Newby's allegations stunned Claude Trout. Trout insisted that he had made every effort to conserve the partnership's cash, had not diverted any funds to friends to friends or relatives, and had been unaware that he was required to deed the Laurel Valley property to the partnership.Trout then told Newby that he would immediately make the necessary change in the title of the property. Newby cut off Trout in mid-sentence, telling the elderly gentleman that "it was too late" to transfer the property to the partnership. Within minutes, Newby had packed his briefcase and was on his way out the door when Trout stopped him. "What can I do clear this up?" Trout asked. After a brief pause, Newby replied sarcastically, "Pray."
Early the next morning, Harry Moore telephoned Trout and asked that he drive to Sacramento to meet with him, Jay Kent Newby, and Newby's father in the accounting firm's office. Trout agreek to make the short trip to Sacramento. Jay Kent Newby reported that presided over the meeting that afternoon among the four men. Newby reported that he had devised a plan for resolving the situation without any legal action being taken against Trout. Because Trout was obviously "crooked and dishonest," Newby suggested that Moore be allowed to withdraw immediately from the partnership. Newby's plan called for Trout to return Moore's initial cash investment in the partnership and to pay Moore interest on his investment for the prior three years. When Trout asked Moore if that was what he wanted, Moore, who had yet to speak during the meeting, nodded affirmatively.