Opinion
Civ. No. 737.
November 3, 1909.
APPEAL from a judgment of the Superior Court of Los Angeles County. W. P. James, Judge.
The facts are stated in the opinion of the court.
Shankland Chandler, for Appellant.
H. E. Guthrie, E. Sharp, and Leonard B. Slosson, for Respondent.
Action to recover a sum of money paid in the purchase of mining stock, which purchase was made under an agreement for the repayment of the same. Judgment went for plaintiff, from which defendant appeals upon the judgment-roll accompanied by bill of exceptions.
Defendant was a foreign mining corporation authorized by its articles of incorporation to transact business in California. It is alleged in the complaint that at the time of the filing thereof and at all times mentioned therein defendant was engaged in the transaction of business in said state; that on December 7, 1903, plaintiff and defendant entered into an agreement whereby plaintiff purchased from defendant one thousand shares of its capital stock for the sum of $3,500, the defendant on its part agreeing that in consideration of such purchase defendant would, on demand of plaintiff, after the latter had inspected and examined defendant's mining property situated in the Republic of Mexico, repay and refund to him the purchase price of such stock; that pursuant to this agreement plaintiff paid the $3,500, and defendant issued to him a certificate for said one thousand shares of stock; that as a result of his inspection of the property plaintiff was dissatisfied with such purchase, and on January 13, 1904, tendered to defendant the redelivery of the stock and demanded repayment of the purchase price thereof; that pending negotiations for settlement, and on March 12, 1904, the parties entered into another agreement, as follows:
"San Francisco, Cal., March 12th, 1904.
"To Whom It May Concern:
"This agreement made and entered into the above date, between the Zubiate Mining Company of San Francisco and Mexico, party of the first part, and J. M. Sharp and J. M. Dickinson of Saticoy, California, the parties of the second part.
"Witnesseth: That whereas the said parties of the second part, on or about December 7th, 1903, paid to the Zubiate Mining Company, three thousand five hundred (3500) dollars each; said payment being for one thousand (1000) shares of stock in said company, with an agreement that said Zubiate Mining Company would refund the money in case, after examination, said parties were not satisfied with the character of the mines, and
"Whereas said parties have made a demand upon the company to have the said amount refunded, and
"Whereas said company has levied an assessment of twenty (20) cents per share on the stock of said company, which assessment is now due and payable.
"Therefore, it is hereby agreed that said parties of the second part will pay the amount of the said assessment and the Zubiate Mining Company will agree to refund said amount of three thousand five hundred ($3500) dollars to each of said parties; also the assessment of two hundred dollars ($200) to be paid by each of the parties, together with interest at eight (8) per cent per annum from December seventh, 1903, on the principal, and from March 12th, 1904, on the assessment, six (6) months from date hereof, provided said parties of the second part elect to accept such refund at that time in lieu of the one thousand (1000) shares of stock held by each.
"ZUBIATE MINING COMPANY,
"By DREW R. OLIVER, President,
"J. R. KENNY, Secretary.
"Subject to the ratification of the board of directors.
"J. M. SHARP,
"J. M. DICKINSON."
That pursuant to the terms of said agreement plaintiff paid to defendant an assessment of $200, and at the expiration of the six months specified in the agreement plaintiff notified defendant that he elected to accept a refund of the money so paid as provided in the agreement, and demanded that defendant pay to him the sums of money specified in the agreement pursuant to the terms thereof; and thereupon tendered the redelivery of the one thousand shares of stock to defendant, but defendant refused to accept the same or to repay said sums of money and interest thereon; that at all times plaintiff was ready, able and willing to return said stock to defendant.
Defendant denied all the allegations of the complaint other than the payment to it of said sums of money so alleged to have been paid in the purchase of the stock and payment of the assessment thereon, and admitted that it had refused to repay the same.
