Mlinarcik v. E.E. Wehrung Parking, Inc.

620 N.E.2d 181 (1993)

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Nature of the Case

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Facts

Edgar started EE. Wehrung Parking, Inc. (D) in 1948. D held a lease on a parking garage in Cleveland. The sole operation of D is the subleasing of the garage to another company for an annual rent of $41, 600 per year. There were only 150 shares outstanding in D. Edgar died and his son, Robert, took over. Robert owned 111 shares, Marilyn owned 9.5, Shirley owned 28.5 and 1 was owned by Esther Pell. Robert and Marilyn were married. Marilyn and Shirley were placed on the board of directors and paid directors' fees, and Robert and Marilyn were paid salaries. From 1967 to 1982, Marilyn got a salary of $3,900 which was increased to $7,200 per year in 1982. Marilyn was the secretary and worked a total of 30-35 hours per year. Robert was paid $10,800 per year for a once a month visit to the garage, the preparing of payroll checks to himself and his wife, and other minor administrative tasks. An expert testified at trial that the value of the serviced performed by Robert and Marilyn was from $567 to $2000 per year. Shirley testified that she got director's fees but that no shareholders' or directors' meetings were ever held and did not know what a director was supposed to do. P sued to stop these goings-on. The trial court ruled that the compensation was not excessive.