Evangelista v. Holland case brief summary
27 Mass. App. Ct. 244
SYNOPSIS: A superior court (Massachusetts) determined the amount that defendant executors were required to accept for their stock in closely held family corporations in plaintiff shareholder's action against the executors. The executors appealed.
FACTS:
-Four brothers, who included the shareholder, organized two corporations to run a restaurant.
-From the inception of the business, the brothers had a stockholders' agreement that required the corporations to buy out the estate of any stockholder who died.
-When one of the shareholders withdrew from active involvement and gave the stock to his children, the shareholders conducted a meeting.
-The brothers agreed to pay a certain amount for the children's interest in the business.
-One of the brothers died before the necessary financing was arranged.
-The shareholder filed an action against the executors, seeking to compel them to accept the value placed on the stock at the meeting.
PROCEDURAL HISTORY:
-The trial court entered judgment in favor of the shareholder.
-On appeal, the executors argued that requiring them to part with their interest for the price stated by the trial court violated the duty of good faith and loyalty owed one another by stockholders in a closely held corporation.
HOLDING:
The court found that all the stockholders in advance entered into an agreement for the purchase of stock of a withdrawing or deceased stockholder. Therefore, the court held that the stockholder was entitled to the stated price.
RULES:Stockholders owe one another a duty of good faith and loyalty in a closely held corporation. Questions of good faith and loyalty do not arise when all the stockholders in advance enter into an agreement for the purchase of stock of a withdrawing or deceased stockholder.
OUTCOME:
The court affirmed the trial court's judgment, which determined the amount the executor's were required to accept for their stock in the closely held family corporations.
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27 Mass. App. Ct. 244
SYNOPSIS: A superior court (Massachusetts) determined the amount that defendant executors were required to accept for their stock in closely held family corporations in plaintiff shareholder's action against the executors. The executors appealed.
FACTS:
-Four brothers, who included the shareholder, organized two corporations to run a restaurant.
-From the inception of the business, the brothers had a stockholders' agreement that required the corporations to buy out the estate of any stockholder who died.
-When one of the shareholders withdrew from active involvement and gave the stock to his children, the shareholders conducted a meeting.
-The brothers agreed to pay a certain amount for the children's interest in the business.
-One of the brothers died before the necessary financing was arranged.
-The shareholder filed an action against the executors, seeking to compel them to accept the value placed on the stock at the meeting.
PROCEDURAL HISTORY:
-The trial court entered judgment in favor of the shareholder.
-On appeal, the executors argued that requiring them to part with their interest for the price stated by the trial court violated the duty of good faith and loyalty owed one another by stockholders in a closely held corporation.
HOLDING:
The court found that all the stockholders in advance entered into an agreement for the purchase of stock of a withdrawing or deceased stockholder. Therefore, the court held that the stockholder was entitled to the stated price.
RULES:Stockholders owe one another a duty of good faith and loyalty in a closely held corporation. Questions of good faith and loyalty do not arise when all the stockholders in advance enter into an agreement for the purchase of stock of a withdrawing or deceased stockholder.
OUTCOME:
The court affirmed the trial court's judgment, which determined the amount the executor's were required to accept for their stock in the closely held family corporations.
---
Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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