Blaw 308, Business Law II

it’s an assignment about chapter 42, (organization and financial structure of corporations ).

1)first is a Case brief and the case name isCoyle v. Schwartz. It should be in IRAC format. I attach the case and format details below. For. the case brief before the IRAC format there should be one paragraph or two about the summary facts of the case and then should be IRAC format.

2)answering question number 4. It is from Chapte 43 (management of corporations). ( I will attach the questions below.)

Through the 1965 baseball season, the Cubs were the
only major league baseball team that played no home
games at night because Wrigley Field had no lights
for nighttime baseball. Philip K. Wrigley, director and
president of the corporation, refused to install lights
because of his personal opinion that baseball was a
daytime sport and that installing lights and scheduling
night baseball games would result in the deterioration
of the surrounding neighborhood. The other directors
assented to this policy. From 1961 to 1965, the Cubs
suffered losses from their baseball operations. The Chi-
cago White Sox, whose weekday games were generally
played at night, drew many more fans than did the Cubs.
A shareholder sued the board of directors to force them
to install lights at Wrigley Field and to schedule night
games. What did the court rule? Why?
7.4. The Chicago National League Ball Club (Chicago
Cubs) operated Wrigley Field, the Cubs’s home park.over 12 years, Schwartz took the risk that Coyle would exercise
the majority-purchase option at a time when the actual value
of American Scale’s shares was in excess of the $250 price
originally listed in the stock-valuation provision. Schwartz is
not entitled to have the courts rewrite the parties’ agreement
simply because he believes he is receiving the short end of the
bargain. Accordingly, we reverse the trial court’s finding that
the stock-valuation provision listing a price of $250 per share
was unenforceable.
The terms of the stock-valuation provision listed an original
price of $250 per share. The provision further stated that the fair
market value shall be $250 “unless altered as herein provided”
via the “mutual agreement” revaluation method. Since the par-
ties failed to revaluate the price of American Scale’s shares, $250
is the “last recorded value” with respect to the price of the cor-
poration’s shares. Therefore, the majority-purchase option and
the stock-valuation provision entitle Coyle to purchase all of
Schwartz’s stock at a price of $250 per share.
Finally, we address Schwartz’s claim that the trial court
erred by finding that Schwartz and Coyle did not abandon the
stock-valuation provision of the cross-purchase agreement. Spe-
cifically, Schwartz argues that by completely ignoring the cross-
purchase agreement’s requirement that both shareholders “shall
re-determine the value of the stock within 60 days following the
end of each fiscal year” and record the same, as well as their
intention to revalue their shares in American Scale, Schwartz and
Coyle unequivocally acted in a manner inconsistent with the exis-
tence of the cross-purchase agreement.
We disagree and hold that the trial court did not err by find-
ing that Coyle and Schwartz did not abandon their rights under
the stock-valuation provision. “A contract may be rescinded or
discharged by acts or conduct of the parties inconsistent with the
continued existence of the contract, and mutual assent to aban-
don a contract may be inferred from the attendant circumstances
and conduct of the parties. … While as a general rule a contract
will be treated as abandoned or rescinded where the acts and con-
duct of one party inconsistent with its existence are acquiesced in
by the other party, to be sufficient the acts and conduct must be
positive and unequivocal.”
In the instant case, while Coyle and Schwartz never revalu-
ated American Scale’s stock in the years following the execu-
tion of the cross-purchase agreement, this fact, standing alone,
does not constitute “positive and unequivocal” acts which could
lead to a finding of abandonment. The stock-valuation provision
itself provided a default price for the stock in the event the par-
ties failed to revaluate the shares. Therefore, Coyle and Schwartz
contemplated that they might not always conduct a revaluation.
Accordingly, the failure of Coyle and Schwartz to conduct an
annual revaluation of American Scale’s shares did not constitute
an abandonment of the stock-valuation provision.
Judgment reversed in favor of Coyle.Coyle v. Schwartz
2004 Ky. App. Unpub. LEXIS 1012 (Mar. 26, 2004)
