiffs contended that the mandatory buy-sell
provision of the stock-purchase agreement was not applicable to the 800
shares of Great Southwest stock owned by Richard Roth. According to
plaintiffs, the fact that Richard died intestate and that Rebecca Roth issued
the disclaimer meant that the 800 shares of stock had been "otherwise
given" to them as described in the amendment to the stock purchase
agreement. Therefore, plaintiffs alleged, the exception to the mandatory
buy-sell provision applied and Richard's estate was under no obligation
to sell the shares of stock to the corporation.
	Defendants disagreed. Defendants argued that, under the law of
Illinois, intestacy does not constitute an affirmative act of giving and,
therefore, that Richard had not "otherwise given" the 800 shares of stock
to plaintiffs. Thus, in defendants' view, the exception to the mandatory
buy-sell provision did not apply and Richard's estate was required to sell
the shares of stock to Great Southwest. Following a hearing, the circuit
court granted defendants' motion for summary judgment.
	On appeal, the appellate court reversed. The appellate court stated:
		"We agree with the trial court that the term 'otherwise given' is
not ambiguous because this term implies a conscious act of
giving; however, we cannot agree with the trial court's granting
of a summary judgment. The record before us fails to indicate
whether or not Richard Roth intended to give all of his shares to
the plaintiffs. While Richard Roth did not specifically bequeath
the shares to the plaintiffs, there was no showing that he did not
intend for his children to inherit the stock. The fact that he gave
each of his children 100 shares of stock prior to his death
suggests that he may have wanted them to inherit the stock. Mr.
Roth may have been cognizant of the laws of intestacy and may
have known that his widow would disclaim her interest in the
stock. On the record before us, we cannot be sure whether Mr.
Roth's intestacy was a conscious act of giving or an act of
indifference." No. 5-02-0492.
	Having concluded that summary judgment was inappropriate, the
appellate court remanded the cause for trial. Defendants thereafter filed a
petition for leave to appeal in this court, which we allowed.

ANALYSIS
	Summary judgment is proper where "the pleadings, depositions, 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 judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2000);
Robidoux v. Oliphant, 201 Ill. 2d 324, 335 (2002). We review the grant
of summary judgment de novo. Guillen v. Potomac Insurance Co. of
Illinois, 203 Ill. 2d 141, 149 (2003).
	Before this court, the parties do not dispute the essential facts.
Plaintiffs and defendants agree that Richard Roth died intestate, that
Rebecca Roth issued a disclaimer to the 800 shares of Great Southwest
stock which Richard owned at the time of his death and that, under the
laws of intestate succession, the stock would ordinarily devolve to
plaintiffs. The parties do contest, however, the meaning of paragraph four
of the amendment to the stock purchase agreement and its application to
this case. Paragraph four of the amendment states:
		"If an original SHAREHOLDER dies having specifically
bequeathed or otherwise given his shares of stock in the
CORPORATION to a direct descendant or descendants, then
the provisions of the STOCK PURCHASE AGREEMENT for
mandatory sale and purchase of stock by the CORPORATION
and the other SHAREHOLDERS shall not be applicable, and
said transfer shall be permissible, and the CORPORATION
shall retain all proceeds from any life insurance policy which
insured said SHAREHOLDER as for the absolute property of
the CORPORATION."
	As they did in the courts below, plaintiffs acknowledge that Richard
Roth did not "specifically bequeath" his 800 shares of Great Southwest
stock to them. Plaintiffs emphasize, however, that the amendment to the
stock purchase agreement pertains to shares that are "otherwise given"
(emphasis added) to a descendant or descendants. Plaintiffs again assert
that, through the laws of intestate succession, Richard "effectively
conveyed" his shares of stock to plaintiffs once Rebecca Roth executed
her disclaimer. Thus, in plaintiffs' view, the 800 shares of stock were
"otherwise given" to them.
	Defendants, in response, maintain that intestacy is not an act of giving
and, therefore, that Richard did not give the stock to plaintiffs in any sense
of the term. In support of this position, defendants cite two decisions from
our appellate court, Genung v. Hagemann, 103 Ill. App. 2d 409 (1968),
and In re Estate of Anderson, 195 Ill. App. 3d 644 (1990).
