Ownership Without Certificates: Paid‑In Shares and Corporate Records Determine Stock Interests Under Guam’s Clear‑Error Review

Introduction

In Franklin J. Gutierrez, Individually and as Co‑Administrator of the Estates of Jose T. and Florence S. Gutierrez v. Joe & Flo’s, Inc., 2025 Guam 4, the Supreme Court of Guam affirmed a bench‑trial judgment declaring that the Estates of Jose and Florence Gutierrez own a 24% interest in Joe & Flo’s, Inc., represented by 78.75 shares, and ordering the corporation to issue a stock certificate to the Estates. The dispute arose in a closely held, family‑run corporation founded by six siblings, where no physical stock certificates were ever issued and corporate formalities were minimal.

The central issues were: (1) whether the trial court clearly erred in finding that the Estates hold a 24% ownership interest in the corporation; and (2) whether the court could order the issuance of a certificate representing that interest, despite the corporation’s practice of not issuing certificates. At oral argument, Joe & Flo’s withdrew earlier challenges to subject‑matter jurisdiction and Franklin’s authority to bring suit, leaving only the merits of the ownership determination for appellate review.

The opinion is notable for three interlocking propositions:

• In the absence of stock certificates, ownership may be established by substantial evidence from corporate records and conduct, including board minutes, deeds documenting consideration, annual reports, and testimony.
• Where the evidentiary record shows that a percentage interest was set and shares were issued in exchange for property, courts may compute current ownership using paid‑in (issued and consideration‑backed) shares rather than merely subscribed (promised) shares.
• Appellate courts will not reweigh such factual determinations absent clear error; a plausible account grounded in substantial evidence suffices to affirm.

Summary of the Opinion

The Court affirmed the Superior Court’s finding that the Estates of Jose and Florence own a 24% interest in Joe & Flo’s, represented by 78.75 shares, and directed the corporation to issue a certificate for those shares. The Court emphasized the highly deferential clear‑error standard for reviewing factual findings after a bench trial. It held that substantial evidence supported the trial court’s conclusion:

• 1973 board minutes approved issuance of 78.75 shares to the parents at $10 per share, expressed an intent that they hold a 24% interest, and granted them the right to maintain that percentage.
• On the same day, Jose and Florence transferred four parcels of real property to the corporation as consideration for those shares, as reflected in the deed.
• The corporation’s 2009 Annual Report, signed by the long‑time president, listed Jose and Florence as owning 78.75 shares.
• Testimony from multiple insiders established that no shareholder ever purchased additional shares.
• A 2022 Annual Report that omitted the parents’ shares and listed large “subscribed” amounts for each sibling was credibly explained as an oversight and, in any event, did not reflect paid‑in ownership.

The Court accepted the trial court’s calculation that 78.75 shares out of 328.75 paid‑in shares equates to approximately 23.95%, rounded to 24%. It rejected the corporation’s proposed revision to 74.75 shares and concluded that the record did not leave a “definite and firm conviction” that the trial court erred. The dispositive order: “A stock certificate for 78.75 shares shall be issued to the Estates of Jose T. and Florence S. Gutierrez.”

Analysis

1) Precedents and Authorities Cited

• Jurisdiction: 48 U.S.C.A. § 1424‑1(a)(2); 7 GCA §§ 3107(b), 3108(a). These provisions confirm the Supreme Court of Guam’s jurisdiction over appeals from final Superior Court judgments.
• Standard of Review—Findings After Bench Trial:
  • Fargo Pacific, Inc. v. Korando Corp., 2006 Guam 22 ¶ 21: Findings of fact after a bench trial are reviewed for clear error.
  • M Electric Corp. v. Phil‑Gets (Guam) Int’l Trading Corp., 2016 Guam 35 ¶¶ 28, 41: A finding is clearly erroneous when not supported by substantial evidence and the appellate court is left with a definite and firm conviction that a mistake was made.
  • Yang v. Hong, 1998 Guam 9 ¶¶ 6–7 (quoting Ninth Circuit authority): If the trial court’s account is plausible in light of the entire record, it may not be reversed even if the appellate court would have weighed the evidence differently.
  • SEIU v. Fair Political Practices Commission, 955 F.2d 1312, 1317 n.7 (9th Cir. 1992): Emphasizes deference to plausible trial court accounts of evidence.
  • People v. Chargualaf, Crim. No. 88‑00068A, 1989 WL 265040, at *2 (D. Guam App. Div. Sept. 26, 1989): The narrow test is whether the lower court could rationally find as it did.
  • Craftworld Interiors, Inc. v. King Enterprises, Inc., 2000 Guam 17: Reinforces the deference appellate courts give to trial‑level factfinding.
  Collectively, these authorities framed the appellate posture: the question was not who should win anew, but whether the trial court’s findings were sustainable on the record.

