Estate of Hinds

—On October27, 1967, James Hinds and H. Douglas Gamble entered into a written agreement under which Hinds was to purchase from Gamble 40,000 shares of the stock of Little Revenge, Inc., for $79,000. This constituted all of the stock of Little Revenge, Inc. The only asset of that corporation was a 5 3-foot sailboat named, logically enough, “Little Revenge.” What Hinds actually purchased was the boat and, according to the evidence, the agreement provided for the purchase and sale of corporate stock so that he could avoid paying a sales tax.

The agreement further provided that, on November 3, 1967, Gamble would deliver to Hinds the stock certificate, and Hinds would pay Gamble $44,335.93, with the balance of $34,664.07 to be paid on June 1, 1969.

In October or November 1967 Gamble transferred the boat to Hinds. Subsequently, he also transferred the Little Revenge stock.

On January 8, 1968 Hinds executed a document entitled “Assignment.” This recited that Hinds had given Gamble a promissory note for $34,664.07, and that Gamble wished to have Hinds conditionally assign, as security for payment of the note, 25 shares of the stock of Donkins, Inc., owned by Hinds and held in…