Sheffler v. Hutchings

KNIGHT, J.

The defendant Clare Hutchings appeals from an adverse judgment for the payment of money, entered after default for failure to answer the complaint. The grounds of appeal are that the complaint fails to state a cause of action and therefore is insufficient to support the judgment, and that the trial court abused its discretion in determining the motions to set aside the default.

The complaint contains five counts, but it is unnecessary to inquire into appellant’s objections to the first four because the facts alleged in the fifth are legally sufficient, in our opinion, to sustain the judgment. The cause of action stated therein is one to recover the sum of $4,929.32 and the earnings and accumulations thereof based upon the charge that defendant fraudulently obtained from plaintiff the principal sum mentioned for the ostensible purpose of investing it for her under a written guarantee that from such investments she would receive “a net profit of not less than ten per cent per annum”, and that after obtaining said principal sum they fraudulently appropriated the same and the earnings and accumulations thereof to their own use. In this regard it is alleged in substance that defendants were engaged in the real estate business in and about Los Angeles; that plaintiff, a widow, reposed confidence and trust in defendants on account of a friendly business relationship theretofore existing between plaintiff’s husband and defendants ; that upon the death of plaintiff’s husband she received

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the sum of $4,929.32 from his estate and that as a result of conspiracy and false promises defendants induced her to turn said money over to them under the written guarantee above referred to, a copy of which is set out in the complaint; that she received no income whatever from said money and that after a lapse of some three years, during which she was lulled into a feeling of security by false statements made by the defendants as to the nature and character of the investments they claimed to have made for her, she asked for an accounting and then ascertained that defendants had appropriated to their own use the entire principal sum and the proceeds derived from the several transactions financed therewith. The complaint goes on to set forth in detail the method employed by defendants, after obtaining the money, to defraud her thereof and to describe the numerous transactions carried on by them to accomplish such purpose, which consisted chiefly of mortgaging the property in which most of the money was invested and afterward selling the mortgages and appropriating the proceeds received therefrom and the rents and issues from the property to their own use. Eventually, so the complaint alleges, when an acounting was demanded, defendants tendered to plaintiff deeds conveying to her two parcels of land, both of which were fully encumbered and against which foreclosure proceedings were impending for nonpayment of taxes, interest, etc. It was also alleged in substance that in furtherance of the conspiracy to defraud and in consummation thereof appellant stripped himself of all property in which he was interested by transferring the same to his mother, thus preventing plaintiff from realizing on any judgment she might obtain against him.