Washburn v. Waite

In 1923, Arthur D. Washburn, as an original incorporator, acquired a substantial interest in the Ironwood Auto Service Company. In 1930, he purchased a large block of stock held by Dr. L. O. Houghten, then a majority stockholder. After the declaration of a 66 2/3 per cent, stock dividend, Washburn held 376 of 500 shares of stock outstanding, according to a finding by the trial court. The par value of this stock was $100 per share.

In 1923, at or about the time Washburn first acquired his interest in the company, he and his wife borrowed $5,000 from the Iron National Bank of Ironwood, Michigan,…