Court Opinion

ID: 9516564
Source: CourtListenerOpinion
Date Created: 2023-08-06 23:45:21.730664+00
Date Added: 2024-06-11T09:40:35.579940
License: Public Domain

McCown, J.,
dissenting.
The majority opinion interprets a written contract executed by experienced, knowledgeable businessmen, and drawn by capable counsel, as having intended to include as third-party beneficiaries not only the two individuals named in the contract but an unknown number of unidentified heirs, devisees, or subsequent transferees of the two named individuals, even when no third-party beneficiary was a party to, or signer of, the agreement, and no signer of the agreement is a party to this lawsuit.
In my opinion the contract means exactly what it says, and the language of the detailed and extended decree of the trial court effectively sets out the reasons for that opinion.
“[T]he Court finds, both from the express language of the Bednar Agreement and from the circumstances attending its execution, that the rights which were given to John F. Davis to purchase half of any FWSB stock not purchased by other stockholders were personal to him and, as such, did not survive his death and are not held by any of the Defendants. This finding is based upon, but not limited to, the following facts:
“(a) The Bednar Agreement expressly covers the subject of who is entitled to purchase any unsold shares that are not purchased by ‘John F. Davis’. The Agreement expressly gives that right to John R. Lauritzen by stating that the right to purchase all *562unsold shares belongs to ‘John F. Davis and John R. Lauritzen’ in equal amounts, but that ‘all’ such shares could be purchased by ‘either’, should ‘one of them’ decline to purchase. It is clear, therefore, that if ‘one of them’ (i.e., Davis) does not purchase his half, the other ‘of them’ (i.e., Lauritzen) is entitled under the contract to purchase all such shares. No third person, such as a Davis heir, can, therefore, claim entitlement to purchase in advance of Lauritzen should John F. Davis fail to personally take his half.
“(b) The Agreement expresses the intent that the right to purchase unsold shares must be personally exercised by Davis and Lauritzen. The Agreement identifies Davis and Lauritzen by name and provides that each ‘of them’ would have the right to purchase any shares not purchased by the other and that ‘each of them’ would have an additional 30 days to exercise that right. The Agreement further provides that it is not mandatory that any shares ‘must be purchased by . . . John F. Davis and John R. Lauritzen’ and if ‘both John F. Davis and John R. Lauritzen decline to purchase’ then the restrictions imposed by the Agreement are no longer binding on the seller.
“(c) By providing that John R. Lauritzen should have the right to purchase stock not purchased by John F. Davis, the Bednar Agreement expressly precluded Davis from transferring his right to purchase unsold shares to his heirs or devisees since such a transfer would defeat Lauritzen’s alternate contractual right to purchase such shares.
“(d) Although the Agreement expressly names Davis and Lauritzen as third party beneficiaries, it does not provide for their heirs or executors, as do the Davis-Lauritzen Agreement and the Irving Agreement; instead, it provides only for the heirs and executors ‘of the parties’ in identifying who shall receive the benefits of the Agreement in the event of death. Since death was an event contem*563plated by the Agreement and since Lauritzen and Davis are not ‘parties’ to the Agreement, it is evident that their heirs and executors were excluded, for whatever reason, from succeeding to the benefits of the Agreement.
“(e) The circumstances surrounding the execution of the Bednar Agreement indicate the rights given to Davis and Lauritzen, or either of them, to purchase unsold stock were intended to be personal to them. The Agreement was executed by persons who were minority stockholders of FWSB with no power of control. In spite of their inability to control the Bank, these persons were, nevertheless, investing additional funds of their own into the capital of the Bank. These minority shareholders had placed their total confidence in John F. Davis and Lauritzen’s personal abilities, banking expertise and management skills and were looking to John F. Davis and Lauritzen to utilize those personal abilities and skills to assure and safeguard the continued value of the minority investment. It is apparent that John F. Davis and Lauritzen were personally named in the Agreement as the two individuals who would have the last opportunity (either jointly or severally) to purchase any unsold stock because the minority wanted the protection of having any unsold stock offered first to the active overseeing managers of the Bank in whom they had placed their confidence before the restrictions of the Agreement lapsed and the shares could be offered to outside investors.
“(f) There is no evidence whatsoever that in executing the Agreement the minority stockholders had any intention of, or gave any thought to, conferring any benefits on the heirs, wives or children of either John F. Davis or Lauritzen, who admit they were never active in the management of the Bank. In fact, the testimony of the surviving signatories of the Agreement is that they had no such intention.
“(g) If the Court were to adopt the position urged *564by the Defendants and find that the rights given to ‘John F. Davis’ to purchase unsold shares were intended to extend to his personal representatives, successors and heirs so that, upon a failure of John F. Davis to personally exercise his right, those persons could purchase ahead of Lauritzen, the Court would have to expand the express restrictions imposed by the Agreement both in scope and in time by enlarging the beneficiary class from the two named beneficiaries to a class consisting of those two individuals plus an unknown number of unidentified heirs, devisees or subsequent transferees of those two individuals, all of whom would have been unidentifiable by the signatory parties at the time the Agreement was executed. This form of contract construction would not only be contrary to the purposes expressed in the Agreement, but it would also be contrary to the rule that stock restriction agreements (which are restraints on alienation) are to be strictly construed and are not to be expanded in scope or increased in extent beyond their plain meaning. 12 Fletcher Cyclopedia of Corporations §5461.6, p. 215. Such a construction would also require the Court to find, without any supporting evidence and therefore, contrary to Nebraska law (Swift Lumber & Fuel v. Hock, 124 Neb. 30, 345 N.W.2d [sic] 3 (1932)), that the Defendants Thomas L. Davis and Carol Davis Wells and the Davis Executors and Trustees, although not identified as beneficiaries in the Agreement either by name or as a class, were intended third party beneficiaries of the Agreement. The Court rejects these suggested methods of construction as unsound and erroneous.
“40. Accordingly, the Court finds that at the time of the death of Stanley J. Bednar, John F. Davis being previously deceased, Plaintiff John R. Lauritzen was the sole surviving third party beneficiary of the Bednar Agreement who had any right to purchase the 1,071.28 shares of stock which James Irving declined to buy, and the Court further finds that *565Plaintiff Lauritzen holds good title to those 1,071.28 shares. The claims which the Defendants have asserted to one-half of those shares are, therefore, held to be without merit and unenforceable herein.”
I find no legal or equitable justification for rewriting a detailed and carefully drawn written contract between minority shareholders simply because it did not contain a provision which was included in two other majority shareholder agreements executed by different parties. There is simply no basis for holding that the parties to the Bednar agreement actually intended to say something different than what they actually said. In my view the decree of the trial court was eminently correct and should have been affirmed.