Family Claims Coca-Cola Owes Them 1.8 Million Shares For Old Stock Certificate

Like something straight out of Antiques Roadshow (aka the show that makes you want to rip apart your attic every time someone gets a surprise windfall), the family of a man who passed away a few years ago claims Coca-Cola owes them 1.8 million shares, worth around $130 million, of the company after coming upon a stock certificate the man bought at a garage sale.

The man’s family is trying to get Coca-Cola to pay up on the multi-million stake from a canceled stock certificate that he had purchased in 2008. It’s from Palmer Union Oil Co, and the deceased man had done his homework to trace that company back through other long gone companies until landing on Coca-Cola.

When he passed away in 2010, his family took on his estate and now have to convince a judge in Delaware that they should be paid by Coca-Cola. Reuters says if they are successful, the estate would be among the largest non-institutional investors in Coca-Cola. The soda makers are having none of it, however.

“The claim of Mr. Marohn’s estate that it is entitled to millions of dollars in Coca-Cola stock — based on a canceled stock certificate for a long-defunct oil company purchased at an estate sale — is meritless and unfair to the Company’s millions of legitimate shareholders,” the company said in a statement.

Stock certificates need to be on record with the company that issued them, says Coca-Cola. However, lawyers for the man’s estate think they have a case, based on the fact that his certificate was endorsed and signed, but that the transferee was left blank.

*Thanks for the tip, Jonathan!

Garage sale find: $130 million in Coke stock? [Reuters]

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  1. Hi_Hello says:

    but they are canceled ……

    • TheMansfieldMauler says:

      Yeah, I thought if a certificate was cancelled that meant any value for it had already been transferred and settled.

    • Conformist138 says:

      The only place in the original article that the certificate is referred to as ‘cancelled’ is in the quote from a Coca-Cola rep. The rest of the article just calls it an antique.

    • YouDidWhatNow? says:

      “…a stock is an asset, meaning you can easily convert it into cash, and a stock certificate is a document showing legal ownership in a corporation. One stock certificate represents one share of legal ownership (equity). Every stock certificate belongs to an owner, who is named directly on the document. If you wish to sell stock to a buyer, you must first cancel the stock certificate. The process is easier than you may think.”

      http://www.ehow.com/how_7860854_cancel-stock-certificate.html

      The act of “cancelling” a stock certificate is part of the process of transferring it to a new owner.

      • YouDidWhatNow? says:

        Oh, and “…but that the transferee was left blank.”

        Kinda like signing the back of a vehicle title and handing it to someone who you’re transferring ownership to, without filling out all of the new owner’s information.

        That new owner may fill it out, take it to the DOT, and get the title transferred to their name…or they may just hang onto the title that way until they choose to pass it on to someone else later, never having actually transferred the title to themselves.

      • Warren - aka The Piddler on the Roof says:

        Correct-o-mundo! I work with stock certificates and once they’re cancelled, they’re not worth the fancy paper they’re printed on. ;-D

        “Stock certificates need to be on record with the company that issued them, says Coca-Cola.”

        True. And if it’s cancelled, it’s worthless and the records will prove it.

        “However, lawyers for the man’s estate think they have a case, based on the fact that his certificate was endorsed and signed, but that the transferee was left blank.”

        I’d say the lawyers are idiots, but this is clearly a case of lawyers trying to get paid (by the moronic worthless certificate owner, not Coca Cola), so maybe they’re not so dumb after all.

        • GuyGuidoEyesSteveDave‚Ñ¢ says:

          I disagree. I found some old GTE stocks and I bought them for $5 at the flea market from someone who does storage unit clear outs. Never investigated if they are valid, but I bet I can get at least $3 each for them, which means I would make 300% profit.

      • Mackinstyle1 says:

        So these are essentially the leftover, outdated documents that should have been shredded upon the creation of the new official stock certificates. Sounds exactly like something you’d find at a garage sale or whatnot.

  2. huadpe says:

    I gotta say, this is a fascinating question of law, where I really have no idea what the legally proper outcome is.

