Camerini v. Long

SHINN, P. J.

Camerini and wife brought suit against C & W Oil Company, a partnership, Maynard H. Collins and O. V. Long, for the recovery of $3,000 paid for a 1 per cent limited partnership interest and $400 which was later contributed to the business of the partnership. It was alleged in the complaint that C & W Oil Company was a limited partnership in which Collins was the general partner and Long and others were limited partners; plaintiffs purchased a 1 per cent limited partnership interest from Long; the interest was a security which could not be validly issued without a permit of the Commissioner of Corporations, and no permit had been issued. Long answered the complaint; the other defendants were not served. Upon a conclusion of law that the certificate of interest was a void security, judgment was against Long for the recovery of $3,400. He appeals.

C & W Oil Company was a limited partnership in which Collins was the general partner and there were as many as 46 limited partners. It was stipulated no permit had been issued by the Commissioner of Corporations for the issuance of certificates of ownership of partnership interests.

The business of the partnership was the drilling of oil wells upon leased land in Kern County; each limited partnership

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interest would share proportionately in the profits from the first well drilled and each limited partner by a contribution of $400 for each 1 per cent interest held would become entitled to share in the profits from the next well to be drilled. The $400 for which the plaintiffs sued was for their contribution toward the drilling of a second well.

If a limited partnership is created in accordance with the applicable law (Corp. Code, § 15501 et seq.), limited partnership interests may be created without a permit of the Commissioner of Corporations, provided such interests are not offered for sale to the public. Section 25100 of the Corporations Code so provides. In order for plaintiffs to establish that the interest they purchased was a void security it was incumbent upon them to prove that the partnership interests had been offered to the public. The only evidence upon this issue was the testimony of defendant Long. There were 46 limited partners who would share in the profits from the first well and 34 who would share in the profits from a second well. Long testified that the limited partners were a group, all personal friends, most of them connected with the motion picture business, who discussed the project among themselves and decided that they wished to participate; partnership interests were not advertised for sale, nor was there any solicitation of prospective investors. The ones who joined asked to join upon learning of the project; they were not solicited, but only informed of the project. Long had nothing to do with the organization of the partnership. He permitted Collins to use his, Long’s, address for the receipt of mail. He had nothing to do with the drilling of wells or the raising of money. For the use of his address Collins caused to be put in Long’s name “a few units of membership ... 2 or 3,” all of which were transferred to others at the request of Collins and upon the promise of Collins that he would reimburse Long in some way or other, which he failed to do. Long paid nothing for the interests that were in his name and he received nothing when he transferred them to others. Three thousand dollars was paid in cheeks of plaintiffs, one for $2,000 and one for $1,000, which were payable to Collins. Long did not negotiate with plaintiffs for sale of the 1 per cent interest. The $400 was contributed by plaintiffs for an interest in a second well, and at the direction of Collins the check was payable to an abstract company in Bakersfield. No additional certificate was issued for this contribution.