(CN) - The former president of an energy company and five other investors are legally bound to stock purchase agreements they signed but did not read, the New York Appellate Division ruled.
     In July 2008, Stephen Munson, then chief executive officer of Vulcan Power Co., signed off on a series of contracts following negotiations with institutional investors who planned to plunk $100 million into the energy company, according to the New York County Supreme Court's ruling.
     Munson was in the Bahamas at the time, but had brought an assistant who was equipped with a laptop and fax machine to deal with the paperwork, the ruling says.
     Munson urged five other shareholders to also sign the signature pages so that Vulcan could use the money to close a separate drilling rig purchase deal, the ruling says.
     The former company president made $15 million by selling his stock, Supreme Court Judge Richard Lowe III writes, which he never returned.
     After Vulcan and the institutional investors, which assumed control of the board, fired Munson a few months later, Munson and shareholders Soo Min Fay, Doug Frosh, George Marshall, Cal Mitchell and Tim Shea claimed the agreements were invalid.
     "While acknowledging that they never reviewed the final drafts, they allege that Vulcan fraudulently appended the signature pages to documents containing terms to which they never agreed," according to the ruling.
     The judge, who describes Munson as a "highly sophisticated businessperson having negotiated multiple complex agreements on behalf of Vulcan in the past," writes that neither Munson nor the shareholders asked for copies of the final contracts before they signed the paperwork.
     "[The shareholders] argue that they were under pressure to sign the agreement quickly in order to meet an impending deadline," the judge writes. "However, this pressure was being made by Munson rather than the Plaintiffs."
     Lowe found for Vulcan, writing that the stockholders agreement was valid.
     The appellate division agrees, finding that the shareholders wholly relied on Munson "who, in turn, depended upon the representations of people whose interests were at odds with his and who he believed to be untrustworthy."
     On appeal, the defendants argue that the agreements are unenforceable because they signed "loose signature pages," according to the appellate ruling.
     "A signer's duty to read and understand that which it signed is not 'diminished merely because [the signer] was provided with only a signature page,'" the appellate division writes.
     The appellate division also notes that because the shareholders did not read the documents, they cannot use the "fraud in the execution defense."