Appeal, No. 108, Jan. T., 1963, from decree of Orphans' Court of Chester County, No. 309 of 1960, in re estate of Gilbert Mather, deceased. Decree affirmed.
Richard P. Brown, Jr., with him Robert M. Baxter, and Morgan, Lewis & Bockius, for appellants.
John B. H. Carter, with him Frederick H. Spotts, and Pepper, Hamilton & Scheetz, for appellee.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. CHIEF JUSTICE BELL
The Executors of the Estate of Gilbert Mather took this appeal from a decree which entered judgment on
the pleadings and ordered specific performance of a written stock option agreement. The Executors claim the agreement was invalid as an unreasonable restraint on alienation, because the optional purchase price was fixed at $1 per share, which was only a small fraction of the stock's actual value.
In order to decide this question a review of the relevant facts is necessary.
Prior to 1926 Mather & Co. was a partnership consisting of Charles E. Mather, his two sons Victor C. Mather and Gilbert Mather, and his daughter Josephine C. Mather. In December, 1926, the partners incorporated their insurance business under the name of "Mather & Co."
Of the 1,000 authorized shares of common stock, 800 were issued as follows: Charles E. Mather 250 shares; Victor C. Mather 250 shares; Gilbert Mather 250 shares; Josephine C. Mather 50 shares.
On December 22, 1926, the four stockholders entered into a written agreement which provided, inter alia, that if any one of the four die or desire to sell his (or her) stock during his (or her) life he (or she) would first have to offer it to the others at $50 per share.
Charles E. Mather died October 31, 1928. Victor and Gilbert exercised their respective options and bought the stock which was owned by (the executors of) Charles E. Mather for $50 per share. As a result of these purchases Victor C. Mather owned 375 shares, Gilbert Mather owned 375 shares, Josephine C. Mather owned 50 shares.
On or about January 9, 1933, 50 shares of stock held in the treasury but previously unissued, were issued to Charles E. Mather II, the son of Victor C. Mather.*fn1
On November 6, 1939, Victor C. Mather, Gilbert Mather and Josephine C. Mather entered into a written
agreement which provided "... the said contract of December 22, 1926 is hereby canceled and terminated by the unanimous consent of Victor C. Mather, Gilbert Mather and Josephine C. Mather insofar as the Fifty Shares of Common Stock of the said Mather & Co., held by the said Josephine C. Mather, is concerned, to the end that the said Josephine C. Mather may enter into an Agreement with Mather & Co. relative to and touching upon said Fifty Shares of Common Stock held by her."
On the same day, viz., November 6, 1939, Josephine C. Mather and Mather & Co. entered into a written agreement which pertinently provided: "That the said Josephine C. Mather agrees to sell and the said Mather & Co. agrees to buy said Fifty shares of Common Stock of Mather & Co., a Pennsylvania Corporation, from the personal representatives of the said Josephine C. Mather at her death at the rate of Fifty Dollars ($50.00) per share, the payment for same and the transfer of same to be consummated within thirty days of the death of Josephine C. Mather. And the said Josephine C. Mather on her part agrees not to sell said Fifty Shares of Common Stock of Mather & Co. during her lifetime to any person or corporation other than the said Mather & Co. without first obtaining from the said Mather & Co. its consent in writing to such sale and transfer."
On the same day, viz., November 6, 1939, Victor, Charles II and Gilbert entered into a written agreement ...