McFaul v. Deck

[425]

DORAN, J.

This is an appeal from a judgment for plaintiffs in a suit to recover the purchase price of certain interests in an oil venture. In the form of an action for money had and received, plaintiffs sought the recovery on the grounds of constructive fraud alleged to have resulted from the failure of defendants to first obtain a permit from the commissioner of corporations of the state of California authorizing the sale.

The issues were tried upon an agreed statement of facts which later, by stipulation, became the findings. The sole question involved is whether, under the facts presented, a permit was necessary to accord validity to the instrument purporting to transfer the interest sold.

It is contended by appellants that the transaction did not come within the purview of the Corporate Securities Act of the state of California for the reason that the instrument of transfer created a tenancy in common in real property between the seller and the buyer. Respondents, contending to the contrary, point out that although the instrument in question uses the term “tenancy-in-common”, nevertheless the evidence reveals that the interest conveyed was not a tenancy in common, and that such term was used in an attempt to circumvent the provisions of the Corporate Securities Act.

The agreed statement of facts reveals that the Tujax Oil Company is a California corporation. There was issued and outstanding ten shares of capital stock of the corporation, all of which was issued to and paid for by the defendant John Deck, who, as owner of such stock was authorized to appoint and elect, and did appoint and elect, the board of directors of said corporation. On June 1, 1936, an agreement in writing was executed between the Tujax' Oil Company as first party, and plaintiffs Minnie A. McFaul, William D. McFaul and Margueritte McFaul Rasco, as second parties.

The pertinent portion of the instrument is as follows:

“THIS AGREEMENT, made and entered into this 1st day of June, 1936, by and between TUJAX OIL COMPANY, a California Corporation, First Party, and Minnie A. Mc-Faul or Wm. D. McFaul and/or Margueritte McFaul Rasco of Santa Monica, California, Second Parties, “WITNESSETH: