Rudolph v. National Ass'n of Securities Dealers, Inc.

WOOD, P. J. The demurrer to the second amended complaint was sustained without leave to amend. Plaintiffs’ notice of appeal will be regarded as a notice of appeal from the judgment of dismissal which was based on the order sustaining the demurrer.

At the beginning of the second amended complaint there is a heading entitled, “Statement of the Case.” Under that heading plaintiffs quoted a statement which allegedly was made by defense counsel in the case of “Rudolph v. Fulton in the District Court of Appeal at San Francisco.1 Then plaintiffs alleged that said statement indicates that the defendant herein is not entitled to immunity “from a civil suit” by a citizen; that proof of said statement “is based” on certain exhibits which are a part of the complaint; that even if plaintiff Rudolph was a member of defendant company while his firm was “run out of the business” by defendant through fraud and deceit, the defendant cannot hold him to “their disciplinary procedures with their assumption” that defendant is an agency of the federal government; that said statement of defense counsel was “discarded” (disregarded) and the judgment on appeal was based only on the record of the superior court. Then plaintiffs set forth an extended quotation from a Michigan ease regarding freedom and civil rights.

Then plaintiffs alleged that they “repeat” their first amended complaint. (The first amended complaint—as to which a demurrer had been sustained—is then set forth verbatim, as the remainder or final part of the second amended complaint.)

The first amended complaint, as so set forth, was in substance, as follows: Defendant was incorporated in Delaware as a private nonprofit corporation, and for the past 23 years it has fraudulently carried on business throughout the United States as a public nonprofit corporation. It has collected millions of dollars from its members “under cover” of section 15a of the Securities and Exchange Act, and it has used compulsory powers to punish its members by “undue” fines and enormous assessments. It is utilizing powers which, under said section 15a, were meant for a public corporation that was incorporated under the federal statute, whereas it was not incorporated under any federal statute. It functions in the name of the federal government without authorization. It [321]collects enormous fines, assessments, and membership dues, and these actions prove that defendant is a profit-making organization. Defendant pretends that it is a nonprofit corporation in order to avoid paying federal and state income taxes by utilizing the exemption granted to nonprofit corporations. Defendant has deceived the plaintiffs, the public, the state government, and the federal government by incorporating in Delaware as a nonprofit corporation and by registering with the Securities and Exchange Commission as a public nonprofit corporation. All the acts of defendant are unlawful, fraudulent, and malicious. The acts of defendant, as set forth above, have given plaintiffs cause to sue defendant, under section 3294 of the “Code of Civil Procedure [Civil Code] ” for punitive damages in the amount of $1,000,000 for defendant’s fraudulent, oppressive, and malicious actions toward plaintiff Rudolph’s firm. The acts of defendant forced plaintiff Rudolph to close his business, and he lost his connections with a big clientele. The acts of defendant ruined his career as a business man and led to fear and frustration, which crippled his mental and physical ability to function as a normal human being.