Ling and Co. v. Trinity Sav. And Loan Ass'n

Bruce Bowman (defendant) pledged 1,500 shares of Ling & Company, Inc. (defendant) stock to Trinity Savings and Loan Association (plaintiff) as security for a promissory note; Ling's articles required stockholders to obtain New York Stock Exchange approval and offer other stockholders a purchase opportunity before selling or encumbering stock, neither of which occurred for Bowman's pledge. Bowman's stock certificate referenced restrictions detailed on its reverse side, which in turn referenced the articles' transfer restrictions. Trinity sued to collect on the note and foreclose on the pledged stock; Ling objected based on the transfer restrictions. The trial court granted Trinity summary judgment and ordered foreclosure and sale; the court of appeals affirmed, finding the restrictions invalid for lacking conspicuous certificate notice and for being unreasonable.