Brief Fact Summary. Trinity Savings and Loan Association, (Appellee), brought suit to foreclose on a certificate of 1500 shares of Class A Common Stock in Ling & Co, (Appellant). Appellant objected to the sale claiming that transfer of the stock is restricted by certain unsatisfied conditions. Appellant appeals the Court of Appeals decision affirming the Trial Court’s grant of summary judgment in favor of Appellee.
Synopsis of Rule of Law. A restriction is noted conspicuously on a security if something appears on the face of the certificate to attract the attention of a reasonable person when he looks at it.
Whether the content of the certificate complies with the requirements of the Texas Business Corporations Act.
Whether the restrictions on transferability are noted conspicuously on the security.
Whether the restrictions on the transferability of the stock are unreasonable.
Yes. The content of the certificate complies with the requirements of the Texas Business Corporations Act.
No. The restrictions on transferability are not noted conspicuously on the certificate because the notations do not stand out.
No. There is no proof in the record supporting the conclusion that the restrictions on the transferability of the stock are unreasonable.
The requirement of conspicuousness mandates that something must appear on the face of the contract to attract the attention of a reasonable person when he looks at it.View Full Point of Law
The print on the certificate that refers to the restrictions does not stand out and cannot be considered conspicuous. There is nothing to attract the attention of a reasonable person when he looks at it.
There is no proof in the record to support the conclusion that either of the restrictions is unreasonable. Rule 315 of the New York Stock Exchange requires approval of any sale or pledge of the stock. Further there is nothing unusual or oppressive about the successive options to purchase and no proof given to dispel any justification for contending that there is a reasonable corporate purpose in restricting the ownership.