Robbins v. Holther

SHINN, P. J.

In this action Eva M. Robbins was awarded judgment against James H. Holther and Helen M. Holther for $5,000, with interest at the rate of 7 per cent per annum from July 30, 1947. The Holthers appeal.

In the first cause of action plaintiff set out a promissory note of defendants for $5,000, dated July 30, 1947, payable to plaintiff in 25 equal monthly installments of $200, commencing on September 15, 1947, with interest from that date at the rate of 3 per cent per annum payable monthly. Default in the payment of any instalment would render the entire note immediately due. The complaint alleged that no part of the note had been paid. Defendants Holther did not deny the foregoing allegations.

In a second cause of action plaintiff attempted to state a ease of fraud. It was alleged that plaintiff loaned $5,000 to James H. Holther on December 15, 1946, that later Holther caused Perfect Products to be organized as a corporation and “caused fifty shares of the capital stock of said corporation to be issued to plaintiff for said sum of Five Thousand Dollars ($5,000.00) previously loaned and advanced to said defendant by plaintiff as aforesaid,” and that no part of the sum had been paid. It was also alleged that defendants Holther later gave plaintiff the note for $5,000 as alleged in the first cause of action, and that plaintiff entered into an agreement to transfer the 50 shares of stock to James H. Holther. There were also allegations to the effect that Holther had fraudulently manipulated the affairs of Perfect Products so as to render the capital stock thereof wholly worthless, and that for her $5,000 loan to Holther plaintiff held only said promissory note.

There were three other causes of action, based upon the same transaction, but it is unnecessary to take them into consideration. The answer set up eight special defenses to the various

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causes of action. One of the defenses to the first cause of action was that the consideration for the note was plaintiff’s agreement to transfer to James H. Holther 50 shares of the capital stock of Perfect Products, a California corporation, which agreement, it was alleged, was illegal for the reason that said 50 shares of stock eonld not be legally sold or transferred without the consent of the Commissioner of Corporations, which consent had not then been given. The issue to be determined under the first cause of action was whether the note was given as an inseparable part of an agreement that was illegal. The undisputed facts with relation to the first cause of action are the following: 50 shares of stock had been issued to plaintiff in accordance with a permit of the Commissioner of Corporations. As required by the- permit, the stock had been placed in escrow and was not subject to a consummated sale or transfer without the consent of the commissioner. By an undated agreement, presumably executed on the dáte of the note, July 30,1947, plaintiff agreed to transfer the 50 shares of stock to James H. Holther who agreed to , pay $5,300 for the same in 25 monthly payments of $200, and one payment of $300. This agreement was represented by Holther to the Commissioner of Corporations as conditioned upon the commissioner’s giving his consent to the transfer. Although consent of the commissioner had not been obtained for transfer of the stock, plaintiff had signed a request for such consent on July 28th, 1947, and the commissioner approved the transfer September 29th, 1947. Thereafter, James H. Holther promised in writing to comply with his agreement to pay plaintiff $5,000.