Lee v. K. W. Steinhart Lumber Co.

• Decision Date: 13 January 1912
• Citation: 66 Wash. 572,119 P. 1117
• Parties: LEE v. K. W. STEINHART LUMBER CO. et al.
• Court: Washington Supreme Court

119 P. 1117

66 Wash. 572

LEE v. K. W. STEINHART LUMBER CO. et al.

Supreme Court of Washington

January 13, 1912

Department 1. Appeal from Superior Court, Thurston County; R. F Sturdevant, Judge pro tem.

Action by Martin Lee, vice president and minority stockholder of the K. W. Steinhart Lumber Company, a corporation, against the K W. Steinhart Lumber Company, B. E. Loomis, its secretary and treasurer, and K. W. Steinhart, president. From a judgment in favor of complainant, defendant Steinhart appeals. Affirmed.

Frank C. Owings and Thos. O'Leary, for appellant.

E. N Steele, for respondent.

FULLERTON J.

This is an action for an accounting. To an understanding of the controversy, a somewhat extended statement of the facts is necessary. It appears that for some time prior to January 23 1906, the appellant, K. W. Steinhart, owned and operated a factory for the manufacture of porch columns and certain other forms of wood products, the factory being located at Bucoda, Wash. On that day he sold a one-half interest in the business to one B. E. Loomis for a specified consideration, and entered into an agreement with Loomis to the effect that he (Steinhart) should conduct the business of the factory at a fixed salary per month, and divide the net profits of the business with Loomis. This relation continued until January i3, 1908, when the respondent, Lee, became interested in the business. At that time a corporation was formed with a capital stock of $12,000, of which Lee, Loomis, and Steinhart each subscribed for one-third. Loomis and Steinhart paid for their shares by turning into the corporation the factory and stock on hand, subject to an indebtedness, as Lee and Loomis understood it, of $1,706.19, and, as Steinhart contends, of $9,214.97, owing by the partnership. Lee agreed to pay for his stock $4,000, and actually paid thereon $3,800.36. On the formation of the corporation, Steinhart was elected president, Lee vice president, and Loomis secretary. Steinhart, however, was put in charge of the business, and managed it, without hindrance or control, until the factory was destroyed by fire on June 28, 1908. The factory and stock were insured, and after the fire Steinhart collected for the corporation from the insurance companies some $13,030.95, and collected from sales of the remnants left after the fire several hundred dollars more. He then paid the corporation's obligations, and reported to the other stockholders that the funds of the corporation were exhausted. Thereupon Lee and Loomis, in their own names and in the name of the corporation, began an action against Steinhart for an accounting. Loomis also instituted an action against Steinhart for an accounting of the partnership business. After issue had been joined in the actions, the several parties secured expert accountants, and had them go over the books of the concern. On their report, Loomis instructed his counsel to dismiss his action for an accounting of the partnership affairs, and also the action brought in the name of the corporation for an accounting of the corporation's business. Such a motion was made by his counsel, but Lee, who was represented by his private counsel, resisted the motion, in so far as it applied to an accounting of the business of the corporation. The court granted the motion, allowing Lee, however, to continue the action in his own name, on behalf of the corporation, against both Steinhart and Loomis. Lee thereupon filed an amended complaint for an accounting against Steinhart, making Loomis...