- 3 -
acquiring the Bank stock. To compensate for this disparity,
Elmer received 1,200 more shares of Madison preferred stock than
petitioner. The Madison stock was issued as follows:
Common Shares Preferred Shares
Elmer 1,648 15,216
Petitioner 1,648 14,016
The preferred stock provides for a 50� per share, non-
cumulative, preferred dividend. On dissolution, each share
entitles the holder to receive a $100 liquidation preference over
the common stock, but the holder is not entitled to receive
proceeds in excess of the $100 preference. Finally, the
preferred stock is voting stock.
Despite the inequality in their ownership positions, Elmer
and petitioner treated each other as equal partners. When the
Bank suffered financial reverses in the 1980's, petitioner and
Elmer contributed equal amounts ($744,000 each) to Madison.
These funds were used to strengthen the Bank financially.
Petitioner was more involved with the Bank's daily operations,
and Elmer acquiesced to petitioner's management decisions. The
record indicates that the brothers intended to equalize their
respective ownership positions in Madison at some future time.
None of the family members, other than the two brothers, was
aware of the disparity in stock ownership.
In 1983, the brothers executed a buy/sell agreement to
provide for the disposition of Madison stock upon the death of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011