Evangelista v. Holland

Massachusetts Appeals Court · 1989 · Corporations

537 N.E.2d 589 (1989)

Updated August 22, 2026

CorporationsClosely held corporationsStockholders' agreementsSpecific performanceclosely held corporationstockholders' agreementbuy-sell agreementredemption price

Facts

Four Evangelista brothers owned two closely held family corporations in equal shares and in 1984 signed a written stockholders' agreement requiring a buyout of a deceased shareholder's stock for $75,000. After family conflict arose, a July 3, 1986 meeting was held primarily to address control issues and a possible buyout of Leo's children, Jay and Gael, who then owned Leo's shares; negotiations ended with John and Lawrence agreeing to pay Jay and Gael $191,000 for their one-third interest, but the deal never closed before Lawrence died. Lawrence believed the July 3 discussions implicitly raised the death-redemption price to $191,000, but no writing amended the 1984 agreement and the judge found no objective agreement by the others, especially John, to do so. John sought to compel the executors to sell Lawrence's stock under the 1984 agreement for $75,000.

Issue

Did the July 3, 1986 stockholders' meeting amend the 1984 written stockholders' agreement so that the corporation had to redeem a deceased shareholder's stock for $191,000 rather than $75,000? If not, could the executors avoid enforcement of the 1984 agreement on equitable grounds because the fixed price was far below the later negotiated buyout price?

Rule

A stockholders' agreement fixing the redemption price for a deceased shareholder's stock remains enforceable unless the evidence shows that the shareholders objectively agreed to amend or cancel it. In closely held corporations, questions of good faith and loyalty do not arise where all shareholders have in advance entered into a buy-sell agreement, and specific performance will not be denied merely because the contract price later appears inadequate absent facts supporting fraud, mistake, concealment in the nature of fraud, or circumstances against conscience.

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Three siblings own equal shares of Harbor Stone Realty, a closely held company in Portland, Maine. Their written stockholders' agreement requires the company to redeem a deceased shareholder's shares for $120,000. At a tense meeting about buying out one sibling who has been feuding with the others, the parties discuss paying that sibling $260,000 to leave, but they never discuss changing the death-redemption clause, and nothing is signed; one of the remaining siblings dies two months later.

Which price is most likely to govern the redemption of the deceased shareholder's shares?

Explanation. The controlling rule is that a written stockholders' agreement fixing the redemption price remains enforceable unless the evidence shows the shareholders objectively agreed to amend or cancel it. A higher figure negotiated to buy out a troublesome shareholder in a soured relationship does not itself establish a new death-redemption price for all purposes.