Neimark v. Mel Kramer Sales, Inc

306 N.W.2d 278 (1981)

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Nature of the Case

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Facts

P sought specific performance of an agreement for the redemption of stock owned by the late Mel Kramer, founder and majority shareholder of Mel Kramer Sales, Inc. MKS was a closely held Wisconsin corporation engaged in the business of selling auto parts and accessories. The redemption plan called for the deceased shareholder's estate to sell all of its stock to MKS at $400 per share less a specified credit of life insurance. Mel's shares were to be redeemed by MKS within 30 days after the appointment of his personal representative. The agreement also provided that if MKS did not have sufficient surplus, the parties would contribute the necessary capital to enable the lawful redemption of the share to occur and that the parties would be entitled to specific performance on the agreement. After the death, Mel's wife, who was also a shareholder was reluctant to redeem the shares. Niemark, who was also a shareholder insisted on the redemption. The attorney present at the board meeting and who also drafted the agreement that the redemption would violate section 180.385(1). The board voted 3-1 not to purchase the shares. Neimark (P) then sued for specific performance and monetary damages. Subsequently, a third party offered to purchase the business for $1,000,000. P agreed to this subject to Mel and his wife only getting that they were entitled to under the redemption agreement. Ds then counterclaimed against P for a declaration that P was only entitled to his ratable share of the proceeds which denied him the benefit of the redemption agreement. P's personal claim was dismissed, but the court ordered the specific performance. The counterclaim was dismissed. D's appealed.