Hughes v. Maciel

BARNARD, P. J. In 1923, F. R. Maciel mortgaged certain property to the plaintiffs to secure notes to the amount of $15,000 which were payable in 1932. The mortgage covered 240 acres of land in Kings County and also “5/32 of one share of the capital stock of the Peoples Ditch Company”. It is conceded that this fractional share of stock in this mutual water company was not appurtenant to the mortgaged real property or to any real property, but that the water represented by the stock could be used by its owner anywhere within the district. A default having been made in certain payments required by the note and mortgage, foreclosure proceedings were commenced on December 16, 1930, and both the mortgaged real property and the fractional share of stock referred to were, by a commissioner, sold to the plaintiffs on May 29, 1931. In the meantime, on December 2, 1930, an assessment on this fractional share of stock fell due. The same was not paid and by proceedings which were conceded to have been regular, this stock was sold at public auction by the Peoples Ditch Company on February 3, 1931, to F. R. Maciel, Jr., a son of the mortgagor, for the sum of $15.75, being the amount of an assessment of $15 plus a five per cent penalty. The undisputed evidence is that this fractional share of stock was at that time worth $1500. The year of redemption having ex[511]pired on May 29, 1932, plaintiffs brought this action on July 18, 1932, to recover possession of the stock or the value thereof if delivery could not be had.

The theory of this action is that the mortgagor and his son connived together to permit the assessment to go delinquent to the end that the stock should be purchased by the son, and the complaint alleges that the father, for the purpose of defrauding the plaintiffs, refused to pay the assessment, caused the stock to be advertised for sale by the ditch company, and caused the son to purchase the same, by reason of which the stock was sold by the ditch company and a new certificate issued to the son in lieu of the certificate formerly held by the father. The trial court found in all respects in favor of the plaintiffs and entered judgment providing for the delivery of the stock to them upon the repayment to the son of all amounts paid by him as assessments upon the stock, or for the sum of $1500 in the event delivery of the stock could not be had. From this judgment the defendant F. R. Maciel, Jr., alone has appealed.

It is first contended that the complaint fails to state a cause of action against the appellant in that it is not expressly charged therein that the son participated in the fraud alleged to have been practiced by his father. The complaint alleges that the father, for the purpose of defrauding the respondents, permitted the stock to be sold and caused the appellant to purchase the same at the sale. We think it sufficiently appears that the appellant was charged with participation in the fraud alleged, the entire case was tried upon that theory, and the complaint must be held to have been sufficient under the circumstances shown by the record.