2) The Court’s Legal Reasoning

The Supreme Court’s reasoning follows a straightforward arc grounded in deferential review and the weight of corporate records:

• Factual finding at issue: Whether the Estates own a 24% interest in Joe & Flo’s, represented by 78.75 shares. This is quintessentially a question of fact, not law, and thus subject to clear‑error review.
• Substantial evidence supports issuance and percentage:
  • Board minutes contemporaneously recorded the issuance of 78.75 shares to the parents at $10 per share, stated an intent that they hold a 24% interest, and contemplated the right to purchase to maintain that percentage. Contemporaneous minutes in closely held corporations are probative of both issuance and corporate intent.
  • The deed conveying four parcels as consideration corroborated a non‑cash, paid‑in capital exchange. That the deed referenced “love and affection” in addition to the property did not detract from the legal sufficiency of the property transfer as consideration for shares.
  • The 2009 Annual Report—signed by the corporation’s president—listed the parents as holding 78.75 shares, functioning as a corporate admission consistent with the minutes and deed.
  • Witnesses testified uniformly that no shareholder ever purchased additional shares. This testimony neutralized claims that later “subscriptions” or paper adjustments altered ownership.
• Paid‑in versus subscribed shares: The trial court expressly found that the 24% figure was calculated using the total number of shares paid for (i.e., issued for valid consideration), rather than shares merely “subscribed.” Because the record lacked evidence of additional consideration for new issuances, the paid‑in denominator remained 328.75 shares (250 initial sibling shares + 78.75 parental shares). On that denominator, 78.75 shares legally and mathematically support a 24% stake (rounded from 23.95%).
• Annual report irregularities do not erase ownership: The 2022 Annual Report that omitted the parents’ shares and listed large “subscribed” amounts for each sibling was explained as an oversight by the signatory and, critically, lacked evidence of consideration paid for putative new issuances. The Court declined to treat those paper entries as altering the paid‑in ownership structure.
• Remedy—Issuance of a certificate: A stock certificate memorializes, but does not create, ownership. The Court affirmed the order to issue a certificate for 78.75 shares in the Estates’ name, aligning documentary formalities with the proven ownership interest.
• Arguments waived: Joe & Flo’s withdrew its jurisdictional and authority arguments at oral argument; the Court did not address them. The probate court’s earlier statement that it lacked jurisdiction to decide the corporate ownership dispute was noted, and the Supreme Court expressed no opinion on its correctness.

3) Doctrinal Clarifications and Practical Impact

Although the decision is framed as an application of deferential review, it provides important clarifications for Guam corporate practice—especially among closely held family corporations:

• Ownership can be proved without certificates: The absence of stock certificates does not defeat ownership where substantial evidence—board minutes, deeds, and corporate filings—shows that shares were issued for consideration. Courts will compel issuance of certificates to reflect existing rights.
• Paid‑in capital controls for percentage calculations: When computing percentage ownership, courts may use the total number of shares actually issued for consideration—the paid‑in denominator—rather than subscribed or aspirational totals that do not reflect capital contributions. This is especially salient where later “subscriptions” lack evidence of payment or property contribution.
• Corporate filings are admissions, not conclusive reallocations: Annual reports can be powerful admissions of ownership; however, they do not, by themselves, alter ownership if unsupported by issuance formalities and consideration. An omission in a later report does not extinguish previously issued and paid‑for shares.
• Board intent matters when anchored to issuance and consideration: Express statements in minutes about intended percentage ownership can carry weight, particularly when implemented by a contemporaneous issuance and supported by consideration, and when subsequent dealings do not alter the capital structure.
• Deferential appellate posture: Parties challenging trial‑level ownership findings must grapple with a steep standard. Unless the whole record leaves the appellate court with a firm conviction of mistake, plausible trial findings grounded in substantial evidence will stand.

