Opinion ID: 1467528
Heading Depth: 1
Heading Rank: 2

Heading: supersession of the stock redemption resolution

Text: Egan argues that the trial court erred when it concluded that the execution of the June 4, 1971 Agreement superseded the earlier corporate resolution regarding stock redemptions. In his view, there was no supersession and ASI must continue to redeem stock to pay the taxes on both Rohrich's and Steele's estates. On January 1, 1971, the Board of Directors of ASI resolved to empower the corporation to redeem the stock of any deceased stockholder. The corporate resolution was specifically designed to provide sufficient cash proceeds to Rohrich, under Section 303 of the Internal Revenue Code, to pay the Steele estate taxes for which Rohrich had transferee liability. Pursuant to this resolution, Rohrich periodically offered stock and redemptions occurred on November 18, 1971, June 1, 1973, June 24, 1974, and June 23, 1975. The Agreement provides, in pertinent part, that: Upon the death of any stockholder, the Corporation shall purchase . . . all of the common stock of the deceased stockholder (emphasis added). The language quoted plainly states that all of a deceased stockholder's common stock shall be sold by the estate to the corporation. It is mandatory and all inclusive. It does not provide any exceptions for common stock acquired by operation of law, such as that stock acquired by Rohrich at Steele's death. Thus, by its terms it supersedes the redemption resolution. Furthermore, the law in the District of Columbia is that a contract containing a term inconsistent with a term of an earlier contract between the same parties regarding the same subject matter should be interpreted to rescind the inconsistent term in the earlier contract. See Wardman v. Washington Loan and Trust Co., 67 App. D.C. 184, 186, 90 F.2d 429, 431 (1937). Here, the terms of the resolution and the Agreement address the disposition of stock owned by any deceased stockholder at the date of death. Those terms are, however, inconsistent. Therefore, the inconsistency of the two instruments, at least with respect to the disposition of a deceased stockholder's stock interest, should be deemed, in accordance with established principle of contract law, to rescind the original resolution and to substitute the subsequent Agreement as the controlling contractual instrument. The trial court did not err, then, when it found that the Agreement superseded the earlier corporate resolution.