Russek v. Tomark Jet Components, Inc.

DRAPEAU, J. pro tem.

*

Three of the plaintiffs in this case, Marcus I. Russek, T. C. Kegerreis, and Kalman Muller, and the defendant, Charles E. Cook, Jr., started a machine shop. They hoped to establish a paying business; also to secure a lucrative contract to manufacture machine products for the United States government. They all put money into the enterprise.

The remaining plaintiff, Jack Kegerreis, was a son of T. C. Kegerreis. When the shop was first started and while Jack was in Arabia, he sent his father $500 to put into the business. After he came home he put in $2,500 more.

These men held frequent meetings to direct the policy and details of the shop; to run it. They decided to form a corporation “to have a front” for the business. T. C. Kegerreis suggested the corporate name, “Tomark.” It was a combination of his first name and Russek’s first name.

Defendant Cook was president, and plaintiffs Russek and T. C. Kegerreis were vice presidents of the corporation. All three were directors. Russek was in charge of sales, and T. C. Kegerreis was in charge of production, and these two men were paid salaries and allowances by the corporation.

Plaintiffs Muller and Jack Kegerreis were not officers of the corporation, but Jack testified, “We were all in on the thing. ’ ’

No corporate stock was issued to anybody, and no permit to issue stock was procured from the State Corporation Com

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missioner. The books of the corporation denominated payments by the parties as “stock subscriptions.”

Unfortunately, the government contract did not materialize, the business was not a success, and the corporation went into bankruptcy.

Then plaintiffs picked out Cook as a defendant, and sued him for their contributions to the enterprise. Their complaint alleged four common counts for money had and received, and another count on the theory that Cook was liable to them because they paid their money to him for stock in the corporation when no permit from the Corporation Commissioner had been obtained. Concededly, Cook kept none of this money for himself, but put it into the corporation’s bank account as it was paid to him. He also put his own money into the business. He said he considered that a total loss.