Jason Aldredge v. Justin Trevor Aldredge

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

24-702

JASON ALDREDGE

VERSUS

JUSTIN TREVOR ALDREDGE
AND BIG HEAD JERRY’S, INC.

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APPEAL FROM THE
THIRTY-FIFTH JUDICIAL DISTRICT COURT
PARISH OF GRANT, NO. 27,910
HONORABLE WARREN D. WILLETT, DISTRICT JUDGE

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CHARLES G. FITZGERALD
JUDGE

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Court composed of Van H. Kyzar, Jonathan W. Perry, and Charles G. Fitzgerald,
Judges.

REVERSED; RENDERED; AND
REMANDED WITH INSTRUCTIONS.

W. Alan Pesnell
Alan Pesnell Lawyer, L.L.C.
720 Murray Street
Alexandria, Louisiana 71301
(318) 704-0979
Counsel for Plaintiff/Appellant:
Jason Aldredge

Gregory B. Upton
Stephen A. Lafleur
Conner L. Dillon
Gold, Weems, Bruser, Sues & Rundell
Post Office Box 6118
Alexandria, Louisiana 71307-6118
(318) 445-6471
Counsel for Defendants/Appellees:
Justin Trevor Aldredge
Big Head Jerry’s, Inc.

FITZGERALD, Judge.

In the matter before us, Plaintiff filed suit for a declaratory judgment, seeking

to be recognized as a fifty-percent owner of a Louisiana closely held corporation.

The trial court denied Plaintiff’s ownership claim. Plaintiff now seeks review of that

judgment.

FACTS AND PROCEDURAL HISTORY

In 1989, Corwyn Aldredge Sr. (“Mr. Aldredge”) incorporated Big Head

Jerry’s Inc. (“BHJ”). Mr. Aldredge was the original shareholder, owning one

hundred percent of the outstanding shares.

Six years later, Mr. Aldredge decided to donate his entire ownership interest

(2000 shares) to two of his children: Jason Aldredge (“Jason”) and Justin Trevor

Aldredge (“Trevor”). Each son would thus receive 1000 shares. To this end, Mr.

Aldredge met with Jason in December 1995 and handed him a stock certificate;

Jason signed the certificate and handed it back to his father. Mr. Aldredge did the

same thing with Trevor.

Mr. Aldredge died in 2015. The ownership dispute began several years later.

Then, in 2022, Jason filed a petition for declaratory judgment against Trevor and

nominal defendant BHJ. Jason sought a declaration that he was a fifty-percent owner

of BHJ. He also sought an order requiring a shareholder meeting, access to company

records, and the issuance of a new stock certificate reflecting his ownership interest.

In response, Trevor answered the petition for himself and purported to answer

for BHJ. The answer included one affirmative defense: “Jason Aldredge redeemed

his 1000 shares of stock in [BHJ] and surrendered his stock certificate, at which time

Trevor Aldredge became owner of 100% of the issued and outstanding shares of

[BHJ].”

A bench trial was held in August 2024. Then, on September 4, 2024, the trial

court issued a final judgment denying Jason’s ownership claim with corresponding

written reasons. Jason now appeals this judgment, asserting three assignments of

error:

1. The trial court committed legal error in considering the issues
regarding the donative intent of [Mr. Aldredge] which were not raised
in the pleadings and which were uncontested.

2. The trial court committed legal error and manifest error when it
determined that the donation of stock to [Jason] was not valid.

3. The trial court committed an error of law and manifest error in
its fact finding when it found that the stock at issue had been redeemed.

LAW AND ANALYSIS

Questions of law are reviewed de novo. Domingue v. Bodin, 08-62 (La.App.

3 Cir. 11/5/08), 996 So.2d 654. Under this review standard, an appellate court simply

determines whether the trial court was legally correct.

Findings of fact, on the other hand, are reviewed on appeal using the manifest

error-clearly erroneous standard of review. Stobart v. State through Dep’t of Transp.

& Dev., 617 So.2d 880 (La.1993). To reverse a trial court’s determination of fact

under this standard, an appellate court must review the record in its entirety and (1)

find “that a reasonable factual basis does not exist for the finding,” and (2) “further

determine that the record establishes that the finding is clearly wrong” or manifestly

erroneous. Id. at 882. The appellate court must not reweigh the evidence or

substitute its own factual findings even if it would have decided the case differently.

Id. And “where two permissible views of the evidence exist, the factfinder’s choice

between them cannot be manifestly erroneous or clearly wrong.” Id. at 883.