  3. Ashman says:

    Isn’t the key word here. Cancelled? I bet one could easily make one of those in photoshop…

  4. Snowblind says:

    Of course the lawyers think they have a case!

    No Case == No Job

    • centurion says:

      No case == No $$$$$

    • KyBash says:

      There’s an old Non Sequitur cartoon wherein someone is explaining why a case is so complicated and taking so long:
      1) Our clients are multimillionaires.
      2) We’re getting paid by the hour.

  5. Blueskylaw says:

    Fascinating case and I can’t wait to read about the ruling,
    especially if the relatives actually have a strong case.

  6. Velifer says:

    Certificates get cancelled in mergers too. You get a note from the company: “Turn them in by this date to get a shiny new one with our new name on it, or you’ll be holding worthless paper.”

    • phsiii says:

      Mm, I don’t think so. You own something, they don’t get to play a shell game and take it away. Otherwise it would be far too easy to do this *just* to disenfranchise existing stockholders (and I’m talking even beyond simple dilution).

    • kuhj√§ger says:

      I am pretty sure if you don’t reply that you want to transfer your shares, you get cut a check. My mom inherited a ton of stocks through her father’s trust, and she knows absolutely nothing about stocks. I webt through and found tens of thousand in checks in envelops that she had not opened from various companies as she didn’t open the notifications of mergers. It took a lot of paperwork to get the money from the unclaimed property.

  7. There's room to move as a fry cook says:

    I’m not a lawyer and without further googling have no comment on the merits of the case.. but it’s interesting that Coke lawyers a call this claim “unfair”. ‘”Unfair”, like “that’s not cricket”, sounds like the claim could win on a technicality.

    • SecretShopper: pours out a lil' liquor for the homies Wasp & Otter says:

      the lawyer calling it unfair to current shareholders makes me think the next step is them sticking fingers in thier ears and saying “i cant hear you” until the judge dismisses the case

    • marillion says:

      Interesting thought.. If only it could boil down to being that simple…

      However, I have seen DWI cases involving deaths be thrown out because the DWI crash was called an “accident” by the law enforcement agents who handled the case/investigation. It was an “accident”… and therefore no harm was intended…

      That’s why you should never ever refer to a car crash as an “accident”…

    • huadpe says:

      They’re in a court of chancery, which means that the court’s job is to achieve equity, or fairness, given the law and the facts of the circumstances. If the certificate being valid is unfair under the law, then the chancery court should reject the claim. I don’t know the law in this area AT ALL, but fairness actually matters in cases like these.

      Also, delaware is one of the only states to have a chancery court, and I think the only state where the chancery court is fully independent of the rest of the court system except perhaps for appellate jurisdiction.

  8. r-nice says:

    This is pretty interesting. I wonder how long before we get a decision.

  9. David Ciani says:

    This is exactly the reason that shares are normally registered and only negotiable on the books of the corporation. The stock certificate is just evidence of the book-entry and provides a convenient way of collecting the information required to effect a transfer. If you want to sell the stock you have to endorse the certificate AND DELIVER IT TO THE TRANSFER AGENT.

  10. elangomatt says:

    What does it matter to Coke how the family got the stock certificate? If someone finds a Van Gogh painting at a garage sale for $20, the buyer will still get a lot of money for it from the right buyer. The painting doesn’t suddenly become worthless since it was bought at a garage sale.

    If the stock certificate is actually valid, then I really hope that My Marohn’s estate gets the money. I have zero knowledge though about the rules associated with stock certificates though, so I won’t speak as to if I think the certificate is valid or not.

    • elangomatt says:

      grumble grumble… can we get an edit button?!… grumble grumble

      Mr, not My

    • edman007 says:

      Because it is a certificate, it isn’t the actual item owned, when it is canceled it means what is says is no longer true. When you buy a painting you get the actual painting, and if you wanted you could make a certificate that says you own it. This is how cars are sold, you get the physical car and the actual owner (the bank) gets the certificate, if the bank wants the car they can take it, and the certificate proves them right. When you pay off the loan off the loan the bank calls the DMV, they cancel the old certificate and issue a new one with the new owners info on it. Then if you were to sell the painting you would issue a new certificate with the new owners name on it and cancel the new one, the old certificate only serves to prove that you use to own the painting, it is totally worthless to anyone else after it is canceled.

