Morris v. Whittier Amusement Co.

TUTTLE, J.,

pro tem.

This is an action brought to recover secret profits arising from the sale of real property. The trial court sustained a demurrer to the complaint, without leave to amend. Judgment was entered for defendant and the appeal is prosecuted from said judgment.

The complaint alleges that on March 9, 1923, plaintiffs and some of the persons named as defendants associated themselves together for the purpose of purchasing Scenic Theater Building in the city of Whittier, California, from defendants Thuman Berry and Louise Berry; that it was agreed between defendant Harris and the other parties that none of them should charge or receive a commission for purchasing or securing title to said property; that defendant Harris was selected by said intended purchasers as their representative and agent to secure from defendants Berry their lowest purchase price for said property and to negotiate the sale thereof to all of said parties, including plaintiffs and Harris, and a corporation to be thereafter organized by them; that Harris agreed to and did act as such agent; that Harris interviewed the owners of said property and was told that the lowest price was $125,000; that Harris then stated to the Berrys that he desired to make a secret profit, and agreed with the owners that he should report to his associates that the lowest price was $13-5,000; and that they would split the added $10,000 between them, by means of a fictitious note; that Harris falsely and fraudulently reported to his associates that the purchase price for said property was $135,000, and he concealed from them that he had received a dummy note for $10,000; that said parties pur

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chased said property for the sum of $135,000; that title to said property was taken in the names of Siler and Gwin, who were to hold the same and deed it to a corporation to be formed by said parties; that said corporation, Whittier Amusement Company, was formed, and the property deeded to it; that plaintiffs paid $20,000 toward the price of said property and received for the same 200 shares of stock in said corporation; that the total cash investment in said property by said parties was $75,000; that defendant Harris received 100 shares of stock for his dummy note of $10,000; that thereafter plaintiffs and their associates and said corporation discovered for the first time that Harris and Berry had made a secret profit from said sale, and the corporation demanded from them a return of the 100 shares of stock; that this stock was returned to the corporation and is now held by it; that plaintiffs are entitled to a 20/75 share of said stock.