Knop v. Knop
Virginia Supreme Court
297 Va. 553, 830 S.E.2d 723 (2019)
Peter Knop (defendant) and his three children (plaintiffs) owned Ticonderoga Farms (Ticonderoga), a family company with extensive property in Virginia. Knop and his children served as officers and directors of the company at various times. After Knop divorced his wife, he exclusively owned about 73 percent of Ticonderoga’s shares, and his children split the other 27 percent. Knop intended to gift each of his children additional shares, decreasing his ownership and increasing theirs. Knop instructed his accountant to file the appropriate tax returns for the gifts, notified his children of the gifts, and signed emails and corporate documents acknowledging the gifts. According to the gifts given over the years, Knop became owner of 56 percent of the company, and his children owned the other 44 percent. However, Knop never delivered stock certificates to his children for the gifts. Knop eventually wanted to sell some of Ticonderoga’s property, but his children opposed the decision. Under corporate bylaws, Knop needed 90 percent of the ownership interests to approve a property sale. Knop asserted that he never completed his gifts of shares to the children and that he therefore still retained 73 percent of the company. On these grounds, Knop had enough ownership to change Ticonderoga to a limited-liability company and eliminate the 90 percent approval requirement on property sales. Knop’s children filed a complaint in Virginia state court against their father, seeking a declaration that they owned 44 percent of Ticonderoga through Knop’s gifts of shares. The trial court ruled in favor of Knop, finding that no valid gifts of shares had been completed and that Knop could not be estopped. The children appealed the case to the Virginia Supreme Court.
Rule of Law
Holding and Reasoning (McCullough, J.)
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