Court Opinion

ID: 7917126
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:12:26.531589+00
Date Added: 2024-06-11T16:32:52.198104
License: Public Domain

PARKER, J.
(dissenting): My reasons for dissenting from the majority opinion will be stated as briefly as possible.
The parties concede and the trial court found (for the provisions in full see Finding of Fact No. 7 in the majority opinion) the articles of incorporation of the Pabco Drilling Company, Inc., provide, that stockholders of record shall have the prior right to purchase any stock of the corporation offered for sale; that any stockholder desiring to sell his stock in the corporation must give notice to the president and secretary in writing of his desire and intention to do so; that upon receipt of such notice the secretary must give notice to all other stockholders of such intention and that thereupon any stockholder or stockholders desiring to purchase such stock may purchase their pro rata share of the same within thirty days from the date of the secretary’s notice.
The trial court also found by its Finding of Fact No. 8, which is unchallenged and therefore conclusive, that no offer or notice of intention to sell Nibert’s stock had ever been made to the other stockholders and that they had not been given any opportunity to purchase their proportionate share of his stock as required by the articles of incorporation.
Thus at the very outset we are met by the proposition that if Talbott is to have specific performance of his option contract he gets that relief without complying with and in violation of express provisions of the corporate charter prescribing the conditions and circumstances under which he or any other stockholder might acquire additional stock in the corporation.
The trial court concluded as a matter of law (see Conclusion of Law No. 5) that the charter provisions imposing restrictions upon the sale of stock had no application to sales by one stockholder to *152another stockholder and did not govern the sale by Nibert to Talbott. Obviously, since the involved provision expressly provides to the contrary in clear and unambiguous language which is not subject to any such interpretation this conclusion is based upon the premise that the restrictive provisions of such character in the articles of incorporation are invalid and therefore unenforceable. Talbott so contends. On the other hand, as I understand it, the majority opinion holds that questions pertaining to the validity of such restrictions or their force and effect, if valid, are immaterial and that the rights of the parties are determined by general principles governing contractural obligations between individuals, irrespective of and without regard to the charter’s inhibitions. I cannot agree with either conclusion.
Since the enactment in 1939 of the general corporation code of this state our statute (G. S. 1947 Supp. 17-2803[B]) provides:
“The articles of incorporation may also set forth.
“B. Any provision which the incorporators may choose to insert for the management of the business and for the conduct of the affairs of the corporation, and any provisions creating, defining, limiting and regulating the powers of the corporation, the directors and the stockholders, or any class of the stockholders, or, in the case of a corporation which is to have no capital stock, of the members of such corporation; provided, such provisions are not contrary to the laws of this state.”
I find nothing in the corporation code, or elsewhere in the statutes, precluding the inclusion of provisions restricting alienability of stock as between stockholders in articles of incorporation and I am convinced the portion of the statutory enactment just quoted not only contemplates but authorizes just such restrictions with respect to sales of stock as are found in the instant charter.
That such restrictions when included in the articles of incorporation of any corporation, in jurisdictions where they are not prohibited by statute — to say nothing of jurisdictions in which they are so authorized- — are valid and binding as contractual obligations between all the stockholders of a corporation, including purchasers who are chargeable with notice thereof, has long been recognized by the great weight of authority. For legal treatises and other references supporting this conclusion see 12 Fletcher Cyclopedia Corporations (Perm, ed.), 211, § 5453; Christy and McClean, Jr., The Transfer of Stock (2d ed.), 75, § 39; 13 Am. Jur. 411, § 334; 138 *153A. L. R. Anno. 654 to 657; American Digest System, “Corporations,” §113; 18 C. J. S., 924, § 391(d).
Under the quoted section of the general corporation code and the rule announced in the foregoing decisions I am constrained to conclude Talbott was as much bound by the provisions of the articles of incorporation restricting the sale of stock in the corporation as Nibert and that to succeed in an action, either in law or in equity, which would result in his acquisition of additional stock in the corporation Talbott was required to establish compliance with their requirements. This, as I have heretofore indicated, the trial court found he failed to do. Such conclusion, in my opinion, compels the additional one the majority opinion erroneously holds a decision as to the validity of the charter provisions imposing restrictions upon the sale of the involved stock, or their force and effect, is unnecessary to a proper determination of this appeal. To conclude otherwise would enable two or more stockholders of a corporation, by connivance or otherwise, to nullify contractual charter provisions entered into and agreed upon by the incorporators of a corporation for their mutual benefit.
My view is that the trial court erred in concluding as a matter of law the charter provisions restricting the sale of stock had no application to and did not govern sales of stock by one stockholder (Nibert) to another (Talbott) and, in view of its finding of fact No. 8, also erred in the rendition of the judgment requiring Nibert to endorse his certificates of stock to Talbott and directing the corporation to transfer such stock on the books of the corporation. I would reverse the judgment of the court below and direct it to render judgment denying specific performance of the option agreement.
Harvey, C. J., and Smith, J., concur in foregoing dissenting opinion.