F.B.I. Farms, Inc. v. Moore

F.B.I. Farms, Inc. (defendant), a close corporation owned by the Burger family, adopted board resolutions in 1977 barring stock transfers without board approval and giving a right of first refusal first to the corporation, then to shareholders, then to blood relatives. After Linda Burger divorced board member Birchell Moore (plaintiff), Moore received a monetary judgment secured by a lien on Linda's F.B.I. stock; when the judgment went unpaid, Moore executed on the lien and bought the stock at a sheriff's sale in 1998. F.B.I. tried to cancel Moore's shares, arguing the transfer restrictions barred the sale, and Moore sued for a declaration that the cancellation was invalid and that he owned the shares free of the restrictions. The trial court sided with Moore on both points, finding the board-approval and family-preference restrictions unreasonable, and the appellate court affirmed, partly on the theory that transfer restrictions simply don't apply to involuntary transfers like a sheriff's sale.