Before going further, a summary of the evidence adduced at trial will be

useful.

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Summary of the Record Evidence

For all intents and purposes, the record evidence here consists of the corporate

records of BHJ and the witness testimony of Jason and Trevor. The corporate records

include BHJ’s Articles of Incorporation, Bylaws, minutes, stock certificates (issued

and cancelled), stock transfer ledger, and annual reports.

As to the witness testimony, Jason testified that BHJ was a land holding

company, that his father incorporated BHJ in 1989, that he (Jason) acquired his

ownership interest in 1995 through a donation of 1000 shares from his father, and

that Trevor received the same number of shares in the same manner. Jason noted

that he served as the company’s secretary-treasurer since 1995. Trevor, on the other

hand, had never been elected as an officer.

Jason then explained that he never maintained the corporate records of BHJ.

Those records were maintained by his father. According to Jason, the practice was

this: he did what his father wanted him to do. He would sign the business documents

his father wanted him to sign, and he would then give them right back to his father

who maintained them. Jason was then asked about the details of the donation of

stock from his father. Jason recalled that his father met with him, gave him a stock

certificate, and he (Jason) signed the front and back of the certificate and then

immediately handed it back to his father.

The stock transfer ledger shows the issuance of Certificate No. 2 to Jason for

1000 shares (or one-half of the outstanding shares of BHJ). Similarly, the transfer

ledger shows the issuance of Certificate No. 3 to Trevor for the same number of

shares. And that same transfer ledger shows the cancellation of Certificate No. 1,

which was originally issued to their father. Yet the ledger does not show any transfer

of shares after that event.

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Jason recalled that during his father’s succession proceeding, Trevor never

claimed full ownership of BHJ. Jason then pointed out that his father continued to

acknowledge him as a corporate officer in all filings with the secretary of state for

2005 (the year of the alleged redemption) and for the ten years that followed.

According to Jason, there was never a board meeting in which Trevor was elected as

an officer of BHJ.

Next, Jason testified that he never sold or transferred his shares in BHJ. Nor

were his shares redeemed by BHJ: there was never an offer to redeem those shares,

and there was never a meeting of the board of directors to authorize the redemption

of those shares. Indeed, BHJ did not have a bank account. Nor did it have any

income or cash. It was a land holding company.

On the reverse side of Jason’s stock certificate is the signature of notary public

Mary Thomas. Her signature is dated July 15, 2005. According to Jason, Ms.

Thomas worked for A & A Western Store Inc. That store was owned by Mr.

Aldredge. And for many years, the store was jointly managed by Jason and Trevor.

Yet Jason testified that he stopped working at the store in 2005. He testified that he

signed the front and reverse side of the certificate in 1995, not 2005. He then stated

that Ms. Thomas was not present when he signed the certificate.

Jason was then asked why his father had him sign the back of the stock

certificate. Jason explained that he was going through a divorce at that time, and his

father was concerned that his wife would assert an ownership interest in those shares.

But no such claim was ever made.

Trevor testified next. He confirmed that he also received a donation of 1000

shares from his father in 1995, that Jason was given an equal number of shares in

BHJ at that time, that BHJ did not operate a business, that BHJ was a land holding

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company, that BHJ had no bank accounts or income, that he was not an officer until

2014, that he never maintained the corporate books or any corporate records, and

that he attended only one shareholder meeting and one director meeting.

According to Trevor, he owns one hundred percent of the outstanding shares

because Jason signed over his shares in 2005. Yet Trevor admitted that he was not

present when Jason received his stock certificate or signed it. Trevor has no

knowledge of what was done, when it was done, or who was present. He has no

knowledge of any redemption price for Jason’s shares. Indeed, the only evidence of

redemption that he could point to was Certificate No. 2, which was the stock

certificate issued in Jason’s name.

Trevor also confirmed that Jason’s stock was never offered to him and that he

was not informed of an offer to redeem those shares. Although Trevor claimed that

the transaction at issue was a “redemption,” he admitted that the argument was

something he and his lawyers came up with after reviewing the corporate records.

Finally, Trevor confirmed that he attended no corporate meetings in which a

redemption was authorized (either shareholder or director meetings), that BHJ never

had a bank account, that no payment or consideration was given to Jason for the

alleged redemption of his shares, and that no change in Jason’s ownership status of

those shares is reflected in BHJ’s transfer ledger.

