Most v. Superior Court

WHITE, J.

By a petition for a writ of prohibition petitioner challenges the right and jurisdiction of the superior court to adjudge a defendant in an action guilty of contempt for his refusal to answer interrogatories in a proceeding regularly instituted by the plaintiff to take his deposition under the provisions of section 2021 of the Code of Civil Procedure.

Briefly, the amended complaint alleges that plaintiffs were minority stockholders of certain New York corporations, all engaged in the manufacture and sale of certain bronze products; that defendants, including the petitioner herein, were the majority stockholders and were actively in charge of the management of the corporation, were in control of the board of directors, and were the corporation’s managing officers. The amended complaint then goes on to allege that during the year 1927 a projected plan was proposed to merge with another corporation, the corporations in which plaintiffs and defendants had their respective stock interests, through the sale by plaintiffs and defendants of their stock interests to the new corporation. It is then alleged that defendants, including petitioner herein, acted as agents and in a trustee capacity for plaintiffs in negotiating and consummating said merger and the sale of their stock holdings. It is alleged that about December, 1927, the defendants stated to plaintiffs that said transaction had been consummated for a total price of some $324,000, and that $81,000 represented the total

pro rata

share to which plaintiffs were entitled, being approximately one-fourth thereof, and that there was then paid to plaintiffs the sum of $81,000, which they accepted; and, according to the amended complaint, their acceptance was

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based on the fact that they fully believed the statements and representations and relied upon their agents and trustees, who were the defendants. It is then alleged that the transaction in truth was not a cash one, but that the defendants received certain common and preferred stock in the new corporation which defendants sold for a sum alleged upon information and belief to have been in excess of $2,000,000. It is further alleged that plaintiff had no knowledge of the terms and conditions of the sale, and relied solely on the statements and representations of the defendants, and that plaintiffs did not discover the alleged breach of trust until some time during the year 1933. By their amended complaint the plaintiffs seek a declaration by the court that a constructive trust exists and existed in favor of plaintiffs in connection with the transactions above referred to, and pray that defendants, including the petitioner herein, be required and directed to account to plaintiffs for the property, income and profits of the aforesaid transaction. There is a second cause of action contained in the amended complaint which is not pertinent here for the reason that no questions were asked regarding the allegations peculiar thereto.