American Scale Corporation, a closely held Kentucky corporation with its principal place of business in Louisville, Kentucky, was incor-
porated in February 1985 to engage in the sale and repair of industrial and commercial scales. Daniel Coyle was president and Steven
Schwartz was vice president. They were the sole shareholders. At the time of incorporation, Coyle and Schwartz each received 200 shares
of stock in exchange for their capital contributions of $10,000.
In early March 1986, Schwartz had an automobile accident in which his passenger was seriously injured. Schwartz’s passenger filed
suit against American Scale because it had provided insurance coverage on Schwartz’s vehicle. Coyle became concerned that Schwartz’s
activities would expose American Scale to further liability. He was particularly displeased with Schwartz’s actions in transporting an
underage female, who was purportedly Schwartz’s girlfriend, in a vehicle insured by American Scale.
As a result, Coyle informed Schwartz that he no longer desired to be in a 50-50 shareholder relationship with him. Coyle told
Schwartz that unless Schwartz agreed to transfer 1 percent of his shares to Coyle, thereby permitting Coyle to assume majority control
of American Scale, Coyle would either seek dissolution of American Scale or withdraw and begin operating a business in competition
with American Scale. On March 21, 1986, Coyle and Schwartz executed a share-transfer agreement wherein Schwartz transferred
1 percent of his American Scale shares to Coyle. The agreement specifically stated that Coyle would thereafter own a 51 percent interest
in American Scale, leaving Schwartz as owner of the remaining 49 percent of American Scale’s shares.
About two years later, on August 25, 1988, Coyle and Schwartz made a buy-sell agreement that they titled “Stockholders’ Cross-
Purchase Agreement.” The agreement provided for the repurchase of a shareholder’s stock in the event of death, disability, or voluntary
withdrawal of that shareholder. Specifically, the agreement stated that if Coyle or Schwartz died, or otherwise attempted to dispose of his
shares, the other shareholder would have the right to purchase those shares. In addition, the agreement gave the majority shareholder an
option to purchase all of the minority shareholder’s stock at any time upon a 60-day written notice.
The agreement provided a stock-valuation method for determining a per share price in the event either of the provisions was triggered:
Unless altered as herein provided, for the purpose of determining the purchase price to be paid for the stock of a Stockholder,
the fair market value of each share of stock shall be, as of August 25, 1988, $250.
The Stockholders shall redetermine the value of the stock within 60 days following the end of each fiscal year. If the
Stockholders fail to make the required annual redetermination of value for a particular year, the last previously recorded
value shall control.
Over the course of the next 12 years, neither Coyle nor Schwartz attempted to revaluate the price of American Scale’s shares as
provided in the agreement. Hence, the initial buyout price of $250 per share was never changed.
In a letter dated November 20, 2000, Coyle informed Schwartz that he was exercising his option as majority shareholder to purchase
Schwartz’s stock for $250 per share. Schwartz refused to tender his shares to Coyle and filed suit against Coyle seeking to invalidate the buyout
agreement. Schwartz argued that the shareholders had abandoned the agreement by not changing the buyout price for 12 years. Schwartz also
argued that the buyout price was so low as to constitute a penalty. In response to Coyle’s motion for summary judgment, the trial court ruled that
the shareholders had not abandoned the agreement. However, the court agreed with Schwartz that forcing him to sell all of his stock at the price of
$250 per share was a penalty and, therefore, unenforceable. The trial court ordered a current valuation of the stock be undertaken before Schwartz
could be compelled to transfer his shares. Coyle appealed to the Kentucky Court of Appeals.
Johnson, Judge
In his appeal, Coyle argues that the trial court erred by finding
that the stock-valuation provision was unenforceable as a penalty.
While Coyle and Schwartz never revaluated the stock,
this fact alone does not render the provision unenforceable.
Schwartz, as owner of 49% of American Scale’s outstanding
shares, had the right under the corporation’s bylaws to call for a
special meeting to revaluate the listed price of American Scale’s
shares. Schwartz has admitted in his deposition testimony that
he never made such a request. Hence, by sitting on his rights for