14 P.2d 821 | Cal. Ct. App. | 1932
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *552 Annie W. Stimson having been declared incompetent, pending this appeal, the guardian of her estate has been substituted in her stead. For the sake of clarity, she will continue to be called the respondent.
Respondent recovered judgment for the return of her paid subscription for appellant's stock upon the theory that the subscription agreement was void because it included the *553 sale of 700 shares of common stock, which, under the permit of the corporation commissioner, was not to be sold but was to be issued in escrow for the promoter of appellant, as well as 3,040 shares of preferred stock, which such permit authorized appellant to sell. Appellant disputes the evidence's support of the finding that the sale included such common stock in addition to such preferred stock. Respondent signed a subscription agreement in the following form: "I hereby subscribe for and agree to purchase 3040 shares of . . . Preferred stock of" appellant "and agree to pay therefor $10.00 per share . . . in cash with this subscription . . ." At the same time, appellant's agent signed and delivered a writing, prepared by himself and reading as follows: "Received of Annie W. Stimson . . . check for the sum of Thirty Thousand Four Hundred Dollars on account of his (sic) subscription for 3040 shares of . . . Preferred shares of said Company on the terms set forth in his (sic) subscription contract . . ." Underneath his signature, the agent wrote "and seven hundred shares of Common". Also, at the same time, the agent signed and delivered the following instrument, prepared by respondent's secretary: "Received of Annie W. Stimson . . . 152 shares of . . . the Anaheim Sugar Co. . . . for which I agree to deliver to her 3040 shares of the preferred stock and 700 shares of the common stock of the" appellant "or I agree to return the sugar stock received". It is undisputed that the agent received the sugar stock and not the check and that he sold this stock for cash several days later as previously arranged by the parties. No question arises as to the agent's authority.
[1] In support of the finding, respondent, invoking the rule of construction declared in section
[3] Citing Merkeley v. Fisk,
[4] The testimony of respondent and the agent disclosed that, when several days before the execution of the documents he solicited her subscription for preferred stock, she demanded common stock, as an incentive therefor; that he told her, according to his version, that Charles G. Anthony, the president and promoter of appellant, owned it, and, according to her version, that the common stock was owned by the promoters; that he would have to obtain Anthony's approval before he could give her such common stock; and that several days after, he returned and the documents were executed. The reverse of the subscription agreement fully set forth the permit, from which it clearly appears that all common stock was issued in escrow to Anthony, who could only sell it upon further permission of the corporation commissioner. In view of the finding that such permit was exhibited to her and the statement in the subscription agreement that such permit was so exhibited and that she had read the same, it must be taken as true that she knew that Anthony owned the common stock. (Gridley v. Tilson,
[5] Subsequently, on the same day, the agent delivered to respondent two letters. In the first, appellant, by Anthony as its president, acknowledged the subscription for the preferred stock in the form signed by respondent. In the second, Anthony, personally, informed respondent that he was owner of the common stock, that it was escrowed and could only be transferred upon application to the corporation commissioner and that he guaranteed that he would so apply. Appellant argues that these letters should be considered with the first three documents in arriving at the real agreement of the parties. They cannot be so considered because, prior thereto, the transaction had consummated in a contract. [6] Neither can they be considered, in interpreting the contract, as evidence of the construction that the parties had placed upon its terms because one was written by an outsider and the other was written by only one party thereto. (P. Pastene Co. v. Greco Canning Co., 268 Fed. 168.) Furthermore, each is a self-serving declaration in favor of and not against the writer. [7] Appellant also argues that the letters evidence a substitution of Anthony for appellant as debtor for the common stock. "To accomplish a novation by the substitution of a new debtor the substitution must be with the consent of the creditor and the parties must intend that the obligation of the original debtor be released." (20 Cal. Jur. 250.) The record is silent as to such consent or intent on the part of respondent.
[8] The objection that the evidence does not support the finding that the sale and delivery of the common stock was a material consideration for the contract is answered by appellant's stipulation that respondent would testify that she would not have signed the subscription agreement if she had known she was not to receive the common stock mentioned in the other two documents.
[9] Notice of rescission was served eight and one-half months after the date of the contract. In the meantime she made numerous futile attempts to obtain the common stock from Anthony. She also attended the annual stockholders' *557
meeting. These facts, appellant claims, prove laches, debarring her from relief. [10] Appellant further contends that relief should be denied because the parties, in contracting for the sale of the common stock in violation of the permit, were equally guilty. Neither of these contentions is well taken. (First Nat.Bank v. Thompson,
[11] The courts sustained objections to questions asked of the agent which were designed to show that he had told her that Anthony owned the common stock. Appellant claims that these rulings were erroneous. Conceding that they were, the error is without prejudice, because, as above pointed the permit, printed on the reverse of the subscription agreement, stated that Anthony was the owner of the common stock, and the court found, as the agreement stated, that such permit had been exhibited to her. It is obvious, therefore, that the court, in deciding the case, considered that she knew the fact as to the ownership and therefore the excluded evidence would have been only additional evidence as to matter already proven.
Judgment affirmed.
Spence, Acting P.J., and Sturtevant, J., concurred.
A petition for a rehearing of this cause was denied by the District Court of Appeal on October 29, 1932, and an application by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on November 28, 1932. *558