Jackson v. Master Holding Corp.

THE COURT. Plaintiff commenced this action on March 17, 1938, against defendants for fraud. Defendant Turlock Guarantee Building-Loan Association filed a general demurrer to the second amended complaint, which included the plea of the statute of limitations. Defendant El Portal Building-Loan Association filed a similar general demurrer, and also demurred specially upon the ground of uncertainty. Plaintiff’s counsel indicated that he did not desire to amend, and the demurrers were sustained without leave to amend. Judgment against plaintiff followed, and she then brought this appeal.

In order to determine the sufficiency of the complaint against the demurrers it will be necessary to summarize its main allegations, which are as follows:

On March 20, 1930, defendant Master Holding Corporation was organized to act as a holding company for building and loan associations in California. On information and belief, plaintiff alleged that prior to July 29, 1930, two other associations and Master Holding Corporation entered into a written agreement of “general agency”, executed by their respective officers, under which they “were united, allied and affiliated together in the doing of the business of each”, and all came under the control and supervision of Master Holding Corporation; and that thereafter “by virtue of certain resolutions, agreements and transactions duly adopted by the respective boards of directors” of said defendants, these corporations were governed by a regional board of directors, and that Master Holding Corporation acted for all of them.

On July 29, 1930, plaintiff was approached by H. R. Aeteson, claiming to be the authorized agent of Master Holding-Corporation and its “allied and affiliated interests”, who [826]attempted to sell her stock in the corporation. He invited her to meet with him and the officers of the Turlock Association, and plaintiff came to its office. At this meeting, on or about July 30, 1930, Acteson, in the presence of R. Anderson, secretary of said association, stated to plaintiff that he, Acteson, was the authorized agent of Master Holding Corporation and of its allied interests; that the corporation had acquired the control of some twenty or more building and loan associations in the state by purchase of over 50 per cent of their issued and outstanding capital stock; that among these associations were the Turlock Association and El Portal Association; that Master Holding Corporation was receiving over 50 per cent of the net earnings of said associations as dividends, and that all of said associations were producing income; that Master Holding Corporation was receiving over 7 per cent per annum on its stock; that all of these associations were united and affiliated with Master Holding Corporation and that their business was performed through a regional board of directors, thus assuring experience and knowledge in the business; and that the acquisition by Master Holding Corporation of the stock had been approved by the corporation commissioner. Many other representations as to the safety and value of the investment are alleged. Anderson at no time questioned any of the statements but instead advised plaintiff that she could rely on them and that the investment was sound.