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Allen v. Biltmore Tissue Corp.
New York Court of Appeals
141 N.E.2d 812 (1957)
Harry Kaplan acquired 20 total shares of Biltmore Tissue Corp.’s (Biltmore) (defendant) stock though two purchases and one stock dividend. The shares were issued subject to a restriction on the transfer of stock upon the death of the stockholder, which granted the corporation the option to purchase shares for the price it originally received for 90 days after the death of its stockholder. Years later, Kaplan expressed interest in selling his shares of stock and requested Biltmore give him a price to consider. He died on October 25, 1953, five days after his price inquiry to Biltmore. In February 1954, Kaplan’s son, an executor of the estate, inquired with Biltmore regarding whether it was interested in purchasing the shares via letter. On the same day, the attorney for the executors sent a letter requesting Biltmore issue a new stock certificate in the name of the estate or executors along with the three stock certificates. On March 4, 1954, Biltmore voted to exercise its option to purchase the stock, pursuant to the “Stock Transfer in Case of Death” provision of the bylaws. Biltmore offered to pay $20, significantly more than the $5–10 per share price originally paid by Kaplan, based on past purchases of shares from other stockholders. Kaplan’s executors declined to sell and insisted the stock be transferred to the executors. Biltmore refused. The executors sued to compel Biltmore to issue a new certificate for 20 shares in their names, arguing the bylaw is an unreasonable restraint on the transfer of stock, rendering the provision void. Biltmore made a counterclaim for specific performance, i.e., sale of the stock. The lower court ruled in favor of Biltmore. The appellate court reversed and directed transfer of the stock to the executors. Biltmore appealed to the New York Court of Appeals.
Rule of Law
Holding and Reasoning (Fuld, J.)
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