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Coca-cola might owe $130 million for ancient stock certificate

Texashiker

Texashiker

Lifer
http://money.msn.com/top-stocks/post.aspx?post=f76f513b-05ff-429a-b9d9-fa9decd4b634&_nwpt=1

Man finds old stock certificate at estate sale. Certificate worth hundreds of millions of dollars. Man's family suddenly rich.

That's the story that Tony Marohn's family is sticking with -- and it wants Coca-Cola (KO -0.62%) to pay up. Marohn bought an antique Palmer Union Oil Co. stock certificate in 2008 for $5, and his family now says the certificate is worth $130 million in Coca-Cola shares.
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What bothers me about the article, the judge warned the family from trying to cash in on the stock. Isn't that the whole point of buying stock? You get the stock, keep it, cash in later. So why would the judge has an issue with a company having to pay a stock holder?
 
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I assume Palmer Union Oil Co. was bought out by other companies and finally Coca-Cola. It that case wouldn't there be a time limit where you could redeem old stock for new ones? Since none of the old companies or their records exist now, I don't see how it would be verified even if the stocks were still valid.
 
I am not sure how that works either. But isnt there a stock swap? I'd suspect the swap would mean 1 share for .5 shares or something like that?
 
FoBoT and Ausm....


Hypothetical:

Someone comes to you and says that you owe them $1M because of an IOU that your grandfather signed back in 1902.

You always wondered what that weird letter was stuck in your grandma's bible, but it never hit you.

So, do you sell the farm to pay your families debt, or "misplace" that record?


The example is strained in that the stock is a tiny portion to Coca Cola as compared to $1M to most of us, but I hope you do not get hung up on that.

As I said before, they SHOULD have it, but even if they did, would they admit it? Would you trust them?
 
My nose smells a very big lawsuit, with the odds in favor of coke, as they can lawyer up and stall it out for decades. But still, 130 mil is still petty cash to coke-cola, they may strike a compromise to avoid the adverse publicity.
 
Because the law isn't on their side.

Not to mention its a canceled certificate and was likely canceled a long time ago. Signing your name to a canceled certificate doesn't do shit.
 
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JTsyo said:
I assume Palmer Union Oil Co. was bought out by other companies and finally Coca-Cola. It that case wouldn't there be a time limit where you could redeem old stock for new ones? Since none of the old companies or their records exist now, I don't see how it would be verified even if the stocks were still valid.
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There are two kinds of purchase/sales of companies:

1. Asset sale. You buy the assets. The company ceases to exist, you are not liable for any of their past liabilities/claims.

2. Stock sale. The purchasing company (parent) absorbs the (target) company it bought. The parent company is liable for claims against the target company. Essentially, the two companies become one.

Looks like #2 is what happened here.

Coca Cola is/was legally responsible for maintaining the records of the chain of companies it purchased (either directly, or indirectly).

But it's a Delaware case, and Delaware is the #1 state for incorporation because it's state laws are the least favorable to shareholders.

Interesting case.

Fern
 
Ninjahedge said:
FoBoT and Ausm....


Hypothetical:

Someone comes to you and says that you owe them $1M because of an IOU that --your grandfather-- someone who was employed by your grandfather signed back in 1902. --edited to more realistically portray the actual situation

--You always wondered what that weird letter was stuck in your grandma's bible, but it never hit you.-- deleted. this did not happen and was added by you to give emotional appeal to your argument.

So, do you sell the farm to pay your families debt --, or "misplace" that record? -- deleted. this did not happen and was added by you to give emotional appeal to your argument.
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So, based on the real analogy: some stranger comes up to you with an IOU for $1M by someone that worked for your grandfather. There is no authentication, and the IOU does not directly say your grandfather was the one who owed anything. Would you sell your farm to pay it then?
 
QuantumPion said:
So, based on the real analogy: some stranger comes up to you with an IOU for $1M by someone that worked for your grandfather. There is no authentication, and the IOU does not directly say your grandfather was the one who owed anything. Would you sell your farm to pay it then?
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There are only 2 ways I can now think of that Coca-Cola does NOT owe this guy (his family now that he's deceased) all that Coca Cola stock:

1. The owner of the old shares (Palmer Union Oil Co) did in fact receive shares of the (new) purchasing company. And the new purchasing company did not require the Palmer Union Oil Co shares to be tendered. They merely issued new shares and (legally) cancelled the Palmer Union Oil Co shares. I.e., the 'debt' was already paid.

