Corporations – Stock Transfer – Enforceability of Restrictions on Right of Transfer When Not Stated on Certificate
A by-Iaw of defendant corporation provided that no stockholder could sell his shares unless he first offered them for sale to the corporation or its directors. The by-law also stated that this restriction should be printed on the stock certificates and would thereupon bind all present or future owners or holders. The corporation never complied with this latter provision. Plaintiff, having knowledge of the by-law restriction, purchased two shares of the corporation’s stock, but these shares were not first offered for sale to the corporation or its directors. When the corporation refused to transfer the shares, plaintiff sued to compel a transfer and the issuance of new certificates to him. The equity court granted the requested relief. On appeal, held, affirmed. Under the terms of the by-law and the requirements of section 15 of the Uniform Stock Transfer Act, such a restriction is not enforceable, even against one who has actual knowledge, unless stated on the stock certificate. Hopwood v. Topsham Telephone Co., (Vt. 1957) 132 A. (2d) 170.