Shenberg v. DeGarmo

WOOD (W. J.), J. Plaintiff appeals from a judgment in favor of defendants after demurrers to the third amended complaint had been sustained without leave to amend and after a motion to reconsider and to grant leave to file a fourth amended and supplemental complaint had been denied. This is the third occasion on which the various troubles of Golden State Glass Corporation and its stockholders have come before the reviewing courts of California. (See Golden State Glass Corp. v. Superior Court, 13 Cal.2d 384 [90 P.2d 75]; DeGarmo v. Goldman, 19 Cal.2d 755 [123 P.2d 1].)

In the original complaint, which was filed on April 25,1940, the plaintiffs named were N. B. Shenberg and Hortense Shenberg, husband and wife. They alleged therein that they were owners in joint tenancy of stock in Golden State Glass Corporation and sought damages against G. C. DeGarmo, John E. Biby and several fictitious defendants in a sum equal to the value of the stock owned by them. It was alleged in the complaint that defendants had committed several acts of wrongdoing specifically set forth, including the malicious appointment of a receiver for the corporation and the dissipation of the corporation’s assets and conversion of portions thereof to their own use, causing the value of plaintiffs’ stock to be wholly destroyed. Summons was issued on February 17, 1941. A dismissal was filed as against defendant Biby on March 12, 1942. An amended and supplemental complaint was filed and an alias summons issued on April 7, 1942, defendant Golden being substituted for one of the fictitious defendants. In each of the amended complaints Hortense Shenberg was dropped as party plaintiff and the remaining plaintiff, N. E. Shenberg added certain paragraphs, without arranging them as a separate cause of action, in which he alleged that he had a contract with the corporation for his personal services and that defendants had unjustifiably induced a breach of this contract. For this reason he sought additional damages in the sum of $4,915.

In the third amended complaint plaintiff alleges that he and his wife hold as community property one-third of the capital stock of Golden State Glass Company; that defendant DeGarmo owns one-third and that defendant Goldman owns one-third of the stock of the corporation; that until a receiver was wrongfully appointed through the machinations of the original defendants G. C. DeGarmo and John Biby, the corpo[329]ration was highly solvent; that plaintiff was, until May 31, 1938, when the receiver was appointed, employed by the corporation as a co-manager under written contract; that the reasonable market value of the stock held by plaintiff at the time of the appointment of the receiver was $42,225; that defendant DeGarmo was indebted to the corporation at the time of the appointment of the receiver for $22,033.17, monies wrongfully paid him through excessive salaries and without consideration; that DeGarmo wrongfully contended that he was entitled to receive such salary for an indefinite period in the future at the rate of $500 per month; that DeGarmo bore ill will toward plaintiff during the entire period mentioned in the pleadings and that Goldman bore ill will toward plaintiff during the latter period of time referred to in plaintiff’s complaint; that as a result of a conspiracy between defendants DeGarmo, Biby and unnamed parties DeGarmo wrongfully caused a receiver to be appointed in an action in the superior court, various details concerning the manner in which the receiver was procured being set forth; that the receiver took possession of the corporation’s business and property and held it from May 31, 1938, to March 3, 1939, when the receivership was terminated; that since December, 1940, the corporation has been in the hands of a board of directors controlled by defendant DeGarmo and defendant Goldman; that a stockholders’ meeting was held in March, 1942, at which time Frank M. Gunter, counsel and pledgee of certain stock held by plaintiff was elected a director, together with defendants DeGarmo and Goldman; that De-Garmo and Goldman dominate the board, do not hold meetings as required by the by-laws, are dissipating the assets of the corporation, paying monies to defendant DeGarmo belonging to the corporation without consideration and converting assets of the corporation to their own use; that defendant DeGarmo caused certain persons to be named as directors of the corporation and by threats of physical violence barred plaintiff from entering upon the property of the corporation; that by reason of this course of wrong-doing, the stock owned by plaintiff has become valueless to any person other than defendants and that the market value of the stock has become wholly destroyed to plaintiff’s damage in the sum of $42,225.