Question: The stock of West End Development Co was subject to
The stock of West End Development Co. was subject to a transfer restriction. This restriction required that any shareholder selling shares first offer every other shareholder the right to purchase a proportion of the shares being sold. The proportions were to be the same as the percentages of the outstanding shares that the other shareholders already owned. This restriction was stated in the articles of incorporation but was not stated on the stock certificate of the corporation. The Taylors owned stock in the company and sold their stock to Vroom, an officer of the corporation, without first offering any stock to the other shareholders, as required by the restriction. The other shareholders brought an action against Vroom to recover from him the percentages of the shares they would have been entitled to if the Taylors had followed the transfer restriction. Decide. [Irwin v. West End Development Co., 481 F.2d 34 (10th Cir.)]
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