Stewart v. Indian Creek Lumber Co.

SCHOTTKY, J. John C. Stewart, Gerry O. Stewart and Francis E. Hall, as trustees for Southern Humboldt Lumber Company, a corporation whose term of existence has expired, appeal from an order dismissing their third amended complaint after the demurrer of the defendants was sustained with leave to amend and no amendment was filed.

Before discussing the contentions of appellants we shall summarize the factual situation as alleged in the complaint.

The Southern Humboldt Lumber Company was originally incorporated in California in 1902 for a term of 50 years. The charter of the corporation expired by operation of law in 1952. The incorporators, who were the owners of all the capital stock, were Thomas Pollard, Calvin Stewart, John A. McPherson, H. N. Anderson and A. W. Middleton.

In 1939 the Board of Directors of Southern Humboldt consisted of A. W. Middleton, the president, Henry N. Anderson, S. M. Anderson, E. A. Middleton and George L. McPherson. The last three directors had been elected in place of Calvin Stewart and Thomas Pollard who had died. No notice of the election of these directors was ever received by the heirs or representatives of the two deceased directors.

In 1939 Southern Humboldt sold all of its assets, which allegedly were worth over one million dollars, to one A. S. Hoonan, A. W. Middleton’s son-in-law, for the sum of $29,500. As a part of the transaction certain real property was transferred to Hoonan. On August 18, 1939, Hoonan, allegedly acting on behalf of the Anderson and Middleton families, formed a corporation named the Indian Creek Lumber Company, Inc. On October 10, 1939, Hoonan transferred a part of the property received from Southern Humboldt to Indian Creek, and at a later date the remainder. This transfer too was allegedly for the benefit of the Anderson and Middleton families. Later the Andersons became the sole owners of Indian Creek, which in 1948 changed its name to the Andersonia Lumber Company. In 1958 Andersonia was dissolved and all of its assets were transferred to Harold B. Anderson, Eva L. Anderson, his wife, Lucia Anderson Halsey and Edna F. Anderson, constituting a copartnership known as Andersonia Lumber Company.

No notice of any of these transactions was ever sent to the [95]heirs of Calvin and Francis B. Stewart or Thomas Johnson, or to the Wells Fargo Bank and Union Trust Company, as executor of the estate of Thomas Pollard, or to the heirs of Thomas Pollard, though the estates were, and the heirs are, shareholders of Southern Humboldt.