Nature of the Case
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Facts
At the time a 1981 agreement was entered into, Ps were young attorneys, and Ds' decedents, McGuire and Priddy, were elderly and less educated. The record, however, reveals that this was the fourth Ched shareholders' agreement and the only one to which Ps were signatories. With the exception of one agreement in 1964 which contained a market value-based post-mortem buyout provision, which was later discarded, the others all provided a book value formula to determine the value of D's shares. Priddy, a former bookkeeper who was later an office manager, was a signatory to a 1971 agreement wherein the shareholders agreed to return to a book value formula after the 1964 agreement, signed by her husband and containing a fair market value approach, was abandoned. McGuire, who ran a successful business for many years, executed not only the 1981 agreement but also three others containing book value buyout provisions. He had been a party to the 1964 agreement containing the thereafter rejected market value-based formula and the subsequent 1971 agreement returning to the book value approach. At the time a 1981 agreement was entered into, Ps were young attorneys, and Ds' decedents, McGuire and Priddy, were elderly and less educated. The record, however, reveals that this was the fourth Ched shareholders' agreement and the only one to which Ps were signatories. With the exception of one agreement in 1964 which contained a market value-based post-mortem buyout provision, which was later discarded, the others all provided a book value formula to determine the value of D's shares. The 1941 shareholders' agreement of C.L. McGuire & Co., Inc., to which McGuire and Priddy's first husband, Theodore Schmidt, were parties, contained such a book value buyout provision. Neither Ps, nor either of their parents whose interest in Ched they succeeded, were party to that agreement. The 1981 agreement provides that shareholders will not, during their lifetime, 'sell, assign, transfer, pledge or hypothecate either all or any part' of their stock unless it is first offered to the other shareholders. The price at which said stock shall be offered for sale shall be the book value thereof as of the last day of the month immediately preceding the date of the said offer or $200 per share, whichever amount is greater. The agreement provided for the surviving shareholders to buy Ds' shares at the same price applicable to transfers during their lifetime. Ps were not the draftsmen of the 1981 agreement. The 1981 agreement contained the identical post-mortem buyout provision as the 1971 agreement and was only changed to reflect Ps as the new owners of their mother's shares, a change to which Ds consented. The court ruled for Ds against Ps in their specific performance action because Ds were elderly and less educated and therefore the disparity in age and education led to unconscionability. Ps appealed.
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