Stadley v. Pine Island Cooperative Ass'n

203 Cal. App. 2d 390, 21 Cal. Rptr. 418, 1962 Cal. App. LEXIS 2372
CourtCalifornia Court of Appeal
DecidedMay 8, 1962
DocketCiv. No. 6693
StatusPublished
Cited by1 cases

This text of 203 Cal. App. 2d 390 (Stadley v. Pine Island Cooperative Ass'n) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stadley v. Pine Island Cooperative Ass'n, 203 Cal. App. 2d 390, 21 Cal. Rptr. 418, 1962 Cal. App. LEXIS 2372 (Cal. Ct. App. 1962).

Opinion

GRIFFIN, P. J.

Plaintiffs and appellants N. B. Stadley and L. M. Starr brought this action against defendant and respondent Pine Island Cooperative Association, a corporation (hereinafter referred to as Association) for wages claimed to be due them and for money loaned to defendant Association over a period of years. This cause of action is pleaded in several different forms, including open-book account and account stated.

The gist of the action is the claim that defendant owes plaintiff Stadley $7,164 and plaintiff Starr $5,690 for work and labor performed for defendant. In addition, Stadley claims defendant owes him $2,441 for money he loaned the Association.

Defendant answered and denied generally these allegations and set up Code of Civil Procedure, section 339, subdivision 1, as a bar to recovery. A counterclaim alleged that plaintiffs falsely and fraudulently concealed entries in the Association’s books and Association was thereby damaged in the sum of $20,000. This counterclaim was subsequently dismissed.

Defendant Association commenced an unincorporated association after a group of people around Hollywood came to plaintiff Stadley to inquire of Stadley and a health doctor he had associated with him about starting a health enterprise to grow papaya upon property in Florida totaling 84 acres and 71 lots which were subject to a trust deed of considerable size. The modus operandi of the Association was to sell certificates of interest in the corporation for the usual sum of $300. Many were paying monthly on the membership. The membership, when paid, would entitle the purchaser to a right to then buy a lot of his own selection. Apparently, no lots were purchased in the Florida tract, but members were supposed to be allowed to select one in a newly acquired Riverside County tract at some future date. By personal efforts and labor performed for the Association by members, certain credits were built up to apply on their accounts. Many hours of credit due these members is indicated on the books of the Association. It is also indicated that the Association operated at a loss during this entire period. Their equity in the present assets of the corporation is problematical.

Stadley handled the operation for some time. Payments from members fell off and the trust deed on the Florida property became delinquent. That land was sold in August 1952 and land consisting of about 200 acres was purchased in Southern California near Riverside, which land also was [392]*392subject to a trust deed. Stadley and Starr were business partners, being formerly associated in the medical appliance business and later in a cement block business in Riverside. After the unincorporated association was formed with Stadley as chairman of the governing committee and Starr as secretary-treasurer, the governing committee met on April 23, 1949, to authorize compensation for persons doing work on behalf of the Association. The minute order states, after fixing compensation for other employees: “Other employees shall be employed on an hourly basis. The amount to be paid to them shall not exceed $2.00 per hour and shall be approved by the committee or by a Board of Directors. ’ ’

After the corporation was formed, plaintiffs were elected to the board of directors and on March 30, 1950, they were elected to office in the corporation, Stadley as president and Starr as secretary-treasurer. In the years following, Stadley kept all the corporate records and made the entries himself. Exhibit 3 shows that on March 30, 1950: ‘‘The matter of compensation for officers other than Mr. Haering was fixed at the rate of $2.00 per hour, for actual services rendered, and they were instructed to keep a record of time expended for the Corporation. The payments to be made in cash or credit on share and lot accounts.”

All the financial records of the corporation were kept by Stadley in a “Greenwood Standard Bookkeeping Forms” book and this was the only book in which the financial records were kept. The secretary-treasurer admitted that she kept none of the financial records of the corporation. Throughout Stadley’s handling of the finances of the corporation all records are somewhat vague and his methods were quite unusual. Many disbursements were made by Stadley in cash, with no apparent authorization from the corporation. Under Stadley’s and Starr’s management, payments became delinquent on the Riverside property and parcels of it were sold to meet payments on the trust deed and for the operation of the business, including expense accounts for Stadley. Apparently, many of those who bought or were making monthly payments on their memberships in the Association became uninterested. A general meeting of the stockholders was called. Plaintiffs were removed as officers of the corporation and others were elected and took over its operation. Upon removal of plaintiffs, demand was made by the new officers for the corporation’s books and they were ultimately turned over to the Association’s auditor for examination. Plaintiff [393]*393circulated letters to the entire membership claiming large sums were due them for back wages and claimed loans made by Stadley to the corporation. This action followed to recover these amounts. Plaintiffs testified at the trial and certain books were received in evidence. Much of the record consisted of plaintiffs’ testimony and the entries made in the books respecting their claims.

The corporation books themselves showed no entry indicating the Association owed Stadley or Starr any amount for labor or services as an outstanding obligation of the corporation. Stadley kept a private five-year diary from January 1, 1947, to January 1951. Included among his personal notes were items such as: “Home all day,” “Worked on bookkeeping—eight hours,” or “Interviews.” He summarized the hours indicated in the diary and otherwise and fixed it at over 2,000 hours of work; he testified that between January 1955 and December 1957 he did 809 hours of work; that over a period of nine years, and between 1949 and 1958, he spent one-third of the hours on the accounts of the corporation.

Mrs. Starr figured her time spent in attending meetings, showing people about the health-food program and taking papayas to meetings to demonstrate the program, amounted to 2,845 hours. She claimed her private book showed this number of hours and her first record of work was in 1949 and it lasted until 1957.

In accounting for their failure to have recorded on the Association’s books the amount owing them, Mrs. Starr testified that any person who worked for the corporation was supposed to be “paid at a later time” when the corporation could afford to do so, and that no money was paid her for her time, only expenses.

Plaintiffs produced minutes of a meeting on April 8, 1951, reciting that at a directors’ meeting it was suggested that the board members submit their claims for past services rendered to the organization; that certain ones had rendered a report and they were ordered allowed; that President Stadley had been keeping daily records of the number of hours put in for the organization previous to incorporation and afterwards and that the board members knew of the kind and amount of services he had rendered and he asked the board to fix the amount; that after some discussion, it was agreed that both he, as president, and Mrs. May (Mrs. Starr’s former name), as secretary, should be allowed the maximum of $2.00 per hour, beginning April 10,1949, and continuing until changed, [394]*394either by action of the board or by the membership.

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Related

Anderson v. Associated Investment Co.
219 Cal. App. 2d 206 (California Court of Appeal, 1963)

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Bluebook (online)
203 Cal. App. 2d 390, 21 Cal. Rptr. 418, 1962 Cal. App. LEXIS 2372, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stadley-v-pine-island-cooperative-assn-calctapp-1962.