Mason v. San-Val Oil & Water Co., Ltd.

THE COURT.

This is an appeal from an order appointing a receiver

pendente lite.

The order was entered on May 24, 1932. The appeal is presented by a bill of exceptions. The appellants filed their opening brief on November 10, 1932. The respondents have not filed a brief and have failed to make any return to an order of this court directing them to show cause why the order appealed from should not be reversed. Accordingly, the appeal has been ordered submitted on the transcript and the appellants’ opening brief. (Rule V, sec. 1, 204 Cal. xlvii.)

The order appealed from was made on the application of the plaintiffs, pursuant to notice and a hearing. The documents and evidence considered on the hearnig consisted of the verified complaint on file and affidavits, reports and

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other documents introduced on behalf of the respective parties. The contention of the appellants is that the court improperly appointed a receiver on the showing made, and that the order should be reversed. We are satisfied from the record presented that the contention must be upheld.

The plaintiffs, as stockholders of San-Val Oil & Water Company, Ltd., in April, 1932, sued said corporation, its directors, officers and other shareholders. They sought an accounting of all of the corporate transactions from the date of incorporation, cancellation of stock issued to the defendant shareholders, removal of the defendant directors and a declaration that their offices are vacant, and the appointment of a receiver. It appears from the complaint that pursuant to an agreement made in October, 1930, the corporation’s predecessor, San-Val Oil Co., Ltd., purchased certain leases from some of the defendants and other persons in exchange for shares of the corporate stock issued under a permit of the corporation commissioner. The company attempted to drill for oil, but without success. During the operations the source of a mineral water supply was discovered. The company gave up its drilling operations and commenced the business of bottling and marketing the mineral water. For this purpose it obtained additional leases, and in May, 1931, changed the corporate name to its present form and doubled its capitalization. Then follows in the complaint a series of some forty or more paragraphs devoted to allegations, based upon information and belief, of failure of consideration for the issuance of stock to said defendant shareholders, and misappropriation of funds, fraud and conspiracy to defraud on the part of the defendants as directors and otherwise. The allegations are replete with generalities and conclusions of the pleaders, without any allegations of fact substantiating or purporting to substantiate the charges. The allegations in such form without more cannot be considered sufficient allegations of the charges made.