Dos Pueblos Ranch & Improvement Co. v. Ellis

67 P.2d 340, 8 Cal. 2d 617, 1937 Cal. LEXIS 322
CourtCalifornia Supreme Court
DecidedApril 26, 1937
DocketL. A. 16074
StatusPublished
Cited by24 cases

This text of 67 P.2d 340 (Dos Pueblos Ranch & Improvement Co. v. Ellis) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dos Pueblos Ranch & Improvement Co. v. Ellis, 67 P.2d 340, 8 Cal. 2d 617, 1937 Cal. LEXIS 322 (Cal. 1937).

Opinion

CURTIS, J.

The respondent in this action under section 3 of rule Y of this court moved for a dismissal of the appeal or an affirmance of the judgment on the grounds that the appeal was taken for delay only; that the questions on which the decision of the case depends are so unsubstantial as not to need further argument; and that the appellants have failed to comply with the rules of court. Upon the argument of this motion, the respondent (its brief in answer to appellant’s opening brief not having been filed) was given time in which to file said brief, and an order was made placing the cause on its merits on the ready to submit calendar. This order disposes of the respondent’s motion to dismiss or affirm, and its legal effect is to deny said motion and to submit the case for decision on its merits upon the briefs of the parties filed herein.

The complaint in this action contains two causes of action. By the first cause of action, the plaintiff seeks to set aside and cancel a lease of certain real property described therein on the ground that the defendants have violated the terms thereof and have thereby forfeited all their rights thereunder. The second cause of action is the ordinary action to quiet title to real property, being the same real property described in said lease. Rollo Ellis and Hurl A. Ellis filed an answer to said complaint to which the court sustained a demurrer interposed by the plaintiff. These defendants then filed an amended answer, and on the same day the defendant, the Advance Petroleum, Ltd., filed its answer. Demurrers to these answers and motions to strike out portions of each of said answers were filed by the plaintiff, but before any hearing was had on these demurrers or motions, by leave of court, the defendants filed a consolidated amended answer to the complaint. Thereupon, plaintiff, after due notice to defendants, moved to strike from this amended answer certain portions thereof. This motion was granted on March 19, 1936, and notice of. said ruling was given to *620 the defendants on March 21, 1936. On April 24th, plaintiff served notice of motion for judgment on the pleadings. Before said motion was heard and on May 11, 1936, P. Talbot ITannigan, attorney for defendants filed a complaint in intervention on his own behalf, but failed to serve said complaint on plaintiff. The record does not disclose that any action has been taken in reference to this complaint in intervention, except that the court granted leave to file the same. No further reference need be made to this pleading. On June 2, 1936, and before plaintiff’s motion for judgment on the pleadings was heard, the defendants served and filed a notice for leave to file a further amended answer. These two motions, that is, plaintiff’s motion for judgment on the pleadings, and defendants’ motion for leave to file a further amended answer, came on for hearing and were heard together. The court denied the motion of defendants for leave to file said amended answer, and granted plaintiff’s motion for judgment on the pleadings. From the judgment in favor of the plaintiff following the action of the court upon said motions, the defendants have appealed.

As noted above, plaintiff seeks in the first cause of action of its complaint to terminate and cancel a lease of certain real property, executed by it in favor of the defendant, Rollo Ellis, and by him assigned in part to the other defendants. The grounds upon which the plaintiff asked that said lease be terminated and canceled were that the defendants had violated the terms of the lease in a number of material respects and on various and divers occasions. In their several amended answers filed herein, the defendants, while not expressly admitting said acts of violation, allege that whatever acts were done or performed by'them after the execution of said lease and while they were operating thereunder, were done and performed in conjunction with and by the express consent and with the active cooperation of Herbert G. Wylie, and “that at all times therein mentioned the plaintiff and one Herbert G. Wylie were, and now are, one and the same; that at all of the times in said complaint mentioned, said Herbert G. Wylie was and now is, the owner and in possession of more than a majority of the issued and outstanding shares of the capital stock of plaintiff Dos Pueblos Ranch & Improvement Company, a corporation, and the holder of, and did retain absolute control, domination, and management *621 of all of the shares thereof, and of said corporation”. This and other similar allegations in the amended answers filed by the appellants ivere struck out by the court on motion of the respondent on the ground that the same were irrelevant, immaterial and surplusage. They furnish practically the only justification of the appellants for the commission of the acts which respondent contends breached the terms of the lease. The only theory under which these allegations could become material and, therefore afford a legal defense to respondent’s claim that the appellants had breached the terms of the lease, is that they show that the respondent and Herbert G. Wylie were one and the same entity and that one is the alter ego of the other. That these allegations are woefully inadequate for that purpose is apparent when given only a casual observation. It is simply stated in these allegations that Herbert G. Wylie owns more than a majority of the capital stock of said corporation and that he controls, dominates and manages said corporation and all of its shares. This statement is not a sufficient allegation that the two entities are one and the same person. (Erkenbrecher v. Grant, 187 Cal. 7 [200 Pac. 641].) In that case this court held as follows: “In order to cast aside the legal fiction of distinct corporate existence as distinguished from those who own its capital stock, it is not enough that it is so organized and controlled and its affairs so managed as to make it ‘merely an instrumentality, conduit, or adjunct’ of its stockholders, but it must further appear that they are the ‘business conduits'and alter ego of one another’, and that to recognize their separate entities would aid the consummation of a wrong. Divested of the essentials which we have enumerated, the mere circumstances that all of the capital stock of a corporation is owned or controlled by one or more persons, does not, and should not, destroy its separate existence; were it otherwise, few private corporations could preserve their distinct identity, which would mean the complete destruction of the primary object of their organization.” (See, also, Minifie v. Rowley, 187 Cal. 481, 487 [202 Pac. 673]; Hollywood Cleaning & Pressing Co. v. Hollywood Laundry Service, Inc., 217 Cal. 124, 129 [17 Pac. (2d) 709].) There was no error, therefore, in the action of the court in striking out from the several amended answers filed by the appellants, *622 the allegations respecting the relationship existing between the ¿respondent and Herbert G. Wylie.

In the proposed amended answer of the appellants, they attempted to remedy this defect in their former answers by alleging upon information and belief that Herbert G.

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Bluebook (online)
67 P.2d 340, 8 Cal. 2d 617, 1937 Cal. LEXIS 322, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dos-pueblos-ranch-improvement-co-v-ellis-cal-1937.