The Lost Founder

California's Litton Industries has grown into an $860 million electronics-based business since it was started in 1953 by three refugees from the Howard Hughes empire. Its stock has zoomed from 10-c- a share to $75 (value after splits: $300), making millions for its founders: Charles ("Tex") Thornton, board chairman; Roy Ash, president; and Hugh W. Jamieson, who left in 1958 to found his own company. This year Litton has enjoyed its most substantial growth to date, ceaselessly acquiring new companies to add to its list. One thing Litton does not want to acquire is a fourth founder--and last week it was fighting off that possibility in a court case that is being watched with fascination by California industry.

The man who claims to be an unrecognized founder is Emmett T. Steele, who is suing Thornton, Ash and Jamieson for about $20 million in a Los Angeles court on charges that he was defrauded of his rightful share of Litton stock. Steele, 45, left his job at

Hughes Aircraft about the time the others did in 1953, joined Litton as director of military relations. He charges that he helped the group buy the firm's small predecessor company from Charles Litton, and that an agreement was made to split the founders' stock into five parts--two for Thornton and one each for Jamieson, Ash and Steele. As it turned out, Thornton got at least 144,000 shares, Steele only 10,000. According to Litton's lawyers, Steele was fired in 1959 after telling Tex Thornton that he planned to sue for a bigger share.

Litton's defense claims that Steele was just a minor executive "who helped entertain visiting firemen," wryly concedes only that Steele, a onetime manager of the Beverly Hills Tennis Club, "was and perhaps is a very proficient tennis player." The jury will hear evidence over the next few months from 59 witnesses, including Charles Litton and contentious Noah Dietrich, Hughes's longtime right-hand man (they broke up); the onetime boss of the four men in the case, Dietrich will testify for Steele. The trial is sure to produce a lot of heat, and has already confirmed one standard of modern corporate life. In seeking to prove that Steele was really not an important executive, Litton's attorneys pointed out what they obviously thought was a clincher: Steele did not have a company car, while Thornton did, and Thornton's office was "much larger, better equipped, had private convenience facilities." Translation: Tex Thornton had an executive washroom.

This file is automatically generated by a robot program, so reader's discretion is required.