Murphy v. San Gabriel Manufacturing Co.

SHINN, P. J.

In November of 1947 plaintiffs Murphy agreed to purchase two lots in a real estate subdivision from San Gabriel Manufacturing Company. They made a down payment and certain progress payments in the total amount of $2,078. Thereafter they gave notice of rescission, offered to surrender their agreement and demanded the return of their money upon the ground that certain agents of San Gabriel had induced them to enter into the agreement by false and fraudulent representations. Return of the money having been denied they instituted this action in which judgment was given in their favor for $2,078. San Gabriel appeals.

There was evidence that a broker, John M. Pon, was San Gabriel’s agent for sale of the property and that George C. Petersen, who was unlicensed as a broker or salesman, assisted Pon in making the sale to plaintiffs and was paid by Pon one half of a commission of $600. Pon accepted the services of Petersen in negotiating the sale. It was Petersen who was charged with false representations which were unknown to Pon and San Gabriel. On the appeal the sufficiency of the evidence to prove that false representations were made by Petersen and that plaintiffs’ purchase was induced thereby is not questioned. It is contended, however, that San Gabriel was not responsible for the actions of Petersen and it is also claimed that plaintiffs were guilty of delay in attempting a rescission which, as a matter of law, bars their right to equitable relief. These contentions need not be discussed further for the reason that there is an independent ground upon which the judgment must be affirmed.

[367]

The real property which was subdivided was owned by John M. Pon and his wife. They complied with the provisions of Business and Professions Code, sections 11000 to 11020, which require that the plan of subdivision shall be submitted to the Real Estate Commissioner. The purpose of the scheme of state regulation is to protect the buying public and the commissioner may forbid sales or leases under the offering to prevent fraud. (§11019.) It is a valid law.

(In re Sidebotham,

12 Cal.2d 434 [85 P.2d 453, 122 A.L.R. 496].) Section 11010 provides that the subdivider shall notify the commissioner in writing of his intention to sell such offering which notice shall contain among other things: “(e) A true statement of the terms and conditions on which it is intended to dispose of the land, together with copies of any contracts intended to be used.” A copy of the proposed contract was filed with the commissioner in compliance with this requirement. Thereafter Pon and wife conveyed the property to San Gabriel Manufacturing Company but Pon remained as selling agent of the property and made numerous sales of lots. Section 11012 of the code reads: “It is unlawful for the owner, his agent, or sub divider, of the project after it is submitted to the Real Estate Division, to materially change the setup of such offering without first notifying the Real Estate Division in writing of such intended change.