Allen v. Todd

Opinion

GUSTAFSON, J.

Tannen, Winslow & Co., Inc. (hereinafter referred to for convenience as the bond dealer), was engaged principally in the business of purchasing municipal bonds with the purpose of reselling them to the public. As such (Corp. Code, § 25006, since superseded by Corp.

[656]

Code, § 25004), the bond dealer was, as required (Corp. Code, § 25700, since superseded by Corp. Code, § 25210), licensed by the Commissioner of Corporations. The Commissioner of Corporations, believing that the bond dealer was violating the law, brought an action against the bond dealer seeking injunctive relief. (Corp. Code, § 26101, since superseded by Corp. Code, § 25530.) Ancillary to that action, respondent R. E. Allen was appointed receiver for the bond dealer November 7, 1967. (Code Civ. Proc., § 564.) It was later found that as of November 7, 1967, the liabilities of the bond dealer exceeded its assets by $260,115.51.

The trial court made an order approving a report and account filed by the receiver in which appellants were treated as general creditors. This order is appealable under what is now section 904.1 of the Code of Civil Procedure.

(Steinberg

v.

Goldstein

(1954) 122 Cal.App.2d 516 [265 P.2d 153].)

Appellants Henry Rainey and Helen Rainey (hereinafter referred to in the singular as Rainey) in September 1967 ordered from the bond dealer bonds of a designated issue of Calipatria Unified School District in the face amount of $10,000. The bond dealer owned bonds of that issue in that amount but did not own any other bonds of that issue of Calipatria Unified School District. The bonds, however, were not in the possession of the bond dealer since they were pledged to secure a loan made by Union Bank. Rainey paid the purchase price of $10,346.28 by check of October 4, 1967, which was deposited by the bond dealer on October 6, 1967. The written confirmation of Rainey’s order stated that the bond dealer would deliver the bonds by registered mail after receipt of payment. It also stated that the bond dealer “may have hypothecated the securities herein described” but that any such hypothecation “will have ceased upon payment by you for the above described securities in the amount indicated and delivery of such securities to you or your order.” Rainey received a receipt dated October 6, 1967, from the bond dealer which assured him that the securities would be sent as per instructions, i.e., by registered mail.