Boswell v. Buhl

Citations

• 213 Pa. 450
• 63 A. 56
• 1906 Pa. LEXIS 504

Syllabus

<p>Corporation — Stock—Shareholders—Agreement as to sale of stock — Contract — Equity.</p> <p>On a bill in equity for an injunction it appeared that the plaintiff and the seven individual defendants were the owners of all of the common stock of a corporation, which was also a party defendant. By the charter and by-laws of the coiporation the holders of the common stock had the management of the affairs of the corporation, and all of the eight individual parties were actively engaged in some capacity in the management of the business of the company. These parties entered into an agreement in writing in which they recited that it was deemed advisable that the common stock should be held only by those actively engaged in the management of the company, and they agreed to hold the stock on the following terms and conditions: (a) If the holder of stock ceases to be a desirable associate or voluntarily resigns his position, the holders of a majority of the stock may appraise and purchase his stock which “shall be divided or distributed among the holders of said common stock in proportion to the amounts of stock held by each;” (6) if the holder of any stock desires to sell it, he must first offer it to the holders of the balance of the stock at a cash price to be determined by the holders of a majority of the stock, at which price they may buy it, “and distribute same among said holders in proportion to the amount of their respective holdings;” and if they refuse to purchase it at the price, the owner may sell it in open market; (c) the common stock “ shall be under tíie control of and subject to the vote or decision of the majority of said stock.” Two of the defendants who owned between them a controlling interest in the stock, proposed to sell a portion of it to the five other defendants, thus excluding the plaintiff. Held, that under a proper interpretation of the. contract the stock proposed to be sold must be offered to all of the holders of the common stock, including