Case Problem with Sample Answer Harry Hoaas and Larry Griffi ths were shareholders in Grand Casino, Inc., which owned and operated a casino in Watertown, South Dakota. Griffi ths owned 51 percent of the stock and Hoaas 49 percent. Hoaas managed the casino, which Griffi ths typically visited once a week. At the end of 1997, an accounting showed that the cash on hand was less than the amount posted in the casino’s books. Later, more shortfalls were discovered.

In October 1999, Griffi ths did a complete audit.

Hoaas was unable to account for $135,500 in missing cash.

Griffi ths then kept all of the casino’s most recent profi ts, including Hoaas’s $9,447.20 share, and, without telling Hoaas, sold the casino for $100,000 and kept all of the proceeds. Hoaas fi led a suit in a South Dakota state court against Griffi ths, asserting, among other things, a breach of fi duciary duty. Griffi ths countered with evidence of Hoaas’s misappropriation of corporate cash. What duties did these parties owe each other?

Did either Griffi ths or Hoaas, or both of them, breach those duties? How should their dispute be resolved? How should their fi nances be reconciled? Explain. [Hoaas v. Griffi ths, 2006 SD 27, 714 N.W.2d 61 (2006)]

—After you have answered Problem 30–6, compare your answer with the sample answer given on the Web site that accompanies this text. Go to www.cengage.com/blaw/blt, select “Chapter 30,” and click on “Case Problem with Sample Answer.”