4) How the Evidence Fit Together

• 1973 Organization and Par Value: Six siblings initially purchased 250 total shares at $10 per share. This established the initial paid‑in denominator.
• Parental Issuance and Consideration: The board then approved 78.75 shares to the parents at $10 per share, expressly intending a 24% stake, and the parents immediately transferred four parcels to the corporation as consideration—classic paid‑in non‑cash capital.
• Stable Denominator: With no later paid‑in issuances, the denominator remained 328.75 paid‑in shares (250 + 78.75). The trial court’s rounding to 24% was accepted as a reasonable expression of 78.75/328.75.
• Corporate Acknowledgment: The 2009 Annual Report signed by the president listed 78.75 parental shares, confirming the issuance and ownership long after the fact.
• Paper Anomalies Disregarded: The 2022 report’s omission of the parents’ shares and inflated “subscriptions” for siblings did not carry weight absent proof of consideration and issuance; it was credibly deemed an oversight.

5) Practice Pointers and Anticipated Effects

• For closely held corporations:
  • Document issuances contemporaneously in board minutes and keep a stock ledger. If certificates are not issued initially, expect a court to compel issuance later to align records with reality.
  • Do not treat annual report entries as a substitute for actual issuance. Subscriptions unbacked by consideration will not dilute existing owners.
  • If the board intends to grant “percentage maintenance” (preemptive) rights, memorialize the right and the mechanism for future offerings; this case did not require enforcement of that right because no later issuances were proved.
• For estates and fiduciaries:
  • Probate courts may decline to resolve corporate ownership validity; be prepared to bring a separate civil action, as Franklin did, to adjudicate corporate rights.
  • Holographic wills and probate orders can establish authority to act with respect to corporate shares, but corporate ownership turns on corporate records and consideration, not on probate alone.
• For litigators:
  • Expect appellate courts to affirm plausible trial findings grounded in minutes, deeds, annual reports, and consistent testimony. To reverse, you must show the overall record leaves a firm conviction of error.
  • Where ownership percentages hinge on math, pin down the denominator (paid‑in outstanding shares) and be prepared to show why “subscribed” numbers should or should not count.
• Policy signal: The opinion implicitly encourages formal corporate housekeeping in Guam. Courts will honor the economic reality of paid‑in capital and will not allow later, unsupported paper revisions to wash out earlier, consideration‑backed issuances.

Complex Concepts Simplified

• Clear‑error review: An appellate standard deferring to the trial judge’s factual findings. A finding stands if supported by substantial evidence unless the appellate court is firmly convinced a mistake occurred.
• Substantial evidence: Enough relevant evidence that a reasonable factfinder could accept to support a conclusion—even if other evidence points the other way.
• Paid‑in (issued) shares vs. subscribed shares: Paid‑in shares have been issued in exchange for consideration (cash or property) and are counted in ownership. Subscribed shares reflect a promise to purchase; without payment and issuance, subscriptions do not change who owns what.
• Stock certificate: A document evidencing share ownership; it does not create ownership. Courts can order issuance to align paperwork with proven rights.
• Annual report: A corporate filing that may reflect shareholdings and officers. It can be persuasive—but is not dispositive—evidence of ownership; inconsistent filings unsupported by issuance and consideration carry limited weight.
• Holographic will: A handwritten will. In this case, it disposed of the decedents’ corporate interests, and probate orders recognized Franklin’s authority, but corporate ownership was adjudicated in a civil action based on corporate evidence.
• Preemptive or “right to maintain percentage” rights: The board stated parents could buy more shares to maintain 24%. This case did not require enforcement of that right because no later paid‑in issuance occurred.

Conclusion

2025 Guam 4 reinforces that, under Guam law, stock ownership in a closely held corporation can be established—and judicially protected—without stock certificates where substantial evidence shows an issuance for consideration. The Supreme Court’s deference to the trial court’s plausible factual synthesis—anchored by board minutes, a deed of property transfer, consistent testimony, and corroborating annual reports—confirms that paid‑in capital governs ownership percentages, not later paper “subscriptions” unmoored from consideration.

For Guam’s corporate bar and business community, the opinion offers clear guidance: maintain accurate records of issuances and consideration; do not rely on annual report adjustments to retroactively recast ownership; and expect courts to harmonize corporate paperwork with economic reality. The Court’s directive to issue a certificate for 78.75 shares to the Estates not only resolves this family corporation’s dispute but also sets a practical template for curing long‑ignored formalities while respecting proved ownership rights.