## Facts

- Winnsboro Equipment, Inc. (WEI) was a closely held, family-owned corporation operating a tractor dealership.
- Kenneth D. “Ken” Malone owned 849.5 shares of WEI and worked in sales.
- James G. “Greg” Malone, Jr. owned 849.5 shares of WEI and managed the business.
- Their mother, Doris Malone, owned the only remaining share (1 share), which could decide control when the brothers disagreed.
- Before undergoing surgery, Doris signed a written “act of donation” stating she was donating her one share equally to Ken and Greg so that each would own 850 shares (a 50/50 split).
- The document was signed by Doris, Ken, Greg, and two witnesses, but it was not executed before a notary.
- The contemplated stock-transfer steps were not completed (including formal endorsement/delivery steps tied to transferring certificated shares).
- Over time, Ken and Greg recognized there was a problem with the donation’s validity and disagreed about what to do with WEI (including whether the business should be sold).
- Doris later executed a proxy authorizing Greg to vote her share.
- Using Doris’s proxy, Greg acted at the shareholder level and was able to remove Ken from corporate office.
- Ken filed multiple actions against Greg and WEI seeking relief premised on the theory that Doris’s donation made Ken and Greg equal 50% owners and therefore made Greg’s proxy-based control improper; the actions (including requests for injunctive relief and writs such as mandamus and quo warranto) were consolidated.
- The trial court ruled the donation did not meet the formal requirements for a donation of an incorporeal movable, dissolved the temporary restraining order, dismissed the consolidated petitions with prejudice, and treated Doris’s proxy as revocable.
- Ken appealed.

## Issues

1. Whether Doris’s written but unnotarized act purporting to donate her one share of WEI stock (an incorporeal movable) to Ken and Greg was a valid inter vivos donation under Louisiana law.
2. If the donation was invalid, whether the trial court correctly rejected Ken’s claims for injunctive and writ relief that depended on a 50/50 ownership split and on invalidating Greg’s vote of Doris’s share by proxy.

## Decision

- The Louisiana Court of Appeal, Second Circuit affirmed.
- The court held Doris’s attempted donation of her WEI share was invalid because it did not satisfy the required form for donating an incorporeal movable and the transfer was not completed through the required stock-transfer mechanism.
- The court rejected Ken’s reliance on Louisiana Civil Code article 1550 as a substitute for the authentic-act form and as a way to validate the incomplete transfer.
- Because the donation was null, Doris remained the owner of the one share.
- Greg’s use of Doris’s proxy to vote her share was not defeated by Ken’s ownership theory, and the trial court did not err in dissolving the temporary restraining order and dismissing Ken’s consolidated petitions with prejudice.

## Legal Principles

- Shares of corporate stock are incorporeal movables under Louisiana law.
- A donation inter vivos of an incorporeal movable generally must be made by authentic act as required by La. Civ. Code art. 1541; failure to use the required form results in nullity.
- Article 1550 does not validate a purported stock donation where the donor has not completed a qualifying transfer under the governing rules for transferring the shares.
- When an attempted donation is invalid, ownership remains with the donor, and corporate voting rights follow that ownership.
- Claims seeking injunctive relief or extraordinary writs that depend on an ownership change fail when the alleged transfer is null and the claimant cannot show the right to the corporate control sought.

## Conclusion

Malone v. Malone held that Doris Malone’s unnotarized act attempting to donate her single WEI share to her sons did not meet Louisiana’s required form for donating an incorporeal movable and was not completed through proper share-transfer steps, so the donation was null and Doris remained the shareholder; as a result, Greg’s proxy vote of Doris’s share stood and Ken’s consolidated suits seeking to undo Greg’s corporate control were properly dismissed.


Malone v. Malone, 77 So. 3d 1040 (2011)