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COA finds man was shareholder at time of stock sale

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A dispute between family members over stock of the family company led to the Indiana Court of Appeals addressing an issue involving shareholders and revocable trusts that hasn’t yet been addressed in Indiana: whether the settlor, who places shares of stock into a revocable inter vivos trust and names himself as trustee and beneficiary, retains his shareholder status.

At issue in Andrew C. Kesling, individually and as Trustee of the Andrew C. Kesling Trust v. Peter C. Kesling, et al., No. 45A03-1106-PL-271, is whether Peter Kesling was able, under the shareholder agreement of TP Orthodontics Inc., tosell shares of his stock in 2004 to his son, Andrew Kesling. At the time of the sale, Andrew Kesling, who was a shareholder in TPO, had placed his stock into a revocable trust which named himself as a beneficiary and trustee. TPO shareholders had an agreement that restricted the shareholder’s ability to transfer shares of the company to non-shareholders.  

Andrew Keslings siblings initiated a lawsuit, in which they asserted they were each entitled to purchase certain shares of TPO stock. Peter Kesling’s cross-claim against his son is the subject of this appeal, in which Peter Kesling argued that he later learned Andrew Kesling had transferred his shares of the company to a trust before the 2004 sale, so he couldn’t have sold his shares to Andrew Kesling because he wasn’t technically a shareholder. The trial court found the siblings’ claims were moot because it was returning the stock Peter Kesling sold back to him because the court found Andrew Kesling wasn’t a shareholder at the time of the sale.

The COA found the trial court abused its discretion in concluding that Peter Kesling was entitled to rescission of the stock purchase agreements. The judges cited the Indiana Supreme Court decision in Marshall Cnty. Tax Awareness Comm. v. Quivey, 780 N.E.2d 380, 383 (Ind. 2002),  in which an individual asserted property rights where the property was held in a revocable trust, the shareholder agreement of TPO, and the Internal Revenue Code to find that Andrew Kesling, not the trust, was the owner of the stock and therefore a shareholder.

There is no question that Andrew Kesling is the beneficial and record owner of the shares and the trust makes clear that he is entitled to vote the shares, wrote Judge Elaine Brown. Because Andrew Kesling’s trust declaration didn’t extinguish his rights as a shareholder of TPO, the trial court abused its discretion when it ordered rescission in favor of Peter Kesling.

The judges didn’t address the siblings’ claims on appeal, but remanded for the trial court to rule on the claims they raised, which include breach of fiduciary duty and constructive fraud.

 

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  1. On a related note, I offered the ICLU my cases against the BLE repeatedly, and sought their amici aid repeatedly as well. Crickets. Usually not even a response. I am guessing they do not do allegations of anti-Christian bias? No matter how glaring? I have posted on other links the amicus brief that did get filed (search this ezine, e.g., Kansas attorney), read the Thomas More Society brief to note what the ACLU ran from like vampires from garlic. An Examiner pledged to advance diversity and inclusion came right out on the record and demanded that I choose Man's law or God's law. I wonder, had I been asked to swear off Allah ... what result then, ICLU? Had I been found of bad character and fitness for advocating sexual deviance, what result then ICLU? Had I been lifetime banned for posting left of center statements denigrating the US Constitution, what result ICLU? Hey, we all know don't we? Rather Biased.

  2. It was mentioned in the article that there have been numerous CLE events to train attorneys on e-filing. I would like someone to provide a list of those events, because I have not seen any such events in east central Indiana, and since Hamilton County is one of the counties where e-filing is mandatory, one would expect some instruction in this area. Come on, people, give some instruction, not just applause!

  3. This law is troubling in two respects: First, why wasn't the law reviewed "with the intention of getting all the facts surrounding the legislation and its actual impact on the marketplace" BEFORE it was passed and signed? Seems a bit backwards to me (even acknowledging that this is the Indiana state legislature we're talking about. Second, what is it with the laws in this state that seem to create artificial monopolies in various industries? Besides this one, the other law that comes to mind is the legislation that governed the granting of licenses to firms that wanted to set up craft distilleries. The licensing was limited to only those entities that were already in the craft beer brewing business. Republicans in this state talk a big game when it comes to being "business friendly". They're friendly alright . . . to certain businesses.

  4. Gretchen, Asia, Roberto, Tonia, Shannon, Cheri, Nicholas, Sondra, Carey, Laura ... my heart breaks for you, reaching out in a forum in which you are ignored by a professional suffering through both compassion fatigue and the love of filthy lucre. Most if not all of you seek a warm blooded Hoosier attorney unafraid to take on the government and plead that government officials have acted unconstitutionally to try to save a family and/or rescue children in need and/or press individual rights against the Leviathan state. I know an attorney from Kansas who has taken such cases across the country, arguing before half of the federal courts of appeal and presenting cases to the US S.Ct. numerous times seeking cert. Unfortunately, due to his zeal for the constitutional rights of peasants and willingness to confront powerful government bureaucrats seemingly violating the same ... he was denied character and fitness certification to join the Indiana bar, even after he was cleared to sit for, and passed, both the bar exam and ethics exam. And was even admitted to the Indiana federal bar! NOW KNOW THIS .... you will face headwinds and difficulties in locating a zealously motivated Hoosier attorney to face off against powerful government agents who violate the constitution, for those who do so tend to end up as marginalized as Paul Odgen, who was driven from the profession. So beware, many are mere expensive lapdogs, the kind of breed who will gladly take a large retainer, but then fail to press against the status quo and powers that be when told to heel to. It is a common belief among some in Indiana that those attorneys who truly fight the power and rigorously confront corruption often end up, actually or metaphorically, in real life or at least as to their careers, as dead as the late, great Gary Welch. All of that said, I wish you the very best in finding a Hoosier attorney with a fighting spirit to press your rights as far as you can, for you do have rights against government actors, no matter what said actors may tell you otherwise. Attorneys outside the elitist camp are often better fighters that those owing the powers that be for their salaries, corner offices and end of year bonuses. So do not be afraid to retain a green horn or unconnected lawyer, many of them are fine men and woman who are yet untainted by the "unique" Hoosier system.

  5. I am not the John below. He is a journalist and talk show host who knows me through my years working in Kansas government. I did no ask John to post the note below ...

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