Schexnayder v. Yolande Schexnayder & Son, Inc.

119 So. 3d 624, 12 La.App. 5 Cir. 885, 2013 WL 2249221, 2013 La. App. LEXIS 1025
CourtLouisiana Court of Appeal
DecidedMay 23, 2013
DocketNo. 12-CA-885
StatusPublished
Cited by5 cases

This text of 119 So. 3d 624 (Schexnayder v. Yolande Schexnayder & Son, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schexnayder v. Yolande Schexnayder & Son, Inc., 119 So. 3d 624, 12 La.App. 5 Cir. 885, 2013 WL 2249221, 2013 La. App. LEXIS 1025 (La. Ct. App. 2013).

Opinion

MARC E. JOHNSON, Judge.

|2Pefendant, Melissa Schexnayder, appeals the trial court’s granting of a writ quo warranto in favor of plaintiff, Wade Schexnayder, in which the trial court determined that Ms. Schexnayder did not carry her burden of proving she had authority to hold the office of president of Yolande Schexnayder & Son, Inc. (“YSS”), and that Mr. Schexnayder continues to have the voting rights of 7,500 shares of stock that were the subject of an Act of Donation to Ms. Schexnayder in 2008. For the reasons that follow, we affirm.

FACTS & PROCEDURAL HISTORY

YSS, which is in the business of selling clay and dirt material, is a closely held corporation that was incorporated in September 1989 by plaintiffs grandfather, Yo-lande Schexnayder, and Yolande’s son, Carroll Schexnayder. At the time of incorporation, YSS issued 5,000 shares of stock to Yolande and his wife Beatrice, and 5,000 shares of stock to Carroll and his wife Sharleen. In 1992, both Yolande and Carroll donated 2,500 shares of their YSS stock to Mr. |3Schexnayder for a total of 5,000 shares.1 Later, in 2007, Yolande made a second donation of 2,500 shares of stock to Mr. Schexnayder, giving him a total of 7,500 shares in YSS.

On September 22, 2008, Mr. Schexnay-der executed an Act of Donation donating all of his separate property, including his interest in YSS, to Ms. Schexnayder with the stipulation that the donated property “form part of the community existing between the Donor and the Donee.” Thereafter, in 2009, Mr. Schexnayder purchased an additional 5,833.34 shares of YSS stock from relatives who had inherited the shares from their parents. And, in 2010, both Mr. and Mrs. Schexnayder purchased 1,666.68 shares of YSS stock from various relatives.

Between February 2008 and January 2012, Mr. Schexnayder was the president of YSS and ran the day-to-day operations of the business. At the same time Mr. Schexnayder became president, he used his shares to vote Ms. Schexnayder to the board of directors.

On December 22, 2011, Ms. Schexnay-der, as Secretary/Treasurer of YSS, issued a Notice of Meeting of the Shareholders [627]*627and Board of Directors of YSS set for January 5, 2012. At the shareholders’ meeting, YSS’s corporate attorney advised that upon review of several documents, including the 2008 Act of Donation by Mr. Schexnayder to Ms. Schexnayder, he determined that Ms. Schexnayder was the owner of 11,250, or 75%, shares of YSS stock, and Mr. Schexnayder was the owner of 3,750 shares, or 25%, shares of YSS stock. According to Mr. Schexnayder, he objected to this determination but his objection was not noted in the minutes of the meeting. Thereafter, a new board of directors [4was elected, which included Mr. Schexnayder, Ms. Schexnayder and Matt Milazzo, who was present through a proxy and was elected to the board solely through Ms. Schexnayder’s votes.

Immediately after the shareholders meeting, a meeting of the board of directors was held. During the meeting, Mr. Schexnayder was removed as President of YSS, and Ms. Schexnayder was elected president through her votes and those of Mr. Milazzo by proxy. Ms. Schexnayder also used her votes and those of Mr. Milazzo by proxy to elect herself as Treasurer of YSS.

On February 7, 2012, Mr. Schexnayder filed a Petition for Mandamus and Quo Warranto, for Temporary Restraining Order and for Injunctive Relief claiming, among other things, that Ms. Schexnayder wrongfully usurped control of YSS. He sought issuance of a writ of quo warranto be issued to force Ms. Schexnayder to explain by what authority she acted in removing him as president of YSS and voting herself in as president and her brother-in-law, Matt Milazzo, in as a director. Mr. Schexnayder further sought to enjoin Ms. Schexnayder from further acting as a YSS officer.

A show cause hearing was held on May 21, 2012. At the conclusion of the hearing, the trial court determined that Ms. Schex-nayder had not carried her burden of proving that she had the right to vote the 7,500 shares of stock that were donated to her in 2008, and thus had not shown she had the right to vote herself as President and Treasurer of YSS. The trial court noted that the 2008 donation clearly stated the stocks were to be community property and made no reference to voting rights. It further noted the stock certificates for the 7,500 shares were still in Mr. Schexnay-der’s name, and there had been no request to transfer the stock certificates to Ms. Schexnayder’s name, despite the passage of more than three years from the act of donation to the January 2012 meeting. As such, the trial 15court granted the writ quo warranto in favor of Mr. Schexnayder and found he continues to have the voting rights to the 7,500 shares of stock he donated to Ms. Schexnayder.

ISSUE

On appeal, Ms. Schexnayder challenges the trial court’s determination that the Act of Donation did not transfer the voting rights of the 7,500 shares of stock. She maintains that the voting rights were included in the donation of the stock and that Mr. Schexnayder would have had to have made a specific reservation in the donation in order to retain those voting rights, which he did not do. She also contends the trial court erred in relying on parole evidence, specifically the conduct of the parties after the act of donation, to determine the intent of the parties regarding the voting rights of the donated shares.

LAW & ANALYSIS

The proper procedure to contest title to an office in a private corporation is a writ of quo warranto. Canedo v. Vicari, 11-1116 (La.App. 5 Cir. 5/8/12); 99 So.3d 64, 68. A writ of quo warranto directs an [628]*628individual to show by what authority he or she claims or holds public office, or office in a corporation, or directing a corporation to show by what authority it exercises certain powers. La. C.C.P. art. 3901. If the court determines that a person is holding an office without authority, the judgment shall forbid him to do so. The judgment may further declare who is entitled to the office or may direct an election when necessary. La. C.C.P. art. 3902. However, if it is determined that a person holds office by virtue of a valid election, the inquiry ceases, and the writ should be dismissed. Canedo, supra. The respondent in a quo warranto proceeding has the burden of showing by what authority he or she claims or holds office in the corporation. Id.

|fiMs. Schexnayder claimed she validly held the office of president by virtue of an election by the board of directors in which she held the majority of voting shares through the voting rights of 7,500 shares of stock that were donated to her by Mr. Schexnayder in 2008. The 2008 Act of Donation states, in pertinent part:

WADE J. SCHEXNAYDER, SR., a person of the full age of majority, domiciled in the Parish of St. James, State of Louisiana [“Donor”], who declared that, in consideration of the love and affection which he bears to his spouse, Melissa D. Schexnayder, he does, by these presents, make a gift and donation inter vivos, UNTO said:
MELISSA D. SCHEXNAYDER [“Donee”], hereby appearing for the purpose of accepting the same of the following:

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119 So. 3d 624, 12 La.App. 5 Cir. 885, 2013 WL 2249221, 2013 La. App. LEXIS 1025, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schexnayder-v-yolande-schexnayder-son-inc-lactapp-2013.