St. Louis Union Trust Co. v. Merrill Lynch, Pierce, Fenner & Smith
United States Court of Appeals for the Eighth Circuit
562 F.2d 1040 (1977)
- Written by Daniel Clark, JD
Facts
Kenneth Bitting was a general partner of Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) (defendant) when it dissolved as a partnership in order to incorporate. Bitting received common stock from the new corporation. The certificate of incorporation restricted transfer of stock and granted Merrill Lynch the option to purchase a holder’s stock upon the death of such holder. The stock certificates conspicuously displayed both the restriction on transfer and the existence of Merrill Lynch’s option. When Bitting died, Merrill Lynch purchased his common shares pursuant to its option. The executors of Bitting’s estate (plaintiffs) sued, arguing that Delaware law did not authorize options exercisable involuntarily against holders. Rather, they argued, only those restrictions that gave a corporation a right of first refusal were authorized. The district court agreed with the executors and held that the option was unenforceable. Merrill Lynch appealed.
Rule of Law
Issue
Holding and Reasoning (Ross, J.)
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