Corporations – Capital and Stock – Applicability of Restrictions on Transfer of Stock to Transfer Caused by Death
The stock of the Taylor Trunk Company, with the exception of the two shares now in controversy, was divided equally between two brothers, the remaining two shares having been held by a third brother now deceased. A by-law provided: “That no transfer or sale of the stock of the Company can be made without first offering said stock for sale to the remaining stockholders. . . .” The administrator with will annexed and the legatee of the decedent sought in this action to have the two shares of stock owned by decedent at his death transferred on the books of the corporation to the legatee without first offering to sell the shares to the other stockholders. The circuit court ruled that the corporation did not have to transfer the stock until the by-law had been complied with. From this judgment the administrator and legatee appealed. Held, reversed. Although such a by-law is valid, it will be strictly construed and held applicable only to a voluntary sale. Taylors Administrator v. Taylor, (Ky. 1957) 301 S.W. (2d) 579.