Westover

Prior to November 20, 1944, P. H. Sheedy was sole stockholder of Pacific Magnesium, Inc., the plaintiff, then known as Socal Magnesium, Inc., under certificates issued to him in his own name, as trustee and to another corporation of which he was the sole stockholder. He was also the sole stockholder, either in his own name or -as beneficiary under a trust, of Socal Foundry, to be referred to as Socal. Throughout the year 1944, Sheedy was president and director of both corporations. Frank Gaines had, prior to June, 1944, been an officer, director and general manager of both corporations. On November 20, 1944, he was not an officer or director of either. On that day, an agreement was entered into by Sheedy and Gaines, by which Sheedy sold to Gaines a $14,000.00 note of Socal, held by Sheedy, and all the Socal shares. Gaines paid $56,000.00 in cash and promised to cause Socal to accept $4,000.00 in settlement of a debt of $39,335.07 owed to Socal by the plaintiff.

The Preamble of the Agreement contained the following reference to this obligation:

“Whereas, Socal Foundry claims that Socal Magnesium, Inc. is indebted to it in the approximate amount of Thirty-nine Thousand, Three…