As a further defense to the action, defendant alleged: 1. That the several agreements set forth in the answer were without consideration and void: 2. That defendant had no power or authority to make or enter into said contracts or either of them; and 3. That any rights which plaintiff may have had by reason of such agreements were lost by reason of his laches in failing to act thereunder within a reasonable time. The finding of the court as to all the issues was in favor of plaintiff, the judgment followed as prayed for in complaint.
Appellant contends that the court erred in denying its motion to quash the summons. As shown by the affidavit of the party serving the summons upon defendant, such service was had on January 13, 1906, in Los Angeles county, "by delivery to and leaving with George A. Hart, the president and managing agent, within the state of California, of said corporation . . . a copy of said summons," etc. Thereafter, defendant moved to quash the summons and set aside the service thereof upon the grounds, among others unnecessary to mention, that said corporation was organized under the laws of South Dakota, and "that said George A. Hart is not a managing agent, or business agent, or any agent, or cashier, or secretary of said defendant corporation." The notice of motion specified that it would be made upon the complaint and an affidavit of George A. Hart, which was sworn to on January 20, 1906, wherein it was averred that "affiant is not a managing agent, nor business agent, nor any agent, nor cashier, nor secretary of said corporation." Reference to the motion as made discloses that it was not made upon the ground that Hart was not managing agent, cashier or secretary of the corporation at the time, to wit, January 13, 1906, when service was had upon the corporation, but at a time subsequent thereto; nor does this affidavit of Hart, sworn to on January 20th, from which it appears that he was not on that date the managing agent, etc., negative or tend to prove that he was not on January 13th the managing agent in California of defendant. Neither the motion nor affidavit is directed to the time of the service of the summons.
At the hearing of the motion another affidavit of Hart was submitted, where it was averred that he never had at any time been the managing agent of defendant corporation. Regarding this as having reference to and covering the time when service was made of the summons, and conceding the motion to have been directed to such time, it is sufficient to raise an issue of fact as to which there is a conflict between the affidavits of Hart and the person making the affidavit of service; as to which, like any other fact in dispute, this court will not disturb the finding of the trial court when there is a substantial conflict of evidence.
Conceding our position thus far to be correct, appellant, nevertheless, contends that it is shown by Hart's affidavit, which as to such fact is uncontradicted, that defendant was not at the time of service either actively or otherwise engaged in transacting business in California. That a foreign corporation must be "doing business" in this state to justify service upon it through a managing agent, is required by section 411, Code of Civil Procedure. (See, also, Jameson v. Simonds Saw Co., 2 Cal.App. 584, [ 84 P. 289].) Such objection to service of process, however, may be waived, and inasmuch as this was not made one of the grounds of the motion and notice thereof given, as required by section 1010, Code of Civil Procedure, defendant must be deemed to have waived any objection to service based upon such ground. We therefore conclude the court did not err in its ruling upon the motion to quash the summons and vacate the service thereof.
Defendant contends that its demurrer should have been sustained, upon the ground that the complaint failed to state a cause of action. The sole purpose of the action was to recover from defendant the sums of money agreed to be repaid in accordance with the terms of the agreements. The tender of the return of the stock, if such tender was necessary, left nothing to be done by plaintiff. The consideration had passed to the obligor, and the only duty imposed upon defendant was the obligation to repay the sums of money specified. ( Hellings v. Heydenfeldt, 107 Cal. 577, [40 P. 1026].) This fact brings the case within the provision of section 3302, Civil Code, which provides that, "the detriment caused by the breach of an obligation to pay money only is deemed to be the amount due by the terms of the obligation, with interest thereon." As said in Bartlett v. Odd Fellows' Bank, 79 Cal. 218, [12 Am. St. Rep. 139, 21 P. 743]: "When the plaintiff, as here, alleges facts to exist, which, if proved, would entitle him to recover the sum of money he demands from the defendant, he has shown, so far as the recitals of the complaint can, that he has sustained damages." Having alleged that defendant had promised to pay a specified amount for which judgment is prayed, it was unnecessary to allege that plaintiff had been damaged in such sum. ( Bank of British Columbia v. Port Townsend, 16 Wn. 450, [47 P. 896].) The value of the stock was immaterial for the reason that plaintiff's right to repayment did not depend upon its value; and as to the cause of action, it is likewise immaterial whether or not defendant accepted plaintiff's tender of a return of the stock. The second agreement extended the time within which plaintiff might demand performance of the obligation to repay the purchase money, and also provided for the payment of interest thereon and repayment of the assessment. To such extent the first agreement was modified. Such modification, however, could not have the effect of releasing defendant from the terms of the first agreement. There was no error in the ruling of the court upon the demurrer.
