Fairbairn v. Eaton

MARKS, J.

This is an appeal from a judgment of dismissal after a demurrer to the second amended complaint was sustained without leave to amend. The demurrer raised two objections to the sufficiency of this pleading, which we will hereafter refer to as the complaint, that neither it nor its several counts stated facts sufficient to constitute a cause of action against Claude S. Eaton, the demurring defendant, and that the court had no jurisdiction of the subject-matter attempted to be stated in the complaint or its counts. The trial court sustained the demurrer on the second ground and refused the request of plaintiff for leave to further amend the pleading.

This ease was first appealed to the District Court of Appeal of the Second Appellate District. It was transferred to the Supreme Court because of the belief that jurisdiction of the appeal rested there. The Supreme Court transferred the case to this court for decision for “good cause”.

We have examined the pleading and while it is obvious that it is open to attack on various grounds of special demurrer, we have reached the conclusion that it is not so wholly lacking in its allegations of facts that a general demurrer should be sustained without leave to amend some of its carelessly drawn paragraphs. We will, therefore, devote ourselves to a consideration of whether the Superior Court of Los Angeles County, or the Municipal Court of the City of Los Angeles, had jurisdiction of the subject-matter of the action. This will involve a determination of the question of whether the action was one for the rescission of contracts and the recovery of money paid under them and within the equity jurisdiction of the superior court, or one at law for the recovery of $1250, paid by plaintiff and his assignors to defendants, and within the jurisdiction of the Municipal Court of Los Angeles. The judgment of dismissal- was entered before the effective date of the recent amendment to section 89 of the Code of Civil

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Procedure under which the municipal court would have had jurisdiction of the action in either event. (Stats. 1933, chap. 743.)

The complaint contains five separate causes of action which, for the purposes of this appeal, may be considered identical in their material allegations. We will confine ourselves to a summary of the allegations of the first cause of action. It is there alleged that Claude S. Baton and Robert Lee Ford were partners doing business under the firm name of Baton-Ford Oil Securities Company; that on or about October 20, 1930, defendants entered into an oral contract to sell to plaintiff and Mary Fairbairn, his wife and assignor, one-half of one per cent of all oil, gas and other hydrocarbon substances produced, saved and sold under an oil lease on certain described property, subject to a charge of $4 per month for maintenance and operating expenses; that plaintiff and his wife paid defendants $500 and received a written “royalty assignment” purporting to convey to them such interest in the petroleum and its products; that the royalty assignment was duly recorded in the official records of Los Angeles County; that the royalty assignment was a security within the meaning of that term as used in the Corporate Securities Act and was issued and sold without permission of the commissioner of corporations and contrary to the terms of a permit issued by him; that Baton made various false and fraudulent representations which were believed and relied upon by plaintiff and his assignor and which induced them to purchase the royalty interest and pay defendants $500; that promptly upon learning of the fraud plaintiff offered to rescind the contract, and notified defendants in writing of such desire to rescind and demanded a return of the money paid them; that the offer and demand were refused; that plaintiff is willing to reassign the royalty assigned under the royalty assignment and “do and perform such other acts as may be required of plaintiff in order to place the said defendants and each of them