	At issue in Genung was an antenuptial agreement between Eleanor
Genung and Gilbert Genung. The agreement provided, in part, that
"nothing herein shall be construed to be a bar to either party to this
agreement giving any property of which they may be possessed to the
other party by will or otherwise." Gilbert died intestate. Eleanor thereafter
filed a declaratory judgment action in which she maintained that, because
the antenuptial agreement stated that property could be given by will or
"otherwise," she had a right to an intestate's share of her late husband's
estate. The defendants disputed this construction of the antenuptial
agreement and maintained that to give property "by will or otherwise"
meant that an affirmative act of either making a will or inter vivos gift was
required. The appellate court agreed, stating:
		"The statement that either party may give property to the other
is followed by the statement that each shall 'control' their
personal estate and do with it 'whatsoever they wish and will,
by his or her orders or directions, or by will ... .' (Emphasis
added.) We believe this indicates an intention that an affirmative
act of ordering, or directing, or making a will, is intended if the
other is to take property over which he or she has by the
agreement given up all rights. We do not construe the agreement
to mean that a failure to act, such as intestacy, is the 'giving' or
the 'doing with the properties' specified in the agreement."
Genung, 103 Ill. App. 2d at 417.
	In Anderson, which involved the interpretation of a prenuptial
agreement, the appellate court agreed with, and followed, the logic of
Genung. Anderson, 195 Ill. App. 3d at 651. In so doing, the court noted
with approval the Genung court's conclusion that "[i]ntestacy was
analogous to a failure to act." Anderson, 195 Ill. App. 3d at 651.
	We find the appellate court's holdings in Genung and Anderson
persuasive and applicable here. In this case, the phrase "otherwise given"
appears in the amendment to the stock purchase agreement immediately
after the words "specifically bequeathed"-words which connote an
affirmative action taken on the part of the original shareholder. Further, as
noted previously, the phrase "otherwise given" is found in the body of an
amendment that is largely concerned with creating a right on behalf of the
original stockholders to transfer stock by gift to direct descendants. In this
context, it is appropriate to give the words "otherwise given" their plain
and ordinary meaning and to assume that the words refer to some
affirmative act of transfer, such as an inter vivos gift.
	The appellate court below agreed that the phrase "otherwise given"
unambiguously refers to "a conscious act of giving." The court reasoned,
however, that if Richard Roth was aware of the laws of intestacy, and if
he was aware that his widow would disclaim any interest in his stock, then
it could be said that he "gave" the 800 shares of stock to plaintiffs. We
disagree. Intestacy, by definition, is not taking action with respect to the
distribution of one's estate. See, e.g., Genung, 103 Ill. App. 2d at 417.
To hold, as the appellate court did, that intestacy could be "a conscious
act of giving" is to adopt a contradiction. It is the equivalent of saying that
not taking action is, in fact, acting. We reject that proposition. Accord
Genung, 103 Ill. App. 2d at 417; Anderson, 195 Ill. App. 3d at 651.
The 800 shares of Great Southwest stock at issue in this case were not
given to plaintiffs by Richard Roth. Rather, the stock devolved to plaintiffs
by operation of law, i.e., through intestate succession and Rebecca Roth's
disclaimer.
	Plaintiffs cite Brown v. Momar, 201 Ga. App. 542, 411 S.E.2d 718
(1991), as persuasive authority for their contention that the 800 shares of
stock were "otherwise given" to them. That case is of no relevance here
since it involved the interpretation of a will rather than the question of
whether intestacy could be considered an act of giving.
	In the case at bar, the 800 shares of stock owned by Richard Roth
at the time of his death were not "specifically bequeathed or otherwise
given" to plaintiffs. Accordingly, the exception to the mandatory buy-sell
provision, as set forth in paragraph four of the amendment to the stock
purchase agreement, is inapplicable. The circuit court therefore properly
granted summary judgment in favor of defendants.

CONCLUSION
	For the forgoing reasons, the judgment of the appellate court is
reversed. The judgment of the circuit court granting defendants' motion for
summary judgment is affirmed.
	Appellate court judgment reversed;
	circuit court judgment affirmed.