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Initially, UPE had three stockholders, Stewart, Kelso Vernor
(Vernor), and Joseph Busch (Busch). Their collective initial
capital contribution to UPE was $1,000, with each of the three
shareholders receiving one-third of the common stock. Mickey
Goolsby (Goolsby) was hired as UPE’s president to run the day-to-
day operations.
Vernor was a demolition expert, and before UPE’s
incorporation, he had been awarded a salvage contract by Dow
Chemical Co. (Dow). Vernor contributed the Dow contract to UPE.
Under the contract, Dow agreed to exchange equipment and its
accompanying paperwork and support parts for UPE’s removal of the
equipment from Dow’s premises. The Dow contract provided UPE
with an inventory of used equipment. Busch, who was familiar
with the salvaged equipment, was responsible for cataloging the
parts and machinery. In addition, Busch had a working knowledge
of the international markets for used equipment, and he was to
seek the highest price for UPE’s salvaged equipment.
Stewart was responsible for securing capital for UPE. As
petitioner’s sole shareholder, Stewart directed petitioner to
make a number of advances of working capital to UPE. Some of the
advances came from petitioner’s operating capital, but most
advances were from the proceeds of petitioner’s loans from
Grocers. Stewart personally guaranteed the only loan that UPE
had made directly with Grocers.
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Last modified: May 25, 2011