The corporate records show that a meeting of the shareholders was held on

December 29, 1995. The minutes from that meeting reflect that Jason and Trevor

were both present and that Jason and Trevor were elected as the only two directors

of the corporation. The meeting of the board of directors was then held that same

day. The minutes from that meeting reflect that Mr. Aldredge was elected president,

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and Jason was elected secretary-treasurer. This was the only meeting attended by

Trevor.

First and Second Assignments of Error

In its written reasons for judgment, the trial court frames the issues this way:

“Did a valid donation of stock in BHJ occur from [Mr. Aldredge] to Jason

Aldredge?” And “[i]f a valid donation did occur, did Jason Aldredge later redeem

his shares of stock in BHJ?”

Next, the trial court’s reasons provide a lengthy analysis of Mr. Aldredge’s

donation of BHJ shares to Jason. The trial court then concludes that the donation

from father to son was not valid. Yet none of this is in the final judgment. Instead,

the final judgment states that “judgment is rendered in favor of Justin Trevor

Aldredge and Big Head Jerry’s, Inc. (“BHJ”), and against Jason Aldredge, denying

his claim that he is the owner of fifty percent of the outstanding shares of BHJ, at

plaintiff’s cost.”

Nevertheless, Jason’s first and second assignments of error contend that the

trial court legally erred in considering the validity of the initial donation and in

determining it was not valid. Although we agree that the trial court’s focus was

misplaced, the matter is of no moment. Why? Because we review judgments, not

reasons for judgment. Succession of Hackney, 97-859 (La.App. 3 Cir. 2/4/98), 707

So.2d 1302.

That said, we would be remiss if we did not explain why the trial court’s focus

on the initial donation was misplaced. First, that issue was not pleaded as an

affirmative defense nor was it otherwise properly before the trial court.

Second, Trevor admitted in his answer that “[o]n December 19, 1995, [Mr.

Aldredge] transferred 1000 of his shares in [BHJ] to Trevor Aldredge and 1000

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shares to Jason Aldredge. After the transfer Trevor Aldredge owned 50% and Jason

Aldredge owned 50% of the stock in [BHJ].”

Third, Mr. Aldredge’s donation of 1000 shares to Jason mirrored his donation

of 1000 shares to Trevor. The donations were effectuated in the exact same manner.

So if the donation to Jason was invalid, the donation to Trevor would also be invalid.

This is why Trevor was quick to admit to the validity of both donations.

Fourth and finally, the donation of 1000 shares from Mr. Aldredge to Jason

complied with the legal requirements in effect in 1995: the donation was thus valid.

But again, we review judgments, not written reasons for judgment. The

soundness of the trial court’s written reasons for judgment is not an issue on appeal.

Hence, Jason’s first and second assignments of error are of no moment.

Third Assignment of Error

In his third assignment, Jason asserts that the trial court manifestly erred in

finding that the shares at issue had been redeemed.1

At trial, Jason had the initial burden of proving his ownership interest in BHJ.

He did this by introducing into evidence stock Certificate No. 2. “[A] stock

certificate is prima facie evidence of corporate ownership[.]” Fireplace Shop, Inc. v.

Fireplace Shop of Lafayette, Inc., 400 So.2d 702, 703 (La.1981). Additionally,

Trevor admitted at trial that Mr. Aldredge gave Jason 1000 shares in December 1995

and that Jason was the legal owner of those shares at that time. At this point, the

burden shifted to Trevor to prove his affirmative defense: redemption.

1
Unlike the previous issue, Trevor’s affirmative defense of redemption was properly before
the trial court. Thus, the trial court’s written reasons on that issue will assist us in determining
whether there was error.

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To this end, the trial court summarized Trevor’s affirmative defense in its

reasons for judgment as follows:

With respect to the issue of redemption, Defendants[, Trevor and
BHJ,] argue that Jason’s testimony about signing the back of the stock
certificate and delivering same to his father . . . establishes a prima facie
case for redemption. They further argue that the transaction was a
redemption rather that [sic] a transfer because the evidence indicates
that the first right of refusal limitation upon third party transfers
(established in Article 3.3 of the BHJ’s Articles of Incorporation) was
not complied with. Defendants also argue that [Mr. Aldredge] did not
receive the shares in his personal capacity because during the course of
his Succession it was determined that he did not own any interest in
BHJ. Thus, Defendant’s [sic] conclude, [Mr. Aldredge] can only have
accepted the redemption of Jason’s shares in his capacity as President
of BHJ.

