Eckert v. Graham

SPENCE, J.

Plaintiff was the assignee of C. F. Colmar and Cyclops Iron Works. Plaintiff’s assignors were creditors of the Vulcan Iron Works, a corporation. This action was brought to recover against the defendants as stockholders of the last-named corporation. The cause was tried by the court sitting without a jury and, from a judgment in favor of defendants, plaintiff appeals.

In 1926, the defendants herein were the owners of practically all of the outstanding stock of the Vulcan Iron Works, a corporation. In September, 1926, plaintiff’s assignor, C. F. Colmar, entered into an agreement with defendants whereby he purchased the stock of said defendants for the sum of $25,000. The stock was transferred into the name of C. F. Colmar and was placed in escrow pending the completion of the payments therefor. The payments were made as agreed, but subsequently C. F. Colmar rescinded the sale because of alleged fraudulent representations and brought an action to enforce the rescission and recover the purchase price paid. Said action was entitled

C. F. Colmar, Plaintiff,

v.

M. E. Pinckard, Defendant,

and was numbered action 183066 in the Superior Court of the City and County of San Francisco. Upon the first trial of said action in one of the departments of said court, plaintiff therein recovered judgment, But a motion for new trial was thereafter granted. Upon the second trial of said

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action in another department of said court, the trial court indicated that judgment would be entered in favor of the defendant therein, but no findings or judgment were signed or entered. Said action is still pending and the question of whether said Colmar was entitled to rescind and the question of the ownership of said stock as between said C. P. Colmar and defendant M. E. Pinckard has never been finally-determined therein.

While the above-mentioned action was pending, said C. P. Colmar and Cyclops Iron Works assigned to plaintiff herein their claims arising out of the indebtedness of the Vulcan Iron Works. In order to avoid the running of the statute of limitations, plaintiff brought this action against defendants herein in the Superior Court of the City and County of San Prancisco, being action numbered 212315, claiming that defendants were the owners of the stock and seeking to recover against them on their liability as stockholders. The complaint was in the customary form of a complaint to enforce stockholders’ liability and the action was brought upon the theory that as said C. P. Colmar had rightfully rescinded the sale of the stock, the status of the parties was the same as though no sale had occurred and defendants were therefore at all times the owners of the stock and liable as such stockholders.