Fairchild v. Western Securities Corp.

VICTOR E. SHAW, J., pro tem.

In this action plaintiff sought a rescission of sale of 250 shares of its capital stock made to her by the California Guarantee Life and Accident Insurance Company and the recovery of five hundred dollars paid as consideration for the purchase thereof.

As appears from the bill of exceptions, motions made by defendants California Guarantee Life and Accident Insurance Company and J. W. Carmichael for an order of court striking out certain portions of the first amended complaint and substantially all of a supplemental complaint filed by

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leave of court were granted. Thereafter plaintiff filed an engrossed copy of the first amended complaint omitting therefrom the portions so stricken out by order of court, to which said defendants interposed a demurrer upon both general and special grounds. The court by an order in general terms sustained the demurrer as to each defendant, and plaintiff was granted twenty days in which to amend her complaint. At the expiration of the time so granted, plaintiff having failed to exercise her right to file an amended complaint, a judgment dismissing the action as to said defendants California Guarantee Life and Accident Insurance Company and D. W. Carmichael was entered, from which plaintiff prosecutes this appeal.

As we view the case, it is unnecessary to consider the alleged error predicated upon the ruling of the court in granting the motion to strike. This for the reason that had the motions been denied, the complaint would nevertheless be obnoxious to the general demurrer interposed.

The ground of rescission was on account of the alleged false and fraudulent representations as to material facts made by defendants to plaintiff, by reason whereof she was induced to pay them five hundred dollars, in consideration of which they sold and delivered to her a certificate for 250 shares of the capital stock of the California Guarantee Life and Accident Insurance Company, which shares of stock at the time of filing the complaint she retained in her possession. Not only is there a failure on the part of plaintiff to aver that the stock so held by her was of no value, but, on the contrary, the allegations of the complaint, indicating as they do that the stock has a substantial value, are wholly inconsistent therewith. Subdivision 2, section 1691, of the Civil Code provides that when not effected by consent, the parties seeking a rescission “must restore to the other party everything of value which he has received from him under the contract; or must offer to restore the same upon condition that such party shall do likewise, unless the latter is unable or positively refuses to do so.” In the absence of any averment showing the stock to be worthless or that defendants were unable to or had upon tender thereof refused to return the five hundred dollars so received by them as the purchase price therefor, and there are none, an allegation showing compliance with this provision of the statute was an essential