Donovan v. Hollar

BARNARD, P. J. This is an action in equity to establish a trust on the ground of fraud. The plaintiff claims as a beneficiary under a common-law trust, having purchased shares or certificates of beneficial interest therein, and filed the action for himself and for the benefit of all other persons similarly situated.

The complaint alleges that by written lease dated January 1, 1921, fifteen named persons leased to one John G. Clark as lessee, certain real property situated in San Bernardino County; that by another lease dated December 1, 1921, Ada Julia Hollar, Ruth Susan Hollar and Susan Hollar leased to the said Clark as lessee, certain other lands situated in that county; that the said Clark sublet both of said properties to the defendant X. H. Hollar; that the lessors named in these two leases, with six other named persons, entered into a written agreement and declaration of trust creating a common-law trust, the name of which was afterward changed to Saline Products Company; that under the declara[550]tion of trust and under a permit issued by the corporation commissioner the “leasehold interest and properties” described and set forth in the above leases were turned over to X. H. Hollar, C. D. Grites, S. A. Court and W. D. Stroud as trustees of said trust; that certain shares or certificates of beneficial interest in the trust were given to the various trustors; and that other shares or certificates of beneficial interest were sold to outsiders, including the plaintiff. It is then alleged that X. H. Hollar controlled the actions of the other trustees and that the trustees, for the purpose of evading the trust and defrauding the- holders of beneficial interests therein, caused to be organized under the laws of Nevada a corporation known as Saline Products Go., Inc., and transferred to that corporation all of the assets of said common-law trust. It is further alleged that the defendants X. H. Hollar, S. A. Chapman and Knute B. Norswing conspired together to wrongfully secure to themselves the ownership, control and domination of the property of the trust estate and to convert to their own use the trust estate which they hold in trust for the benefit of all of the trustors and beneficiaries holding beneficial interests in the trust estate, and to wrongfully cheat and defraud all those holding beneficial interests in the trust estate by forming this Nevada corporation and turning the assets of the trust estate over to that corporation; that the directors of that corporation are but the creatures of the defendant X. H. Hollar and were at all times subservient to all of his wishes; that said corporation was organized solely for the purpose of carrying out a fraudulent scheme whereby the assets of the trust estate would be turned over to a corporation bearing a name similar to that of the common-law trust for the purposes of deceiving the beneficiaries of that trust; that the said corporation was organized solely for the benefit of X. H. Hollar and the persons responsible for its organization; that the said X. H. Hollar, in violation of his trust, delivered to the Nevada corporation the purported title to all of the property of the trust estate and had himself appointed general manager of said corporation; that he has since that time acted as such manager and conducted the business for and on behalf of the Nevada corporation; and that he intends to sell shares of stock in the Nevada corporation and otherwise dispose of such shares in a manner that would involve the