Ultimately, the trial court agreed with Trevor, finding that “Jason Aldredge

redeemed his shares. Accordingly, his Petition for Declaratory Judgment is

denied[.]” In our view, the trial court manifestly erred in making this finding and in

denying Jason’s claim based on that finding.

To begin, Chapter 8 of the Louisiana Commercial Laws governs the transfer

of corporate securities. Under that chapter, indorsement and delivery of a stock

certificate is sufficient to transfer the underlying shares. La.R.S. 10:8-304.

“‘Indorsement’ means a signature that alone or accompanied by other words is made

on a security certificate in registered form or on a separate document for the purpose

of assigning, transferring or redeeming the security or granting a power to assign,

transfer, or redeem it.” La.R.S. 10:8-102(a)(11) (emphasis added). “An indorsement

may be in blank or special.” La.R.S. 10:8-304(a).

Here, Jason’s father handed him Certificate No. 2 and asked him to sign the

front and back. Jason complied and then handed the certificate back to his father.

Jason’s signature on the reverse side of the certificate is an example of an in blank

indorsement. And delivery of the stock certificate was accomplished when Jason

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handed it back to his father.

But in this instance, are these two things—in blank indorsement and

delivery—enough to establish a prima facie case of redemption? The answer is no.

In other words, the fact that Jason signed the back of the stock certificate and handed

it back to his father could be evidence of a sale by Jason to his father; it could be

evidence of a donation inter vivos from Jason to his father; it could signify a pledge

(as security for a personal loan); it could also be evidence of a donation from Jason

to BHJ (but this assumes that Jason’s father accepted delivery in his capacity as

president of BHJ); it could be a pledge to BHJ; or it could be none of these things—

Jason could have simply granted his father the power to transfer the shares based on

the happening of a future uncertain event, such as his former wife claiming an

ownership interest in those shares.

But even still, Trevor points to the transfer restrictions in the Articles of

Incorporation as dispositive evidence of share redemption by BHJ. According to

Trevor, this “could not have been a sale, because of the restrictions on the sale of

stock contained in the Articles of Incorporation and Bylaws of BHJ[] prohibited such

an act. The Articles provide that shares of stock may not be ‘transferred’ without

first offering the shares to the other stockholders.” (Footnote omitted).

Trevor then suggests that a redemption of stock is not a “transfer.” As he puts

it: “[T]here is a distinct difference between a transfer of stock, such as a sale, and a

redemption.” We disagree for two reasons. First, the essence of a redemption is the

transfer of shares from a shareholder back to the corporation. This is discussed

below in greater detail.

And second, Trevor’s argument is misleading and incomplete. The share

transfer restriction at issue is found in the Articles of Incorporation, and the full text

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of that restriction is reproduced as follows:

[S]hares of stock in this corporation shall not, subsequent to the initial
issuance thereof, be transferred in any manner from the owner thereof
without first offering said shares to all other stockholders of the
corporation in proportion to the percentage of the outstanding stock of
the corporation owned by each of the other stockholders for purchase
by the latter at current book value or for a sum equal to the highest bona
fide offer made by some third party for the purchase of the shares,
whichever price is higher; provided, however, that this provision shall
not apply to bona fide employee stock-option plans which may be
adopted by the Board of Directors. The non-selling shareholders shall
be allowed a period of fifteen (15) days to determine whether to
purchase any stock tendered under this provision, during which period
no sale to a third party may be consummated.

(Emphasis added).

The above transfer restriction does not identify a particular type of transfer.

Instead, it is written broadly—shares shall not “be transferred in any manner”—to

ensure absolute control over entry into the corporation. In short, the transfer

restriction is not limited to just sales; it covers all manner of transfers, including

redemption of shares, donations, and even pledges.

Trevor also contends that Mr. Aldredge accepted delivery of Certificate No. 2

in his capacity as president of BHJ, as opposed to receiving delivery in his personal

capacity. In support, Trevor attempts to point to a judgment rendered in his father’s

succession proceeding in 2019. But that judgment was not filed into evidence in the

matter before us, meaning that it is not part of the record on appeal.

So what is redemption? At all relevant times in this case,2 former La.R.S.

