Rankin

On December 4, 1967 plaintiffs James N. Rankin and William D. Myers filed a complaint against John G. McCoy (“McCoy”), Fred Bankey, Joseph Tillery, Frebank Company, a corporation (“Frebank”), Frebank Company Profit Sharing Plan, a trust, and Marion W. McCoy. In essence, the complaint prayed for an involuntary dissolution of Frebank and the recovery of “secret profits” said to have been wrongfully diverted by the controlling officers, directors and stockholders. The trial judge ordered the dissolution of Frebank, but denied recovery of most of the claims for secret profits. Plaintiffs have appealed from the judgment, claiming the trial judge awarded too little; defendants McCoy and Tillery also have appealed, claiming the trial judge awarded too much.

The Background

A. The Shares of the Company

Frebank Company was incorporated under the laws of California in July 1950. In conformity with a permit issued by the Corporation Commissioner, 100 shares were issued to Bankey, and 100 shares were issued to one E. S. Rockwell. After a series of transactions not relevant here, by late 1953 McCoy had become the rightful owner of Rockwell’s original shares.

The history surrounding…