Taylor v. Taylor
Idaho Supreme Court
163 Idaho 910, 422 P. 3d 1116 (2018)
- Written by Eric Miller, JD
Facts
In 1983, Donna Taylor (plaintiff) and her husband, Reed Taylor, created AIA Services Corporation (AIA) (defendant). In 1987, Donna and Reed divorced, and Donna received 200,000 shares of AIA’s preferred stock as part of the settlement. At this point, AIA amended its articles of incorporation to reflect the agreement, providing for the redemption of Donna’s shares at the prime lending rate minus 1.5 percent over a 15-year period. In 1995, AIA sought to reorganize and entered a new agreement with Donna, changing the terms of the redemption to the prime lending rate plus 0.25 percent over a 10-year period. This change was recorded in a letter agreement but was not put to a shareholder vote. Later, AIA discontinued the redemption at the rate agreed upon in 1995. Donna brought suit for breach of contract. AIA asserted that the 1995 letter agreement was invalid due to lack of shareholder approval and therefore illegal, though AIA did not specifically raise the defense of ultra vires. The district court ruled in favor of AIA, holding that all but 7,110 of Donna’s shares had already been redeemed according to the valid rate agreed upon in 1987. Donna appealed to the Idaho Supreme Court.
Rule of Law
Issue
Holding and Reasoning (Burdick, C.J.)
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