12:55 (1989) governed the power of a corporation to purchase or redeem its shares.3

2
It is of no consequence that Jason’s signature on the reverse side of Certificate No. 2 is
dated July 15, 2005, despite his testimony that he signed both sides of the certificate on December
29, 1995. The same law was in effect on both dates. And our ultimate disposition does not change
depending on which date is used.
3
Louisiana Revised Statutes 12:55 (1989) was repealed by 2014 La. Acts No. 328, § 5.
The full text of former La.R.S. 12:55 (1989) is reproduced as follows:

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Professors Morris and Holmes addressed the former statute in their treatise on

business organizations, stating as follows:

The statutory language [of La.R.S. 12:55 (1989)] reflects the generally
accepted distinction between repurchase, which is often used as the
broad generic description for any acquisition of its own shares, and
redemption, which more narrowly applies to the acquisition of shares
pursuant to some right or obligation created at the time of issuance of
the shares.

Glenn G. Morris & Wendell H. Holmes, 7 La. Civ. L. Treatise, Business

Organizations § 27:02 at 658 (1999).

Importantly, the disputed shares here were not issued with redemption rights;

they are not redeemable shares. Thus, BHJ could not have repurchased the shares

pursuant to some purchase right or option created at the time of issuance of those

shares. This means that redemption would have required approval from the board

A. A corporation shall not purchase or redeem its shares when it is insolvent,
or when such purchase or redemption would render it insolvent, or at a price, in the
case of shares subject to redemption, exceeding the redemption price thereof, or
when its net assets are less than, or such purchase or redemption would reduce its
net assets below, the aggregate amount payable on liquidation upon any issued
shares, which have a preferential right to participate in the assets in event of
liquidation, remaining after the purchase or redemption and cancellation of any
shares in connection therewith. Subject to the provisions of this subsection, a
corporation may purchase its own shares, or redeem its shares subject to
redemption, as provided in the following subsections of this section.

B. Subject to the provisions of R.S. 12:62(B), a corporation may purchase
its own shares, or redeem its shares subject to redemption, out of surplus or, as
permitted by R.S. 12:55(C) out of stated capital.

C. A corporation may purchase or may redeem its shares subject to
redemption out of stated capital only to the extent that stated capital is not thereby
reduced below the aggregate allocated value of the issued shares remaining after
the purchase or redemption and cancellation of any shares in connection therewith.

D. Shares which are cancelled are thereby restored to the status of
authorized and unissued shares, unless the articles provide otherwise; however,
shares purchased out of stated capital for the purpose of paying dissenting
shareholders entitled to payment for their shares under the provisions of this
Chapter shall be cancelled.

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of directors. And it is undisputed that this never happened.

There are other statutory restrictions on the repurchase or redemption of

shares. For instance, subject to the requirement of earned-surplus reserves in former

La.R.S. 12:62(B) (1984), the corporation must purchase or redeem its own shares

out of surplus. La.R.S. 12:55(B) (1989). Yet here, it is undisputed that BHJ had no

cash, income, or bank accounts, meaning there were no legally available funds for

the redemption or repurchase of Jason’s shares. And “the legality of share

reacquisitions depends largely upon the presence of legally available funds in the

capital accounts of the corporation.” Morris & Holmes, 7 La. Civ. L. Treatise,

Business Organizations § 27:03 at 659 (1999).

Finally, other than Jason’s signature on the back of Certificate No. 2, nothing

in the corporate records evidences the alleged redemption or repurchase of shares by

BHJ. This is in stark contrast with the donation of shares from Mr. Aldredge to his

sons. That transfer was immediately reflected in the company’s transfer ledger; Mr.

Aldredge’s stock certificate was promptly cancelled; and new certificates were

issued to his sons. So why are the company records silent as to the alleged

redemption? It is because Jason’s shares were never redeemed by BHJ. The record

evidence does not support any other conclusion.

In the end, Jason satisfied his burden of proving ownership of one-half of the

issued and outstanding shares of BHJ. The burden then shifted to Trevor to prove

his affirmative defense of redemption. Ultimately, the trial court manifestly erred in

finding that the disputed shares had been redeemed by BHJ.

DISPOSITION

For the above reasons, we reverse the judgment of the trial court, and we

render judgment in favor of Jason Aldredge and against Justin Trevor Aldredge and

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Big Head Jerry’s Inc., declaring Jason Aldredge the legal owner of fifty percent of

the issued and outstanding shares of Big Head Jerry’s Inc. We also remand the case

to the trial court for a determination of the incidental relief sought in Jason

Aldredge’s petition for declaratory judgment. And finally, the costs of this appeal

are assessed to Justin Trevor Aldredge.

REVERSED; RENDERED; AND REMANDED WITH INSTRUCTIONS.

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