Walker v. Harbor Realty & Development Corp.

SHENK, J.

This is an appeal from a judgment for the plaintiff, in an action to recover damages suffered by the plaintiff on account of an alleged fraudulent sale to her by the defendants of corporate stock of the defendant corporation.

It is not disputed that the stock certificates delivered to the plaintiff in exchange for $5,000 cash found to have been paid by her were issued by the corporation and delivered to the plaintiff by the defendant Elmer Dwiggins, acting as president of said corporation," prior to the issuance of a permit therefor by the corporation commissioner, as required by section 12 of the Corporate Securities Act, and that such a transaction is void under the terms of said section. (Stats. 1917, pp. 673, 679.) The purchase price of the stock was paid by the plaintiff about September 13, 1924. This action was brought on September 7, 1927, against the Harbor Realty & Development Corporation, which issued the stock, and against Elmer Dwiggins, and other defendants individually, and Dwiggins Company, a copartnership. The basis of the action was the alleged fraud of the defendants in inducing the plaintiff to enter into the illegal sale of the stock certificates, and the plaintiff sought as damages the sum of $5,000 paid as the purchase price thereof.

As grounds of appeal the defendants contend that the findings bearing upon the issues of fraud are not supported by the record and that the court erred in rejecting the de

[48]

fendants’ offer of testimony the purpose of which was to show, under the doctrine of the case of

Domenigoni

v.

Imperial Live Stock etc. Co.,

189 Cal. 467 [209 Pac. 36], that the plaintiff was

in pari delicto

with the defendants and not entitled to recover. The testimony offered and rejected by the trial court was to the effect that the plaintiff was one of the incorporators and directors of the defendant corporation and attended the meeting of the incorporators and the first meeting of the directors.