answer

1. Exclusion of Allen's Testimony

Allen's testimony was logically relevant to prove that Owen intended to give Blackacre to Allen as a graduation gift, and probative of Allen's ownership of Blackacre, which is the central fact in dispute.

However, while Ellen's testimony is reliable since Alien heard the statements himself, Alien is an incompetent witness under the Dead Man's Rule. This rule holds that an interested witness, such as Alien, is incompetent to testify against a dead person 's estate concerning a communication with a deceased declarant. However, some jurisdictions and the federal rules have abolished this rule and in such jurisdictions, the court's order excluding Alien's testimony was improper.

Alice' testimony is hearsay, because it was made out of court and is being offered to prove that Owen gave Blackacre to Allen. Allen will successfully argue that Owen's statement is admissible for a non-hearsay purpose, to show the existence of operative facts of the conveyance, and to show Owen's intent and state of mind, which are facts in dispute. assuming that Alien's testimony is hearsay, it would qualify as a party admission. Although Owen is deceased, his Estate stands in his shoes and Owen's statement, which admits and acknowledges ownership by Alien, constitutes a vicarious admission. Dot make a statement giving away, his property unless It were true.

If the Dead Man's Rule is held not to apply, Aliens testimony is admissible under either hearsay exception.

2. Estate of Owen v. Allen

Statute of Frauds- Oral Coveyance

Any argument by Allen that Blackacre was conveyed to him by virtue of Owen's statement, indicating his intention to give Blackacre to Allen as a graduation gift, should be rejected due to non-compliance with the Statute of Frauds. The Statute requires that all conveyances concerning land be in writing and holds an oral contract for land enforceable only where part performance, such as payment for the land coupled with possession, takes the agreement outside the Statute of Frauds.

Depending on the requirements of the particular jurisdiction, Allen may prevail, since he possessed Blackacre since 1994, except for three years beginning in 1998, and added valuable improvements to the land, including a cabin and barn, and fencing. While Allen did not pay anything for the land, his expenditures in reliance on Owen's statements were substantial, and if Allen's testimony is found both admissible and credible, Allen should prevail and the oral agreement enforced.

Adverse Possession

Allen will alternatively argue that he acquired the land through adverse possession. Allen's possession was open and notorious, as he built structures and fences on the land and openly raised sheep which grazed on the entire estate. Sheep are not wild creatures. Their presence would place the actual owner on notice that another was openly using the land for his own purposes. Allen never made any attempt to conceal his possession of Blackacre, although Owen's estate may argue that because Blackacre was heavily wooded and located 50 miles from the City, Owen could not have had actual notice of Allen's possession. But given the fact that Allen occupied the land for 10 years and Shepard leased the land from Allen, coupled with the fact that Allen paid taxes for 10 years, Allen would clearly prevail on this issue.

Allen's possession was also continuous. Except for the three year period when Allen leased Blackacre to Shepard, Alien occupied Blackacre In the manner described above for 10 Years, which is the statutory period required in the adverse possession statute. Shepard’s possession of the kind pursuant to a lease with Allen will be attacked on to the two periods of time between 1994 and 1998 and between 2001 and 2007, when Allen occupied Blackacre, since Alien did not surrender the land to Shepard and maintained control over the property. Even assuming that Alien's possession of Blackacre was interrupted by his lease of the. land to Shepard, Alien occupied Blackacre for 10 years, the period required under the statute. Thefinal requirement is that Alien's possession Qf tbe land is hostile. This factor possesses some difficulty since it is position that he received the land as a gift from Owen in 1994, and his possession of the land was apparently known of and j that in 2000, Owen conducted a survey in preparation of a recreational subdivision on Blackacre s뇨year. after Owen allegedly I gave tbe land to Allen as a graduation 锁. This act Is entirely inconsistent with Owen's previous act of giving Blackacre to Allen and would be a strong indicator that Ellen's occupation of Blackacre was in fact hostile. .1 These factors, both individually and together, favor Allen's acquisition of Blackacre on an adverse possession theory- and thus, the court erred in finding in favor of Owen's estate.

1. Can Exco (“E”) rescind the transaction?

There are three independent theories pursuant to which E could attempt to rescind the transaction with Art’s family (the “Sellers”).

Breach of fiduciary duty

Where a director has a personal interest in a transaction which his corporation is considering, he is ordinarily obliged to (1) disclose that interest to the entire board of directors, (2) refrain from voting upon it, and (3) disclose any information indicating that the transaction may not be in corporation’s best interests. A transaction involving a director’s immediate family would probably constitute a “personal” interest. While it is unclear from the facts whether or not Art believed the transaction was not in E’s best interests, he clearly failed to meet the initial two requirements.

It will be difficult to for Art to successfully claim that the transaction was subsequently impliedly ratified by a majority of the board (e.g., when Bob, Curt and Don advised him that they approved of the transaction), since (1) there was never a formal vote upon it, (2) he and Bob never disclosed to the other members of the board that the Sellers were members of Art’s immediate family, and (3) there is no clear majority in favor of the purchase if Art’s vote is discounted. Of these problems, (2) is the most important, since ratification requires a full disclosure of the underlying facts, including the facts that demonstrate the conflict.

Lack of authority

The President ordinarily oversees the day-to-day operations of a corporation. While this officer usually has the power to bind the corporation in routine transactions, a five million dollar acquisition (constituting 10% of E’s assets) would probably not be within this implied authority.

SEC Rule 10b-5

Under SEC Rule 10b-5, it is unlawful to employ any scheme to defraud another in connection with the purchase or sale of a security. If it could be shown that (1) Art had reason to know that the Yang stock was overvalued, or (2) Sellers knew (or should have known) that Art was effectuating the sale for the purpose of paying them an excessive amount for their Yang shares, the transaction is probably violative of SEC Rule 10b-5.

Under recission (1) E would tender the Yang stock back to the Sellers, and (2) the Sellers would return the purchase price of the shares to E.

Sellers could contend that rescission (an equitable remedy which is discretionary with the court) is not appropriate, since (1) laches is applicable