Ackel v. Ackel

George Ackel Sr. (Sr.) married Jeanette Ackel (Jeanette) (defendant). Sr. partly owned DPJ, Inc., which operated a drugstore. DPJ defaulted on its rent and closed. DPJ transferred assets worth over $263,000 to Sr. Using the transferred assets as paid-in capital, Sr. formed GJA, Inc., with his son, George Ackel Jr. (Jr.), to operate a drugstore in the same location as before. GJA was taxed as an S corporation. Sr. conducted himself as the owner of GJA, including in his filed tax returns and public representations. Jr. made no financial contributions to GJA, managed the drugstore, and performed certain administrative tasks, like applying for permits. Sr. agreed to GJA’s issuance of a stock certificate to Jr., signed by Jr. as president of GJA, for all the authorized shares of GJA. About a year after GJA’s incorporation, Sr. died. Jeanette was the appointed administrator of the succession. Jeanette had not consented to the alienation of GJA, its stock, or its assets. Sr. had another son, Thad Ackel (Thad). A dispute over the ownership of GJA developed between Jr., on the one hand, and Jeanette and Thad, on the other hand. Jeannette and Thad acted to remove Jr. from his position at GJA. In turn, Jr. sued Jeanette and Thad, asserting ownership of GJA by virtue of Jr.’s stock certificate. The trial court found that Jr. was the owner of GJA and entered judgment accordingly. Jeannette and Thad appealed, challenging Jr.’s ownership of GJA and arguing that GJA was part of Sr.’s estate.