Ford v. Superior Court

VAN DYKE, P. J.

This is an original proceeding in prohibition, wherein petitioners ask that the respondent court be restrained from taking any further proceedings in an action pending therein without granting to petitioners a jury trial on the legal issues raised by the complaint, answer and cross-complaint.

The action in respect to which petitioners seek the writ was brought by them against named defendants, hereafter sometimes referred to as real parties. The complaint alleges that petitioners had purchased from real parties all of the capital stock of a certain corporation; that they had been induced thereto by fraudulent misrepresentations concerning the value of the stock as reflected by the assets of the corporation, its business, its prospects, and its good will; that petitioners had paid $30,000 for the stock; that on discovering the fraud they had rescinded the contract, had tendered the return of the stock and had demanded that defendants restore to them the money paid; that petitioners had received nothing except the stock, and that the stock was without value; that in perpetrating the alleged fraud real parties had acted maliciously. By an additional count petitioners alleged that real parties had received from them the sum of $30,000 for the use and benefit of petitioners; that demand had been made for the return of

[756]

said sum which was refused and that the entire sum remained unpaid. By the prayer of the complaint, petitioners ask that “the agreement of purchase and sale of stock . . . be declared rescinded”; that defendants restore to petitioners the sum of $30,000, together with interest; that petitioners be awarded punitive damages, costs of suit, and “such other and further relief as to the Court may seem just and equitable. ’ ’ The defendants in said action answered, putting in issue the material allegations of the complaint by denying the fraud, by denying that the contract had been rescinded, by denying all of the particular allegations of fraudulent acts alleged to have been done by them. They asserted affirmatively that petitioners had not acted promptly and, therefore, had not been entitled to rescind when they did act; that this failure to act promptly had injured defendants; that petitioners had themselves breached the agreement by refusing to pay a balance of the purchase price of the stock; that petitioners could not restore everything of value received by them because certain conduct of theirs had greatly depreciated the assets of the corporation, had injured its business, and that petitioners could no longer place real parties in status quo; that some real parties, in reliance upon the sale of the stock had subjected themselves to disadvantageous adjustments in reliance upon and in consideration of the sale, from which position they could no longer extricate themselves, to their damage if rescission were permitted ; that petitioners, after obtaining full knowledge of all particulars concerning which they claimed to have been misled, had elected to affirm the contract and to retain the benefits accruing to them therefrom; that petitioners came before the court with unclean hands. Real parties asserted that petitioners, for all these reasons, were not entitled to equitable relief. Real parties denied the allegations of the common count generally. They also cross-complained, alleging that a part of the purchase price was unpaid, for which they asked judgment. They further cross-complained, averring that by reason of petitioners’ false representations real parties had been led to believe that a business broker who handled the deal was their sole agent in the transaction when in fact he was the agent of petitioners and unknown to them; that in reliance upon this falsely-induced belief they had paid the broker $5,000 commission. They ask judgment in that sum.