Court Opinion

ID: 9858957
Source: CourtListenerOpinion
Date Created: 2023-09-24 17:47:40.33244+00
Date Added: 2024-06-11T09:58:44.339151
License: Public Domain

ERICKSTAD, Chief Justice,
dissenting.
I would construe the 1956 Agreement as giving prior purchase options to Glenn Sor-lie and the Bismarck Tribune Company only in the event that Evelyn, during her lifetime, decided to sell or otherwise transfer the stock to someone else. Since Evelyn did not do so the 1956 Agreement terminated at her death, and neither Glenn Sorlie nor the Bismarck Tribune Company currently possess any purchase option rights by virtue of that agreement.
The majority is correct in its statement that provisions which restrict a shareholder’s right to sell or transfer stock are ordinarily looked upon with disfavor and are strictly construed. I also agree with the majority’s conclusion that the rule of strict construction should not be applied to defeat the express intent of an agreement. However, I do not agree that the rule of strict construction should not be applied when a close corporation is involved. The majority, under the guise of using a liberal construction of the 1956 Agreement, has, in essence, rewritten the agreement to provide restrictions on the transfer of Evelyn’s stock which were not written into the agreement itself.
In Remillong v. Schneider, 185 N.W.2d 493 (N.D.1971), a case involving a closely held corporation, this Court stated that restrictions on a stockholder’s right to sell or transfer stock should be strictly construed, and, in recognizing the legitimate purpose of such restrictions toward preventing sale to outsiders, we concluded, under syllabus 1:
“Generally, the purpose of corporate bylaws restricting the sale of corporate stock is to prevent or to discourage sale to outsiders, and such restrictive purposes must be specifically stated.” [Emphasis added.] 185 N.W.2d at 494.
I would construe the language of paragraph four as making the 1956 Agreement enforceable against the “heirs, personal representatives and assigns of the parties” only in the event that the purchase options were triggered by Evelyn’s attempt to sell or transfer the stock during her lifetime. Similar language was given that interpretation by the Supreme Court of Illinois in Vogel v. Melish, 31 Ill.2d 620, 203 N.E.2d 411 (1964). The majority concludes that such interpretation would render the words of paragraph four “idle and useless” because without that provision in the agreement Evelyn’s “heirs and personal representatives would nevertheless be required to complete the sale.” Under the majority’s reasoning a contract provision could never be construed to accomplish an objective which the law might allow to be accomplished without the contract provision. I don’t believe the majority’s reasoning constitutes a valid rule of contract interpretation.
The majority has construed the 1956 Agreement to purvey an intent advocated by parol evidence which is contrary to and an unreasonable interpretation of the express language of the agreement. The pa-rol evidence admitted in this case was to the effect that Stella intended to give Glenn and the Bismarck Tribune Company options to purchase Evelyn’s stock only in the event that the stock was transferred outside the Ness family. However, the 1956 Agreement contains no language which is susceptible to that interpretation *850of Stella’s intent. Parol evidence is only admissible to explain what the parties meant by what they said, not to show what they may have intended to say. See, Quandee v. Skene, 321 N.W.2d 91 (1982). If it was Stella’s intent for Glenn and the Bismarck Tribune Company to receive options to purchase Evelyn’s stock in the event that the stock was ever transferred outside the Ness family, it was incumbent upon her to clearly place such restriction in the written agreement. She did not do so.
In accordance with these views I would reverse the judgment of the district court.