2. There is some sort of time limit on exchanging shares. I.e., something similar to lost property rules whereby after a period of years the unclaimed property is cancelled and no longer legally owed.

BTW: The whole 'grandfather' analogy is incorrect because your grandfather and you are two distinct and separate legal persons. One cannot owe for the other (without the other's agreement). That's not the case here. Palmer Union Oil Co and Coca Colas are the same legal person (assuming it was a stock purchase and not an asset sale.)

Fern
 
Fern said:
There are only 2 ways I can now think of that Coca-Cola does NOT owe this guy (his family now that he's deceased) all that Coca Cola stock:

1. The owner of the old shares (Palmer Union Oil Co) did in fact receive shares of the (new) purchasing company. And the new purchasing company did not require the Palmer Union Oil Co shares to be tendered. They merely issued new shares and (legally) cancelled the Palmer Union Oil Co shares. I.e., the 'debt' was already paid.

2. There is some sort of time limit on exchanging shares. I.e., something similar to lost property rules whereby after a period of years the unclaimed property is cancelled and no longer legally owed.

BTW: The whole 'grandfather' analogy is incorrect because your grandfather and you are two distinct and separate legal persons. One cannot owe for the other (without the other's agreement). That's not the case here. Palmer Union Oil Co and Coca Colas are the same legal person (assuming it was a stock purchase and not an asset sale.)

Fern
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Add to your list:

3) The stock was unclaimed and went to the unclaimed property fund of some state and then escheated to the state.
 
LOL This is pretty strong language for a judge. They usually don't throw around language like this unless something is totally merit-less.
"This is a new version of the Beverly Hillbillies," Judge Leo Strine said in a January hearing, according to the Daily Mail. He also warned the family against pursuing "a drive-by of a public company" to get millions of dollars."It's just not a sport,"
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Zebo said:
LOL This is pretty strong language for a judge. They usually don't throw around language like this unless something is totally merit-less.
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Probably some butt hurt judge who is jealous of someone getting rich.

There also seems to be a mindset that the right to be rich belongs to certain families, or to certain groups of people.

When donald trump makes 100 million, everyone expects it.

When some redneck hill billy makes 100 million, people think something is wrong.
 
Zebo said:
LOL This is pretty strong language for a judge. They usually don't throw around language like this unless something is totally merit-less.
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I googled him.

While I would say you are generally correct, this particular judge has long thrown around such language on a daily basis. He's famous for it.

I.e., I wouldn't read too much into it.

Fern
 
I have the same stock certificate for slightly less shares. If he's owed $130 million, I'm owed about $122 mill 😀

We shall see
 
QuantumPion said:
So, based on the real analogy: some stranger comes up to you with an IOU for $1M by someone that worked for your grandfather. There is no authentication, and the IOU does not directly say your grandfather was the one who owed anything. Would you sell your farm to pay it then?
Click to expand...

If that letter was proven to be real, I would have no other choice but to go to court to see how much could be claimed according to my current self worth.

the key here is, the only reason that IOU was/is worth $1M is because the letter says "I owe you x% of everything", and you now own $1B.
 
Ninjahedge said:
If that letter was proven to be real, I would have no other choice but to go to court to see how much could be claimed according to my current self worth.

the key here is, the only reason that IOU was/is worth $1M is because the letter says "I owe you x% of everything", and you now own $1B.
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The probate process was the proper venue for claims against the estate to be made. This is one of the reasons death notices are made: To give fair notice to possible claimants against the estate. Since no claim was made in probate, unsecured claims are generally no longer valid after probate ends. There are exceptions, of course ("I was in a coma for 2 years while probate was ongoing"), but an ancient, unsecured IOU would almost certainly be considered null and void against the heirs.

Note that there's also a statute of limitations on debt, even secured debt. Presumably, your grandfather can be deemed to have defaulted on the signed IOU at some point. Once that default occurred, the statute-of-limitations clock began to run. The statute of limitations on debt is usually no longer than 6 years (it's as long as 15 years in some states). But the point is that an IOU from 110 years ago would CERTAINLY be null and void.
 
Most likely that ancient IOU would only be for $10 or $15. At such a price, I would pay just to get the IOU from my ancestor for my geneology records. 🙂
 
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