Leven v. Legarra

WILSON, J.—

This is an action for the recovery of $2,500 paid as the purchase price for stock in the Modern Engineering & Development Company, sold in violation of section 2(a) (8) of the Corporate Securities Act in force at the time of the transaction. (Stats. 1937, ch. 477, p. 1428 ; 2 Deering’s Gen. Laws, pp. 1418, 1420, Act 3814.)

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From a judgment in favor of plaintiff defendant Rolland Legarra appeals.

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The corporation did not have a permit from the Division of Corporations to offer its stock for sale in California and the only question raised by this appeal is whether the court erred in finding that the sale of the securities was made in California.

There is no dispute as to the facts. The Modern Engineering and Development Company was a Nevada corporation maintaining its executive offices in California. The company through its agents, defendants Legarra and Rollins, in Los Angeles, offered to sell to plaintiff 2,500 shares of its stock, conditioning its offer upon plaintiff’s accepting the same by mailing his check for the purchase price addressed to the corporation at Carson City, Nevada. Plaintiff mailed his check to the company office in Nevada. When the offer was made, when it was accepted and at the time of the receipt of the check in Nevada the stock certificate book and the seal of the corporation were at its offices in Los Angeles. The certificate of stock received by plaintiff was signed by Legarra as secretary and the seal of the corporation was placed on the certificate in Los Angeles, after which the certificate was mailed to the company’s agent in Carson City, Nevada, and subsequently redeposited in the mail in Carson City in an envelope addressed to plaintiff at Los Angeles, where it was received by him.

There can be no doubt but that the device of having plaintiff mail his check in Los Angeles to the corporation’s agent in Nevada and mailing a completed certificate from Los Angeles to Nevada and then remailing it to plaintiff in Los Angeles was adopted in an attempt to evade the laws of the State of California. Indeed, appellant concedes as much but asserts that the sale was not complete until the stock was placed in the mail in Nevada and that it was therefore not a sale within the State of California as contemplated by section 2(a)(8) of the Corporate Securities Act,