Chapter 28-5. C.E. Stumpf & Sons, Inc., was formed to conduct a masonry and gene

Question

Chapter 28-5.   C.E. Stumpf & Sons, Inc., was formed to conduct a masonry and general contracting business. The corporation was owned in equal shares by Stumpf and his two sons, who had previously operated the same business as partners. Hostility between the two sons grew so extreme that one, Donald, ended contact with his family and was allowed no say in the operation of the business. After Donald’s withdrawal from the business, he received no salary, dividends, or other revenue from the company. He brought suit seeking involuntary dissolution of the corporation. Should the court of appeals of California uphold the trial court’s dissolution order? Why or why not? [See: Stumpf v. C.E. Stumpf & Sons, Inc., 120 Cal. Rptr. 671 (CA).]

Explanation / Answer

Answer :- Involuntary dissolution is a process where the court separates the conflicting partners by intiating a sale of ownership from one to the other or by intiating a sale of the entire business. A involuntary dissolution can be intiated by the following person i.e 1/2 of the directors of the company or shareholders holding 1/3 or more of the stock can sue for involuntary dissolution. Involuntary dissolution is the last resort after all other ways of ending the dispute is not available.

In Stumpf V. C.E Stumpf & Sons Inc the court should uphold the trial court decision based on the evidence that Donald has no say in the operation of the business as well as he has not received no salary, dividends, or other revenue from the company.

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