McElhaney v. W. E. Moyer & Co.

California Court of Appeal Sep 30, 1929 No. Docket No. 5441.Published

Before: Burnell

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Holding. The court held that the evidence supported a finding of fraud where the defendant induced the plaintiff to sign documents under false pretenses, and that an action for money had and received was appropriate because the fraud prevented a meeting of the minds, rendering the purported contract void rather than voidable.

Issues

Whether the evidence was sufficient to support the trial court's finding of fraud.
Whether the plaintiff was required to bring an action for rescission rather than an action for money had and received.

Disposition. affirmed

Quotations verified verbatim against the opinion

“We think that this evidence is amply sufficient to justify the trial court in finding that appellant had practiced fraud upon respondent.”

“Where there is no meeting of the minds there can be no contract and hence there is nothing which can be rescinded.”

“In such a case there is no necessity for attempting to rescind that which never in fact existed.”

BURNELL, J.,

pro tem.

Respondent brought this action to recover the value of certain shares of stock which she claimed had been secured from her by fraud on the part of the appellant corporation. Appellant’s chief contention is that the evidence does not support the finding of fraud. We have examined the transcript with care, and while the evidence is conflicting there is abundant evidence to support the court’s findings in this regard.

It appears from the testimony of the respondent and of various other witnesses that prior to January, 1924, respondent owned two units of stock in a corporation known as Commercial Loan Company, each unit consisting of two shares of preferred and one of common stock. Her first transaction with appellant was in that month and consisted of the signing of a subscription agreement for four shares of stock of a corporation known as United Camps, at $100 per share, payable in installments of $25 a month. The certificates representing these shares were never delivered to her. On its face the subscription agreement appears to establish a contractual relation between respondent and United Camps. There is evidence, however, to the effect that Moyer & Company was actually selling to respondent stock which was owned by itself; that her “subscription” was never turned in to United Camps, which corporation incidentally had power under its permit from the corporation commissioner to sell for cash only and not on installment payments and that she was charged on appellant’s books with the agreed purchase price of the stock and credited with her payments thereon.

In March, 1924, respondent called at appellant’s office in response to a letter from Mr. Moyer, its president and general manager, suggesting switching her subscription for United Camps to one for four shares of Moyer & Company stock at $100 per share. To this she agreed. At this time she sold to appellant her Commercial Loan Company stock for $470, receiving $300 in cash and a credit of $170 on her account for the purchase of the Moyer & Company stock, pursuant to the arrangement for taking that stock instead of United Camps. She kept up her payments until they were completed and then received certificates evidencing

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her ownership of the Moyer & Company stock. This was the only stock received by her from appellant.

McElhaney v. W. E. Moyer & Co.

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BURNELL, J.,

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