Court Opinion

ID: 6910226
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:19:32.320168+00
Date Added: 2024-06-11T16:06:29.582730
License: Public Domain

ROSSMAN, J.,
dissenting.
Prior to 1953 one Harold Eykelbosch, now deceased, and Prank M. Penepacker, .the decedent whose estate is the plaintiff in this case, were the owners of all the corporate stock of the two corporations which are mentioned in the prevailing opinion. Each of the two men owned one-half of the stock. In April of 1953 Eykelbosch died and shortly the corporations redeemed all of his stock. When that had been done Penepacker’:s stock became the sole outstanding stock and represented sole ownership of the two corporations. In order to obtain funds with which to redeem the stock held by Eykelbosch’s estate it became necessary to obtain a sizeable bank loan.
After Penepacker became sole owner of the stock of the two corporations he attempted to sell the stock, the corporations, or their assets. Negotiations to that end were under way when death overtook him in 1957. Prior to his death he and Pacific Building Materials Company—one of the two aforementioned corporations—entered into the agreement mentioned in the prevailing opinion which required Pacific Building Materials Company to redeem enough stock held by Penepacker and discharge the obligations attendant upon Penepaeker’s death—such as administration, funeral, tax, and similar liabilities. Since he had been endeavoring to sell the assets of the corporations, partial liquidation as attempted by the agreement was natural and would aid in the sale of the businesses. The fact that the agreement was entered into in good faith and for an understandable purpose surely should be persuasive as to its nature.
After Penepacker’s death the assets of the two corporations were sold and the corporations were dis*490solved. They no longer exist. Without further recital of the facts, I express my belief that the redemption of the stock .should be given effect as .a distribution made in liquidation and not a dividend.
I dissent.