Morrison v. Jaksick

SCHOTTKY, J. Samuel Jaksick has appealed from a judgment in favor of Fred W. Morrison, as executor of the estate of William I. Morrison, deceased, in an action brought by the executor to recover the sum of $68,998.35, allegedly the balance due on the sale of 6,250 shares of stock of Goose Lake Box Company, a Nevada corporation.

It was alleged in the complaint and found by the court that on August 30, 1947, W. I. Morrison and Lillian Morrison, his wife, sold their 6,250 shares of the common stock of Goose Lake Box Company to defendant Samuel S. Jaksick for the sum of $101,171.87, and received the sum of $4,180.48 on account. The court found also that on September 2, 1947, Jaksick, representing himself to be the seller, and as the seller, agreed to sell to the Loyola University Foundation all of the issued and outstanding stock of the Goose Lake Box Company, including the 6,250 shares purchased by Jaksick from the Morrisons, and the stock of several other corporations. The agreement provided that the foundation would lease the assets of the acquired corporations to an operating company which would pay rent to the foundation, and the foundation would in turn pay the greater portion of the funds to a trustee. These rental payments were to be the source of the funds which would be used to pay for the acquired properties. The agreement also provided that the seller “has full right and authority to sell and transfer all of said shares . . . free and clear of all liens or encumbrances. ...”

The court found further that in order to assure the payment of the balance of $96,991.39 due the Morrisons on the sale of their stock Jaksick on December 17. 1947, made an assignment to the Morrisons wherein the First National Bank of Reno, as escrow agent under the aforesaid agreement of September 2, 1947, was instructed to pay to the Morrisons 1.4453 per cent of the moneys received by said trustee under the said agree[178]ment of September 2, 1947, until the full sum of $96,991.39 was paid. The final paragraph of the assignment stated that it was made to the Morrisons for the sale of their stock.

It appears from the record that after the agreement between Jaksiek and the foundation was consummated the foundation leased the property acquired to White Pine Lumber Company, a corporation, in which Jaksiek was the controlling stockholder. In the beginning of 1952 the Director of Internal Revenue audited the returns of White Pine and of Jaksiek. A large tentative tax liability was indicated as a result of the audit. White Pine and the foundation agreed to impound all further rentals until the tax status of the transaction could be determined.