Clark v. Tavares

PRESTON, J.

Respondent, plaintiff below, to secure the fruits of a rescission

in pais

on a contract to purchase shares of stock of the appellant corporation, sued the said corporation and its stock sales manager, J. G. Tavares, for the sum of $6,000, representing the value of securities exchanged by respondent for said stock, which transaction was alleged to have been induced by fraudulent representations.

The complaint is in three counts and declares upon three separate transactions: First, it alleges that on September 24, 1928, for 113 shares of class A stock of said corporation, respondent gave in exchange 22 shares of the common capital stock of the Pacific Gas and Electric Company. Second, it alleges that on September 27, 1928, for 152 shares of class A stock of said corporation, respondent gave in exchange 10 shares of the common capital stock of the Pacific Telephone and Telegraph Company. Third, it alleges that on October 26, 1928, in part payment for 335 shares of class A stock of said corporation, respondent gave

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15 shares of the stock of the Bank of Italy and supplied the balance of the purchase price by giving a check for $293.75.

The purchase price was $10 per share although the evidence shows that the stock was offered as low as $6 per share at the office of defendant stock sales manager. The parties who directly perpetrated the fraud in the first two instances above named were George F. Kenney and D. A. Schlemmer, working together, and in the third instance, A. Shapiro and B. L. Goldberg, working together. Schlemmer was the leading conversationalist in inducing the first two purchases. He had been a sales manager of appellant, selling its cement products. The four men were working under the immediate supervision and direction of defendant Tavares, who made no defense to this action but defaulted therein.

The cause was put at issue and the court made findings of fact and gave judgment in favor of respondent, giving him the full relief prayed for and decreeing that the stock of appellant corporation, having been deposited in court, be held subject to the order of defendants.