Truesdail v. Lewis

THOMPSON, J.

The plaintiff has appealed from a judgment which was entered against him pursuant to an order sustaining a demurrer to the third amended complaint without leave to amend the pleading.

[720]

This is a suit to quiet title to 625 shares of the common stock of California Yeast Products Corporation, Ltd., and to declare that the defendant, Lawrence W. Lewis, holds the stock in trust for plaintiff. The third amended complaint alleges that plaintiff is a research scientist and chemist who has had thirteen years of experience in that work; that the California Yeast Products Corporation, Ltd., was incorporated April 18, 1931, with 5,000 shares of common stock of the par value of $1.00 each; that its principal place of business was Los Angeles and that the defendant, Lawrence W. Lewis, was one of the incorporators of the company, a member of the board of directors, president and general manager thereof; that he was virtually the

alter ego

of the corporation which was engaged in conducting, improving and producing a yeast enterprise, together with the by-products thereof; that on June 18, 1931, the corporation was duly authorized to issue and sell 5,000 shares of the common stock of the company at $1.00 per share, and that 4,998 of said shares were issued to the said Lewis, who ever since said time has been and now is the record owner and holder thereof; that the defendant Lewis agreed with plaintiff that if he would conduct all scientific and chemical experiments for the improvement and production of byproducts and better methods of handling the yeast and procure a $15,000 loan for the corporation he would be given one-eighth of the common stock of the corporation and become a share-holder thereof “as soon as the shares were issued”; that the said Lewis told plaintiff his reports on such products would have far greater weight with the public if his name did not at first appear as a stockholder of the company, and that his shares of the stock would be issued to Lewis, who would hold them for plaintiff and transfer them to him at a later time, which was agreed upon; that in reliance upon that agreement plaintiff continuously performed services of that nature until the latter part of 1934 and succeeded in procuring the $15,000 loan mentioned; that on November 5, 1931, Mr. Lewis signed a written agreement to transfer to the plaintiff 50 shares of the stock as soon as it was issued by permission of the Corporation Commissioner; that the plaintiff often demanded of Lewis the issuance and delivery of his capital stock, but that said defendant fraudulently told him the stock had- never been issued; that in May, 1936, the said Lewis falsely and fraudulently informed the plaintiff that the com