Sanchez v. Centro Mexicano of Sacramento

Opinion

STONE, P. J.

Plaintiff filed this action to determine the validity of an election of a board of directors of defendant corporation, Centro Mexicano of Sacramento, which, in turn, rests upon the validity of the sale of shares to some of the stockholders who participated in the election of the board members.

Prior to 1948, a non-profit corporation called Comité Pro-Hogar Mexicano was formed by Mexican-American leaders in the Sacramento area. In 1948 it had approximately $7,300 in its treasury and owned land of a value of $7,500. On. April 1, 1948, the leaders of Comité Pro-Hogar Mexicano and other members of the Mexican colony in Sacramento formed a California stock corporation, called Centro Mexicano of Sacramento, hereinafter called “Centro.” The initial capital consisted of the cash and land donated by the non-profit corporation.

The purposes of Centro, as stated in its articles of incorporation, were (1) to provide a center for recreation and social work activities for the local population of Mexican citizenship or Mexican ancestry, and (2) to

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develop a civic spirit among the Mexican colony and act as a medium of contact between the Mexican people and the rest of the city’s population. It was anticipated that Centro would finance its activities by renting a hall to be constructed on the land donated by Comité Pro-Hogar Mexicano.

Two permits were obtained to sell shares of stock, and 3,800 shares were issued and sold at $5 per share prior to January 1, 1965. The proceeds thereof, along with the $7,300 contributed by Comité Pro-Hogar Mexicano, were used to construct the present Mexican center owned by Centro. Between April 1948 and 1950, Centro improved its real property and purchased furniture and equipment in amounts which totaled around $40,000. In the early years Centro accumulated a small cash balance, but as of December 31, 1951, there was a net loss of $3,381.30.

In 1951 Centro leased all of its assets to a non-profit corporation, Societe Social Jose Maria Morelos, hereinafter referred to as “Morelos,” which operated the center until April 17, 1966. The lease called for rent to be paid to Centro; it appears that no rent was ever paid direct to Centro, although Morelos paid existing debts and certain expenses of Centro. As of April 1966, the pertinent date herein, Centro owed approximately $800 property taxes, and had cash assets of $70 derived from the sale of 14 shares of stock.