Pacific Home Building Realty Co. v. Daugherty

WORKS, J.

Petitioner made his application to the superior court for a writ of review against defendant. The writ issued, but judgment was rendered dismissing it, upon answer to the petition for the writ and after hearing thereon. Petitioner appeals from the judgment.

So far as its averments are material to a disposition of the appeal, the petition for the writ alleged that appellant is a corporation organized and existing under the laws of this state; that it was organized on November 18, 1922, for the purpose of engaging in the real estate and building business, and particularly for the purpose of operating under what is known as the Ritchey Simplified and Combined Features Plan in selling real estate and in the building of homes on the installment plan, under which the company sells to the home purchaser contracts in units of $1,000, and agrees within a specified time, and upon a certain amount being paid in, to purchase for him a lot, and thereafter to build for him a home, expending for him practically the amount of money paid by him into the company, less a commission for its work; that prior to the incorporation of appellant those who organized it had incorporated an earlier corporation, with a capitalization of $20,000, for the same purposes as those for which appellant was later organized; that this earlier corporation had applied to respondent, the Commissioner of Corporations, for a permit to sell its stock and to dispose of its contracts; that respondent ruled that the capital stock of the earlier corporation was too small and that a new corporation must be formed with a capital of at least $50,000, from which capital the new corporation would be required to set aside #10,000, as a reserve fund to be held

[625]

subject to the written order of respondent; that thereafter, and in accordance with this ruling of respondent, appellant was organized; that thereafter, and on November 22, 1922, pursuant to application therefor, respondent issued to appellant a permit to sell its stock and $20,000 worth of its contracts; that on May 10, 1923, respondent issued to appellant an amended permit directing the establishment of a reserve fund in accordance with the previous ruling of respondent and providing for its accumulation; that thereafter the reserve fund was duly accumulated, and that thereafter, and on October 8, 1923, respondent, upon application for leave to sell an additional $1,000,000 worth of its contracts, issued to appellant a permit authorizing it to sell $250,000 worth thereof; that at the time of the issuance of this latter permit an officer of the corporation department notified appellant that its plan was just and legal, but that it was advisable to see whether its contracts could be sold successfully to the public, and that if they were so sold successfully, then a permit would be granted to sell the additional $750,000 worth of contracts mentioned in the application; that, relying in good faith upon this representation, appellant proceeded immediately to employ and did employ trained salesmen, opened an office and solicited business from the public, with the result that between October 11 and December 29, 1923, it had sold all the contracts authorized by respondent’s two permits to be sold and was unable to do further business until a supplemental permit was granted allowing it to proceed therewith; that on October 28, 1923, appellant filed with respondent its application for a permit to sell the remaining $750,000 worth of its contracts specified in its previous application for leave to sell $1,000,000 worth thereof; that on January 21, 1924, and without any further examination into appellant’s business than such examination as was made in connection with appellant’s earlier application, respondent refused the permit requested by the application of October 28, 1923; that respondent, through his investigation and by the permit granted by him on November 22, 1922, and by the amended permit granted by him on October 8, 1923, found that the business carried on by appellant is not unfair, unjust, or inequitable; that appellant intends fairly and honestly to transact its busi