Western Underwriting & Mortgage Co. v. Superior Court

ALLEN, P. J.

It appears from the affidavit on application for this writ that an action is pending in the superior court of San Diego County, wherein one Scott and others, minority stockholders of defendant corporation, are plaintiffs, and petitioner and others in control of the corporation, are defendants; that in that action by the amended complaint on file facts are alleged which, if true, develop a fraudulent

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scheme by certain of the defendants through which plaintiffs were induced to become stockholders of the defendant company, and the money paid by them for their stock was misappropriated by certain of defendants; that the corporation is dominated by one Tennant, who has a controlling interest therein and acquired his stock without any adequate consideration and by fraudulent methods, and continues in the control and management of the corporation; that the directors thereof are elected by Tennant and are entirely subservient to his will and are mere dummies elected and acting only for the purpose of serving the interests of Tennant who by fraudulent means has acquired the greater part of the assets of the corporation; that said corporation by and through such board of directors so dominated by Tennant is dissipating its assets and plaintiffs ’ rights as stockholders are being destroyed; that certain contracts have been made by the corporation through Tennant and his board of directors, the effect of which has been not only to absorb a majority of the stock of the corporation, but to remove from this state all of its assets and to divert and change its business from the purposes and objects originally provided and intended and in which the corporation was engaged when plaintiffs acquired and paid for their stock. The prayer of the complaint is for an accounting, the cancellation of the fraudulent contracts specified in the complaint, for the cancellation of the shares of stock held by Tennant and alleged to have been fraudulently procured to he issued to him, and for all other appropriate relief; and, in addition, for the appointment of a receiver to take charge of the corporate affairs pending the litigation. The superior court by its order directed the defendants to appear at a time specified and show cause why a receiver should not be appointed to take charge of the business, assets, and liabilities of such corporation as prayed for in the complaint. The judge of the superior court before whom the cause is pending has announced that, if the facts set out in the complaint are established, he will appoint a receiver for the defendant corporation during the pendency of the action. Petitioner herein by this proceeding in prohibition seeks an order of this court restraining the superior court from making such appointment of a receiver, upon the grounds that the court has no jurisdiction or authority to make such appointment; that