Opinion ID: 1795728
Heading Depth: 1
Heading Rank: 3

Heading: j. reed enterprises

Text: In 1997, approximately 1 year after they were married, Christine and Jeffrey formed C.J. Reed Enterprises. They formed the business to purchase and operate a jewelry store. Christine and Jeffrey obtained financing for the store from Norwest Bank. Jeffrey's parents, James and Precious Reed, agreed to act as sureties on the loan from Norwest Bank. On July 11, 1997, Christine, Jeffrey, James, and Precious executed an agreement setting forth each party's rights and obligations stemming from James and Precious' roles as sureties. At the time, Christine and Jeffrey each owned half of the 10,000 total shares of C.J. Reed Enterprises stock. The agreement specified that James and Precious could take title to all of the corporation's stock if Christine or Jeffrey ever failed to discharge her or his obligations as owners of C.J. Reed Enterprises to the satisfaction of James and Precious. Among other things, the agreement required Christine and Jeffrey to avoid default in making payment to trade creditors or any other creditors. In 2000, James and Precious paid Christine and Jeffrey's debt to Norwest Bank and thereby became the sole financiers of Christine and Jeffrey's business. The total principal on Christine and Jeffrey's loan was $576,595.92, and interest was calculated at $188,163, assuming the loan was paid within 10 years. It is not clear how much Christine and Jeffrey paid toward the loan before May 2001. However, between May 2001 and the time of the divorce proceeding, they paid a mere $3,000 toward the principal and $40,000 toward the interest. Christine and Jeffrey both concede that this constituted a default within the meaning of their July 1997 agreement with James and Precious. Nevertheless, James and Precious did not execute their right to take title of C.J. Reed Enterprises stock until Jeffrey advised James in early June 2004 of his intent to divorce Christine. On June 11, 2004, approximately 2 weeks before Jeffrey filed for divorce, James and Precious notified their attorney that they wanted to exercise their option to take title of C.J. Reed Enterprises. On June 15, James and Precious sent Christine and Jeffrey separate letters informing them that James and Precious were transferring all 10,000 shares of C.J. Reed Enterprises stock into their names. Jeffrey filed for divorce on June 24.