Renberg v. Zarrow

Supreme Court of Oklahoma · 1983 · Corporations

667 P.2d 465 (Okla. 1983)

Updated August 22, 2026

Corporationsclosely held corporationsbuy-sell agreementsstock transfer restrictionsfiduciary dutiesbuy-sell agreementstock transfer restrictionclose corporation

Facts

Sooner Pipe & Supply Corporation's shareholders executed a 1963 stock purchase agreement providing that on a shareholder's death, surviving shareholders could buy the decedent's shares within one year at the most recently fixed per-share price, with the last set price controlling if no new price was adopted. The option price was set at $3,500 per share in 1975 and was never changed before Dorothy's death in 1978, although Dorothy was told book value was much higher, had access to corporate financial information through her attorney, and could have called a shareholders' meeting to reassess the value. Dorothy and her representatives also used the agreement's low valuation in estate and gift tax matters. After Dorothy died, the surviving shareholders exercised the option at $3,500 per share, and the Renbergs challenged the agreement as invalid and unfair because the shares' actual value was allegedly much higher.

Issue

Whether the 1963 buy-sell agreement was unenforceable or improperly interpreted because the option price was substantially below the stock's alleged actual value and was not annually repriced, and whether the surviving majority shareholders owed Dorothy a fiduciary duty of disclosure or fairness that was breached when they exercised the option.

Rule

Reasonable restrictions on transfer of close-corporation stock are valid and are strictly construed according to the parties' clear contractual intent. Once close-corporation shareholders agree on a price formula, the restriction does not fail merely because of a disparity between option price and market value; absent fraud, overreaching, bad faith, or inequitable treatment, the agreement is binding on the shareholder, heirs, and personal representative. A fiduciary duty of full disclosure in such a stock transaction arises only if a special fiduciary relationship or circumstances supporting fraud or unfair dealing are present.

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Four shareholders of Lakeview Toolworks, a closely held corporation in Tulsa, signed a stock-purchase agreement providing that if any shareholder died, the surviving shareholders could buy the decedent's shares at the most recently fixed per-share price. The last set price was $400 per share, but when Nora Patel died in 2025, an appraisal commissioned by her estate valued the shares at $1,500 per share.

If Nora's estate challenges the sale solely because the option price is far below appraised value, which result is most consistent with the governing rule?

Explanation. A clear buy-sell agreement in a close corporation is enforced according to its terms. The majority opinion rejected the idea that a large gap between option price and actual value, by itself, makes the agreement invalid. More than disparity is required—such as fraud, overreaching, bad faith, or inequitable treatment.