Man o’ War Restaurants, Inc. v. Martin, 932 S.W.2d 366 (Ky. 1996)

Facts

Martin was hired as a manager of Sizzler and was permitted to purchase 25% of the stock in corporation.  If he was terminated during his 5 year employment contract, however, Martin was required to return the stock in exchange for the purchase price.  Martin was terminated after 3 years and demand was made for the stock.

Procedural History

Martin contended the termination was without cause but the trial court found otherwise.  The Court of Appeals reversed.

Issue(s)

Was the contract provision compelling the transfer of property without regard to its value enforceable?

Holding(s)

No.

Reasoning/Analysis

The Court found that the only way the stock return provision of the contract can be upheld is if Martin is paid book value or fair market value for the stock.  Upon the transfer of stock to Martin, he held it independently of his status as an employee, making the stock his property.  Public policy against forfeiture protects property from being taken without appropriate compensation.

Judgment/Outcome

The Court affirmed the judgment of the Court of Appeals.