      Stock certificates works in exactly the same way, they just serve to prove that you own it, when it’s canceled it’s only use is to prove you use to own it (useful for taxes and court), there are many reasons why it might get canceled without having to fill out the transfer info as well (mergers come to mind, it would need to be re-issued with the new companies name), the actual paper is worthless, even if it’s not canceled.

  11. u1itn0w2day says:

    Cancelled? Why not void at time of the merger or buyout of that company decades ago?

    Something about unsigned or unfilled in transferee space on stock.

  12. emax4 says:

    Does the stock certificate SAY “Coca-Cola”? No? Well then…

    • Loias supports harsher punishments against corporations says:

      If that oil company was bought by Coca-Cola……

  13. AllanG54 says:

    I’ve owned stock where the company has merged or been bought out and I’ve either gotten stock in the new company or cash. I’m assuming that all the companies that came after the original gave stock instead of cash but I’m just wondering if someone before him actually got the new stock and just hadn’t turned in the certificate as companies will sometimes do that for the person on record so that you don’t have to send the certificate back and risk it getting lost.

  14. mingtae says:

    I thought the original recipe was cocaine, not oil.

  15. Lyn Torden says:

    The defense is basing its case on “unfair”? What? There’s no other legal defense? FAIL!

  16. Warren - aka The Piddler on the Roof says:

    “However, lawyers for the man’s estate think they have a case, based on the fact that his certificate was endorsed and signed, but that the transferee was left blank.”

    Uh, yeah… Hate to break it to you, greedy lawyers, but lack of a name in the transferee slot doesn’t mean dick. I work with stock certificates all the time; we issue them and redeem them. The whole process is VERY tightly regulated. And if there’s a ‘CANCELED’ stamp on a cert, it was either cashed in, redeemed for a new certificate, transferred to someone else, or any combination thereof.

    We redeem certs all the time that aren’t filled out in any way — they come to us in the same condition in which they were issued. They still get stamped with ‘CANCELED’, the shares get redeemed or transferred in one way or another, and the world keeps on spinning…

    • GuyGuidoEyesSteveDave‚Ñ¢ says:

      If I gave you some info on some old GTE shares I have, can you give me some knowledgeable advice?

    • usa_gatekeeper says:

      I agree with cancellation rendering the certificate void. It then only has value to those who collect cancelled stock and bond certificates in an area known as “scripophily”.

      There are many similarly cancelled shares out there being collected, traded, sold and bought world wide as collectibles. Some are worth more than others, but NOT based on the cancelled face value.

  17. framitz says:

    Seems if the stock wasn’t transferred then it is just a piece of fancy paper.

  18. Hoss says:

    Either the 1.8 million shares are generating dividends to someone (or some entity), or there are no shares on the books with respect to this stock. Who’s getting the dividends?

    • Citizen says:

      Unfortunately, if the registered owner or their heirs have been out of touch with the issuer or their agent for some years the shares would have been escheated to the state as lost property and the shares canceled. Happens all the time.

  19. Captain Obvious says:

    I am puzzled why Coca-Cola would file suit to get a declaration that he was not entitled to the company’s stock if the claim is really meritless.

    What does a company do with shares that are held by an owner that is deceased or shares that are otherwise abandoned?

  20. soj4life says:

    “It’s not so much about the money,” he said. “For my client, for Jamie and her mom, it’s about her dad. This was a big deal for her dad before he passed away. She’s going to finish the fight for her dad.”

    No, it is just about the money.

    Stock certificates are only nice pieces of paper. When coke bought this company, that sale would finalize the holdings of the existing stock. Whoever owned the certificate, if it was still valid at the time of acquisition, would have received either received cash and or coke stock.

    This family trying to get money from coke would be the same as if I went into a bank with csa money or the bills that banks printed up back in the 19th century. They would turn down my request because what I have is worthless.

  21. homer2324 says:

    IRS is probably calling the estate for unpaid tax.