16 Cal. 2d 824 | Cal. | 1940
Plaintiff commenced this action on March 17, 1938, against defendants for fraud. Defendant Turlock Guarantee Building-Loan Association filed a general demurrer to the second amended complaint, which included the plea of the statute of limitations. Defendant El Portal Building-Loan Association filed a similar general demurrer, and also demurred specially upon the ground of uncertainty. Plaintiff’s counsel indicated that he did not desire to amend, and the demurrers were sustained without leave to amend. Judgment against plaintiff followed, and she then brought this appeal.
In order to determine the sufficiency of the complaint against the demurrers it will be necessary to summarize its main allegations, which are as follows:
On March 20, 1930, defendant Master Holding Corporation was organized to act as a holding company for building and loan associations in California. On information and belief, plaintiff alleged that prior to July 29, 1930, two other associations and Master Holding Corporation entered into a written agreement of “general agency”, executed by their respective officers, under which they “were united, allied and affiliated together in the doing of the business of each”, and all came under the control and supervision of Master Holding Corporation; and that thereafter “by virtue of certain resolutions, agreements and transactions duly adopted by the respective boards of directors” of said defendants, these corporations were governed by a regional board of directors, and that Master Holding Corporation acted for all of them.
On July 29, 1930, plaintiff was approached by H. R. Aeteson, claiming to be the authorized agent of Master Holding-Corporation and its “allied and affiliated interests”, who
Plaintiff further alleged, on information and belief, that the sale of the stock of Master Holding Corporation to plaintiff was part of a general sales campaign, conducted by the regional board of directors of the affiliated associations, and that Acteson was employed by said regional board of directors, and under resolutions and agreements of said board was fully authorized by all of the allied and affiliated associations to make the representations alleged; and that the money received from plaintiff by Master Holding Corporation for the purchase of said stock was actually used for the benefit of all of the said associations.
Allegations of falsity of the representations and reliance thereon then follow. In particular it is alleged that Master Holding Corporation never acquired any of the stock of any of the corporations, and that its stock was of no value whatever. Instead, it is alleged on information and belief that
Plaintiff alleges finally that all of the facts constituting the fraud were concealed by the defendants, and that all information respecting these transactions was kept in the private files of defendants. She did not discover the facts until May 9, 1935, when another investor told her of the void exchanges and the insolvency of Master Holding Corporation. She alleges that prior to said discovery and the resulting litigation, she had no notice of any circumstances which would lead her to discover the facts constituting the fraud.
From the foregoing summary of the allegations of the complaint it is clear that the serious question on this appeal is whether the complaint pleads sufficient facts to excuse the late discovery of the fraud, in order to take the case out of the bar of the statute of limitations. Unless it does, the action is barred, for the fraud occurred in 1930, and the action was not brought until 1938.
Defendants rely on the many cases which establish the requirement of pleading facts to excuse the belated discovery of the alleged fraud, of which Lady Washington C. Co. v. Wood, 113 Cal. 482 [45 Pac. 809] , Consolidated Reservoir & Power Co. v. Scarborough, 216 Cal. 698 [16 Pac. (2d) 268], Nighbert v. First Nat. Bank, 26 Cal. App. (2d) 624 [79 Pac. (2d) 1105], and Turner v. Liner, 31 Cal. App. (2d) 196 [87 Pac. (2d) 740], are typical. The argument, based on these cases, is that plaintiff was a stockholder with a duty to inquire into the acts of officers and directors of the corporation, and that she is charged, in some degree at least, with knowledge of facts which appear on the records of the corporation. The complaint alleges that plaintiff was promised an income of 7 per cent and never received any dividends at all. But she made no inquiry of the officers of the corporation nor of the Building and Loan Commissioner as to the
It is neither necessary nor desirable at this time to consider the extent to which the doctrine of the foregoing cases has been or should be relaxed in situations where the failure to make inquiry is a result of deceptive assurances by the fraudulent parties, or other conduct tending to lull the plaintiff into a sense of security; nor where the plaintiff does make some inquiry, but fails to discover the truth. (See' discussion in Bainbridge v. Stoner, ante, p. 423 [106 Pac. (2d) 423].) The present pleading cannot be justified even under the most liberal relaxation of the rule for there is no showing of any inquiry at all, and no explanation is offered for the failure to make it except the vague averment that the facts were “concealed” and “kept in the private files” of defendants. The pleading simply fails to meet the minimum requirements of a complaint for fraud which is filed more than three years after its commission.
In view of our conclusion on this issue it is unnecessary to consider the numerous specifications of uncertainty raised by the special demurrer.
The judgment is affirmed.
Rehearing denied. Curtis, J., Houser, J., and Carter, J., voted for a rehearing.