Bjork v. April Industries, Inc., 14143

• Decision Date: 12 March 1976
• Docket Number: No. 14143,14143
• Citation: 547 P.2d 219
• Parties: Harold O. BJORK et al., Plaintiffs and Appellants, v. APRIL INDUSTRIES, INC., a Delaware Corporation, Defendant and Respondent.
• Court: Utah Supreme Court

Page 219

547 P.2d 219

Harold O. BJORK et al., Plaintiffs and Appellants, v. APRIL INDUSTRIES, INC., a Delaware Corporation, Defendant and Respondent.

No. 14143.

Supreme Court of Utah.

March 12, 1976.

John W. Lowe of Brayton, Lowe & Hurley, Salt Lake City, for plaintiffs and appellants.

Kenneth W. Yeates, of Prince, Yeates, Ward & Geldzahler, Salt Lake City for defendant and respondent.

GOULD, District Judge:

This case is related to Lowe v. April Industries, Inc., 531 P.2d 1297 (Utah 1974). The plaintiffs here were directors of the former Alta-Helena M & M Corporation which later became April Industries, Inc. The plaintiffs herein and Lowe in the related case were all issued restricted stock in the corporation for services rendered. At the time of the change in ownership of the corporation, the defendant April agreed to register plaintiffs' shares if and when April made a public offering of its shares, which registration would have made plaintiffs' shares marketable. This is known as a 'piggy-back' registration.

The trial court found that the plaintiffs were the owners of shares validly and legally issued to them as compensation for services rendered, and that plaintiffs' shares were the subject of the 'piggy-back' registration agreement which entitled plaintiffs' shares to registration when April made a public offering of its shares. April later made a public offering but declined to register plaintiffs' shares. The agreement was not honored by April in spite of numerous inquiries and suggestions that it be honored. During the period that plaintiffs were endeavoring to have April honor the registration agreement, the stock offered in the public offering rose in price substantially.

Upon these facts, the trial court held that plaintiffs did not effectively convey to April their desire to sell their shares and should have taken steps to enforce the agreement and denied recovery of damages but ordered April to deliver shares without the restriction theretofore placed on the shares.

We know of no rule of law that either requires or permits this result. Demand is not necessary where both parties have equal knowledge of the contract provision, or where the defaulting party denies the obligation. See 17 Am.Jur.2d 794, Contracts Sec. 356. Either April performed its contract (which it did not) or April breached its contract (which it did) by failing to register the shares. Plaintiffs were entitled to damages flowing from that breach, subject only to ...