Earthman's Inc. v. Earthman

526 S.W.2d 192 (1975)

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Earthman’s Inc. v. Earthman

Texas Court of Civil Appeals
526 S.W.2d 192 (1975)

KS

Facts

Dorothy Earthman (plaintiff) sought damages from her ex-husband, his father, his brother, and three family corporations (collectively, the Earthman family) (defendants). Pursuant to Dorothy’s divorce decree, she had been awarded shares in three Earthman family companies by the court. The Earthman family failed to transfer the shares to Dorothy. Dorothy filed suit seeking a declaration of her rights to the stock and ordering the proper stock certificates be issued to her. Later, she amended her complaint to include charges of conspiracy to defraud and sought damages for conversion and exemplary damages. The Earthman family contended that their refusal to issue the stock transfer was consistent with a provision in the articles of incorporation of Earthman’s, Inc.—one of the three companies—that prohibited the sale of stock without first the stock being first offered to the corporation or other shareholders. The Earthman family argued that the divorce decree awarding shares in the family’s companies to Dorothy was comparable to a sale to a third party. The trial court determined that Dorothy’s divorce decree did not trigger any provision under the bylaws that afforded Earthman’s, Inc. or fellow shareholders a right to purchase the shares given to Dorothy Earthman under the divorce decree. The Earthman family appealed.

Rule of Law

Issue

Holding and Reasoning (Evans, J.)

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