McCord v. Martin

RICHARDS, J.

These are appeals from judgments in favor of each of the two defendants upon their separate demurrers to the plaintiffs’ amended complaint. The same and the single question involved in each appeal is as to whether or not the twenty-five causes of action set forth in the complaint were assignable to the plaintiffs, who sue as the assignees thereof. General and special demurrers similar in form and substance were presented by each of said defendants to each of said causes of action. The court made a general order sustaining said demurrers without leave to amend. It seems to be conceded that the order of the court sustaining these demurrers was based upon the general ground that the complaint fails to state a cause of action in any of its counts because of the nonassignability of the claims sued upon. To that question this court will therefore address itself, regardless of any uncertainty in the complaint assailed by the special demurrers; for as to these the trial court, had it based its orders sustaining the demurrers upon any of the special grounds, should have granted leave to amend.

The facts of the case as revealed by the averments of the plaintiffs ’ complaint are these: The twenty-five persons who are the assignors of the causes of action set forth in the complaint were stockholders in a corporation known as the Lost Hills Mining Company, incorporated in the year 1909, having its principal place of business at Hanford, Kings County, California, and being the owner of a number of oil mining claims in Kern County, in said state. The assignors of plaintiffs owned an aggregate of thirty-six thousand eight hundred shares of the capital stock of said corporation amounting to a controlling interest therein. In the month of October, 1909, the corporation entered into a contract with the firm of Martin & Dudley by which the latter were granted the right to enter upon and occupy said lands and drill wells therein for the purpose of developing its oil possibilities. In the event of finding a successful well the firm was to have a certain interest in the property. The defendant, J. D. Martin, who was

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one of the members of said firm, was also at the time, and thereafter continued to be, a stockholder of the corporation. The firm of Martin & Dudley assigned their interest in said contract to another corporation known as the Lake Shore Oil Company, of which said corporation Martin & Dudley owned about one-half of the capital stock, the said J. D. Martin being a director in said last-named corporation. Considerable work was done upon the properties of the Lost Hills Mining Company under this contract during the year which followed, and said Martin became very familiar with the lands and oil values and possibilities of said property, much more so in fact than any of those of his fellow-stockholders who were to be the assignors of the plaintiffs herein, none of whom resided in that region or had any knowledge of the value of the lands of their corporation as oil-producing properties. In the year 1911 said J. D. Martin learned that one George W. Cameron, of San Francisco, was desirous of purchasing not less than twenty thousand shares of the capital stock of the Lost Hills Mining Company and would be willing to pay therefor eight dollars per share, and that if he could succeed in purchasing said stock of the Lost Hills Mining Company for said price, he would also be willing to buy certain other properties in which the firm of Dudley & Martin and the Lake Shore Oil Company were interested. Upon learning these facts, as the complaint alleges, said Martin devised a scheme by which he was to effect a sale of all the properties in which he was interested to Cameron, as a part of which he was to induce the said assignors of plaintiffs to place their stock in escrow in one block to be taken up by an undisclosed purchaser at the price of five dollars per share. In order to carry out said scheme said Martin sought the aid and co-operation of his codefendant Lindemann, who was the secretary of the Lost Hills Mining Company, and to whom for his share in the scheme he promised a portion of the profits to spring from the consummation of the transaction by which Martin and Lindemann would appropriate the difference between five dollars and eight dollars per share upon .the transfer of said stock. The scheme was carried into effect. The defendants represented to their fellow-stockholders that there was an undisclosed purchaser for their stock who was to pay five dollars and no more per share for the same, provided it was placed in escrow in one block in a certain bank, to be taken by such