Dreiske v. Los Angeles Investment Securities Corp.

PULLEN, P. J.

On May 5, 1930, plaintiff became the owner of certain bonds of the Angeles Hospital Association, a corporation, having acquired them for cash from Los Angeles Investment Securities Corporation, respondent herein. During the negotiations for these bonds it was represented to the prospective purchaser that all taxes and municipal assessments had been fully paid. The Hospital Association paid the interest on its bonds until October 1,1931, at which time it defaulted. Thereupon, plaintiff was requested to join with other bondholders in authorizing the trustee to proceed to foreclose the deed of trust securing the bonds. Plaintiff thereupon executed a bondholders’ committee agreement and deposited his bonds with the trustee. In accordance with this agreement the property conveyed to the trustee as security for the bonds was sold yielding an amount far less than the face value of the bonds. Some time in September, 1932, and during the investigation by the bondholders’ committee and after the assignment by plaintiff of his bonds to the bondholders’ committee, and after the property had been sold, he “learned -for the first time that when he purchased the bonds the representations then made to him that all of the taxes and municipal assessments levied against the property had been paid, were untrue, and that taxes, penalties and assessments were at that time unpaid and delinquent. He thereupon attempted to rescind his purchase of the bonds and so notified

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defendant and offered to assign to defendant all interest he had under the bondholders’ agreement and offered to deliver to defendant an order on the bondholders’ committee to transfer and convey to defendant all interest, right or title he had in the bonds or the trust indenture or the real property described therein, and in return demanded of defendant that he repay to him all he had paid on account of the purchase price of the bonds.

Upon the trial, based upon this notice of rescission, the court sustained an objection to the introduction of any evidence on the ground the complaint failed to state a cause of action, the plaintiff being unable to allege or prove he could restore the defendant to its

status quo.

Appellant contends that his assignment' to the bondholders’ committee was a transfer to an agent rather than an actual sale and that it was not necessary to restore defendant to an exact