1. What did the plaintiff contend?

2. Can a shareholder who is also an officer and director of a corporation lawfully obtain a premium for selling controlling interest in a corporation?

3. State the general rule of law applicable to this case.

Paul Warlick Jr. was the president, chief executive officer, and a stockholder of Coca-Cola Bottling Co. of Anderson, South Carolina (Coke-Anderson). He controlled 273.5 shares of stock of the total of 480 shares of stock outstanding, including the stock of his mother, uncle, and aunt. Warlick agreed to sell this controlling interest in Coke-Anderson to Coke- Ashville for $4 million, which included a premium (difference between market and sale price) to be paid him for his controlling interest. Wayne Shoaf, a minority shareholder, brought suit against Warlick, contending that Warlick had violated his fiduciary duty to the corporation and had received an unlawful premium for the sale of the majority interest in Coke- Anderson. From a judgment for Warlick, Shoaf appealed.

JUDICIAL OPINION

SHAW, J.… The issues we are asked to consider are whether Warlick had a fiduciary duty owed to the other stockholders and whether he breached this duty, and whether Warlick has a basis to claim appellants are equitably estopped from attacking his premium received for his stock.

South Carolina has long followed the general rule that corporate stock is personal property which the owner may “dispose of … as he sees fit.” … Concomitantly, when selling stock, stockholders must “necessarily act for themselves, and not as trustees for other stockholders.” … This general rule applies as well to majority shareholders:

A dominant or majority shareholder is generally under no duty to the minority stockholders to refrain from receiving a premium upon the sale of his controlling stock. “The law of the marketplace dictates that a shareholder who has a controlling interest in a corporation will likely be able to receive a higher price per share than a minority shareholder. As a general rule, nothing in the law of the courthouse prevents a majority shareholder from retaining this ‘control premium.’ … This is so even if as is so frequently the case, the controlling shareholder is an officer or director of the corporation.…A shareholder, irrespective of whether he is also a director, officer, or both, may sell his shares, just as he may sell other kinds of personal property, for whatever price he can obtain, even if his shares constitute a controlling block and the price per share is enhanced by that fact. Further, the courts generally hold that neither the selling shareholder nor his purchaser is under an obligation to see that other shareholders are provided opportunities to sell their shares on the same favorable terms as the controlling shareholder or even to inform minority shareholders of the price and other terms of the sale of the controlling interest.”

Martin v. Martin, 529 So. 2d 1174 (Fla. 3d Dist. Ct. App. 1988).

Judgment affirmed.