Cottonwood Family Trust et al. v. Cottonwood Holdings, Inc.

Between September 1991 and August 1995, 48,750 shares of Cottonwood Holdings, Inc. common stock were transferred from Wendell branch holdings to Reuben and Silas branch holdings without the corporate authorization required under Article VII of the 1985 Articles of Incorporation (D-001). These transfers appear in the typed 1995-2010 stock ledger (D-003) as completed events with carried-forward opening balances, but are absent from the contemporaneous 1985-1995 handwritten ledger (D-002) and from corporate meeting minutes for the same period (D-005a).

The discrepancy is corroborated from outside the corporate record: Form 706 Schedule B for the Wendell Cottonwood Sr. estate (D-009, filed 2008) reports a closing share count that matches the handwritten ledger D-002 to within rounding, but diverges from D-003 by precisely the 48,750-share delta. Two stock certificates from the disputed period (numbers 7-A-0091 and 7-A-0092) are documented as missing in the 2010 corporate audit (referenced in D-006) and have never been produced or explained.

The 48,750 shares represent approximately 12.4% of pre-transfer outstanding common stock. Applying the 2024 valuation of approximately $230 per share derived from D-008 mineral lease income and D-007 water rights value, the disputed quantum is approximately $11.2M.

This finding does not establish the motive, knowledge, or intent of any individual with respect to the discrepancy. It does not allocate the 48,750-share quantum among specific transferees in the absence of certificates 7-A-0091 and 7-A-0092. The 2003 fire (documented in D-013) destroyed portions of the 1991-1993 handwritten ledger entries, which limits the granularity of the record for those years; the finding rests on the surviving pages and on the post-fire reconstructions reflected in subsequent filings.