Keck v. Keck

PRESTON, J.

This is a family dispute centering around the control and management of a California family corporation organized in 1908 and known as the Keck Company. The father, G. 0. Keck, and the brothers, A. W. Keck and Ralph D. Keck, complete the

dramatis personae.

The latter, however, plays an unimportant role, leaving the father and the other son, A. W. Keck, as the principal actors. Both the father and the son, Ralph D. Keck, have died since judgment in this action and their respective personal representatives have been substituted as parties appellant.

The Keck Company has a capital stock of 1,000 shares of the par value of $100 each and from the date of its organization until about the year 1919 it was an active concern engaged in extensive farming operations. It now owns real estate of the approximate value of $50,000. Since 1919 it

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has been a dormant corporation but at that time it owned a considerable amount of liquid assets other than said real property. Prom its organization until the year 1922' it was under the active management of A. W. Keck. During that year, however, on account of both physical and mental illness he disappeared from the scene of action and remained away until about the year 1926, when he re-appeared, apparently restored in both mind and body. In 1925 his place on the board of directors was filled, and, finding this out in 1926, as above mentioned, unfortunate differences in the family arose.

Prior to his illness, A. W. Keck had become indebted to the corporation for borrowed money, which said sum, together with sums advanced for his account during his illness, aggregated the total sum of $42,018.48. During the same period the father was a responsible member of a co-partnership, known as Keck & Keck, composed of himself and the son Ralph D. Keck, which also became indebted to the corporation in the sum of $99,775.68> and the father individually became indebted to the corporation in the sum of $9,610.67. The said partnership had become practically insolvent and the son Ralph D. Keck had sold to his father his stock in the family corporation, so that at the period here involved the beneficial interest in the stock of said corporation was owned as follows: By the father 461% shares, plus 77 shares; by A. W. Keck, 461% shares. Although the latter’s stock, with the exception of one share, stood in the name of A. W. Keck Company, a corporation, he was the sole owner of the A. W. Keek Company capital stock, so in reality the entire stock of the family corporation was owned by the father and said son, about fifty-four per cent thereof by the father and about forty-six per cent thereof by the son.