Articles Posted in Non-Profit Corporations

James Garside acquired shares in South Despain Ditch Company in contravention of corporate restrictions on transferability of South Despain shares. After the sale, South Despain refused to issue certificates in Garside’s name and recognize him as a shareholder, claiming that the sale violated the transfer restrictions and was therefore was void. Garside filed suit, challenging the enforceability of the restrictions and asserting that their enforcement put South Despain in breach of its obligations in contract, fiduciary duty and the Utah Nonprofit Corporation Act. The district court granted summary judgment in favor of South Despain. Garside died during litigation, and Paul Southam proceeded on appeal. The Supreme Court affirmed, holding that the restrictions on the transfer of South Despain shares were enforceable, and thus, Southam acquired no viable rights as a shareholder. Absent a shareholder interest in the corporation, Southam lacked standing to pursue any of his claims. View "Southam v. S. Despain Ditch Co." on Justia Law