Colmar v. Pinckard

STURTEVANT, J.

The plaintiff filed a complaint in the ordinary form asking for the rescission of a contract of the sale of the stock of a corporation. The complaint 'alleged certain misrepresentations as to the indebtedness of the corporation. The defendant answered and denied the material allegations of the complaint and set forth a separate defense in which he alleged that the plaintiff was not the real party in interest. The trial court made findings in favor of the defendant and from the judgment entered thereon the plaintiff has appealed. In his brief the plaintiff attacks nearly every single finding made by the trial court.

Prior to the first day of August, 1926, Victor Etienne, Jr., held a three-eighths interest in and was one of the corporate officers engaged in the management of Cyclops Iron Works, a factory located in San Francisco. At the same time he was the president of a life insurance company. M. E. Pinckard held the controlling interest and was one of the corporate officers engaged in the management of the Vulcan Iron Works, a competitor of the Cyclops Iron Works. Both factories were engaged in the manufacture, etc., of refrigeration machinery. M. E. Pinckard at the same time was engaged in the brokerage business. C. F. Colmar was employed by a real estate firm in San Jose. He had but little capital and that was invested in a venture the financial outcome of which was altogether problematical. He and Mr. Etienne had been acquainted for many years. Mr. Pinckard and Mr. Etienne had also been acquainted for many years and had had business dealings in the pur

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chase and sale of investment securities. A short time prior to the date last mentioned the Vulcan Iron Works had such financial difficulties that it was taken over by its creditors. Later the creditors liquidated their accounts and the management of the Vulcan Iron Works was turned back to its owners. The active management then rested in the hands of Robert Kemp. From time to time Mr. Pinckard and Mr. Etienne discussed the sale of the Vulcan Iron Works. Still later that subject was taken up in earnest. The discussions regarding the nature and extent of the property owned by the Vulcan Iron Works, the indebtedness thereof, the status of its accounts, and the sales price of the stock were taken up by Mr. Pinckard and Mr. Etienne. Finally the parties agreed on a sale of the corporate stock of. the Vulcan Iron Works for the agreed price of $25,000, payable $5,000 on the twentieth day of October, 1926, and $5,000 on the twentieth day of each month thereafter to and including January 20, 1927. In carrying out the sale Mr. Etienne brought forward Mr. Colmar as the nominal purchaser and an escrow was opened at one of the banks. The seller produced the stock and deposited it in the escrow. Mr. Etienne promised to make the payments and thereafter did make the payments. Furthermore, from time to time he advanced to the Vulcan Iron Works such amounts as were necessary to carry on the business. When the last payment had been made the bank sent the certificates of stock to Mr. Colmar, who shortly thereafter delivered them to Mr. Etienne. No written contract was made between Mr. Etienne and Mr. Colmar which obligated Mr. Colmar as principal or otherwise.