Wyatt v. Mortimer

THE COURT. This is an appeal from a judgment ot dismissal entered upon an order sustaining demurrers to plaintiff’s third amended and supplemental complaint without leave to amend.

To the original complaint, Mortimer, as receiver, demurred and the demurrer sustained, and an amended complaint immediately filed. This defendant again demurred to the first amended complaint and the demurrer overruled. Thoreson was then served under the name of John Doe, and the complaint, not being sufficient as to him, was amended, demurrer overruled, and an answer to the second amended complaint filed. The cause was then brought to trial and judgment entered for defendants. Upon a motion for a new trial this judgment was set aside. On account of certain transactions alleged to have been fraudulent and which were brought out at the trial, leave to file amendments to the second amended complaint was granted and J. M. Reynolds was made a defendant. Demurrers were again interposed, but overruled. Again facts were discovered involving a fraudulent transfer, which had taken place subsequent to the filing of the complaint and amendments, and a supplemental complaint was filed adding the Junior [30]Capital Company, Ltd., and Leon Herman as defendants. These parties demurred, and with the consent of plaintiff, these demurrers were sustained. A demurrer to these amendments was likewise sustained. Under the direction of the trial court the various amendments were then incorporated in a third amended and supplemental complaint. To this third amended and supplemental complaint demurrers were interposed and this time sustained without leave to amend, which brought the matter before us.

This third amended complaint is too long to more than briefly summarize, but in substance it is alleged that plaintiff was a client of the American Mortgage Company, and set forth facts showing a confidential relationship existing between them. In 1931 the amended complaint alleges the Mortgage Company advised plaintiff to purchase a $10,000 deed of trust, referred to as the Morris deed of trust, representing that it was a second lien upon property exceeding $45,000 in value and subject only to a first encumbrance of $25,000. It is then alleged that plaintiff, relying upon these statements and others made to induce him to make the purchase, acquired the Morris deed of trust. Shortly thereafter plaintiff left the state, and upon his return some three months later, found that the American Mortgage Company was in the hands of a receiver; that the representations made to him in regard to the Morris transaction were false, and that the Mortgage Company was and had been for several years, hopelessly insolvent, and that the Morris loan was not a second deed of trust, but was subsequent to the deed of trust for $25,000, and also subsequent to a second deed of trust for $10,000, referred to as the Withers deed of trust, and that the property was not worth in excess of $20,000.