The court found against the special defenses set up in the answer. It is contended that such findings are unsupported by the evidence, and that the court should have granted defendant's motion for a nonsuit. It is unnecessary to quote the evidence; suffice it to say, an examination of the record satisfies us that it is ample to justify the ruling of the court in denying defendant's motion for a nonsuit and fully supports the findings. The transaction did not constitute an unconditional original subscription to the stock of defendant, but was a conditional purchase of stock, which the evidence tended to show had been theretofore issued to another and by him returned to the company. The purchase was made upon conditions fully set forth in a written contract which was contemporaneous with and part of the transaction of purchase. ( Jefferson v. Hewitt, 95 Cal. 535, [30 P. 772].) Nor was the agreement secret. On the contrary, it appears from the evidence of witness Sharp that early in January, at least, plaintiff was, through him, advised by the secretary of the company that "they had a copy of the agreement in the office, and that the matter would be presented to the board of directors at the next meeting." Neither was there any want of consideration. The purchase price paid subject to the conditions contained in the agreement was a sufficient consideration for defendant's promise to repay if plaintiff, after inspection of the property, was dissatisfied therewith. In the absence of the rights of creditors being involved, and none appear, we perceive no reason why this agreement should not be enforceable against the corporation. ( Vent et al. v. Duluth Coffee Spice Co., 64 Minn. 307, [67 N.W. 70].) Says Mr. Cook in his work on Corporations (sec. 83): "Instead of subscribing for stock, a party may make a contract with a corporation to take the stock with the right to return it and receive back the purchase price within a certain time. Such a contract is legal, and the stock may be returned and the money recovered, if corporate creditors' rights do not intervene."
This being true, the extension of time for repayment and the payment of $200 on account of the assessment furnishes ample consideration for the contract dated March 12, 1904, whereby defendant agreed to repay both sums with interest thereon at the expiration of six months, if plaintiff elected to demand the same. It is true this agreement was made subject to ratification by the board of directors, and appellant contends that the board failed to ratify it. Through its president and secretary the corporation must be deemed to have had notice of the agreement at the time of the making thereof. It appears from the minutes of the proceedings of its board of directors that it was formally submitted to the board for action on May 9, 1904. No action, however, was taken thereon until October 21, 1904, nearly six weeks after plaintiff, at the expiration of the time specified in this agreement, had made formal demand for repayment, which demand defendant then refused and by its formal resolution disaffirmed the agreement. Conceding this contract so made on behalf of the corporation to have been unauthorized, nevertheless, it was one which it had authority to make, and its failure to disaffirm the same for more than seven months after notice thereof, coupled with the fact that it retained the $200 paid thereunder, if not a technical ratification of the contract, was, nevertheless, sufficient to estop the corporation from pleading want of ratification as a defense. (Clark Marshall on Private Corporations, secs. 716d and 716c; Phillips v. Sanger Lumber Co., 130 Cal. 431, [ 62 P. 749]; Curtin v. Salmon River etc. Co., 141 Cal. 308, [99 Am. St. Rep. 75, 74 P. 851]; Blood v. La Serena L. W. Co., 113 Cal. 221, [41 P. 1017, 45 P. 252].)
The judgment is affirmed.
Allen, P. J., and Taggart, J., concurred.