Chick v. Tomlinson
Idaho Supreme Court
531 P.2d 573 (1975)
- Written by Sean Carroll, JD
Facts
Carlyle Chick (plaintiff) worked for Lewis Korth Lumber Company (Lewis Korth), which was owned by K. D. Tomlinson (defendants). In 1963, the parties agreed that Chick would be entitled to a bonus equaling 40 percent of Lewis Korth’s net profits above $25,000. Lewis Korth made sufficient profits to allow a bonus for Chick in 1963, 1967, and 1968. In 1968, Lewis Korth earned record profits. In calculating Chick’s 1968 bonus, Lewis Korth for the first time deducted Tomlinson’s salary and a bonus for Tomlinson prior to calculating Chick’s share of the net profits. In addition, Lewis Korth intentionally devalued its lumber inventory by over one million board feet, reducing the company’s gross profits by over $70,000. Chick sued Lewis Korth and Tomlinson, claiming that these accounting practices violated generally accepted accounting principles (GAAP). As to the devaluing of the inventory, Lewis Korth argued that this was a normal business practice in successful years to hedge against lower prices and workers’ inevitable requests for wage increases the following year. The trial court ruled in favor of Chick. Lewis Korth and Tomlinson appealed.
Rule of Law
Issue
Holding and Reasoning (Donaldson, J.)
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